annual report and accounts 2007 - zonebourse.com€¢ post year end merger agreement for $182.3m...

Annual Report and Accounts 2007

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Contents p.3 Highlights p.5 About Sports Direct International plc p.7 Chief Executive’s Review p.11 Financial Review p.18 Board of Directors p.19 Directors’ Report p.26 Corporate Governance Report p.33 Directors’ Remuneration Report p.40 Directors’ Responsibilities p.41 Independent Auditors’ Report p.43 Consolidated Income Statement p.44 Consolidated Statement of Recognised Income and Expense p.45 Consolidated Balance Sheet p.46 Consolidated Cash Flow Statement p.47 Notes to the Financial Statementsp.84 Independent Auditors’ Reportp.86 Company Balance Sheetp.87 Notes to the Company Financial Statementsp.90 Consolidated Five Year Recordp.91 Shareholder Information

02 SPORTS DIRECT ANNUAL REPORT

Highlights• Listing and admission to trading on the London Stock Exchange on 2 March 2007

• Revenue growth in the year of 12.8% to £1.35bn

• Group margin up 600 basis points to 44.3%

• Operating profit before exceptional items growth of 47.6% in the retail division and 9.4% in brands

• Group EBITDA pre exceptional items up 31.8% to £191m and underlying Group profit before tax up 38.3% to £151m

• Underlying earnings per share up 40.4% to 14.0p

• Further development and consolidation of head office and distribution in new purpose built site at Shirebrook Derbyshire

• Acquisitions during the year of Original Shoe Company, Streetwise and Kangol

• Post year end merger agreement for $182.3m with Everlast and acquisition of 60% of Field & Trek for £5m (with an option to acquire the remaining 40% for a further £5m)

SPORTS DIRECT ANNUAL REPORT 03

About Sports Direct International plcSports Direct is the UK’s leading sports retailer by revenue and operating profit, selling a wide range of competitively priced branded sports and leisure clothing, replica kit, footwear and equipment. As at 29 April 2007, the group operated out of 462 stores, of which 414 were located in the UK (excluding Northern Ireland), 33 in Belgium, 11 in Slovenia and 4 in Holland. In addition, through its 42.5% shareholding in the Heatons chain, Sports Direct had 13 stores, 3 in Northern Ireland and 10 in the Republic of Ireland. The majority of the Group’s stores trade under the Sports World fascia, although the Sports Direct.com name has been used on most new stores since the sportsdirect.com domain name was acquired in April 2006. The group has also acquired a number of retail businesses over the last few years and also trades under the Exsports, Lillywhites, McGurks, Gilesports, Hargreaves, Streetwise and Original Shoe Company fascias.

In addition to retailing third party brands including Nike, adidas, Reebok and Umbro in its stores, the Group owns a portfolio of internationally recognised sports and leisure brands, including Antigua, Dunlop, Kangol, Karrimor, Lonsdale and Slazenger, and products under those brands are sold in its own stores and through third-party retailers and by licensees. The Group is also in the process of developing licensed, stand-alone stores outside the UK for certain Group brands, including Lonsdale and Slazenger.

Sports Direct targets a broad customer base and differentiates itself from its competitors through its reputation as a price leader in the sports retail sector. The Group’s successful business model - leveraging Sports Direct’s retail and brand expertise to enhance margins and cash flow - has been a key contributor to its rapid growth. Strategic retail add-on acquisitions - including Hargreaves, Gilesports and Streetwise and the stand-alone Original Shoe Company chain - have contributed to the development of Sports Direct as one of the largest sports retailers in Europe.

On 2 March 2007 Sports Direct International plc was admitted to trading and listed on the London Stock Exchange. The prospectus issued at that time, a copy of which is available on the Company’s web site, contains detailed information on the Group and its businesses.


Chief Executive’s Review


In the 52 weeks ended 29 April 2007, the Group achieved sales growth of 12.8%, taking total revenue to £1.35 billion. Group margins strengthened to 44.3% so allowing a growth in EBITDA pre exceptional items to £191 million and in underlying profit before tax including property transactions to £151 million. Underlying earnings per share were up 40.4% to 14.0 pence. In accordance with the statements made at the time of the IPO, an interim dividend for 2007-08 of 1.03p per share, totalling £7.4m, was paid on 31 July 2007 to shareholders who were on the register on 29 June 2007. The Directors will not recommend at the Company’s Annual General Meeting the payment of a final dividend for the year.

Retail ReviewSports Direct’s growth in its retail business over many years has enabled it to build a strong, market-leading position. The Group benefits from its purchasing power and also from the strength of its Group and licensed-in (such as Umbro) brands. This manifests itself in the value that we pass onto customers.

Sales in the retail division grew during the year by 16.2%, and gross margin from 37.5% to 44.3%. We continued to strengthen our retail portfolio by organic growth and by acquisition. In May 2006, we acquired Original Shoe Company (‘OSC’) with 54 stores. OSC stores are principally located on the high street, with a concentration in Scotland and the North of England. Following market analysis and discussions with our leading 3rd party brands, we believe that, with OSC, there is the opportunity to develop a different store concept as premium outlets with higher specifications selling highly fashionable products. This concept will target customer groups who do not regularly visit Sports World stores. In addition, during the year the Group acquired Streetwise, a regional chain, with 33 stores, which has been integrated into the main retail chain.

Chief Executive’s Review

Review by business segment

52 weeks ended 53 weeks ended 29 April 2007 30 April 2006

£m £m % Retail Revenue: UK retail 1,069.7 943.8 UK wholesale and other 41.5 14.8 International retail 64.0 52.7 Total retail revenue 1,175.2 1,011.3 +16.2 Cost of sales (654.9) (631.8) Gross margin 520.3 379.5 Gross margin percentage 44.3% 37.5% Brands Revenue: Wholesale 154.5 169.2 Licensing 17.4 14.2 Total brands revenue 171.9 183.4 -6.3 Cost of sales (96.0) (106.2) Gross margin 75.9 77.2 Gross margin percentage 44.1% 42.1%


As at 29 April 2007, the Group operated out of 462 stores, of which 414 were located in the UK (excluding Northern Ireland), 33 in Belgium, 11 in Slovenia and 4 in Holland. In addition, through its 42.5% shareholding in the Heatons chain, Sports Direct has 13 stores, 3 in Northern Ireland and 10 in the Republic of Ireland. The majority of the Group’s stores trade under the Sports World fascia, although the Sports Direct.com name has been used on most new stores since the sportsdirect.com domain name was acquired in April 2006. The group has also acquired a number of retail businesses over the last few years and also trades as Exsports, Lillywhites, McGurks, Gilesports, Hargreaves, Streetwise and Original Shoe Company.

We also took our first steps into the Dutch market with the opening of 4 stores. Our existing international retail operations are continuing to develop as we place the same emphasis on margin growth in those businesses as we do in our retail business in the UK.

Brands DivisionThe brands division continues to develop and sell its traditional and well known products – such as Dunlop tennis racquets and Slazenger tennis balls and cricket equipment – through Group stores and third parties. The division also licenses third parties to exploit those brands in many product areas in countries throughout the world.

During the year we acquired the well known Kangol brand, and since the year end we have entered into a merger agreement with Everlast International, the owner of the Everlast boxing brand, under which, subject to the approval of Everlast’s shareholders and customary conditions including merger clearance in the United States, we will acquire that company for $182.3m.

Brands revenue fell overall in the year, largely due to the loss of sales of golf balls following the closure of the golf ball factory in the United States, but licensing income grew by 22.5%, and licensing continues to be the main driver of growth within the brand division. The brands division continues to invest in sponsorship of leading sportsmen and women, in events such as Wimbledon, and in marketing around the core values of each brand.

We are very pleased to have recently concluded an agreement with Dubai based company Retail Corp that will see Lillywhites and Sports Direct stores open throughout the Middle East region and the Republic of South Africa.

The agreement gives Retail Corp exclusive rights to open Lillywhites and Sports Direct stores within their designated territory of UAE, Kingdom of Saudi Arabia, Kuwait, Qatar, Bahrain, Oman, Egypt and the Republic of South Africa, with the use of Lillywhites or Sports Direct fascia determined by the consumer profile in each location. Carrying Group and proprietary brands, a minimum of 15 stores are due to be opened during the 25-year contract, with the total number expected to reach 25. Of these, 18 are planned to open by 2010. This is particularly exciting for South Africa as it coincides with the country’s hosting of the 2010 FIFA World Cup.

The stores will range from 900 to 1600m2. Retail Corp is committed to allocating significant shop space to Group brands. Initially products will be sourced from Shirebrook, but this will move to direct supply from the Far East in time.

We continue to develop Group brands in territories around the world and build a distribution and licensing network as a platform for future growth.

Shirebrook CampusThe Group continues to make significant investment in infrastructure. The remaining functions in Dunstable were transferred during March and April 2007 to the new, purpose built head office and distribution facility at Shirebrook, Derbyshire. Also transferred in the period between January 2007 and April 2007 were the head office and support functions for both OSC and Streetwise. All UK retail functions now operate out of Shirebrook and we are hoping to consolidate as many of the UK based brands business units as possible during the current financial year. Shirebrook will enhance our operational efficiency and accommodate growth.

Supply chain including sourcingSourcing capability is a key strength of the business. The Group has long standing relationships with suppliers who concentrate on product development, design, quality control and factory procurement. Members of the key suppliers’ teams are regularly in Shirebrook liaising with the Group’s retail designers and buyers to improve information flow and commercial decision making.

Chief Executive’s Review (continued)


Managing the BusinessWe manage our business with the objective of increasing long term shareholder value. We focus on achieving detailed budgets for sales, costs, and, for the reasons set out in the Financial Review, EBITDA. An analysis of the performance of the businesses against those key performance indicators is set out in the Financial Review. We are in the process of developing non financial KPIs, such as those relating to waste recycling, energy usage and employee retention, which we will employ in the future.

As part of the IPO process we examined the risks the Group faced, and these will be reviewed on an ongoing basis. Those risks – which are described in detail in the prospectus issued in connection with the IPO - include the possibility of disruption to the supply chain, dependence on manufacturers in developing countries, the highly competitive nature of the markets in which the Group operates, dependence on key management, logistics and distribution infrastructure, reliance upon the Group’s IT infrastructure, factors outside the control of the Group including weather and terrorism, risks relating to the property portfolio, the inability to open new stores or make acquisitions or to integrate acquired businesses, restrictions imposed by competition authorities, failure to predict or fulfil consumer demand, failure or inability to protect intellectual property rights, failure to develop or secure market acceptance of brands owned by the Group, failure of licensees of Group brands, and distraction caused by the transition to being a listed company.

Financial risks are identified in the Financial Review.

Group StrategyThe Group is seeking to grow profitability across both of its divisions. This will be driven by the following:

• Organic Growth - through sales and margin growth and by widening the product offer into new categories.

• New Space Development - through the addition of new stores in the UK. In addition we continually appraise all stores in the portfolio, including the more recently acquired stores, to maximise retail performance. We also intend to start an initial trial of three health and fitness clubs, which will include a retail element with a full Sports Direct offer.

• Acquisitions – in both the retail and brands divisions. The Group is always looking to add complementary brands to its portfolio especially where we can identify potential growth across retail, wholesale and licensing. As with the recently announced acquisition of a 60% interest in Field & Trek, these acquisitions may also take us into product categories not previously catered for within the portfolio.

• Strategic stakes will continue to be made and held in both retail and brands companies to help develop deeper relationships with those businesses where stakes are held. Investments are made where we believe there is strategic value in doing so and where we believe commercial advantages can be achieved. Since 29 April 2007 we have announced the acquisition of stakes in Amer Sports Corp, a manufacturer of sports equipment, technical apparel and footwear, whose brands include Wilson, Salomon, Precor, Atomic and Suunto, and in Adidas, a leading manufacturer of footwear apparel and accessories for many sports.

• International Expansion - entry into new territories utilising our existing companies, joint ventures with partners in new territories and through licensing deals with retail partners.

Outlook for the current yearThe first three months of the current financial year have been exceptionally difficult with the unprecedented weather conditions having an immediate impact on sales.

Despite this, and at this early stage in the financial year, due to the underlying strength of the business and its model, the Board believes there should be limited growth in EBITDA pre exceptionals from the £191m reported in the current financial year.

Dave ForseyChief Executive 3rd August 2007


Financial Review

Volore dolore molorerChairman

Basis of reportingThe financial statements for the Sports Direct International plc group for the 52 weeks ended 29 April 2007 are presented in accordance with International Financial Reporting Standards as adopted by the EU (IFRS). They are the first financial statements by the Company prepared under IFRS and accordingly they take account of the requirements and options in IFRS 1, “First-time Adoption of International Financial Reporting Standards”, as they relate to the comparative financial information for the 53 weeks ended 30 April 2006.

In March 2007, the Company acquired 100 per cent of the ordinary shares of Sports World International Limited, Brands Holdings Limited, International Brand Management Limited and CDS Holdings SA through a combination of cash, non cash and ordinary share issues. This transaction has been accounted for under the principles of merger accounting and reverse acquisition accounting and the consolidated financial statements of the Company represent a continuation of the financial statements of Sports World International Limited, Brands Holdings Limited, International Brand Management Limited and CDS Holdings SA and their subsidiaries.

Summary of results


£m £m %

Revenue 1,347.1 1,194.7 +12.8

EBITDA pre exceptionals 190.6 144.6 +31.8Operating profit pre exceptionals 152.7 108.1 +41.3Reported profit before taxation (after exceptionals) 60.5 96.3 - 37.2 Pence per Pence per

share share

Basic EPS 8.18 15.32 -46.6Underlying EPS 14.03 9.99 +40.4

Profit pre exceptionals is used by management as a key measure of profitability within the Group. It is defined as profit for the period excluding certain exceptional items. The Directors believe that EBITDA pre exceptionals and operating profit pre exceptionals provide additional useful information for shareholders on the underlying performance of the business, and is consistent with how business performance is measured internally. They are not recognised profit measures under IFRS and may not be directly comparable with “adjusted” profit measures used by other companies.

EBITDA is earnings before investment income, finance income and finance costs, tax, depreciation and amortisation and therefore includes share of profit of associated undertakings and joint ventures of £3.4m (2006: £3.4m). EBITDA pre exceptionals is calculated as EBITDA before exceptional items, operating profit pre exceptionals is calculated as operating profit before exceptional items and profit after tax pre exceptionals is defined as profit after tax before the post tax effect of exceptional items and losses on the year end revaluation of forward foreign currency contracts in accordance with IFRS.


The comparative period covers 53 weeks and the effect of the additional week was to add £12.6m to revenue and £1.3m to operating profit. Amounts in this report have not been adjusted to remove the 53rd week from 2006.

Revenue and margin

Revenue 52 weeks ended 53 weeks ended 29 April 2007 30 April 2006

£m £m % Retail UK retail 1,069.7 943.8 +13.3UK wholesale and other 41.5 14.8 +180.4International retail 64.0 52.7 +21.4 Total retail 1,175.2 1,011.3 +16.2 Brands Wholesale 154.5 169.2 -8.7Licensing 17.4 14.2 +22.5 Total brands 171.9 183.4 -6.3 Total revenue 1,347.1 1,194.7 +12.8

Overall revenue grew by 12.8%.

Retail revenue grew by 16.2%. The UK accounted for 94.6% of retail with the balance in Belgium, The Netherlands and Slovenia.

Brands revenue fell by 6.3% overall. Licensing income increased by 22.5%. The reduction in wholesale revenue of 8.7% is primarily due to the loss of sales to third parties of golf balls following the closure of the manufacturing facility in the USA.

Retail margins in the UK increased from 37.5% to 44.3%, the most significant component being the improvement in price in the second half of the year. The weakness of the dollar accounted for about 20% of margin improvement and about a further 30% came from efficiencies associated with the new distribution centre in Shirebrook, such as reduced stock loss through improved security and less write down of stock because such reductions are identified and implemented quicker and are therefore of less significant value.

UK wholesale and other includes income on property transactions which is not regarded as being exceptional or non recurring totalling £14.7m.

Brands margins increased from 42.1% to 44.1% as a result of the reduction in lower margin wholesale business and the increase in high margin licensing income.

Financial Review (continued)



Selling, distribution and administration costsSelling, distribution and administration costs increased as a percentage of revenue. This was a result of costs in the acquired companies and a realised foreign exchange loss of £24 million compared to a profit of £16 million in the previous period.

The centralised distribution, IT and head office facility in Shirebrook was opened in March 2006 and the final move from Dunstable was completed in April 2007. We have continued to see the benefit of the move through increased operational efficiencies through decreased stock handling costs. It is expected that the Shirebrook site will provide the space to support the expansion of the group for many years to come.

We continue to protect our brand rights whenever they are threatened. Provision is made in these accounts for actions, the outcome of which may not be in our favour.

Exceptional operating costs and revenues Exceptional operating costs and revenues in the 52 weeks ended 29 April 2007 comprised:


£m £m

Costs relating to Admission 0.6 - Past performance bonuses including National Insurance 56.4 - Legal claims 6.0 - Profit on disposal of certain retail concessions (4.2) - Reorganisation costs - 3.4 58.8 3.4 Finance income and costs


£m £m Finance income: Bank interest receivable 0.7 0.8 Other interest receivable 0.6 0.7 Expected return on pension plan assets 2.1 1.9 3.4 3.4

Finance costs: Interest on bank loans and overdrafts (7.0) (4.0) Interest on other loans (0.9) (2.2) Interest on retirement benefit obligations (2.5) (2.1) Fair value adjustment to forward foreign exchange contracts (31.7) (9.5) (42.1) (17.8)

The loss on the fair valuing of forward foreign exchange contracts arises under IFRS as a result of marking to market at the year end those contracts held to hedge the Group’s currency risk.


TaxationThe effective tax rate on profit before tax for the 52 weeks ended 29 April 2007 was 38.6% (2006: 32.7%). The increase is due to the tax impact of the unremitted earnings of an associate and the greater impact in percentage terms of prior year under provisions and non deductible items.

Earnings

52 weeks ended 53 weeks ended

29 April 2007 30 April 2006 %

p per share p per share Basic EPS 8.18 15.32 -46.6Underlying EPS 14.03 9.99 +40.4

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. The comparative weighted average number of shares has been adjusted for the impact of reverse acquisition accounting methodology adopted.

The underlying earnings per share reflects the underlying performance of the business compared with the prior year and is calculated by dividing underlying earnings after tax by the number of shares in issue at the year end. It is not a recognised profit measure under IFRS and may not be directly comparable with “adjusted” profit measures used by other companies.

The items adjusted for in arriving at the underlying profit are as follows:


£m £m

Profit after tax 37.1 64.9 Post tax effect of Exceptional items: Costs relating to Admission 0.4 - Past performance bonuses including National Insurance 39.5 - Legal claim 4.2 - Profit on disposal of certain retail concessions (2.9) Reorganisation costs - 2.3 Fair value adjustment to forward foreign exchange contracts 22.2 6.7 Underlying profit after tax 100.5 73.9

DividendsNo dividends were paid during the year. A dividend of 1.03p per share, totalling £7.42m, was paid on 31 July 2007 to shareholders on the register on 29 June 2007.

Capital expenditure Expenditure, including acquisitions, on property, plant and equipment amounted to £61.6m (2006: £75.6m). This related to over £50m on new and refurbished stores, with the balance covering further spend at Shirebrook, other plant and equipment and IT hardware.



AcquisitionsThe Group spent £20.2m on acquisitions during the 52 weeks ended 29 April 2007. The principal acquisitions related to Kangol, Original Shoe Company and Streetwise. The net assets acquired have been analysed and separate intangible assets and the residual goodwill recognised as appropriate in accordance with IFRS3: Business Combinations. As part of the acquisition, the brand name “Streetwise”, recognised on acquisition at £1.4m, has been impaired in full as we intend to re-badge the stores acquired in the short to medium term as the opportunities to do so arise.

Cash flow and net debtOut of net operating cash flow of £175.4m (2006: £61.3m), in addition to the amount invested in capital expenditure and acquisitions, the Group invested £67.2m (2006: £13.3m) in strategic stakes. Net debt fell from £53.5m at 30 April 2006 to £38.1m at 29 April 2007. Taking into account the inclusion of marketable securities (available for sale financial assets) there was no net debt at the date of the IPO and at 29 April 2007.

The analysis of debt at 29 April 2007 was as follows:

29 April 2007 30 April 2006 £m £m

Cash – sterling 26.6 8.7 Cash – US dollars 147.0 27.6 Cash – Euros 4.6 10.3 Cash – others 3.6 2.3 181.8 48.9 Borrowings – sterling (201.8) (97.4) Borrowings – other (18.1) (5.0) Net debt (38.1) (53.5) Market value of marketable securities 75.4 15.3 Net liquidity/(indebtedness) 37.3 (38.2)


Reconciliation of movement in equity

Total equity movement is as follows: 52 weeks ended 52 weeks ended 29 April 2007 30 April 2006 £m £m

Total equity at 30 April 2006 291.2 Profit for the 52 weeks ended 29 April 2007 37.1 Items taken directly to equity: Exchange differences on translation of foreign operations 0.1 Actuarial (losses)/gains on defined benefit pension schemes (0.5) Fair value adjustment in respect of available-for-sale financial assets (7.1) Tax on items taken directly to equity 2.3 (5.2) Movement in equity issued: Capital issued 969.0 Reverse combination reserve (987.4) Share issue costs (23.5) (41.9) Dividends (0.4) Total equity at 29 April 2007 280.8

PensionsThe Group operates a number of closed defined benefit schemes in the Dunlop Slazenger companies. The net deficit in these schemes fell from £15.2m at 30 April 2006 to £14.0m at 29 April 2007.

Strategic investmentsThe Group has, from time to time, taken strategic stakes in other companies. At 29 April 2007, the Group held investments in Blacks Leisure and JD Sports. Changes in the value of these investments are recognised directly in equity in accordance with IFRS.

Financial risks, systems and controlsThe principal financial risks the Group faces are:

• Movement in interest rates on borrowings. The Group has not historically hedged this risk.

• Movement in currency exchange rates. A significant amount of the Group’s purchases are in US dollars. The Group hedges the risk of such movements by using forward purchases of foreign currency. Certain of the Group’s assets are held overseas in local currency and are revalued in accordance with currency movements. This currency risk is not hedged.

• Funding and liquidity for the Group’s operations are provided through bank loans and overdraft facilities and shareholders’ funds. The objective is to maintain sufficient funding and liquidity for the Group’s requirements.

The Group maintains a system of controls to manage the business and to protect its assets. We continue to invest in people, systems and in IT to manage the Group’s operations and its finance effectively and efficiently.

Bob MellorsFinance Director 3rd August 2007


Board of Directors

Mike Ashley (Executive Deputy Chairman)Mike Ashley (aged 43) established the business of the group on leaving school in 1982 and was the sole owner of the business until the Company’s listing in March 2007. Mike is the Executive Deputy Chairman and is responsible for formulating the vision and strategy of the Company.

Simon Bentley (Non Executive Interim Chairman)Simon Bentley (aged 52) was appointed to the board on 2 March 2007 and interim Chairman on the resignation of David Richardson. He is also Chairman of the Audit Committee and a member of the Remuneration Committee. As Chairman he chairs the Nominations Committee. Simon qualified as a chartered accountant in 1980 and in 1987 joined Blacks Leisure Group plc where he was Chairman and Chief Executive for 12 years until 2002. Simon chairs and is on the board of a range of companies and organisations. Among these, he is Deputy Chairman of the solicitors Mishcon de Reya and a Senior Trustee of The Leadership Trust. He is the Chairman of hair product brand Umberto Giannini, the hotelier Maypole Group Plc, First Sports Group and Espro Acoustiguide (the worldwide museum and commercial audioguide and producer/operator). He has lengthy experience of the sporting goods industry and is a Director of the UK’s leading five-a-side football centre operator, Powerleague.

Chris Bulmer (Non Executive Director)Chris Bulmer (aged 48) was appointed a director of the Company on 2 March 2007, and is Chairman of the Remuneration Committee and a member of the Audit and Nominations Committees. Chris has been a non-executive director of Britvic PLC since November 2005. From 2001 to 2003, Chris was the Group Human Resources Director for Brambles Industries plc and Brambles Industries Limited and prior to that was Group Human Resources Director for Whitbread Group PLC. Chris has also worked for Blue Circle, Diageo, Mars and Unilever. She is also an Independent Trustee Director of Berkeley Square Pension Trustee Company Limited.

Dave Forsey (Chief Executive)Dave Forsey (aged 41) has been with the business for over 20 years, during which he has acquired significant knowledge and experience. He has overall responsibility for the business and is Chief Executive.

Bob Mellors (Group Finance Director)Bob Mellors (aged 57) has been the Group’s Finance Director since 2004. A graduate in economics, he qualified with PriceWaterhouseCoopers before joining Eacott Worrall, where Sports Direct became a client in 1982. He was managing partner and head of corporate finance at Eacott Worrall before joining the business.


The directors of Sports DirectInternational plc present theirannual report to shareholders,together with the auditedconsolidated financial statementsfor the Company and its subsidiariesfor the 52 weeks ended 29 April2007.

This document contains a numberof forward-looking statementsrelating to the Company and itssubsidiaries (the Group) withrespect to, amongst others, thefollowing: financial conditions;results of operations; economicconditions in which the Groupoperates; the business of the Group;and future benefits of the currentmanagement plans and objectives.The Group considers anystatements that are not historicalfacts as “forward-lookingstatements”. They relate to eventsand trends that are subject to risksand uncertainties that could causethe actual results and financialposition of the Group to differmaterially from the informationpresented in the relevant forward-looking statement. When used inthis document the words “estimate”,“project”, “intend”, “aim”, “believe”,“expect”, “should”, and similarexpressions, as they relate to theGroup and the management of it,are intended to identify suchforward-looking statements.Readers are cautioned not to placeundue reliance on these forward-looking statements which speakonly as at the date of this document.Neither the directors nor anymember of the Group undertake anyobligation publicly to update orrevise any of the forward-lookingstatements, whether as a result of

new information, future events orotherwise, save in respect of anyrequirement under applicable laws,the Listing Rules, and otherregulations.

Principal activitiesThe principal activities of the Groupduring the year were:

● Retailing of sports and leisureclothing, footwear and equipment;

● Wholesale distribution and sale ofsports and leisure clothing, footwearand equipment under Group ownedor licensed brands; and

● Licensing of Group brands.

Further information on the Group’sprincipal activities is set out in theChief Executive’s Review on pages7 to 9.

Preparation of accountsThe Company was incorporated on21 December 2006 and in March2007 acquired one hundred percent of the ordinary shares of SportsWorld International Limited, BrandsHoldings Limited, InternationalBrand Management Limited andCDS Holdings SA (the “ContinuingBusiness Entities”) through acombination of cash, non cashassets and ordinary share issues.

Prior to this transaction Mike Ashleypersonally controlled each of theContinuing Business Entities and byvirtue of his controlling shareholdingin Sports Direct International plc,Mike Ashley continues to controlthe Continuing Business Entities. Ascommon control transactions areoutside the scope of IFRS 3:Business Combinations the directors

have, as required by IAS 8:Accounting Policies, Changes inAccounting Estimates and Errors,used their judgement in developingand applying an accounting policywhich reflects the economicsubstance of the transaction toaccount for the Continuing BusinessEntities.

The directors consider the principlesof merger accounting to beappropriate to account for thecombination of Brands HoldingsLimited, International BrandManagement Limited and CDSHoldings SA with the Company. As aresult Brands Holdings Limited,International Brand ManagementLimited and CDS Holdings SA arepresented as if they have legallybeen a group of companies since the25 April 2005 following the mergeraccounting principles set out below:

● the assets and liabilities ofBrands Holdings Limited,International Brand ManagementLimited and CDS Holdings SA arerecorded at book value;

● intangible assets and contingentliabilities are recognised only to theextent that they were recognised bythe acquiree in accordance withapplicable IFRS; and

● no goodwill is recorded.

The combination of Sports WorldInternational Limited with theCompany is also a common controltransaction which falls outside ofthe scope of IFRS 3: BusinessCombinations. Again the directorshave used their judgement indeveloping and applying anaccounting policy which reflects the

Directors’ Report


economic substance of thetransaction. The directors considerthe guidance contained within IFRS3: Business Combinations in relationto reverse acquisitions to beappropriate in these circumstancesand as a result the principles ofreverse acquisition accounting havebeen applied with Sports WorldInternational Limited identified asthe acquirer.

Under the principles of reverseacquisitions, the cost of theacquisition is measured at the fairvalue of the notional number ofequity instruments that would havebeen issued by the subsidiaries tothe parent in order to provide theresulting one hundred per centownership in Sports WorldInternational Limited. The net assetsof the parent are restated to fairvalue in the consolidated financialinformation and the goodwill (if any)is calculated based on the differencebetween the cost of acquisition andthe restated net assets of the parent.The deemed cost of the acquisitionwas £50,000 and no goodwill wascreated on the reverse acquisition ofthe Company by Sports WorldInternational Limited.

The share capital and premiumreported in the consolidated balancesheet is required to be that of thelegal parent. However, it is also arequirement that the total of theissued equity instruments of theconsolidated Group should reflectthat of the legal subsidiaries plusthe cost of the acquisition. Toachieve this, a reverse combinationreserve is created, being thedifference between the total of theGroup’s equity instruments and the

reported equity of the legal parent.The reported consolidated retainedearnings are the consolidatedretained earnings of the legalsubsidiaries plus those of the legalparent subsequent to the reversecombination.

This consolidated financialinformation therefore represents acontinuation of the financialinformation of Brands HoldingsLimited, International BrandManagement Limited, CDS HoldingsSA and Sports World InternationalLimited with the Company as thereporting entity. Comparatives forthe 53 weeks ended for 30 April2006 relate solely to the ContinuingBusiness Entities. The consolidatedfinancial information for the 52weeks ended 29 April 2007 is thefirst consolidated financialinformation prepared by the Groupin accordance with IFRS. As such,they take account of therequirements and options in IFRS 1:First-time Adoption of InternationalFinancial Reporting Standards, asthey relate to the comparativefinancial information for the 53weeks ended 30 April 2006included therein. The Group’stransition date to IFRS was 25 April2005.

In preparing these consolidatedfinancial statements the Group haselected to apply certain exemptionsavailable under IFRS 1, which are asfollows:

● the Group has deemed cumulativetranslation differences for foreignoperations to be zero at the date oftransition. Any gains and losses orsubsequent disposals of foreignoperations will not therefore include

translation differences arising priorto the transition date;

● IFRS 3 – Business Combinations isapplied from 25 April 2005 and notretrospectively to earlier businesscombinations;

● the effect of translationdifferences arising on fair valueadjustments and goodwill inbusiness combinations is notapplied retrospectively before 25April 2005 thereby treating thegoodwill and fair value adjustmentsas assets of the Company asopposed to the entities acquired bythe Company; and

● all cumulative actuarial gains andlosses in respect of the Group’sdefined benefit pension schemewhich have been recognised inequity under UK GAAP havecontinued to be recognised in equityat the transition date.

The consolidated financialstatements have been prepared inaccordance with IFRS (includingInternational Accounting Standards(“IAS”)) and International FinancialReporting InterpretationsCommittee (“IFRIC”) interpretationsand with those parts of theCompanies Act 1985 applicable tocompanies reporting underaccounting standards as adopted foruse in the EU. The consolidatedfinancial statements have beenprepared under the historical costconvention, as modified to includefair valuation of financial assets andderivative financial instruments withborrowings recognised initially atfair value, net of transaction costsincurred, and subsequently atamortised cost as required by IFRS.

SPORTS DIRECT ANNUAL REPORT20

Directors’ Report(continued)

Business review and futuredevelopmentsA review of Group activities duringthe period under review, groupresults for the period and likelyfuture developments, are dealt within the Chief Executive’s Review onpages 7 to 9, and the FinancialReview on pages 11 to 17.

The Chief Executive’s and BusinessReview and the Financial Reviewalso describe the principal risks anduncertainties that face the Group,the financial risk managementobjectives and policies of the Group,and details of the exposure of theGroup to financial risks relating tofinancial instruments.

The principal risks and uncertaintiesrelating to the Group’s businessesand its shares were set out on pages11 to 18 of the prospectus issued inMarch 2007. A copy of theprospectus is available on theCompany’s web site and can beobtained on request from theCompany Secretary.

AppropriationsAn interim dividend of 1.03p pershare was paid on 31 July 2007 toshareholders on the register on 29June 2007. The directors do notrecommend the payment of a finaldividend.

Group structure and operationsIn March 2006 the Group made asignificant investment in theoperational, logistics andinfrastructure of its business byopening a new head office, campusand distribution centre ofapproximately 800,000 sq. ft. inShirebrook, Derbyshire, at a cost of

over £30m. The relocation of allhead office, warehousing anddistribution activities to Shirebrookwas completed during the currentyear.

In May 2006 the Group acquiredthe Original Shoe Company Limited,which operated 54 stores.

In October 2006 the Groupacquired Kangol Holdings Limited,the owner of the worldwide rights tothe Kangol brand (except in Japan,where the rights are only owned inrelation to headwear), subject to anumber of existing licences,including a worldwide exclusivelicence in respect of headwear.

In December 2006 the Groupacquired Streetwise SportsCompany Limited which operated33 stores.

Important events occurring afterthe year endDavid Richardson resigned from theBoard and as Chairman on 31 May2007, and Simon Bentley wasappointed Interim Chairman.

On 7 June 2007 the Groupannounced that it held a 4.9% stakein Amer Sports Corp., amanufacturer and marketer ofsports equipment, technical appareland footware, whose brands includeWilson, Salomon, Precor, Atomicand Suunto. On 1 August 2007 theGroup announced that it hadincreased that stake to 10.6%.

On 28 June 2007 the Groupannounced that it had entered into adefinitive agreement with EverlastWorldwide Inc (Everlast) to merge awholly owned subsidiary of Brands

Holdings Limited (itself a whollyowned subsidiary of the Company)with Everlast for a cash price of $30per share of Everlast. On 29 June2007, Hidary Group Acquisitions,LLC (Hidary), submitted an offer toacquire Everlast for $31.25 pershare. The Hidary offer providedthat Everlast shareholders couldtake up to 50% of the considerationin the form of shares in Hidary or itsacquisition vehicle, neither of whichis currently publicly traded.

On 2 July the Company announcedthat it had increased its offer priceto $33 per share of Everlast, whichequated to an equity value ofapproximately $149.3 million. Therevised offer was made up entirelyof cash. The Everlast boardapproved of the terms of the revisedoffer, and Everlast and the Company(through Brands Holdings Limited)have entered into a definitiveagreement to amend the terms ofthe previously announced mergeragreement to reflect the increasedoffer of $33.00 per share of Everlast.

Together with assumed liabilities asat 2 July 2007, the revised termsrepresent a total transaction valueof approximately $182.3 million(approximately £91.1 million)including expected tax benefits. Thetransaction remains subject toapproval of the shareholders ofEverlast and other customaryconditions, including receipt of allnecessary antitrust approvals, and isexpected to be completed duringthe second half of calendar 2007.

On 12 July 2007 the Companyannounced the acquisition of a 60%interest in Field & Trek (UK) Limited,the outdoor clothing and equipment


retailer. Field & Trek operates elevenstores, mostly in the South East ofEngland. It also has an establishedon-line offer providing camping andoutdoor equipment, waterproofclothing and footwear includingselling leading brands such as TheNorth Face, Berghaus, Merrell andSalomon.

In the year ended 12 January 2007,Field & Trek’s turnover was £14million. The consideration for the60% stake is £5 million. TheCompany also has an option for fiveyears to acquire the remaining 40%of the issued share capital for afurther £5 million.

On 24 July 2007 the Companyannounced that it may utilise itspowers to buy the Company’sshares in the market and place themin treasury.

On 26 July 2007 the Groupannounced the acquisition of a 1%stake in Adidas AG, a leadingmanufacturer and marketer offootwear, apparel and accessoriesfor many sports.

Share capitalThe authorised share capital of theCompany is £100,000,000 dividedinto 1,000,000,000 shares of 10peach.

720,000,000 shares of 10p are inissue fully paid. Details of changesin the share capital of the Companyduring the period under report areset out in note 20 to the financialstatements.

Transfer of sharesA member may transfer all or any ofhis certificated shares by an

instrument of transfer in any usualform or in any other form which theboard may approve. An instrumentof transfer shall be signed by or onbehalf of the transferor and, unlessthe share is fully paid, by or onbehalf of the transferee. Aninstrument of transfer need not beunder seal.

The board may, in its absolutediscretion and without giving anyreason, refuse to register thetransfer of a certificated sharewhich is not a fully paid share,provided that the refusal does notprevent dealings in shares in theCompany from taking place on anopen and proper basis.

The board may also refuse to registerthe transfer of a certificated shareunless the instrument of transfer:

● is lodged, duly stamped (ifstampable), at the office or atanother place appointed by theboard accompanied by thecertificate for the share to which itrelates and such other evidence asthe board may reasonably require toshow the right of the transferor tomake the transfer;

● is in respect of one class of shareonly; and

● is in favour of not more than fourpersons.

The board may refuse to register atransfer of shares in the Companyby a person if those sharesrepresent at least a 0.25% interestin the Company’s shares or anyclass thereof and if, in respect ofthose shares, such person has beenserved with a restriction notice afterfailure (whether by such person or

by another) to provide the Companywith information concerninginterests in those shares required tobe provided under the CompaniesAct 1985 (the Act), unless (i) thetransfer is an approved transfer (asdefined in the Articles ofAssociation of the Company), (ii)the member is not himself in defaultas regards supplying the informationrequired and certifies that no personin default as regards supplying suchinformation is interested in any ofthe shares the subject of thetransfer, or (iii) the transfer of theshares is required to be registeredby the Uncertificated SecuritiesRegulations 2001.

If the board refuses to register atransfer of a share in certificatedform, it will send the transfereenotice of its refusal within twomonths after the date on which theinstrument of transfer was lodgedwith the Company.

No fee may be charged for theregistration of any instrument oftransfer or other document relatingto or affecting the title to a share.

Powers to issue sharesOn 26 February 2007, by amembers’ written resolution:

● the directors of the Company weregenerally and unconditionallyauthorised pursuant to section 80of the Companies Act 1985 (theAct), in substitution for all priorauthorities conferred upon them,but without prejudice to anyallotments made pursuant to theterms of such authorities, toexercise all the powers of theCompany to allot relevant securities(within the meaning of that section)



up to an aggregate nominal amountequal to the entire authorised butunissued share capital of theCompany for the period expiring(unless previously revoked, varied orrenewed) at the conclusion of thenext Annual General Meeting of theCompany save that the Companymay, before such expiry make anoffer or agreement which would ormight require relevant securities tobe allotted after such expiry and thedirectors may allot relevantsecurities in pursuance of such anoffer or agreement as if theauthority had not expired;

● the directors were empowered toallot equity securities (within themeaning of section 94 of the Act)for cash, pursuant to the generalauthorities described above insubstitution for all prior powersconferred upon the board butwithout prejudice to any allotmentsmade pursuant to the terms of suchpowers, as if section 89(1) of theAct did not apply to any suchallotment, such power being limitedto:

(i) the allotment of equity securitiesin connection with an issue infavour of holders of ordinaryshares in the capital of theCompany in proportion (asnearly as may be) to theirexisting holdings of ordinaryshares but subject to suchexclusions or otherarrangements as the directorsdeem necessary or expedient inrelation to fractionalentitlements or any legal orpractical problems under thelaws of any territory, or therequirements of any regulatorybody or stock exchange; and

(ii) the allotment of equity securitiesfor cash (otherwise than asdescribed in (i) above) up to anaggregate amount equal to 5%of the issued and unconditionallyallotted share capital of theCompany immediately followingcompletion of the Initial PublicOffer provided always that suchpower expires (unless previouslyrevoked, varied or renewed) atthe conclusion of the next annualgeneral meeting of the Company,save that the Company may,before the end of such period,make an offer or agreementwhich would or might requireequity securities to be allottedafter expiry of this authority andthe directors may allot equitysecurities in pursuance of suchan offer or agreement as if thispower had not expired.

The authorities expire at the close ofthe next Annual General Meeting ofthe Company, but a contract to allotshares under these authorities maybe made prior to the expiry of theauthority and concluded in whole orpart after the Annual GeneralMeeting, and at that meeting similarauthorities will be sought fromshareholders.

The Company’s power to purchasesharesOn 26 February 2007, by amembers written resolution, theCompany was generally andunconditionally authorised to makemarket purchases (within themeaning of section 163(3) of theAct) of ordinary shares of 10p eachin the Company subject to thefollowing conditions:

● the maximum aggregate numberof ordinary shares authorised to bepurchased is 72,000,000,representing 10% of the Company’sissued ordinary share capital;

● the minimum price (exclusive ofexpenses) which may be paid for anordinary share is 10p (being thenominal value of an ordinary share);

● the maximum price (exclusive ofexpenses) which may be paid foreach ordinary share is the higher of:(i) an amount equal to 105% of theaverage of the middle marketquotations for the Ordinary Shares asderived from the London StockExchange Daily Official List for thefive business days immediatelypreceding the day on which the shareis contracted to be purchased; and(ii) an amount equal to the higher ofthe price of the last independenttrade of an ordinary share and thehighest current independent bid foran ordinary share as derived from theLondon Stock Exchange TradingSystem (“SETS”).

The authority expires at the close ofthe next annual general meeting ofthe Company but a contract topurchase shares under this authoritymay be made prior to the expiry ofthe authority given on 26 February2007, and concluded in whole or inpart after the Annual GeneralMeeting. A similar authority topurchase shares will be sought atthe Annual General Meeting.

ShareholdersNo shareholder enjoys any specialcontrol rights, and, except as set outabove and below, there are norestrictions in the transfer of sharesor of voting rights.


Mike Ashley is the beneficial ownerof 57% of the Company’s issuedshares and has agreed that, subjectto certain exceptions, during theperiod of two years from the 3March 2007, he will not, without theprior written consent of MerrillLynch International, inter alia, offer,sell or contract to sell, or otherwisedispose of, directly or indirectly, orannounce an offer of, any of hisshares (or any interest therein) orenter into any transaction with thesame economic effect as any of theforegoing.

Mike Ashley and the Company haveentered into a RelationshipAgreement, pursuant to which MikeAshley undertook to the Companythat, for so long as he is entitled toexercise, or to control the exerciseof, 15% or more of the rights to voteat general meetings of theCompany, he will:

● conduct all transactions andrelationships with any member ofthe Group on arm’s length termsand on a normal commercial basisand with the approval of the non-executive directors;

● exercise his voting rights or otherrights in support of the Companybeing managed in accordance withthe Listing Rules and the principlesof good governance set out in theCombined Code and not exerciseany of his voting or other rights andpowers to procure any amendmentto the Article of Association of theCompany;

● other than through his interest inthe Company, not have any interestin any business which sells sportsapparel and equipment subject tocertain rights, after notification to

the Company, to acquire any suchinterest of less than 20% of thebusiness concerned, and certainother limited exceptions, withoutreceiving the prior approval of thenon-executive directors; and

● not solicit for employment oremploy any senior employee of theCompany.

As at 3 August 2007, the register ofsubstantial shareholding containsthe following notifications to thecompany:

Percentageof issuedordinary

Number shareName of of shares capitalshareholder held held

Mike Ashley 410,400,000 57%

Payment of suppliersIt is the policy of the Group to agreeappropriate terms and conditionsfor its transactions with suppliers(ranging from standard writtenterms to individually negotiatedcontracts) and for payment to bemade in accordance with theseterms, provided the supplier hascomplied with its obligations.

The number of days purchasesoutstanding for the Group’s UKoperations at 29 April 2007 was 44days (2006: 38 days).

PeopleThe Group communicates with itspeople through a wide variety ofchannels including briefings, held atHead Office, information cascadesthrough line managers, and anemployee consultative body at thewarehouse and distribution centreat Shirebrook, and the Company’s

open management style encouragesemployees to develop and tocontribute to the development ofthe business.

The Group’s policy for its employeesand for all applicants foremployment is to fit the abilities andaptitude of each individual to anappropriate job, irrespective ofgender, race, religion or belief,sexual orientation, disability orethnic origin. The Company andother Group companies will nottolerate discrimination in any form.The Group does all that ispracticable to meet itsresponsibilities towards the trainingand employment of disabled people,and makes every effort to providecontinuity of employment in thesame or similar job where anemployee becomes disabled.

Charitable and political donationsDuring the year, the Group madecharitable donations of £373,000.No political donations were made.

DirectorsDirectors who served during theyear were:Name of Date of Date ofdirector appointment resignation

Mike Ashley 21 December2006

Simon Bentley 2 March2007

Chris Bulmer 2 March2007

Dave Forsey 8 February2007

Bob Mellors 21 December2006

David Richardson 2 March 31 May2007 2007

David Richardson resigned from theBoard and as Chairman on 31 May



2007, and Simon Bentley wasappointed Interim Chairman.

The provisions in the Company’sarticles for the appointment,retirement after appointment by theboard and by rotation, and standingfor reappointment are described inthe Corporate Governance Reporton page 27.

Details of directors, their roles,responsibilities, achievements andsignificant external commitmentsare set out on page 18 and, in theAnnual General Meeting Notice,which is sent to shareholders withthis report.

The board believes that each directorstanding for reappointmentcontinues to demonstratecommitment, to be an effectivemember of the board, and tocontribute to the balance of skills,knowledge and experience identifiedby the board as being required. Theboard is satisfied that the InterimChairman is not precluded fromdevoting sufficient time to his dutiesto the company by reason of hisother commitments. The boardrecommends reappointment of thedirectors standing for reappointment.

Information on service contractsand details of the interests of thedirectors and their families in theshare capital of the Company at 29April 2007 is shown in theDirectors’ Remuneration Report onpages 36 to 39. Copies of theservice contracts of executivedirectors and of the appointmentletters of the Chairman and non-executive directors are available forinspection at the Company’sregistered office during normalbusiness hours and at the AnnualGeneral Meeting.

No director has a directorship incommon or other significant linkswith any other director (except inthe case of executive directorsholding directorships of subsidiarycompanies of the Company).

The Company has entered intodeeds of indemnity for the benefit ofeach director of the Company andfor the benefit of each person whowas a director during the periodunder review, in respect of liabilitiesto which they may become liable intheir capacity as director of theCompany and of any company inthe group. These indemnities arequalifying third part indemnityprovisions within the meaning givento that term by Section 309B of theAct, and all these indemnitiesremain in force.

AuditorsResolutions to reappoint GrantThornton UK LLP as auditors and toauthorise the directors to determinetheir remuneration will be proposedat the Annual General Meeting.

Audit informationThe directors who held office at thedate of approval of this Directors’Report confirm that, so far as theyare each aware, there is no relevantaudit information of which theCompany’s auditors are unaware,and each director has taken all thesteps that he or she ought to havetaken as a director to make him orherself aware of any relevant auditinformation and to establish that theCompany’s auditors are aware ofthat information.

By order of the Board

Michael OliverSecretary

3 August 2007


Corporate GovernanceThe board of directors of theCompany is committed tomaintaining high standards ofcorporate governance and tomanaging the affairs of the Group inaccordance with the provisions ofthe Listing Rules and of theCombined Code on CorporateGovernance, issued by the FinancialReporting Council in June 2006 (the“Combined Code”)

The board has reviewed theCompany’s corporate governanceprocesses and policies, and hasconcluded that during the periodfrom 2 March 2007, when theCompany’s shares were admitted tothe Official List and to trading onthe London Stock Exchange(“Admission”), until 29 April 2007,the Company complied with theprovisions of the Combined Codeexcept as set out below.

The Combined Code (code provisionA3.2) recommends that at least halfof the board of directors of a UKlisted company, excluding thechairman, should be comprised ofnon-executive directors determinedby the board to be independent incharacter and judgment and freefrom relationships or circumstanceswhich may affect, or could appear toaffect, the director’s judgment. Asexplained below, during the periodfrom Admission until 29 April 2007,the board of the Company consistedof the Chairman, three executivedirectors and two independent non-executive directors, and accordinglyon Admission and during the periodunder report the Company did notcomply with this provision of theCombined Code. The Combined

Code also provides (code provisionB2.1 and C3.1) that each of theRemuneration and AuditCommittees of the board shouldcomprise of at least threeindependent non-executivedirectors, and during the periodunder report those committeescomprised of only two suchdirectors.

Since the year end, DavidRichardson, the Chairman duringthe period under report, resignedfrom his appointment as Chairmanand as a director, and Simon Bentleyhas been appointed interimChairman. The Company hasengaged recruitment consultants tosearch for a Chairman and foradditional independent non-executive directors and theNominations Committee hasapproved job descriptions for thoseroles, which for the Chairmanincludes an assessment of the timecommitment expected, alwaysrecognising the need for availabilityin the event of major activity. TheCompany intends to appoint anindependent non-executive directorto the Remuneration and Auditcommittees, which will bring theCompany into compliance with allthe provisions of the CombinedCode.

The BoardFrom Admission and up to 29 April2007, the board comprised of anon-executive Chairman, threeexecutive directors, and two non-executive directors. The names andshort biographies of the currentinterim Chairman and otherdirectors are set out on page 18.Simon Bentley had been appointed

Senior Independent Director prior tohis appointment as interimChairman.

The non-executive directors areconsidered by the board to beindependent. The former Chairman,David Richardson, was consideredby the board to be independent onappointment. The board considersthat an independent director is onewho is independent in character andjudgment, and where there are nocircumstances that are likely toaffect, or could appear to affect, thejudgment of the director.Relationships or circumstances thatcould affect judgment includehaving been an employee of theCompany or of any group companyduring the past five years, havinghad a material business relationshipor having been a partner,shareholder, director or senioremployee of a body with a materialbusiness relationship with theCompany or any group company inthe past three years, receivingremuneration from the Companyother than directors’ fees,participating in any share option orbonus schemes or in a Companypension scheme, having had closefamily ties with any of theCompany’s advisors, directors orsenior employees, having crossdirectorships or significant linkswith any other director, representinga significant shareholder, or servingon the board for more than nineyears.

The Company has entered into aRelationship Agreement with MikeAshley, the Executive DeputyChairman, who currently holds 57%of the issued share capital of the


Corporate GovernanceReport

Company. Under the agreementMike Ashley undertook to theCompany that, for so long as he isentitled to exercise, or to control theexercise of, 15% or more of therights to vote at general meetings ofthe Company, he will:

● Conduct all transactions andrelationships with any member ofthe group on arm’s length terms andon a normal commercial basis andwith the approval of the non-executive directors;

● Exercise his voting rights or otherrights in support of the Companybeing managed in accordance withthe Listing Rules and the principlesof good governance set out in theCombined Code and not exerciseany of his voting or other rights andpowers to procure any amendmentto the articles of association of theCompany;

● Other than through his interest inthe Company, not have any interestin any business which sells sportsapparel and equipment subject tocertain rights, after notification tothe Company, to acquire any suchinterest of less than 20% of thebusiness concerned, and certainother limited exceptions, withoutreceiving the prior approval of thenon-executive directors; and

● Not solicit for employment oremploy any senior employee of theCompany.

Given the structure of the board andthe terms of the RelationshipAgreement, the board believes thatno individual or small group ofindividuals can dominate the board’sdecision making.

The board has established aNominations Committee to ensure aformal, rigorous and transparentprocedure for the appointment ofnew directors to the board. Thecomposition of that committee anda description of its terms ofreference are set out on page 31.

Details of executive directors’service contracts and of theChairman’s and the non-executivedirectors’ appointment letters aregiven on pages 36 to 38. Copies ofservice contracts and ofappointment letters are available forinspection at the Company’sregistered office and at the AnnualGeneral Meeting.

Executive directors normally retireon reaching the age determined bythe board from time to time as theretirement age for executivedirectors.

Non-executive directors areappointed for an initial term of threeyears from the Annual GeneralMeeting following their joining theboard, and, subject to performance,there is an expectation ofreappointment for a further periodof three years. Exceptionally a non-executive director may be invited toserve for a further and final threeyear term. Non-executive directorfees are determined by the board inthe absence of the non-executivedirectors other than the chairman.

All directors appointed by the boardare appointed after consideration ofthe recommendations of theNominations Committee, and thoseso appointed must stand forreappointment at the followingAnnual General Meeting. Every

director must retire at least everythree years, and in addition at leastone third of the continuing membersof the board must retire by rotationeach year. Retiring directors mayseek reappointment if willing andeligible to do so and if sorecommended by the NominationsCommittee. The Chairman will,when proposing the reappointmentof a director, confirm that followingformal performance evaluation, thedirector’s performance continues tobe effective and he or she continuesto demonstrate commitment to therole. This year all the directors areretiring and seeking reappointmentat the Company’s first AnnualGeneral Meeting.

The board has adopted a formalprocess for the performanceevaluation of the board, itscommittees and individual directors.Every other year independentconsultants will conduct confidentialinterviews with each director, whenthe director will have an opportunityto express his or her views on theorganisation and operation of theboard and its committees, theireffectiveness and contribution tothe business, the contributions ofindividual members, and on anyother matter they consider relevant.The results of these interviews willbe consolidated and reported to theChairman and, in so far as theyrelate to the Chairman, to the SeniorIndependent Non-Executive Directorand, in so far as they relate to theboard as a whole or to any of itscommittees, to the board as awhole. The first of such interviewswill be conducted in the first part of2008. In intervening years theprocess will be repeated, covering


the same matters other than thecontribution of individual directors,and by way of questionnaire andwithout the involvement ofindependent consultants.

In addition the Chairman will meetwith individual directors privately atleast once in every year, to review thecontribution of that director to theboard and his or her developmentneeds. The Chairman will meet withthe non-executive directors as agroup and in the absence of anyexecutive directors at least twice ayear, and as part of the BoardEvaluation Programme the non-executive directors, led by the SeniorIndependent Non-Executive Director,will review the performance of theChairman, having taken account ofthe views of the executive directors.

The board and the NominationsCommittee will consider the outputfrom the evaluation programme intheir evaluation of the skills,knowledge and experience of theboard, and in formulatingdevelopment plans.

The board provides corporategovernance training for thosedirectors appointed to the board forwhom it is their first appointment toa listed company board, andprovides a tailored inductionprogramme for all directors onappointment. In addition the boardis made aware of material changesto laws and regulations affecting theGroup’s business from time to time.All directors have access to theadvice and services of the CompanySecretary, and each director andeach board committee may takeindependent professional advice atthe company’s expense, subject to

prior notification to the other non-executive directors and theCompany Secretary. The Companymaintains appropriate directors andofficers insurance.

The division of responsibilitiesbetween the Chairman, theExecutive Deputy Chairman and theChief Executive is in writing and hasbeen agreed by the board. TheChairman is responsible forleadership of the board, for ensuringits effectiveness, and for ensuringthat all directors are able to play afull part in the activities of theCompany. He ensures effectivecommunication with shareholders,and that the board has anunderstanding of the views of majorinvestors. The Chairman is availableto provide advice and support tomembers of the executive team. TheExecutive Deputy Chairman is anambassador for the Company, andtakes the lead in the strategicdevelopment of the Company,formulating the vision and strategyin conjunction with the ChiefExecutive. The Chief Executive isresponsible for leading themanagement team, the running ofthe group’s business, for the deliveryof the strategy approved by theboard, and for implementing specificdecisions made by the board.

The board currently plans to meeton a preplanned basis ten timesduring each year, including astrategy meeting, and meets onother occasions as required. Duringthe period between Admission and29 April 2007 the board met on apre-planned basis once.

The board has a programme toenable it to discharge its

responsibility of providingentrepreneurial leadership to theCompany within a framework ofprudent and effective controls. Anagenda is established for eachmeeting, and appropriatedocumentation is provided todirectors in advance of them. Forregular meetings the agenda willinclude reports from the ChiefExecutive and the Group FinanceDirector, reports on theperformance of the business andcurrent trading, reports on meetingswith investors, reports fromcommittees of the board andspecific proposals where theapproval of the board is sought.Presentations are also given onbusiness or strategic issues whereappropriate, and the board willconsider at least annually thestrategy for the Group. Minutes ofthe meetings of committees of theboard are circulated to all membersof the board, unless a conflict ofinterest arises, to enable alldirectors to have oversight of thosematters delegated to committees,and copies of analysts’ reports andbroker notes are provided todirectors.

Attendance by directors at pre-planned board and board committeemeetings during the period fromadmission to 29 April 2007 are setout in the table below. All directorsattended the preplanned meetingsof the board and of its committees,and attended meetings called atshort notice, unless prevented fromdoing so by prior commitments.


Corporate GovernanceReport (continued)

The Nominations Committee didnot meet during the period.

The board has a formal schedule ofmatters reserved for decision by it.Matters so reserved include theapproval of the strategic plan andlong-term objectives of the Group,the annual budget and the allocationof resources to achieve that budget,decisions relating to unbudgetedexpenditure over certain limits,significant acquisitions, disposalsand joint ventures, other materialscontracts, changes to the corporatestructure of the Group, theappointment and removal of theCompany Secretary, approval ofaccounting policies and practicesand approval of the annual report.The board delegates managementof the businesses of the Group tothe executive management, anddelegates specific responsibilities toboard committees.

The board believes that theappointment of executive directorsto be non-executive directors ofother listed companies benefits theGroup, through the additionalexperiences and knowledge gainedby such an appointment, andaccordingly, executive directors arepermitted to accept one suchappointment where no conflict ofinterest arises, and to retain the feesreceived.

All non-executive directorsdisclosed to the board prior toappointment their significant othercommitments, and they are requiredto notify and have notified anychanges to or additionalcommitments from time to time.Simon Bentley, the InterimChairman, is deputy Chairman ofthe solicitors Mishcon De Reya, asenior trustee of the LeadershipTrust, Chairman of the hair productbrand Umberto Giannini, thehotelier Maypole Group plc, FirstSports Group and EsproAcoustiguide. He is also a directorof Powerleague. The board issatisfied that Mr. Bentley meets hisobligations to the Company. Allnon-executive directors are availableto meet with major investors.

Simon Bentley, the SeniorIndependent Non-Executive Directorprior to his appointment as InterimChairman, was available toshareholders if they had concernswhich had failed to be resolvedthough the normal channels ofChairman, Chief Executive or GroupFinance Director, or for which suchchannels are inappropriate.

The Company Secretary is anemployee of the Company and isthe secretary of all boardcommittees, and fulfils theresponsibilities required of him bythe Combined Code.

Board CommitteesThere are three principal boardcommittees, all of which have withinwritten terms of reference.Summaries of the terms of referenceand details of the membership ofcommittees are set out below.Copies of the terms of reference areavailable from the CompanySecretary and on the Company’swebsite. Only members of eachCommittee are entitled to attend themeetings of committees, althougheach Committee may invite otherdirectors, managers and advisors toattend and have done so.Membership of board committeeswill be regularly reviewed. Given thecurrent size of the board, and theterms of reference, non-executivedirectors are members of everycommittee. It is, however, theboard’s intention that, when thenumber of independent non-executive directors appointed to theboard permits, the chairman of theRemuneration Committee will notserve on the Audit Committee, andvice versa. The board is satisfied thatcurrently no one Director exercises adisproportionate influence.

Attendance at meetings ofcommittees is set out above.

Audit CommitteeDirectors who served theCommittee during the period fromAdmission to 29 April 2007 were:

● Simon Bentley (Chairman)● Chris Bulmer

The Chairman of the Committee is aChartered Accountant, and hasrecent and relevant financialexperience.


Board Audit RemunerationMeetings Committee Committee

Mike Ashley 1/1 n/a n/aSimon Bentley 1/1 1/1 1/1Chris Bulmer 1/1 1/1 1/1Dave Forsey 1/1 n/a n/aBob Mellors 1/1 n/a n/aDavid Richardson 1/1 n/a n/a

The Committee met once during theperiod under review.

The Committee’s programme ispreplanned to ensure that eachaspect of its responsibilities isdischarged as part of an annual cycleduring the Company’s financial year.

The main responsibilities of theAudit Committee are:

● Assisting the board with thedischarge of its responsibilities inrelation to internal and externalaudits and controls.

● Monitoring the integrity andclarity of the Group’s financialstatements, including makingrecommendations on judgmentsthey contain.

● Agreeing the scope of the annualaudit and the annual audit plan, andthe extent of the non audit workundertaken by external auditors.

● Advising on the appointment,reappointment and removal ofexternal auditors.

● Reviewing accounting policies,terms of engagement andremuneration of the externalauditors, and any changes thereto,and the method of accounting forunusual transactions.

● Reviewing the effectiveness of theinternal control systems in placewithin the Group and ensuring thatappropriate arrangements are inplace under which employees canraise concerns about possiblefinancial or other impropriety whichare then appropriately investigated.

The Audit Committee will normallymeet not less than three times ayear.

The external auditors attendmeetings of the Committee, otherthan when their appointment orperformance is being reviewed. TheGroup Finance Director also attendsas appropriate. The Committee willmeet with the auditors in theabsence of executive managementat least twice a year.

The Audit Committee considers thereappointment of the auditors andtheir remuneration, and makesrecommendations to the board, andthe auditors are reappointed eachyear at the Annual General Meeting.The Committee will consider thelevel of service provided by theauditors and their independenceannually.

The Committee has approved apolicy on the engagement of theexternal auditors for non-audit work,in order to ensure that theobjectivity of the auditors’ opinionon the Group’s financial statementsis not or may not be seen to beimpaired, and has established aprocess to monitor compliance withthat policy.

The policy identifies threecategories of potential work. Firstly,those tasks that the auditors maynot provide, as to do so wouldrepresent a real threat toindependence. That work includesthe preparation of accountingentries or financial statements, ITsystem design and implementation,management of projects and taxplanning where the outcome wouldhave a material impact on thefinancial statements or where theoutcome is dependent uponaccounting treatment. Secondly,categories of work that the auditors

may undertake with the consent ofthe Chairman of the AuditCommittee. Included in thiscategory is certain corporate financeservices, acquisition due diligence,management consultancy andsecondment of staff other than forthe preparation of accountingentries or financial statements.Thirdly, there are services that theauditors may provide as the work isclearly audit related and there is nopotential threat to independence,including regulatory reporting andacting as reporting accountants. TheCompany is satisfied that its policyfalls within the requirements of theAuditing Practices Board.

Every engagement of the auditorsfor non-audit work is reported to thenext meeting of the Committee.

During the period from Admissionto the 29 April 2007 the Committeealso considered the accountingtreatment of the restructuring of thegroup on 2 March 2007 onAdmission.

The Combined Code recommendsthat the Audit Committee is madeup of at least three non-executivedirectors, independent in characterand judgment and free from anyrelationship or circumstance whichmay, could or would be likely to, orappear to, affect their judgment. TheAudit Committee currently consistsof only two independent non-executive directors, but theCompany intends to appointadditional independent non-executive directors to the board,following which a furtherindependent non-executive directorwill also be appointed a member ofthe Audit Committee, and the



Committee’s structure will thencomply with the recommendationset out in the Combined Code.

Remuneration CommitteeDirectors who served theCommittee during the period fromAdmission to 29 April 2007 were:

● Chris Bulmer (Chairman)● Simon Bentley

The main responsibilities of theRemuneration Committee are to:

● Determine the Company’s policyon executive remuneration,including the design of bonusschemes, and targets and paymentsmade thereunder.

● Determine the levels ofremuneration for the Chairman andeach of the executive directors.

● Recommend and monitor theremuneration of seniormanagement.

● Agree any compensation for lossof office of any executive director.

The Committee met once during theperiod under review.

During the period from Admissionfrom 29 April 2007 the Committeedetermined the comparator groupfor the TSR tranche of thePerformance Share Plan, and madeawards under that plan.

A report on the remuneration ofdirectors appears on pages 33 to 39.

The Combined Code recommendsthat the Remuneration Committee ismade up of at least three non-executive directors, independent incharacter and judgment and free

from any relationship orcircumstance which may, could orwould be likely to, or appear to,affect their judgment. TheCommittee currently consists ofonly two independent non-executivedirectors. The Company intends toappoint additional independent non-executive directors to the board,following which a furtherindependent non-executive directorwill be appointed a member of theRemuneration Committee, and theCommittee’s structure will thencomply with the recommendationsset out in the Combined Code.

Nominations CommitteeMembers of the NominationsCommittee during the period fromadmission to 29 April 2007 were:

● David Richardson (Chairman)● Simon Bentley● Chris Bulmer.

The Committee did not meet duringthe period under review.

The main responsibilities of theBoard Nominations Committee areto:

● Review the board’s structure.

● Review the composition and makeup of the board, including evaluatingthe balance of skills, knowledge andexperience of the members of theboard.

● Give consideration to successionplanning for directors.

● Prepare a description of the roleand capabilities required for anyboard appointment including that ofChairman.

● Make recommendations to theboard concerning the standing forreappointment of directors.

● Identify potential candidates to beappointed as directors, and makerecommendations to the board asthe need may arise.

The Nominations Committee alsodetermines succession plans for theChairman and Chief Executive, whowill not be present at meetingswhen such matters are beingdiscussed.

The Nominations Committee willmeet at least once a year and willalso meet when appropriate.

Dave Forsey, as Chief Executive, willnormally attend meetings of theNominations Committee, savewhere the Nominations Committeeis dealing with matters relating tohim or with the appointment of hissuccessor.

The Combined Code recommendsthat a majority of the NominationsCommittee be non-executivedirectors, independent in characterand judgment and free from anyrelationship or circumstance whichmay, could or would be likely to, orappear to, affect their judgment. Theboard considers that the Companycomplies with the requirements ofthe Combined Code in this regard.

Share dealing codeThe Company has adopted a codeof securities dealings in relation toits shares and other securities whichis based on, and is at least asrigorous as, the Model Code aspublished in the Listing Rules.


The code applies to the directorsand to other appropriate employeesof the Group.

Internal controlThe directors have overallresponsibility for the Group’s systemof internal control and for reviewingtheir effectiveness. The systems ofinternal control are designed tomanage, rather than eliminate, therisk of failing to achieve businessobjectives. Such a system can,however, provide only reasonable,and not absolute, assurance againstmaterial misstatement or loss.

Members of the board haveresponsibility for monitoring theconduct and operations of individualbusinesses within the group. Thisincludes the review and approval ofbusiness strategies and plans andthe setting of key businessperformance targets. The executivemanagement responsible for eachbusiness is accountable for theconduct and performance of theirbusiness within agreed strategies.

Business plans and budgets for eachbusiness include financial andstrategic targets against whichperformance is monitored.Monitoring includes theexamination of and changes torolling annual and half yearforecasts, monthly measurement ofactual achievement against keyperformance targets and plans, andweekly reviews of performance.

The Group has clear procedures forthe approval and control ofexpenditure. Strategic investmentdecisions involving both capital andrevenue expenditure are subject toformal detailed appraisal and review

according to approval levels set bythe board. Operating expenditure iscontrolled within each business withapproval levels for such expenditurebeing determined by the individualbusinesses.

Executive management isresponsible for the identification,evaluation and management of thesignificant risks applicable to theirareas of business. These risks wereassessed and verified as part of theIPO process, and identified in theprospectus issued in March 2007.

The Group operates a Retail SupportUnit which provides strongoperational internal audit services inthe retail division, and there areprocedures in place in the Brandsdivision to monitor and controllicencees. Work is underway toextend and consolidate proceduresacross the Group, and to formalisereporting to the Audit Committee inrespect of Internal Audit.

The board Audit Committee assiststhe board in fulfilling its oversightresponsibilities, reviewing thereporting of financial and non-financial information toshareholders and the audit process,satisfying itself that appropriatesystems of internal control and riskmanagement are in place and areserving to identify and manage risk.The reporting accountants reportedon financial reporting procedures aspart of the IPO process, and theAudit Committee has reviewedprogress on implementingrecommendations made by thoseaccountants. The auditors attend allmeeting of the Audit Committee,save for those parts of any meetingwhen the Committee reviews the

performance of the auditors andwhen the Committee is havingseparate discussions with the GroupFinance Director.

The Group’s systems of internalcontrol and its effectiveness ismonitored and reviewed by theboard, the board Audit Committeeand management, and the boardbelieves that the Group hasmaintained throughout the periodunder review and up to the date ofapproval of the annual report andaccounts an effective embeddedsystem of internal control and hascomplied with the Turnbullguidance.

Social, environmental and ethicalmattersThe Group has for many years,recognised the benefits that accruefrom responsible employment,environmental and communitypolicies. Identifying and managingrisks to the Company’s reputationhas a high priority. The evaluation ofthe Group’s performance in social,environmental, community andethical matters is ongoing.

Going concernHaving considered group cash flowforecasts and strategic plans, thedirectors are satisfied that theCompany and the Group hasadequate resources to continue inoperational existence for theforeseeable future. For this reason,they continue to adopt the goingconcern basis in preparing thefinancial statements.



This report has been prepared inaccordance with the requirementsof the Directors’ RemunerationReport Regulations 2002 (theRegulations) and of the CombinedCode on Corporate Governance2006 (“the Combined Code”).

In this report Admission refers tothe Company’s admission to theOfficial List and to trading on theLondon Stock Exchange on 2 March2007.

UNAUDITED INFORMATION

The Remuneration CommitteeSince Admission and for theremainder of the period, themembers of the RemunerationCommittee (“the Committee”), bothof whom are independent, were:

Chris Bulmer (Chairman)Simon Bentley

The main responsibilities of theCommittee are summarised in theCorporate Governance Report onpage 31.

AdvisersThe Committee has appointedTowers Perrin to provide it withindependent advice in determiningthe appropriate remuneration,including bonus schemes, and otherterms and conditions ofemployment of directors, and toassist it in reviews of remunerationpolicies and practices throughoutthe Group.

Towers Perrin have, with theconsent of the Committee, assistedthe Company by providing marketdata in connection with theremuneration of senior managers,

and advice on the design ofremuneration packages, includingbonus schemes, for such managers.The Committee is conscious of theneed to ensure that no conflict ofinterest arises as a result of TowersPerrin advising both it and theCompany, but believes that thebenefits of consistent adviceoutweighs the possible problemsthat could arise from thesearrangements.

A summary of the terms ofreference of Towers Perrin in theirrole as independent advisors to theCommittee are set out on theCompany’s website and areavailable upon request from theCompany Secretary.

Dave Forsey, the Chief Executive,and Bob Mellors, the Group FinanceDirector, have also advised theCommittee when requested.

Remuneration policyThe Committee has endorsed theprovisions of Section B of theCombined Code, and has had thoseprovisions in mind whendetermining remuneration policiesfor the past, current and futureyears. Policies and practice inrespect of remuneration inevitablyevolve over time and, while it iscurrently believed that the policiesdescribed in this report will apply infuture years, they will be subject toregular review.

The Committee seeks to ensure thatlevels of remuneration are sufficientto attract, retain and motivatedirectors and senior managers ofthe quality required to run theGroup successfully, and, in order tomaintain the Group’s historic focus

on growth, has adopted a stronglyperformance based remunerationpolicy for executive directors, underwhich a large proportion of theirremuneration will be dependentupon the Group’s performance.

Basic salaries for executive directorsother than Mike Ashley have beenset at a level well below the medianlevel for a business of the size andcomplexity of the Group and itssubsidiaries. The maximumpayment under the annual bonusplan is 100% of salary, and thePerformance Share Plan permitsannual grants of up to four timesalary.

Towers Perrin have advised that therewards at constant share pricesunder the Performance Share Planare expected to be approximately170% of salary. If the Company’sperformance meets target levelperformance related pay is likely toaccount for approximately 70% ofDave Forsey and Bob Mellors’ totalremuneration, and at upper quartileperformance, performance relatedpay would account forapproximately 85% of totalremuneration, depending in eachcase on share price improvementduring the relevant performanceperiod.

Executive directors do notparticipate in a typical companypension arrangement and do nothave the use of a company car orother similar benefits often availableto executive directors. As such,Towers Perrin have advised theCommittee that in aggregate thetotal remuneration of Dave Forseyand Bob Mellors is below median.

Directors’ RemunerationReport


Base salaries are reviewed annually,but the first review post Admissionwill not take place until 2008. Therewas no increase in executivedirectors salaries in 2006-07. If theCommittee were to change itspolicy on base salaries, then itwould revisit the salary multiple forgrants under the Performance SharePlan, and the Committee’sremuneration policy set out abovewill not necessarily apply to anynew appointment to the Board.

The Committee intends to establishand thereafter maintain contactwith major shareholders andrepresentative groups whereappropriate concerningremuneration matters.

Remuneration policies 2006-07and 2007-08 and key elements ofremunerationExecutive directors’ remuneration inthe period since Admissioncomprised and in 2007-08 willcomprise the following elements:

Basic SalaryAnnual Bonus SchemePerformance Share PlanIPO BonusPensionOther Benefits

Mike Ashley has agreed that he willnot receive a salary for his role asExecutive Deputy Chairman, nordoes he participate in thePerformance Share Plan, but he iseligible to be considered for a bonusunder the Annual Bonus Scheme.

Basic salaryThe basic salaries of Dave Forseyand Bob Mellors were not changed

in 2006-07. Mike Ashley receivedsalary and fees of £43,153 during2006-07 in respect of hisdirectorship of Donnay InternationalSA, a Belgian subsidiary of theCompany under arrangementswhich have now been terminated.

Annual Bonus SchemeThe Annual Bonus Scheme rewardsexecutive directors for achievingchallenging business performancetargets, chosen at the beginning ofthe period for their relevance indriving the short term performanceof the Company towards theachievement of strategic goals. In2006-07 the maximum bonuspayable to Dave Forsey and BobMellors was 100% of salary, and theentire bonus was payable if a salestarget was met. The sales targetwas not met, and accordingly nobonus was payable.

The Committee has determined for2007-08 that the maximum bonuswill be 100% of salary, and that onehalf of the bonus will be paid if bothtarget sales and target EBITDA areachieved, and the remainder of thebonus will be paid if target sales areachieved and if a stretch targetEBITDA is achieved, with nointermediate payments.

Mike Ashley did not participate inthe Annual Bonus Scheme for2006-07, and will not participate inthe scheme for 2007-08.

The Performance Share PlanThe Performance Share Plan wasadopted on 11 February 2007, andprovides a direct link betweenexecutive directors’ remunerationand the return to shareholders.

The maximum number of sharesthat an executive director mayacquire pursuant to share awardsgranted to him in any financial yearmay not have an aggregate marketvalue, as measured at the date ofgrant, exceeding 400% of hisannual basic salary. Market value forthis purpose is based on the middlemarket quotation for a share asderived from the Daily Official Listof the London Stock Exchange forthe dealing day immediatelypreceding the date of grant. In the42-day period following Admission,share awards were granted to eachof Dave Forsey and Bob Mellorsrelating to 400% of their basicsalary.

Share awards under thePerformance Share Plan are subjectto performance conditions imposedby the Committee at the time ofgrant. The extent to which theperformance conditions are satisfiedwill determine how many (if any) ofthe shares each executive director isentitled to receive. Performanceconditions are not capable of beingretested, so that any proportion of ashare award which does not vest onthe normal vesting date will lapse.

The Committee determined inrespect of the first grants madeunder the plan, 50% of the sharesunder awards would be subject to aperformance target based on theearnings per share (“EPS”) growthof the Company over the designatedperformance period. The remaining50% of the shares under awards aresubject to a performance targetbased on the Company’s totalshareholder return (“TSR”) over thesame performance period when


Directors’ RemunerationReport (continued)


compared against a group ofcomparator companies.

The performance period for grantsunder the Performance Share Planwill usually be the three consecutivefinancial years commencing withthe financial year in which theoption or award is granted, but forinitial awards following Admission,the performance period runs fromthe date of grant to 25 April 2010(the end of the 2009-10 financialyear).

EPS was chosen as a performancemeasure because it is an absolutemeasure of real Group performance.The Committee chose TSR as aperformance measure because itcompares the actual returns toshareholders with the actual returnsto shareholders in a comparatorgroup of companies, thus providinga relative measure of performance.The Committee believes that thecombination of absolute and relativemeasures is the best way to alignthe interests of the director with theactual return to shareholders, andthat the targets reflect the history ofgrowth in the Company’s businessesand are challenging but achievable.

EPS growth over the firstperformance period will becalculated by reference to the EPSas derived from the proformaaccounts prepared for the 26 weekperiod to 29 October 2006.

For the purpose of the PerformanceShare Plan EPS means the dilutedearnings per ordinary share of theCompany calculated in accordancewith IAS 33 Earnings Per Share orany modification or replacement tothat standard with which the

Company is obliged to complyprovided that the Committee hasthe power (after consultation withthe auditors) to adjust the EPSfigure to arrive at a figure whichreflects underlying businessperformance of the Group and alsoto take such steps as necessary toensure that relevant accountingstandards are applied on aconsistent basis.

The number of shares that will vestunder the EPS tranche of eachaward will be determined as follows:

Percentageof shares

in EPS trancheEPS Growth that vest

Below 19% per annum 019% per annum (“Threshold”) 2524% per annum (“Target”) 5029% per annum (“Stretch”) 100

Shares comprised in the EPS tranchewill vest on a straight-line basis forperformance between Thresholdand Target and between Target andStretch.

TSR means, in relation to a share inthe Company or an ordinary share ina company in the comparator groupin a performance period, theaggregate of the increase above ordecrease below the average marketvalue of such a share at thebeginning of the relevantperformance period and theaggregate value of dividends paid inthat performance period (excludingany tax credit), where each suchdividend is deemed to have beenreinvested in the shares of eachrelevant company from the date ofpayment of the dividend to the lastday of the performance period.

The initial comparator group ofcompanies comprised the followingcompanies:

Marks & Spencer plcKingfisher plcNext Group plcHome Retail Group plcDSG International plcThe Carphone Warehouse Group plcSignet Group plcKasa Electricals plcDebenhams plcN Brown Group plcGaliform plcCarpetright plcHalfords Group plcW H Smith plcJJB Sports plcHMV Group plcThe John David Group plcBlacks Leisure Group plcUmbro plc

The Committee will keep thecomparator group under review andwill, if and when it considersappropriate, include additionalcompanies to replace any of theexisting comparator group that areno longer appropriate or listed.

TSR will be calculated for thesegrants using average market valueof shares in each company in thecomparator group over the 20dealing days immediately followingAdmission.

The percentage of the sharescomprised in the TSR tranche thatvest will be determined by referenceto the Company’s TSR rankingwithin the comparator group at the



end of the performance period asfollows:

Percentageof shares

in TSR trancheTSR Ranking that vest

Upper quartile 100Median 25Below median 0

Shares comprised in the TSRtranche will vest on a straight-linebasis for performance betweenmedian and upper quartile.

The Committee may amend theperformance conditions if an eventoccurs that causes it reasonably toconsider that the originalperformance conditions are nolonger, without alteration, a fairmeasure of performance, providedthat the amended conditions are atleast as challenging as the originalperformance conditions. Any suchamendment will be disclosed in thedirectors’ remuneration reportfollowing the amendment.

The Committee may set differentperformance conditions for futureawards.

Subject to satisfaction of applicableperformance conditions, awards willvest at the end of the performanceperiod and vested share awards willbe released to participantsautomatically as soon as practicableafter the date the shares vest.

Share awards may normally onlyvest if the executive director remainsin employment with the Group. If aparticipant leaves employmentbefore the vesting date, the shareawards will normally lapse. However,if the reason for leaving is injury,

disability, ill-health, the sale of thebusiness or company in which theexecutive director is employed, orany other reason, at the Committee’sdiscretion, a participant’s awards willnot lapse and will vest on theoriginal vesting date to the extentthe performance conditions havebeen met. The number of shareswhich are released or capable ofexercise will be pro-rated to reflectthe proportion of the performanceperiod the participant was actuallyemployed unless the Committeedetermines otherwise. In the eventof a participant’s death, a shareaward may be released to orexercised by their personalrepresentatives.

In the event of a takeover, scheme ofarrangement (other than a schemeto create a new holding company forthe Company having substantiallythe same shareholders as theCompany) or voluntary winding-upof the Company, share awards willvest following such an event to theextent the performance conditionshave been met but on a time pro-rated basis. Share awards may alsoby agreement, be exchanged forequivalent share awards or optionsover shares in the acquiringcompany.

The Committee has determinedthat, upon the vesting of any award,a participant will receive additionalshares representing the gross valueof dividends as if they had been paidon those shares and reinvestedduring the performance period.

The Company intends to establish adiscretionary trust to acquire andhold, or to enter into agreements toprocure the delivery of shares

required to satisfy share awardsgranted under the PerformanceShare Plan.

The IPO BonusIn recognition of their importantcontribution to the development ofthe Company over many years, itwas agreed prior to Admission thateach of Dave Forsey and BobMellors should receive a bonus of£5.0 million, payable in April 2007,subject to continued employment atthe payment date. The Committeesubsequently agreed with therecipients before the bonus waspayable that £2.5 million should bepaid in April 2007, and that thebalance of £2.5 million be paid inApril 2008.

PensionExecutive directors are entitled toparticipate in a stakeholder pensionscheme under which the Companymakes no contribution.

Other benefitsDave Forsey and Bob Mellors areentitled to sick leave and to 25 dayspaid holiday each year in addition tobank and public holidays in England.The executive directors do not havethe use of a company car or othersimilar benefits.

Contracts of ServiceOn 11 February 2007, each executivedirector entered into a new serviceagreement with the Company. Theagreements became effective onAdmission.

Each executive director’semployment is terminable by eitherparty on 12 months’ written notice.The Company may elect to


terminate the employment of DaveForsey and/or Bob Mellors bymaking a payment in lieu of noticeequal to basic salary that thedirector would have received duringthe notice period or, if notice hasalready been given, during theremainder thereof, a pro ratedannual bonus payment for their 12months’ notice period or anyunexpired period thereof assumingon target performance, and the costto the Company of providing otherbenefits (excluding pension) thatthe director would have receivedduring the notice period or theunexpired portion thereof. TheCompany may elect to continue toprovide the other benefits duringthe notice period, or deem suchbenefits to have a value of 10% ofbasis salary and pay an appropriatesum in lieu.

The Company may elect to pay anypayment in lieu of notice by monthlyinstalments during the outstandingnotice periods, and if the directorobtains alternative employment orprovides services pursuant to aconsultancy agreement while suchpayments are being made (thedirector being obliged to use hisbest efforts to obtain suchemployment), each instalmentfalling due after the commencementof such employment or provision ofservices is reduced by one twelfth ofthe annual remuneration or feesreceived by the director in respect ofthat alternative employment orconsultancy.

Any entitlement to benefits underany share related incentive schemeare determined in accordance withthe rules of that scheme.

Executive directors’ employment isalso terminable without notice andwithout liability to make anytermination payment in the event ofa number of specified events havingoccurred, including seriousmisconduct, bankruptcy or beingcharged with a criminal offenceother than a road traffic offence notsubject to a custodial sentence.

Each executive director’s servicecontract automatically terminateson the date that the director reachessuch age as is determined by theboard from time to time as theretirement age for executivedirectors.

The non-executive directors haveeach entered into a letter ofappointment with the Company,which became effective onAdmission. Details of the letters ofappointment are set out below:

Non-executive directors do notparticipate in any bonus or sharescheme;

Each appointment is for an initialperiod that expires on the date ofthe Company’s first annual generalmeeting. If the appointment of eachof Simon Bentley and Chris Bulmeris renewed at the AGM, it willcontinue for a term of three yearsand then terminate unless renewedprior to the expiry of that term.

Notwithstanding renewal for a threeyear term, the appointment of eachof Simon Bentley and Chris Bulmermay be terminated at any time byeither party on one months’ writtennotice.

Each of the appointments of thenon-executive directors may also beterminated in accordance with thearticles of association of theCompany, and immediately incertain prescribed circumstances(including the bankruptcy of thenon-executive director).

Annual Fee Date of LetterName Position £ of Appointment

David Richardson * Non-Executive Chairman 144,000 11 February 2007Simon Bentley Non-Executive Director 40,000 11 February 2007Chris Bulmer Non-Executive Director 40,000 11 February 2007

* David Richardson resigned on 31 May 2007

In addition to the annual fee shownabove, Simon Bentley is entitled to afee of £10,000 per annum asChairman of the Audit Committee,and Chris Bulmer is entitled to a feeof £7,500 per annum as Chairmanof the Remuneration Committee.Simon Bentley and Chris Bulmereach also received a one-offpayment of £5,000 for their workleading up to Admission. Non-executive directors are subject toconfidentiality undertakings withoutlimitation in time; they are notentitled to receive anycompensation on the termination oftheir appointment and are notentitled to participate in theCompany’s share or bonus schemes.

Non-executive directorshipsThe board recognises that executivedirectors may be invited to becomenon-executive directors of othercompanies, and that the experienceand knowledge gained as a result ofsuch appointment are of benefit tothe Company. Accordingly, theboard has agreed that the executivedirectors may accept one suchappointment, and retain any feespayable in respect thereof, subjectto there being no conflict of interest.

No executive director currentlyholds any such appointment.

Performance graphThe following graph, required by theRegulations, shows the Company’stotal shareholder return since listingagainst that of the FTSE 250 index(excluding investment trusts). TheCommittee considered this an

appropriate index against which tocompare the Company’sperformance as it is widely acceptedas a national measure and includesthe companies that investors arelikely to consider alternativeinvestments.



Historical TSR Performance Growth in the Value of a Hypothetical £100 Holding since Floatation up to Year End

FTSE mid 250 excluding Investment Trusts Comparison Based on Spot Values

£60

£70

£80

£90

£100

£110

£120

£130

£140

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FTSE 250 ex Investment Trusts

Sports Direct International

Service ContractsThe Executive Directors’ service contracts are summarised in the followingtable:

Notice ProperContract Date Period Law

Mike Ashley 11 February 2007 12 months England & WalesDave Forsey 11 February 2007 12 months England & WalesBob Mellors 11 February 2007 12 months England & Wales

AUDITED INFORMATION

Auditors’ reportThe auditors are required to reporton the information contained in thefollowing section of this report,other than in respect of directors’shareholding.

Directors’ Remuneration 2006-07This page sets out an analysis ofdirectors’ emoluments and annualbonus, entitlements under thePerformance Share Plan andshareholdings.

Directors’ emolumentsAn analysis of directors’emoluments relating to salary anddirectors fees, annual bonus andother benefits (other entitlementsunder the Performance Share Planand in respect of pensions) for theyear to 29 April 2007 is set outbelow:

Salariesand Other Total

£000 fees Bonus benefits 2007

Mike Ashley 43 – – 43Simon Bentley 8 – 5 13Chris Bulmer 8 – 5 13Dave Forsey 150 5,000 – 5,150Bob Mellors 150 5,000 – 5,150David Richardson 24 – – 24

Simon Bentley and Chris Bulmer’sother benefits are a payment madeto each of £5,000 in respect of workundertaken by them in the IPOprocess prior to their appointmentto the Board.

Mike Ashley’s salary and fees relateto his directorship of DonnayInternational SA, a subsidiary of theCompany.

The figures for IPO Bonus includethat element of the bonus payablein April 2008.

The aggregate of directors’emoluments was £10,393,000.

Basic SalaryThe basic salaries of executivedirectors at the year end and at2 August 2007 (the latestpracticable date before the printingof this report were as shown below:

At At29 April 2 August

2007 2007

Mike Ashley — —Dave Forsey £150,000 £150,000Bob Mellors £150,000 £150,000

Annual BonusPerformance against businesstargets during the year was suchthat no annual bonus was earned byexecutive directors participating inthe Annual Bonus Scheme.

Performance Share PlanShare awards under thePerformance Share Plan were madeto certain of the executive directorsin April 2007, as shown below:

ShareAwards

2007 Total

Dave Forsey 223,256 223,256Bob Mellors 223,256 223,256

The share price used to calculatethe share awards was 268.75p,being the middle market price forthe shares at the close of businesson the day preceding the grant. Theperformance period in respect of theshare awards ends on 25 April 2010,and the outcome for that period and

the number of awards that vest willnot be known until July 2010. Theperformance conditions for theawards are set out on pages 34to 36.

Directors’ ShareholdingsThe beneficial interests of thedirectors in office on 29 April 2007and of their families as at 29 April2007 and 25 July 2007 in the sharecapital of the company are shownbelow:

Ordinary OrdinaryShares Shares

29th April 25th July2007 2007

Mike Ashley 410,400,000 410,400,000Simon Bentley – –Chris Bulmer – –Dave Forsey – –Bob Mellors – –David Richardson – –

Pension ContributionsThe Company made nocontributions to directors’ moneypurchase schemes during the periodfrom Admission to 29 April 2007.

By order of the board

Chris BulmerChairman of the BoardRemuneration Committee

3 August 2007


The directors are responsible forpreparing the Annual Report and theCompany and Group financialstatements in accordance withapplicable law and regulations.

Company law requires the directorsto prepare financial statements foreach financial year which give a trueand fair view of the state of affairsof the Company and the Group as atthe end of the financial period andof the profits or loss of the Groupfor that period .

The directors confirm that theCompany financial statements havebeen prepared in accordance withUnited Kingdom accountingstandards. They also confirm thatthe Group consolidated financialstatements have been prepared inaccordance with InternationalFinancial Reporting Standards asadopted by the European Union.

In preparing each of the Companyand Group financial statements, thedirectors are required to:

● select suitable accounting policiesand then apply them consistently;

● make judgements and estimatesthat are reasonable and prudent;and

● prepare the financial statementson the going concern basis unless itis inappropriate to presume that theCompany and Group will continue inbusiness.

The directors are responsible forkeeping proper accounting recordsthat disclose with reasonableaccuracy the financial position ofthe Company and the Group andenable them to ensure that thefinancial statements comply withthe Companies Act 1985 and Article4 of the IAS Regulation. They have

general responsibility for the systemof internal control, taking such stepsas are reasonably open to them tosafeguard the assets of theCompany and the Group and toprevent and detect fraud and otherirregularities.

Under applicable law andregulations, the directors are alsoresponsible for preparing aDirectors’ Report, Directors’Remuneration Report and CorporateGovernance Report that complywith that law and those regulations.

The directors are responsible for themaintenance and integrity of thecorporate and financial informationincluded on the company’s website.Legislation in the UK governing thepreparation and dissemination offinancial statements may differ fromlegislation in other jurisdictions.


Directors’ Responsibilities

We have audited the consolidatedfinancial statements of SportsDirect International plc for the 52week period to 29 April 2007which comprise, the consolidatedincome statement, theconsolidated statement ofrecognised income and expense,the consolidated balance sheet,the consolidated cash flowstatement and notes 1 to 44.These consolidated financialstatements have been preparedunder the accounting policies setout therein.

We have reported separately onthe parent company financialstatements of Sports DirectInternational plc for the periodfrom incorporation on 21December 2006 to 29 April 2007and the information in theDirectors’ Remuneration Reportthat is described as having beenaudited.

This report is made solely to theCompany’s members, as a body,in accordance with Section 235 ofthe Companies Act 1985. Ouraudit work has been undertakenso that we might state to theCompany’s members thosematters we are required to stateto them in an auditors’ report andfor no other purpose. To thefullest extent permitted by law, wedo not accept or assumeresponsibility to anyone otherthan the Company and theCompany’s members as a body,for our audit work, for this report,or for the opinions we haveformed.

Respective responsibilities ofdirectors and auditors

The directors’ responsibilities forpreparing the Annual Report andthe consolidated financialstatements in accordance withUnited Kingdom law andInternational Financial ReportingStandards (IFRS) as adopted bythe European Union are set out inthe Statement of Directors’Responsibilities.

Our responsibility is to audit theconsolidated financial statementsin accordance with relevant legaland regulatory requirements andInternational Standards onAuditing (UK and Ireland).

We report to you our opinion as towhether the consolidated financialstatements give a true and fairview and whether theconsolidated financial statementshave been properly prepared inaccordance with the CompaniesAct 1985 and Article 4 of the IASRegulation. We also report to youwhether in our opinion theinformation given in the Directors’Report is consistent with thefinancial statements. Theinformation given in the Directors’Report includes that specificinformation presented in, theChief Executives and BusinessReview and the Financial Reviewthat is cross referred from theBusiness review and futuredevelopments section of theDirectors’ Report.

In addition we report to you if, inour opinion, we have not receivedall the information andexplanations we require for ouraudit, or if information specifiedby law regarding directors’remuneration and othertransactions is not disclosed.

We review whether the CorporateGovernance Report reflects theCompany’s compliance with thenine provisions of the 2006Combined Code specified for ourreview by the Listing Rules of theFinancial Services Authority, andwe report if it does not. We arenot required to consider whetherthe Board’s statements on internalcontrol cover all risks andcontrols, or form an opinion onthe effectiveness of the Group’scorporate governance proceduresor its risk and control procedures.

We read other informationcontained in the Annual Reportand consider whether it isconsistent with the auditedconsolidated financial statements.The other information comprisesonly the Directors’ Report, theChief Executive’s Review, theFinancial Review and theCorporate Governance Report. Weconsider the implications for ourreport if we become aware of anyapparent misstatements ormaterial inconsistencies with theconsolidated financial statements.Our responsibilities do not extendto any other information.

Report of the Independent Auditors’ to the membersof Sports Direct International plc


Basis of audit opinion

We conducted our audit inaccordance with InternationalStandards on Auditing (UK andIreland) issued by the AuditingPractices Board. An audit includesexamination, on a test basis, ofevidence relevant to the amountsand disclosures in theconsolidated financial statements.It also includes an assessment ofthe significant estimates andjudgments made by the directorsin the preparation of theconsolidated financial statements,and of whether the accountingpolicies are appropriate to theGroup’s circumstances,consistently applied andadequately disclosed.

We planned and performed ouraudit so as to obtain all theinformation and explanationswhich we considered necessary inorder to provide us with sufficientevidence to give reasonableassurance that the consolidatedfinancial statements are free frommaterial misstatement, whethercaused by fraud or otherirregularity or error. In forming ouropinion we also evaluated theoverall adequacy of thepresentation of information in theconsolidated financial statements.

Opinion

In our opinion:

● the consolidated financialstatements give a true and fair view,in accordance with IFRS as adoptedby the European Union, of the stateof the Group’s affairs as at 29 April2007 and of its profit for the 52week period then ended;

● the consolidated financialstatements have been properlyprepared in accordance with theCompanies Act 1985 and Article 4of the IAS Regulation; and

● the information given in theDirectors’ Report is consistent withthe consolidated financialstatements.

GRANT THORNTON UK LLPREGISTERED AUDITORCHARTERED ACCOUNTANTS

LONDON

3 August 2007


Report of the Independent Auditors’ to the membersof Sports Direct International plc (continued)

52 weeks 53 weeksended ended

29 April 30 April2007 2006

Notes £’000 £’000

Continuing operations:Revenue 1,4 1,347,144 1,194,736Cost of sales (751,003) (738,057)

Gross profit 596,141 456,679Selling, distribution and administrative expenses (445,198) (351,622)Other operating income 5 1,783 3,044Exceptional items 6 (58,826) (3,368)

Operating profit 4, 7 93,900 104,733Investment income 1,790 2,624Finance income 9 3,449 3,387Finance costs 10 (42,081) (17,832)Share of profit/(loss) of associated undertakings and joint ventures 15 3,422 3,406

Profit before taxation 60,480 96,318Taxation 11 (23,360) (31,448)

Profit for the period 4 37,120 64,870

Equity holders of the Group 27 37,671 62,886Minority interests 28 (551) 1,984

Profit for the period 4 37,120 64,870

Earnings per share from total and continuing operations attributable to the equity shareholdersPence Pence

per share per share

Basic earnings per share 12 8.18 15.32Diluted earnings per share 12 8.18 15.32

The accompanying accounting policies and notes form part of these financial statements.

Consolidated Income Statementfor the 52 weeks ended 29 April 2007



29 April 30 April2007 2006

Notes £’000 £’000

Exchange differences on translation of foreign operations 24 110 (947)Actuarial (losses)/gains on defined benefit pension schemes 30 (456) 1,226Fair value adjustment in respect of available-for-sale financial assets 16 (7,106) 2,011Taxation on items taken directly to equity 31 2,268 (974)

Income and expense recognised directly in equity (5,184) 1,316Profit for the period 4 37,120 64,870

Total income and expense recognised in the period 31,936 66,186

Equity holders of the Group 32,487 64,202Minority interests (551) 1,984

31,936 66,186



Consolidated Statement of Recognised Income and Expensefor the 52 weeks ended 29 April 2007

Consolidated Balance Sheetas at 29 April 2007


29 April 30 April2007 2006

Notes £’000 £’000

ASSETSNon-current assetsProperty, plant and equipment 13 224,463 205,122Intangible assets 14 87,981 49,364Investments in associated undertakings and joint ventures 15 21,988 18,408Available-for-sale financial assets 16 75,447 15,338Deferred tax assets 31 31,925 14,106

441,804 302,338

Current assetsInventories 17 231,383 219,065Trade and other receivables 18 88,615 98,021Cash and cash equivalents 19 181,808 48,875

501,806 365,961

TOTAL ASSETS 943,610 668,299

EQUITY AND LIABILITIESShare capital 20 72,000 1,000Share premium 21 874,300 –Permanent contribution to capital 22 50 –Capital redemption reserve 23 50 –Foreign currency translation reserve 24 (837) (947)Merger reserve 25 – 43Reverse combination reserve 26 (987,312) –Retained earnings 27 317,708 285,711

275,959 285,807Minority interests 28 4,845 5,396

Total equity 280,804 291,203

Non-current liabilitiesOther payables 2,408 1,032Borrowings 29 1,935 2,628Retirement benefit obligations 30 14,032 15,179Deferred tax liabilities 31 18,586 13,115Provisions 32 23,821 23,092

60,782 55,046

Current liabilitiesDerivative financial liabilities 33 42,463 10,798Trade and other payables 34 309,944 194,084Borrowings 29 217,996 99,782Current tax liabilities 31,621 17,386

602,024 322,050

Total liabilities 662,806 377,096

TOTAL EQUITY AND LIABILITIES 943,610 668,299


The financial statements were approved by the board on 3 August 2007 and were signed on its behalf by:

Bob Mellors

Director

Consolidated Cash Flow Statementfor the 52 weeks ended 29 April 2007



29 April 30 April2007 2006

Notes £’000 £’000

Cash inflow from operating activities 36 199,261 85,933Income taxes paid (23,886) (24,635)

Net cash inflow from operating activities 175,375 61,298

Cash flow from investing activitiesProceeds on disposal of property, plant and equipment 10,120 4,767Purchase of joint venture (238) (7,368)Purchase of subsidiaries, net of cash acquired 35 (22,747) (13,234)Purchase of intangible assets (2,978) (1,965)Purchase of property, plant and equipment (54,797) (70,302)Purchase of listed investments (67,215) (13,327)Investment income received 1,790 2,624

Net cash outflow from investing activities (136,065) (98,805)

Cash flow from financing activitiesFinance income received 1,339 1,528Finance costs paid (7,948) (6,195)Net repayments of borrowings (6,583) (123)Proceeds from share issues 20 928,850 –Purchase of a certain percentage of previous owner’s equity investment 20 (928,800) –Share issue costs (9,762) –Equity dividend paid (380) –

Net cash outflow from financing activities (23,284) (4,790)

Net increase/(decrease) in cash and cash equivalents including overdrafts 16,026 (42,297)Cash and cash equivalents including overdrafts at beginning of period (41,055) 1,242

Cash and cash equivalents including overdrafts at the period end 19 (25,029) (41,055)



1 Accounting policiesThe consolidated financial statements of Sports Direct International plc (the “Company”) and its subsidiaries (together the “Group”) have beenprepared in accordance with International Financial Reporting Standards as adopted by the EU (“IFRS”).

Basis of preparationThe Company was incorporated on 21 December 2006 and in March 2007 acquired one hundred per cent of the ordinary shares of Sports WorldInternational Limited, Brands Holdings Limited, International Brand Management Limited and CDS Holdings SA (the “Continuing Business Entities”)through a combination of cash, non cash assets and ordinary share issues.

Prior to this transaction M J W Ashley personally controlled each of the Continuing Business Entities and by virtue of his controlling shareholding inSports Direct International plc, M J W Ashley continues to control the Continuing Business Entities. As common control transactions are outsidethe scope of IFRS 3: Business Combinations the directors have, as required by IAS 8: Accounting Policies, Changes in Accounting Estimates andErrors, used their judgement in developing and applying an accounting policy which reflects the economic substance of the transaction to accountfor the Continuing Business Entities.

The directors consider the principles of merger accounting to be appropriate to account for the combination of Brands Holdings Limited,International Brand Management Limited and CDS Holdings SA with the Company. As a result Brands Holdings Limited, International BrandManagement Limited and CDS Holdings SA are presented as if they have legally been a group of companies since the 25 April 2005 following themerger accounting principles set out below:

● the assets and liabilities of Brands Holdings Limited, International Brand Management Limited and CDS Holdings SA are recorded at book value;

● intangible assets and contingent liabilities are recognised only to the extent that they were recognised by the acquiree in accordance withapplicable IFRS; and

● no goodwill is recorded.

The combination of Sports World International Limited with the Company is also a common control transaction which falls outside of the scope ofIFRS 3: Business Combinations. Again the directors have used their judgement in developing and applying an accounting policy which reflects theeconomic substance of the transaction. The directors consider the guidance contained within IFRS 3: Business Combinations in relation to reverseacquisitions to be appropriate in these circumstances and as a result the principles of reverse acquisition accounting have been applied with SportsWorld International Limited identified as the acquirer.

Under the principles of reverse acquisitions, the cost of the acquisition is measured at the fair value of the notional number of equity instrumentsthat would have been issued by the subsidiaries to the parent in order to provide the resulting one hundred per cent ownership in Sports WorldInternational Limited. The net assets of the parent are restated to fair value in the consolidated financial statements and the goodwill (if any) iscalculated based on the difference between the cost of acquisition and the restated net assets of the parent. The deemed cost of the acquisitionwas £50,000 and no goodwill was created on the reverse acquisition of the Company by Sports World International Limited.

The share capital and premium reported in the consolidated balance sheet is required to be that of the legal parent. However, it is also arequirement that the total of the issued equity instruments of the consolidated Group should reflect that of the legal subsidiaries plus the cost ofthe acquisition. To achieve this, a reverse combination reserve is created, being the difference between the required total of the Group’s equityinstruments and the reported equity of the legal parent. The reported consolidated retained earnings are the consolidated retained earnings of thelegal subsidiaries plus those of the legal parent subsequent to the reverse combination.

These financial statements therefore represent a continuation of the financial statements of Brands Holdings Limited, International BrandManagement Limited, CDS Holdings SA and Sports World International Limited with the Company as the reporting entity. Comparatives for the 53weeks ended for 30 April 2006 relate solely to the Continuing Business Entities. The financial statements for the 52 weeks ended 29 April 2007are the first financial statements prepared by the Group in accordance with IFRS. As such, they take account of the requirements and options inIFRS 1: First-time Adoption of International Financial Reporting Standards, as they relate to the comparative financial information for the 53 weeksended 30 April 2006 included therein. The Group’s transition date to IFRS was 25 April 2005.

In preparing these consolidated financial statements the Group has elected to apply certain exemptions available under IFRS 1, which are as follows:

● the Group has deemed cumulative translation differences for foreign operations to be zero at the date of transition. Any gains and losses orsubsequent disposals of foreign operations will not therefore include translation differences arising prior to the transition date;

● IFRS 3 – Business Combinations is applied from 25 April 2005 and not retrospectively to earlier business combinations;

● The effect of translation differences arising on fair value adjustments and goodwill in business combinations is not applied retrospectively before25 April 2005 thereby treating the goodwill and fair value adjustments as assets of the Company as opposed to the entities acquired by theCompany; and

● all cumulative actuarial gains and losses in respect of the Group’s defined benefit pension scheme which have been recognised in equity underUK GAAP have continued to be recognised in equity at the transition date.

Notes to the financial statementsfor the 52 weeks ended 29 April 2007

The consolidated financial statements have been prepared in accordance with IFRS (including International Accounting Standards (“IAS”)) andInternational Financial Reporting Interpretations Committee (“IFRIC”) interpretations and with those parts of the Companies Act 1985 applicable tocompanies reporting under accounting standards as adopted for use in the EU. The consolidated financial statements have been prepared under thehistorical cost convention, as modified to include fair valuation of financial assets and derivative financial instruments with borrowings recognisedinitially at fair value, net of transaction costs incurred, and subsequently at amortised cost as required by IFRS.

ConsolidationThe consolidated financial statements consolidate the revenues, costs, assets, liabilities and cash flows of the Company and its subsidiaries, beingthose entities in relation to which the Company has the power to govern the financial and operating policies, generally achieved by a share of morethan 50% of the voting rights.

On acquisition, the assets and liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Anyexcess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost ofacquisition below the fair values of the identifiable net assets acquired is credited to the consolidated income statement in the period of acquisition.The interest of minority shareholders is stated at the minority’s proportion of the fair values of the assets and liabilities and contingent liabilitiesrecognised.

The results of subsidiaries acquired or disposed of during the year, other than the acquisitions of Sports World International Limited, BrandsHoldings Limited, International Brand Management Limited and CDS Holdings SA, which are accounted for as set out under ‘Basis of preparation’above, are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, asappropriate.

Inter-company transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated.

Associates and joint venturesAssociates are entities over which the Group has significant influence but not control, generally accompanied by a share of between 20% and 50%of the voting rights.

A joint venture is an entity in which the Group holds an interest on a long term basis and which is jointly controlled by the Group and one or moreother venturers under a contractual agreement.

The Group’s share of the results of associates and joint ventures is included in the Group’s consolidated income statement using the equity methodof accounting. Investments in associates and joint ventures are carried in the Group’s consolidated balance sheet at cost plus post acquisitionchanges in the Group’s share of the net assets of the associates, less any impairment in value. The carrying values of investments in associatesinclude acquired goodwill.

If the Group’s share of losses in an associate or joint venture equals or exceeds its investment in the associate or joint venture, the Group does notrecognise further losses, unless it has incurred obligations to do so or made payments on behalf of the associate or joint venture.

Unrealised gains arising from transactions with associates and joint ventures are eliminated to the extent of the Group’s interest in the entity.

InvestmentsInvestments other than held-to-maturity securities are classified as held for trading or designated on initial recognition as available for sale or at fairvalue through profit or loss and are measured at subsequent reporting dates at fair value. Where securities are held for trading purposes, gains andlosses arising from changes in fair value are included in profit or loss for the period.

For available-for-sale investments, gains and losses arising from changes in fair value are recognised directly in equity through the statement ofrecognised income and expense, until the security is disposed at which time the cumulative gain or loss previously recognised in equity is includedin the consolidated income statement for the period. If an available-for-sale investment is determined to be impaired, the cumulative losspreviously recognised in equity is included in the income statement for the period.

GoodwillGoodwill arising on consolidation is recognised as an asset and reviewed for impairment at least annually or when a change in circumstances orsituation indicates that the goodwill has suffered an impairment loss. Any impairment is recognised immediately in the income statement. Gainsand losses on the disposal of a business include the amount of goodwill relating to that business.

Other intangible assetsBrands, trade marks and licences that are internally generated are not recorded on the balance sheet. Acquired brands, trade marks and licences areinitially carried on the balance sheet at cost. The fair value of brands, trade marks and licences that are acquired by virtue of a businesscombination are determined at the date of acquisition and is subsequently assessed as being the deemed cost to the Group.


Notes to the financial statementsfor the 52 weeks ended 29 April 2007 (continued)


1 Accounting policies (continued)No amortisation is charged on brands, trade marks or perpetual/renewable licences with an indefinite life as the Group believes that the value ofthese brands and trade marks can be maintained indefinitely. The Group carries out an impairment review on the intangible assets, at leastannually, or when a change in circumstances or situation indicates that those brands have suffered an impairment loss. Impairment is measured bycomparing the carrying amount of the intangible asset with the recoverable amount, that is, the higher of its fair value less costs to sell and its valuein use. Value in use is calculated by discounting the expected future cash flows, using a discount rate based on an estimate of the rate that themarket would expect on an investment of comparable risk.

Amortisation is provided on brands, trade marks and licences with a definite life over their useful economic lives of 10 to 12 years and is accountedfor within the selling, distribution and administrative expenses category within the income statement.

Property, plant and equipmentProperty, plant and equipment are stated at historical cost less depreciation less any recognised impairment losses. Cost includes expenditure thatis directly attributable to the acquisition or construction of these items. Subsequent costs are included in the asset’s carrying amount only when itis probable that future economic benefits associated with the item will flow to the Group and the costs can be measured reliably. All other costs,including repairs and maintenance costs, are charged to the income statement in the period in which they are incurred.

Depreciation is provided on all property, plant and equipment other than freehold land and is calculated on a reducing balance basis or straight-linebasis, whichever is deemed by the Directors to be more appropriate, to allocate cost less assessed residual value, other than assets in the course ofconstruction, over the estimated useful lives, as follows:

Freehold buildings — 15 to 50 years straight lineLeasehold property — over the term of the leasePlant and equipment — between 5% and 33% per annum

The assets’ useful lives and residual values are reviewed and, if appropriate, adjusted at each balance sheet date.

The gain or loss arising on disposal or scrapping of an asset is determined as the difference between the sales proceeds, net of selling costs, andthe carrying amount of the asset and is recognised in the income statement.

Impairment of assets other than goodwill and intangible assets with an indefinite lifeAt each balance sheet date, the Directors review the carrying amounts of the Group’s tangible and intangible assets, other than goodwill andintangible assets with an indefinite life, to determine whether there is any indication that those assets have suffered an impairment loss. If any suchindication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where the assetdoes not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit towhich the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows arediscounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risksspecific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset(cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant assetis carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Impairment losses recognised for cash-generating units, to which goodwill has been allocated, are credited initially to the carrying amount ofgoodwill. Any remaining impairment loss is charged pro rata to the other assets in the cash-generating unit.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate ofits recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had noimpairment loss been recognised for the asset (cash-generating unit) in prior periods. A reversal of an impairment loss is recognised in the incomestatement immediately.

Revenue recognitionRevenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and servicesprovided in the normal course of business, net of discounts and sales related taxes.

In case of goods sold through retail stores, revenue is recognised when goods are sold to the customer, less provision for returns. Accumulatedexperience is used to estimate and provide for such returns at the time of the sale. Retail sales are usually in cash, by debit card or by credit card.

In the case of income generated from trade marks and licences, revenue is recognised on an accruals basis in accordance with the relevantagreements or on a transactional basis when revenue is linked to sale or purchase volumes.

Revenue from property related transactions is recognised in accordance with the nature of the transaction and economic value delivered.

Exceptional itemsThe Group presents as exceptional items on the face of the income statement those significant items of income and expense which, because oftheir size, nature and infrequency of the events giving rise to them, merit separate presentation to allow shareholders to understand better theelements of financial performance in the year, so as to facilitate comparison with prior periods to assess trends in financial performance morereadily.

Interest incomeInterest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the ratethat exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.

Government grants and similar incomeIncome from government grants and similar income such as landlord contributions and inducements that compensate the Group for the cost of anasset are recognised in the balance sheet as a deduction in arriving at the carrying amount of the related asset. This is considered to reflect the truecost of the asset to the Group. The amount is recognised in the consolidated income statement over the life of the depreciable asset by way of areduced depreciation charge. To date the Group has not received government grants in compensation for expenses charged in the consolidatedincome statement.

Foreign currenciesThe reporting currency of the Group is Sterling. Foreign currency transactions are translated into Sterling using the exchange rates prevailing on thedates of the transactions. Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, areincluded in the income statement for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value areincluded in the income statement for the period except for differences arising on the retranslation of non-monetary items in respect of which gainsand losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directlyin equity. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date.All differences are taken to the income statement.

On consolidation, the assets and liabilities of foreign operations which have a functional currency other than Sterling are translated into Sterling atforeign exchange rates ruling at the balance sheet date. The revenues and expenses of these subsidiary undertakings are translated at average ratesapplicable in the period. All resulting exchange differences are recognised as a separate component of equity.

The Group has deemed cumulative translation differences for foreign operations to be zero at the date of transition, that being 25 April 2005. Anygains and losses or subsequent disposals of foreign operations will not therefore include translation differences arising prior to the transition date.When a foreign operation is sold, combined exchange differences that have been recognised as a separate component of equity are recognised inthe income statement as part of the gain or loss on disposal.

In order to mitigate its exposure to certain foreign exchange risks, the Group enters into forward contracts (Note 3).

InventoriesInventories are valued at lower of cost and net realisable value. Cost includes the purchase price of the manufactured products, materials, directlabour, transport costs and a proportion of applicable overheads. Cost is calculated using FIFO (first in, first out). Net realisable value is based onthe estimated selling price less all estimated selling costs.

Trade and other receivablesTrade and other receivables are recognised initially at fair value and subsequently measured at amortised cost under the effective interest ratemethod less provision for impairment. Provision for impairment is established when there is objective evidence that the Group will not be able tocollect amounts due according to the original terms of the receivable. The amount of the impairment is the difference between the asset’s carryingamount and the present value of the estimated future cash flows, discounted at the original effective interest rate.

Cash and cash equivalentsCash and cash equivalents comprise cash in hand and on demand deposits held with banks.

Trade and other payablesTrade and other payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest ratemethod.



1 Accounting policies (continued)Deferred taxationDeferred taxation is calculated using the liability method, on temporary differences arising between the tax bases of assets and liabilities and theircarrying amounts in the consolidated financial statements. However, if the deferred tax arises from the initial recognition of goodwill or initialrecognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accountingnor taxable profit or loss, it is not accounted for. Deferred tax is determined using tax rates and laws that have been enacted (or substantiallyenacted) by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

Deferred tax liabilities are provided in full.

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporarydifferences can be utilised.

Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement, except where they relate toitems that are charged or credited directly to equity in which case the related deferred tax is also charged or credited directly to equity.

PensionsThe Group operates pension plans for the benefit of certain employees, including both defined contribution and defined benefit plans.

In relation to its defined contribution plans, the Group makes contributions to independently administered plans, the contributions being recognisedas an expense when they fall due. The Group has no legal or constructive obligation to make any further payments to the plans other than thecontributions due.

In relation to its defined benefit schemes, the Group recognises in its balance sheet the present value of its defined benefit obligations less the fairvalue of plan assets. The current service cost is charged against operating profit. Interest on the scheme liabilities is included in finance costs andthe expected return on scheme assets is included in finance income.

The defined benefit obligation is calculated at each period end by independent actuaries using the projected unit credit method. The present valueof the obligation is determined by discounting the estimated future cash outflows using interest rates of high quality corporate bonds that aredenominated in the currency in which the benefits will be paid and which have terms to maturity approximating the terms of the related pensionliabilities. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are reflected in the statement ofrecognised income and expense in the period in which they arise.

Borrowings and borrowing costsBorrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently at amortised cost. Any difference between theproceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using theeffective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 monthsfrom the balance sheet date.

Borrowing costs, being interest and other costs incurred in connection with the servicing of borrowings, are recognised as an expense whenincurred.

ProvisionsA provision is recognised when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow ofresources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

The Group provides for dilapidations costs following advice from chartered surveyors. The estimated cost of fulfilling the leasehold dilapidationsobligations is discounted to present value and analysed between non-capital and capital components. The capital element is recognised as adecommissioning cost and depreciated over the life of the asset. The non-capital element is taken to the income statement in the first year of thelease where the cost it represents is of no lasting benefit to the Group or its landlord. ‘Wear and tear’ costs are expensed to the income statement.Provisions for onerous lease contracts are recognised when the Group believes the unavoidable costs of meeting the lease obligations exceed theeconomic benefits expected to be received under the lease.

LeasesLeases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance leases.Finance leases are capitalised at the lease’s inception at the lower of the fair value of the leased asset and the present value of the minimum leasepayments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balanceoutstanding. The asset subject to the finance lease is depreciated over the shorter of its useful life and the lease term. The corresponding rentalobligations, net of finance charges, are included as a liability.


Leases of property, plant and equipment where the Group does not have substantially all the risks and rewards of ownership are classified asoperating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the lease term.Incentives provided by the lessor are credited to the income statement on a straight-line basis over the minimum lease term.

Rental income from operating leases where the Group acts as a lessor is recognised on a straight-line basis over the term of the relevant lease.

Derivative financial instrumentsThe most significant exposure to foreign exchange fluctuations relates to purchases made in foreign currencies, principally the US dollar. TheGroup’s policy is to reduce substantially the risk associated with purchases denominated in foreign currencies by using forward fixed rate currencypurchase contracts, taking into account any foreign currency cash flows. The foreign exchange contracts do not meet the criteria for treatment asan effective hedge and accordingly any gain or loss is recognised immediately in the income statement.

Derivative financial instruments are measured at fair value. Gains or losses on derivative financial instruments related to financing activities areincluded in finance costs when recognised in the income statement.

Share-based paymentsThe Group has applied the requirements of IFRS 2, “Share-based Payments”. The Group issues equity-settled share-based payments to certaindirectors and employees. These are measured at fair value at the date of grant which is expensed to the consolidated income statement on astraight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest.

Fair value is measured by use of a Monte Carlo method. The expected life used in the model has been adjusted, based on management’s bestestimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations. No share-based payment charge wasrecognised for the 52 weeks ended 29 April 2007 as the directors did not consider it material to the Group’s financial results or position.

Equity instrumentsAn equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equityinstruments issued by the Group are recorded at the proceeds received, net of any direct issue costs.

DividendsDividends are recognised as a liability in the Group’s financial statements and as a deduction from equity in the period in which the dividends aredeclared. Where such dividends are proposed subject to the approval of shareholders, the dividends are regarded as declared once shareholderapproval has been obtained.

International Financial Reporting Standards (“Standards”) in issue but not yet effectiveAt the date of authorisation of these consolidated financial statements, the International Accounting Standards Board (“IASB”) and InternationalFinancial Reporting Interpretations Committee (“IFRIC”) have issued the following standards and interpretations which are effective for annualaccounting periods beginning on or after the stated effective date. These standards and interpretations are not effective for and have not beenapplied in the preparation of the consolidated financial statements:

● IFRS 7: Financial Instruments: Disclosures (effective as of 1 January 2007)

● IFRS 8: Operating Segments (effective as of 1 January 2009 – not yet endorsed by the European Union (“EU”))

● IAS 23: Borrowing Costs (amended) (effective as of 1 January 2009 – not yet endorsed by the EU)

● IAS 1 (Amended: Presentation of Financial Statements) – Capital Disclosures (effective as of 1 January 2007)

● IFRIC Interpretation 9: Reassessment of Embedded Derivatives (effective as of 1 June 2006)

● IFRIC Interpretation 10: Interim Financial Reporting and Impairment (effective as of 1 November 2006)

● IFRIC Interpretation 11: IFRS 2 – Group and Treasury Share Transactions (effective as of 1 March 2007)

● IFRIC Interpretation 12: Service Concession Arrangements (effective as of 1 January 2008 – not yet endorsed by the EU)

● IFRIC Interpretation 13: Customer Loyalty Programmes (effective as of 1 July 2008 – not yet endorsed by the EU)

● IFRIC Interpretation 14: IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (effective as of1 January 2008)

The Directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the Group’s financialstatements in the period of initial adoption. However, the Directors are aware that the application of IFRS 7 and IFRS 8 will significantly alter theamount and complexity of disclosure contained in the Group’s next financial statements.



2 Critical accounting estimates and judgmentsThe critical accounting estimates and judgments made by the Group regarding the future or other key sources of estimation, uncertainty andjudgment that may have a significant risk of giving rise to a material adjustment to the carrying values of assets and liabilities within the nextfinancial year are:

Financial position of retirement benefit plansThe net defined benefit pension plan assets or liabilities are recognised in the Group’s balance sheet. The determination of the financial positionrequires assumptions to be made regarding inter alia future salary increases, mortality, discount rates and inflation. The key assumptions made inrelation to the pension plan are set out in Note 30.

Provision for obsolete, slow moving or defective inventoriesThe Directors have applied their knowledge and experience of the sports retail industry in determining the level and rates of provisioning required incalculating the appropriate inventory carrying values.

Impairment of goodwillThe calculation for considering the impairment of the carrying amount of goodwill requires a comparison of the present value of the cash-generating units to which the goodwill has been allocated, to the value of goodwill in the balance sheet. The calculation of present values requiresan estimation of the future cash flows expected to arise from the cash-generating units and the selection of a suitable discount rate. The keyassumptions made in relation to the impairment review of goodwill are set out in Note 14.

Identification and valuation of acquired intangible assetsOn acquisition, each material separable intangible asset is identified and valued by the Directors with assistance from a professional third party.Any such calculation is judgmental in nature as it is based on a valuation methodology.

Brand valuations are typically valued using the relief from royalty valuation methodology.

Useful economic life of intangible assetsFor intangible assets which have a finite life, the Directors revisit their estimate of useful economic life at each period end and revise accordingly.Licences and trade marks typically have a life of between 10 and 12 years.

Impairment of other intangible assetsThe calculation for considering the impairment of the carrying amount of other intangible assets with an indefinite life, specifically brands, trademarks and licences, requires a comparison of the present value of the cash-generating units to the value of the other intangible assets in thebalance sheet. The calculation of present value requires an estimation of the future cash flows expected to arise from the cash-generating units andthe selection of a suitable discount rate.

Provision for dilapidations and onerous contractsThe basis of the estimation of the provisioning for dilapidations and onerous contracts is detailed in the provision accounting policy and Note 32.

Estimates and judgments are continually evaluated and are based on historical experience, external advice and other factors, including expectationsof future events that are believed to be reasonable under the circumstances.

Past performance bonusIn recognition of their important contribution to the development of the Group over many years, Justin Barnes, Karen Byers, Dave Forsey, RobertMellors and Sean Nevitt were each awarded a cash bonus during the period totalling £5.0 million, payable in April 2007 and April 2008.

Certain other employees were awarded a past performance bonus based on their length of service with the Group, payable in May 2007 and May2008.

Both of the aforementioned past performance bonus schemes were announced in March 2007 as part of the initial public offering and formalletters were distributed immediately thereafter. The directors estimate that the total cost to the Group including employer’s national insurance ofthe past performance bonuses will be £56.4 million and this amount has been accrued in full.




3 Financial risk managementThe Group’s current activities result in the following financial risks and management’s responses to those risks in order to minimise any resultingadverse effects on the Group’s financial performance.

Foreign exchange riskThe Group is exposed to foreign currency risks on purchases and cash holdings that are denominated in a currency other than Sterling. Thecurrencies giving rise to this risk are primarily the US dollar and the Euro. The Group’s policy is to reduce the risk associated with purchasesdenominated in foreign currencies, by using forward fixed rate currency purchase contracts taking into account any forecast foreign currency cashflows.

In respect of other monetary assets and liabilities held in currencies other than the US dollar and the Euro, the Group ensures that the net exposureis kept to an acceptable level, by buying or selling foreign currencies at spot rates where necessary to address short-term imbalances.

Interest rate riskThe Group has net borrowings, which are principally at floating interest rates linked to bank base rates or LIBOR. The Group does not use interestrate financial instruments to hedge its exposure to interest rate movements. The Group regularly monitors and reacts accordingly to any exposureto fluctuations in interest rates and the impact on its monetary assets and liabilities.

Credit riskThe Directors have a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on allcustomers requiring credit over a certain amount. The Group does not require collateral in respect of financial assets.

At each balance sheet date, there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by thecarrying amount of each financial asset in the balance sheet.

Liquidity riskThe availability of adequate cash resources is managed by the Group through utilisation of its revolving bank facilities together with equity andretained profits thereby achieving continuity of funding and short-term flexibility.

4 Segmental analysis

Primary reporting format – business segmentsFor management purposes, the Group is organised into and reports its performance between two business segments, Retail and Brands. The Retailbusiness segment comprises the retail network of stores and the Brands business segment comprises the identification, acquisition, developmentand trading of a portfolio of internationally recognised sports and leisure brands.

Segment information about the business segments is presented below:

Segmental information for the 52 weeks ended 29 April 2007:

Retail Brands Eliminations Total

UK wholesale International

UK retail & other UK total retail Total Wholesale Licensing Total£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Sales to external customers 1,069,667 41,525* 1,111,192 64,018 1,175,210 154,484 17,450 171,934 – 1,347,144Sales to other segments – 11,235 11,235 – 11,235 12,523 – 12,523 (23,758) –

Revenue 1,069,667 52,760 1,122,427 64,018 1,186,445 167,007 17,450 184,457 (23,758) 1,347,144

Gross profit 498,101 22,173 520,274 75,867 – 596,141

Operating profit before exceptional items 131,762 1,264 133,026 19,700 – 152,726

Operating profit 81,790 1,264 83,054 10,846 – 93,900Investment income 1,790Finance income 3,449Finance costs (42,081)Share of profits of associated undertakings and joint ventures 3,422

Profit before taxation 60,480Taxation (23,360)

Profit for the period 37,120

* Includes £14.7 million in relation to property transactions.

Sales to other segments are priced at cost plus a 10% mark-up.

Other segment items included in the income statement for the 52 weeks ended 29 April 2007:

Retail Brands Total£’000 £’000 £’000

Depreciation 29,022 1,882 30,904Amortisation – 3,584 3,584

Information regarding segment assets and liabilities as at 29 April 2007 and capital expenditure for the 52 weeks then ended:

Retail Brands Eliminations Total£’000 £’000 £’000 £’000

Investments in associated undertakings and joint ventures 14,847 7,141 – 21,988Other assets 984,598 265,434 (328,410) 921,622

Total assets 999,445 272,575 (328,410) 943,610

Total liabilities (744,811) (246,405) 328,410 (662,806)

Tangible asset additions 57,732 3,875 – 61,607Intangible asset additions 20,756 21,445 – 42,201

Total capital expenditure 78,488 25,320 – 103,808



Retail Brands Eliminations Total

UK wholesale International

UK retail & other UK total retail Total Wholesale Licensing Total£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Sales to external customers 943,841 14,792 958,633 52,664 1,011,297 169,193 14,246 183,439 – 1,194,736Sales to other segments – 10,649 10,649 – 10,649 19,711 – 19,711 (30,360) –

Revenue 943,841 25,441 969,282 52,664 1,021,946 188,904 14,246 203,150 (30,360) 1,194,736

Gross profit 363,508 15,951 379,459 77,220 – 456,679

Operating profit before exceptional items 89,173 926 90,099 18,002 – 108,101

Operating profit 85,805 926 86,731 18,002 – 104,733Investment income 2,624Finance income 3,387Finance costs (17,832)Share of profits of associated undertakings and joint ventures 3,406

Profit before taxation 96,318Taxation (31,448)

Profit for the period 64,870

Sales to other segments are priced at cost plus a 10% mark-up.

Other segment items included in the income statement for the 53 weeks ended 30 April 2006:

Retail Brands Total£’000 £’000 £’000

Depreciation 28,375 3,790 32,165Amortisation – 968 968

Information regarding segment assets and liabilities as at 30 April 2006 and capital expenditure for the 53 weeks then ended:

Retail Brands Eliminations Total£’000 £’000 £’000 £’000

Investments in associated undertakings and joint ventures 11,379 7,029 – 18,408Other assets 534,375 212,599 (97,083) 649,891

Total assets 545,754 219,628 (97,083) 668,299

Total liabilities (279,266) (194,913) 97,083 (377,096)

Tangible asset additions 74,072 1,484 – 75,556Intangible asset additions 2,718 2,988 – 5,706

Total capital expenditure 76,790 4,472 – 81,262



4 Segmental analysis (continued)

Secondary reporting format – geographic segmentsThe Group operates in two geographic segments, UK and Non-UK. These geographic segments are the basis on which the Group reports itssecondary segment information, as presented below:


UK Non-UK Unallocated Eliminations Total£’000 £’000 £’000 £’000 £’000

Segmental revenue from external customers 1,178,528 192,374 – (23,758) 1,347,144

Total capital expenditure 94,873 8,935 – – 103,808

Segmental assets 1,112,957 133,532 25,531 (328,410) 943,610


UK Non-UK Unallocated Eliminations Total£’000 £’000 £’000 £’000 £’000

Segmental revenue from external customers 1,040,369 184,727 – (30,360) 1,194,736

Total capital expenditure 73,565 4,138 3,559 – 81,262

Segmental assets 601,146 116,175 48,061 (97,083) 668,299

5 Other operating income52 weeks 53 weeks

ended ended29 April 30 April

2007 2006£’000 £’000

Commissions receivable 71 10Rent receivable 1,435 1,177Other operating income 277 1,857

1,783 3,044

6 Exceptional items52 weeks 53 weeks


2007 2006£’000 £’000

Reorganisation costs – 3,368Costs relating to admission to the London Stock Exchange 586 –Past performance bonuses including national insurance (note 2) 56,400 –Profit on disposal of certain retail concessions(1) (4,160) –Legal claims 6,000 –

58,826 3,368

(1) In May 2006, the Group disposed of its Hargreaves airport concessions.




7 Operating profitOperating profit for the period is stated after charging/(crediting):


29 April 30 April2007 2006

£’000 £’000

Foreign exchange losses/(gains) 23,543 (15,609)Depreciation of property, plant and equipment

owned assets 30,571 32,165assets held on finance leases 333 –

Amortisation of intangible assets 3,584 968Operating lease rentals

Land and buildings 80,211 65,297Other 216 495

Services provided by the Group’s auditor

For the 52 weeks ended 29 April 2007 the remuneration of the auditors, Grant Thornton UK LLP and associated firms, was as detailed below:


29 April 30 April2007 2006

£’000 £’000

Audit of the Company’s and the consolidated financial statements 118 –Audit of subsidiary companies’ financial statements 529 501Other services provided pursuant to legislation 19 33Other services relating to taxation 540 470Services relating to corporate finance transactions 2,674 –All other services 18 –

Included within the above are fees paid to the auditors for both advisory and compliance work relating to the reorganisation, issue of shares and theCompany’s Admission to the London Stock Exchange amounting to £2,650,000, which are included in the carrying value of the investment.

8 Employee costsThe average monthly number of employees, including Executive Directors, employed by the Group during the period was:


29 April 30 April2007 2006

Number Number

Retail stores 9,206 8,590Distribution, administration and other 2,711 2,362

11,917 10,952

The aggregate payroll costs of the employees, including Executive Directors, were as follows:


29 April 30 April2007 2006

£’000 £’000

Wages and salaries 153,477 129,593Social security costs 10,031 9,205Pension costs 1,229 419

164,737 139,217

Past performance bonuses totalling £56,400,000 are excluded from the above analysis.

8 Employee costs (continued)Aggregate emoluments of the directors of the Company are summarised below.


29 April 30 April2007 2006

£’000 £’000

Aggregate emoluments (including past performance bonuses) 10,350 600

Further details of directors’ remuneration are given in the Directors’ Remuneration Report on pages 33 to 39.

Details of certain key management remuneration are given in note 40.

9 Finance income52 weeks 53 weeks


2007 2006£’000 £’000

Bank interest receivable 709 796Other interest receivable 630 732Expected return on pension plan assets (Note 30) 2,110 1,859

3,449 3,387

10 Finance costs52 weeks 53 weeks


2007 2006£’000 £’000

Interest on bank loans and overdrafts 7,024 3,977Interest on other loans and finance leases 924 2,217Interest on retirement benefit obligations (Note 30) 2,468 2,132Fair value adjustment to forward foreign exchange contracts (Note 33) 31,665 9,506

42,081 17,832

The fair value adjustment to forward foreign exchange contracts relates to adverse differences between the nominal value of forward foreigncurrency contracts and their fair value at each period end.


11 Taxation52 weeks 53 weeks


2007 2006£’000 £’000

Current tax 35,053 28,471Adjustment in respect of prior periods 3,068 4,645

38,121 33,116Deferred tax (Note 31) (14,761) (1,668)

23,360 31,448

Tax reconciliationProfit before taxation 60,480 96,318

Taxation at the standard rate of tax in the UK of 30% 18,144 28,895Tax effects of:Expenses not deductible for tax purposes 2,510 1,221Impact of tax losses and other short-term timing differences not recognised in deferred tax (3,753) (2,756)Deferred tax recognised in respect of unremitted earnings from an associate 1,174 828Overseas tax rate differential 559 (431)Other tax adjustments 1,658 (954)Adjustments in respect of prior periods 3,068 4,645

23,360 31,448

12 Earnings per share from total and continuing operations attributable to the equity shareholdersBasic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinaryshares outstanding during the year. The comparative weighted average number of shares has been adjusted for the impact of the applications ofthe principles of reverse acquisition accounting as set out in note 1, Basis of Preparation.

Share awards granted during the period were anti-dilutive as at 29 April 2007 as the exercise price exceeded the average market price of theCompany’s shares during the period from when the share awards were granted to 29 April 2007. As a result share awards are not taken intoaccount when determining the weighted average number of ordinary shares in issue during the period and therefore the basic and diluted earningsper share are the same.

Basic and diluted earnings per share

52 weeks 52 weeks 53 weeks 53 weeksended ended ended ended

29 April 29 April 30 April 30 April2007 2007 2006 2006Basic Diluted Basic Diluted

£’000 £’000 £’000 £’000

Profit for the period 37,671 37,671 62,886 62,886

Number in thousands Number in thousands

Weighted average number of shares 460,582 460,582 410,400 410,400

Pence per share Pence per share

Earnings per share 8.18 8.18 15.32 15.32

Underlying earnings per shareThe underlying earnings per share reflects the underlying performance of the business compared with the prior year and is calculated by dividingunderlying earnings by the shares in issue at the period end. Underlying earnings is used by management as a measure of profitability within theGroup. Underlying earnings is defined as profit for the period attributable to equity holders of the parent for each financial period but excluding thepost tax effect of certain exceptional items.



12 Earnings per share from total and continuing operations attributable to the equity shareholders (continued)The Directors believe that the underlying earnings before exceptional items and underlying earnings per share measures provide additional usefulinformation for shareholders on the underlying performance of the business, and are consistent with how business performance is measuredinternally. Underlying earnings is not a recognised profit measure under IFRS and may not be directly comparable with “adjusted” profit measuresused by other companies.

52 weeks 52 weeks 53 weeks 53 weeksended ended ended ended

29 April 29 April 30 April 30 April2007 2007 2006 2006Basic Diluted Basic Diluted

£’000 £’000 £’000 £’000

Profit for the period 37,671 37,671 62,886 62,886Post tax adjustments to profit for the period for the following exceptional items:Costs relating to admission to the London Stock Exchange 410 410 – –Past performance bonuses including national insurance 39,480 39,480 – –Fair value adjustment to forward foreign exchange contracts 22,166 22,166 6,654 6,654Profit on disposal of certain retail concessions (2,912) (2,912) – –Reorganisation costs – – 2,358 2,358Legal claims 4,200 4,200 – –

Underlying profit for the period 101,015 101,015 71,898 71,898

Number in thousands Number in thousands

Shares in issue at the period end 720,000 720,000 720,000 720,000

Pence per share Pence per share

Earnings per share 14.03 14.03 9.99 9.99


13 Property, plant and equipmentFreehold Long Shortland and leasehold leasehold Plant andbuildings property property equipment Total

£’000 £’000 £’000 £’000 £’000

CostAt 24 April 2005 19,830 10,496 74,902 184,328 289,556Exchange differences 174 – – 3,408 3,582Additions through business combinations – 283 434 4,537 5,254Additions 9,118 24 8,979 52,181 70,302Eliminated on disposals (420) (37) (345) (34,097) (34,899)

At 30 April 2006 28,702 10,766 83,970 210,357 333,795Exchange differences (347) – – (1,154) (1,501)Additions through business combinations (Note 35) 1,669 1,087 21 4,033 6,810Additions 1,622 2 14,159 39,014 54,797Eliminated on disposals (1,790) (543) (597) (16,582) (19,512)

At 29 April 2007 29,856 11,312 97,553 235,668 374,389

Accumulated depreciationAs at 24 April 2005 (1,461) (3,072) (17,621) (101,674) (123,828)Exchange differences (91) – – (2,880) (2,971)Charge for the period (2,060) (314) (8,099) (21,692) (32,165)Eliminated on disposals 139 17 268 29,867 30,291

As at 30 April 2006 (3,473) (3,369) (25,452) (96,379) (128,673)Exchange differences 174 – – 85 259Charge for the period (1,658) (485) (4,108) (24,653) (30,904)Eliminated on disposals 247 174 597 8,374 9,392

At 29 April 2007 (4,710) (3,680) (28,963) (112,573) (149,926)

Net book amountAt 29 April 2007 25,146 7,632 68,590 123,095 224,463

At 30 April 2006 25,229 7,397 58,518 113,978 205,122

Finance leased assets included in the above net book valuesAt 29 April 2007 – – – 1,059 1,059

At 30 April 2006 – – – – –

Included within freehold land and buildings cost as at 29 April 2007 is £1,749,000 (2006: £1,016,250) of capital grants received from the EastMidlands Development Agency. The Group is subject to the following principal conditions of the grant being met for a period, which is at thediscretion of the East Midlands Development Agency, of five years after the first grant instalment was made on 28 April 2006 or 18 months afterthe last grant instalment was made on 29 April 2007 (“conditional period”):

● The Group remains solvent.

● The Group does not cease to own, or for a period of at least three months does not cease to use the relevant premises for which the grant wasprovided or its related assets.

● The Group employs at least 507 permanent full-time employees or equivalent at the relevant premises.

● The Group employs in total at least 1,171 employees at the relevant premises.

If the Group fails to adhere to any of the above conditions during the conditional period the East Midlands Development Agency may demand fullrepayment of the grant.



14 Intangible assetsTrade marks

Goodwill and licences Brands Total£’000 £’000 £’000 £’000

CostAt 24 April 2005 34,192 10,434 – 44,626Additions through business combinations 3,741 – – 3,741Other additions 878 1,087 – 1,965

At 30 April 2006 38,811 11,521 – 50,332Arising on business combinations 19,343 – – 19,343Additions through business combinations (note 35) 436 3,844 15,600 19,880Other additions – 2,978 – 2,978

At 29 April 2007 58,590 18,343 15,600 92,533

Trade marksGoodwill and licences Brands Total

£’000 £’000 £’000 £’000

AmortisationAt 24 April 2005 – – – –Charge for the period – (968) – (968)

At 30 April 2006 – (968) – (968)Charge for the period – (2,184) (1,400) (3,584)

At 29 April 2007 – (3,152) (1,400) (4,552)

Net book amountAt 29 April 2007 58,590 15,191 14,200 87,981

At 30 April 2006 38,811 10,553 – 49,364

The carrying value of goodwill is allocated to cash-generating units as follows:

£’000

Retail 18,908Brands 39,682

58,590

Brands, with a net book amount of £14,200,000 (2006: £nil) as at 29 April 2007 are considered to have an indefinite life and are allocated to thebrand cash-generating unit.

The Group tests the carrying amount of goodwill and assets with an indefinite life annually for impairment or more frequently if there areindications that their carrying value might be impaired. The carrying amounts of other intangible assets are reviewed for impairment if there is anindication of impairment.

Impairment is calculated by comparing the carrying amounts to the value derived from discounted cash flow projections for the cash generatingunits to which the intangible assets are allocated. The forecasts cover a three year period and the cash flows beyond this period are extrapolatedusing a growth rate of 2%, which does not exceed the long term growth rate for the sectors to which the intangible assets relate. Discount rates areestimated at a pre-tax weighted average cost of capital of 13.6%.

No impairment as at the balance sheet date is required.


15 Investments in associated undertakings and joint venturesThe Group uses the equity method of accounting for associates and joint ventures. The following table shows the aggregate movement in theGroup’s investment in associates and joint ventures:

JointAssociates ventures Total

£’000 £’000 £’000

At 25 April 2005 7,456 – 7,456Exchange differences 178 – 178Additions – 7,368 7,368Share of profit/(loss) 3,745 (339) 3,406

At 30 April 2006 11,379 7,029 18,408Exchange differences (80) – (80)Additions – 238 238Share of profit/(loss) 3,548 (126) 3,422

At 29 April 2007 14,847 7,141 21,988

AssociatesThe Group has a 42.5% interest in Warrnambool private unlimited, a company incorporated in the Republic of Ireland which is the ultimate parentundertaking of Heatons which is a private unlimited company. The business activity of Heatons is that of household, sporting and leisure goodsretail. Heatons operates in the Republic of Ireland and Northern Ireland.

The Group’s share of Heatons’ assets, liabilities and income statement, which is included in the consolidated financial statements, is as follows:

29 April 30 April2007 2006

£’000 £’000

Share of non-current assets 23,600 18,407Share of current assets 9,874 9,210Share of non-current liabilities (7,091) (10,448)Share of current liabilities (11,536) (5,790)

14,847 11,379


29 April 30 April2007 2006

£’000 £’000

Income 57,468 47,068Expenses (52,867) (42,810)

Profit before taxation 4,601 4,258Taxation (1,053) (513)

Profit for the period 3,548 3,745

Heatons has a coterminous year end with the Group. There are no significant restrictions on the ability of associated undertakings to transfer fundsto the parent, other than those imposed by legal requirements.



15 Investments in associated undertakings and joint ventures (continued)

Joint venturesThe Group’s joint ventures are:

Percentage ofCountry of issued share

Name incorporation capital held Nature of business

No Fear International Limited* England 50 Brand licensingPBF International Limited* England 50 Brand licensing

* Held by an intermediate subsidiary.

All joint venture undertakings operate in their country of incorporation.

The Group’s share of its joint ventures’ assets, liabilities and income statement, which is included in the consolidated financial statements, is asfollows:

29 April 30 April2007 2006

£’000 £’000

Share of non-current assets 6,818 7,174Share of current assets 1,966 843Share of non-current liabilities – (66)Share of current liabilities (1,643) (922)

7,141 7,029


29 April 30 April2007 2006

£’000 £’000

Income 2,793 125Expenses (2,799) (452)

Loss before taxation (6) (327)Taxation (120) (12)

Loss for the period (126) (339)

16 Available-for-sale financial assets29 April 30 April

2007 2006£’000 £’000

Available-for-sale financial assets 75,447 15,338

The fair value of the listed available-for-sale investments is based on bid quoted market prices at the balance sheet date.

The following table shows the aggregate movement in the Group’s financial assets during the year:

29 April 30 April2007 2006

£’000 £’000

At beginning of period 15,338 –Additions 67,215 13,327Revaluation through equity (7,106) 2,011

At end of period 75,447 15,338


The financial assets at 29 April 2007 relate to strategic investments held of between 2.2% and 29.3% of share capital. The Directors do notconsider that they have significant influence over the financial and operating policies of the investees as they have no representation on the boardof Directors, have no participation in policy-making processes, including participation in decisions about dividends or other distributions, have nomaterial transactions with the investees and do not interchange any managerial personnel.

The Group has one investment in excess of 20% of share capital, that being 29.3% (2006: 0%) of the ordinary share capital of Blacks LeisureGroup plc, a company incorporated in England. The aggregate of its share capital and reserves and (loss)/profit for the year ended 28 February2007 and 28 February 2006 are as follows:

28 February 28 February2007 2006

£’000 £’000

Aggregate share capital and reserves 91,888 109,580

(Loss)/profit after taxation (12,624) 14,538

17 Inventories29 April 30 April

2007 2006£’000 £’000

Raw materials 3,872 1,937Work in progress 986 794Goods for resale 226,525 216,334

231,383 219,065

The following inventory costs have been recognised in cost of sales:


29 April 30 April2007 2006

£’000 £’000

Cost of inventories recognised as an expense 748,683 735,379

18 Trade and other receivables29 April 30 April

2007 2006£’000 £’000

Trade receivables 56,473 50,437Amounts owed by related undertakings 979 268Other debtors 3,844 14,264Prepayments and accrued income 27,319 33,052

88,615 98,021

The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.

The following charges have been recognised in administrative expenses in respect of bad and doubtful debts:


29 April 30 April2007 2006

£’000 £’000

Bad and doubtful debt charge 2,371 3,348

The Group has no significant concentration of credit risk, with exposure spread over a large number of customers. These bad debtprovisions/charges have been determined by reference to past default experience and a knowledge of the individual circumstances of certainreceivables.




19 Cash and cash equivalents29 April 30 April

2007 2006£’000 £’000

Cash in bank and in hand – Sterling 26,569 8,655Cash in bank and in hand – US dollars 146,985 27,560Cash in bank and in hand – Euros 4,584 10,312Cash in bank and in hand – other 3,670 2,348

181,808 48,875Bank overdraft (Note 29) (206,837) (89,930)

Cash and cash equivalents including overdrafts at period end (25,029) (41,055)

20 Share capital29 April 30 April

2007 2006£’000 £’000

Authorised999,500,010 ordinary shares of 10p each (2006: 1,000,000 ordinary shares of £1 each) 99,950 1,000499,990 redeemable preference shares of 10p each (2006: nil) 50 –

100,000 1,000

Allotted, called up and fully paid720,000,000 ordinary shares of 10p each (2006: 1,000,000 ordinary shares of £1 each) 72,000 1,000

Consistent with the principle of reverse acquisition accounting, as described in note 1 Basis of preparation, the issued share capital shown above at29 April 2007 is that of the Company with the comparative issued share capital being that of Sports World International Limited.

The following share issues and redemptions were made by the Company since its incorporation:

No. ofNo. of redeemable

ordinary preferenceDate shares shares

21 December 2006 – on incorporation 10 –8 February 2007 – ordinary share issue – 499,9902 March 2007 – ordinary share issue 673,559,990 –2 March 2007 – redemption of redeemable preference shares – (499,990)29 March 2007 – ordinary share issue 46,440,000 –

720,000,000 –

The Company was incorporated on 21 December 2006 with an authorised share capital of £1,000, divided into 10,000 ordinary shares of 10p each,of which 10 ordinary shares were issued at par at the date of incorporation.

On 8 February 2007, the authorised share capital of the Company was increased to £50,000 by the creation of 490,000 new ordinary shares of10p each.

On 8 February 2007, the authorised share capital of the Company was reorganised into 499,990 redeemable preference shares of 10p each and 10 ordinary shares of 10p each.

On 8 February 2007, the Company issued 499,990 redeemable preference shares at par.

On 26 February 2007, the authorised share capital of the Company was increased from £50,000 to £100,000,000 by the creation of 999,500,000new ordinary shares of 10p each.

On 2 March 2007, the Company was admitted to the Official List and to trading on the London Stock Exchange and issued 309,600,000 ordinaryshares at £3 per share, giving rise to share premium of £897,840,000. The cash proceeds from this share issue were used to acquire a certainpercentage of the previous owner’s equity investment in Sports World International Limited.

On 2 March 2007, the Company issued 326,303,990 ordinary shares at £3 per share in exchange for 478,210 ordinary shares of £1 each in SportsWorld International Limited. No share premium arose as the directors applied the merger relief provisions available under the Companies Act 1985.

On 2 March 2007, the Company issued 37,656,000 ordinary shares at £3 per share in exchange for the entire ordinary share capital of £1 each ofBrands Holdings Limited, International Brand Management Limited and CDS Holdings SA. No share premium arose as the directors applied themerger relief provisions available under the Companies Act 1985.

On 2 March 2007, the Company redeemed its 499,990 redeemable preference shares of 10p each at par.

On 29 March 2007, the Company issued 46,440,000 ordinary shares at £3 per share in exchange for 68,060 ordinary shares of £1 each in SportsWorld International Limited. No share premium arose as the directors applied the merger relief provisions available under the Companies Act 1985.

Share options and awards

The Performance Share PlanUnder the terms of the Performance Share Plan, which was approved by the shareholders on 11 February 2007, the Board may grant awards topurchase ordinary shares in the Company to executive directors and others, based on a percentage of salary and subject to performance conditions.The extent to which the awards vest is based on earnings per share growth and total shareholders return over a period of three financial years.Further details are set out in the Directors’ Remuneration Report on pages 35 to 37.

The first awards of 446,512 shares were granted on 5 April 2007 at an exercise price of 268.75p.

No share-based payment charge was recognised in respect of these share awards for the 52 weeks ended 29 April 2007 as the directors did notconsider it material to the Group’s financial results or position.

21 Share premium29 April 30 April

2007 2006£’000 £’000

At 1 May 2006 – –Shares issued 897,840 –Share issue costs (23,540) –

At 29 April 2007 874,300 –

The share premium account is used to record the excess proceeds over nominal value on the issue of shares.

22 Permanent contribution to capital29 April 30 April

2007 2006£’000 £’000

At 1 May 2006 – –Permanent contribution to capital in the period 50 –

At 29 April 2007 50 –

M J W Ashley made a £50,000 cash payment to the Company as a permanent contribution to capital on 8 February 2007 under a deed of capitalcontribution.

23 Capital redemption reserve29 April 30 April

2007 2006£’000 £’000

At 1 May 2006 – –Redemption of redeemable preference shares 50 –

At 29 April 2007 50 –

The capital redemption reserve arose on the redemption of the Company’s redeemable preference shares of 10p each at par on 2 March 2007.



24 Foreign currency translation reserve29 April 30 April

2007 2006£’000 £’000

At 1 May 2006 (947) –Translation differences – Group 190 (1,125)Translation differences – associates (80) 178

At 29 April 2007 (837) (947)

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreignsubsidiaries and associates.

25 Merger reserve29 April 30 April

2007 2006£’000 £’000

At 1 May 2006 43 43Release of merger reserve on group reorganisation (Note 26) (43) –

At 29 April 2007 – 43

The merger reserve of £43,000 represents the nominal value of the share capital of Brands Holdings Limited, International Brand ManagementLimited and CDS Holdings SA following their merger with Sports World International Limited as at 25 April 2005.

26 Reverse combination reserve29 April 30 April

2007 2006£’000 £’000

At 1 May 2006 – –Reverse acquisition accounting on group reorganisation (987,355) –Release of merger reserve on group reorganisation 43 –

At 29 April 2007 (987,312) –

The reverse combination reserve exists as a result of the adoption of the principles of reverse acquisition accounting, see note 1 Basis ofpreparation, in accounting for the group restructuring which occurred on 2 March 2007 and 29 March 2007 between the Company and SportsWorld International Limited, Brands Holdings Limited, International Brand Management Limited and CDS Holdings SA with Sports WorldInternational Limited as the acquirer.

27 Retained earnings29 April 30 April

2007 2006£’000 £’000

At 1 May 2006 285,711 220,562(Expense)/income recognised directly in equity (5,294) 2,263Profit for the financial period 37,671 62,886Dividends (380) –

At 29 April 2007 317, 708 285,711




28 Minority interests29 April 30 April

2007 2006£’000 £’000

At 1 May 2006 5,396 3,412Share of (loss)/profit for the period (551) 1,984

At 29 April 2007 4,845 5,396

29 Borrowings29 April 30 April

2007 2006£’000 £’000

Non-current:Bank and other loans 1,844 2,628Obligations under finance leases 91 –

1,935 2,628

Current:Bank overdrafts 206,837 89,930Bank and other loans 10,463 9,852Obligations under finance leases 696 –

217,996 99,782

Total borrowings:Bank overdrafts 206,837 89,930Bank and other loans 12,307 12,480Obligations under finance leases 787 –

219,931 102,410

The maturity of the Group’s bank and other loan borrowings other than overdrafts is as follows:

29 April 30 April2007 2006

£’000 £’000

Borrowings are repayable as follows:Within one year 11,159 9,852Between one and two years 922 908Between two and five years 924 1,720After five years 89 –

13,094 12,480

Borrowings – Sterling 4,231 7,435Borrowings – Other 8,863 5,045

13,094 12,480

Loans and overdrafts are all on commercial variable rates of interest ranging between 0.6% and 2.5% over the base rate of the country withinwhich the borrowing entity resides.

On 26 February 2007, four members of the Group, Sports World International Limited, Lillywhites Limited, Dunlop Slazenger Group Limited andSmith & Brooks Holdings Limited (the “Borrowers”) entered into a committed working capital facility agreement with The Governor and Companyof the Bank of Scotland (the “Working Capital Facility”). The Working Capital Facility is available to any of the Borrowers and may be drawn to anaggregate limit of £230.0 million. It is capable of being utilised by way of cash advances, letters of credit, guarantees, bonds and/or currencyborrowings. The Working Capital Facility is available until 30 April 2009. Each Borrower is required to observe certain covenants, includingundertakings relating to delivery of financial statements, and certain negative covenants, including in relation to creation of security and disposal ofassets. The Working Capital Facility is secured by a debenture from each of the Borrowers and a composite guarantee from each of the non-dormant subsidiaries of Sports World International Limited.

30 Retirement benefit obligationsThe Group’s defined benefit pension obligations relate to Dunlop Slazenger Group Holdings Limited (“DSGHL”), which was acquired on 28 January2004. DSGHL operates a number of plans worldwide, the largest of which is of the funded defined benefit type. The Scheme is closed to newmembers.

The amounts for the current and previous three periods following the acquisition of DSGHL are as follows:

29 April 30 April 24 April2007 2006 2005

£’000 £’000 £’000

Total fair value of plan assets 36,419 32,829 28,720Present value of plan liabilities (50,451) (48,008) (44,945)

Net plan obligations (14,032) (15,179) (16,225)

Experience adjustments on plan liabilities (1,620) (1,354) (2,156)Experience adjustments on plan assets 1,164 257 3,382

The cumulative amount of actuarial gains and losses recognised in the statement of income and expense as at 29 April 2007 was an actuarial lossof £327,000 (2006: actuarial gain of £129,000)

There were no unrecognised actuarial gains or losses or past service costs as at 30 April 2006 or 29 April 2007.

Amounts recognised in the income statement are as follows:


29 April 30 April2007 2006

£’000 £’000

Current service cost 175 331Interest on retirement benefit obligations 2,468 2,132Expected return on plan assets (2,110) (1,859)

533 604

The current service cost is included within cost of sales. The interest on retirement benefit obligations and the expected return on plan assets areincluded within finance costs and finance income, respectively.

Amounts recognised in the statement of recognised income and expense are as follows:


29 April 30 April2007 2006

£’000 £’000

Actual less expected return of assets 1,164 3,382Actuarial losses relating to plan liabilities (1,620) (2,156)

(456) 1,226

The actual return on plan assets for the 52 weeks ended 29 April 2007 was £3,274,000 (2006: £5,241,000).


The movements in the fair value of plan assets are as follows:


29 April 30 April2007 2006

£’000 £’000

At the start of the period 32,829 28,720Return 2,110 1,859Actuarial gains 1,164 3,382Employer contributions 2,136 424Employee contributions 143 168Benefits paid out (1,963) (1,724)

At the end of the period 36,419 32,829

The Group expects to contribute £688,000 to its defined benefit pension plans for the 52 weeks ended 27 April 2008.

The assumptions used to determine the expected return on assets reflects the underlying asset allocation at each period end. The plan asset mixand the expected returns on the assets are as follows:

29 April 30 April2007 2006

£’000 £’000

Equities 23,570 17,016Bonds 12,774 15,813Cash and other 75 –

36,419 32,829

Equities 8.0% 7.7%Bonds 4.9% 4.5%Cash and other 5.0% –

The principal assumptions underlying the actuarial assessments of the present value of the plan liabilities are:

29 April 30 April2007 2006

% %

Inflation rate 3.2 3.0Future salary increases n/a n/aFuture pension increases 3.1 2.9Discount rate 5.4 5.1

Mortality assumptions:

29 April 30 April2007 2006

% %

Life expectancy at 65 at period end:Future pensioners – male 85.2 85.2Future pensioners – female 87.9 87.9Current pensioners – male 84.5 84.5Current pensioners – female 87.2 87.2




30 Retirement benefit obligations (continued)The movements in the present value of the plan liabilities are as follows:


29 April 30 April2007 2006

£’000 £’000

At the start of the period (48,008) (44,945)Current service cost (175) (331)Interest cost (2,468) (2,132)Actuarial losses (1,620) (2,156)Employee contributions (143) (168)Benefits paid out 1,963 1,724

At the end of the period (50,451) (48,008)

The net movements in the net present value of the plan liabilities were as follows:52 weeks 53 weeks


2007 2006£’000 £’000

Net liability at the start of the period (15,179) (16,225)Movement in fair value of plan assets 3,590 4,109Movements in the present value of the plan liabilities (2,443) (3,063)

Net liability at the end of the period (14,032) (15,179)

In addition to the amounts recognised in relation to the defined benefit retirement plans, amounts of £185,000 and £242,000 have beenrecognised in the income statement in the periods ended 30 April 2006 and 29 April 2007 respectively in relation to defined contributionretirement benefit plans.

31 Deferred tax assets and liabilitiesAccounts

depreciation Unremitted Recognised Otherexceeding tax Tax losses Pension plan earnings from on timing

depreciation recoverable liabilities an associate acquisitions differences Total£’000 £’000 £’000 £’000 £’000 £’000 £’000

At 24 April 2005 (4,490) 4,545 3,644 (2,242) – (1,160) 297(Charged)/credited to the income statement (5,555) – – (828) – 8,051 1,668Charged to the statement of recognised income and expense – – (367) – – (607) (974)

At 30 April 2006 (10,045) 4,545 3,277 (3,070) – 6,284 991(Charged)/credited to the income statement 384 (166) – (1,174) – 15,717 14,761Credited to the statement of recognised income and expense – – 137 – – 2,131 2,268Acquisitions – – – – (4,681) – (4,681)

At 29 April 2007 (9,661) 4,379 3,414 (4,244) (4,681) 24,132 13,339

29 April 30 April2007 2006

£’000 £’000

Deferred tax assets 31,925 14,106Deferred tax liabilities (18,586) (13,115)

Net deferred tax balance 13,339 991

Deferred tax assets are recognised for tax losses recoverable and pension plan liabilities to the extent that realisation of the related tax benefit isprobable on the basis of the Group’s current expectations of future taxable profits.

32 ProvisionsOnerous

Dilapidations contracts Total£’000 £’000 £’000

At 24 April 2005 15,139 5,213 20,352Amounts provided 2,584 1,879 4,463Amounts utilised and reversed (26) (1,697) (1,723)

At 30 April 2006 17,697 5,395 23,092Arising on business combinations 3,065 3,620 6,685Amounts utilised and reversed (3,032) (2,924) (5,956)

At 29 April 2007 17,730 6,091 23,821

The dilapidations provision is the best estimate of the present value of expenditure expected to be incurred by the Group in order to restore itsleasehold premises to the condition required under the lease agreements at the end of the lease discounted at 4% per annum. The provision isexpected to be utilised over the period to the end of each specific lease.

The provision in respect of onerous lease contracts represents the net cost of fulfilling the Group’s obligations over the terms of these contractsdiscounted at 4% per annum. The provision is expected to be utilised over the period to the end of each specific lease.

Reversal of provision during the 52 weeks ended 29 April 2007 is due to the application of a higher discount rate and the removal of therequirement to replace mezzanine floors based on professional advice.

33 Financial instruments

(a) Derivatives: foreign currency forward purchase contractsThe most significant exposure to foreign exchange fluctuations relates to purchases made in foreign currencies, principally the US dollar. TheGroup’s policy is to reduce substantially the risk associated with purchases denominated in foreign currencies by using forward fixed rate currencypurchase contracts, taking into account any foreign currency cash flows. The foreign exchange contracts do not meet the criteria for treatment asan effective hedge and accordingly any gain or loss is recognised immediately in the income statement.

The carrying values of forward foreign currency purchase contracts were as follows:

29 April 30 April2007 2006

£’000 £’000

Fair value of derivative financial instruments – liabilities 42,463 10,798

The sterling principal amounts of forward foreign currency purchase contracts and contracted forward rates were as follows:

29 April 30 April2007 2006

£’000 £’000

US dollar purchases 1,280,330 470,000Contracted rates 1.86 – 1.99 1.78 – 1.83US dollar sales (242,004) –Contracted rates 1.92 – 1.94 –Euro purchases – 17,529Contracted rates – 1.43

Forward foreign currency purchase and sale contracts generally have a maturity at inception of approximately 12 months. However, as at 29 April2007 £250 million principal amount of purchase contracts and all of the sale contracts had a maturity at inception of approximately 24 months(2006: £150 million purchase contracts).



33 Financial instruments (continued)

(b) Non-derivative financial assetsThe carrying values of non-derivative financial assets, which are principally denominated in Sterling, were as follows:

29 April 30 April2007 2006

£’000 £’000

Non-current financial assets 77,458 15,338Cash and cash equivalents 181,808 48,875

259,266 64,213

(c) Non-derivative financial liabilitiesThe carrying values of non-derivative financial liabilities, which are principally denominated in Sterling or US dollars, were as follows:

29 April 30 April2007 2006

£’000 £’000

Non current borrowings 1,935 2,628Current borrowings 217,996 99,782

219,931 102,410

Carrying values do not materially differ from fair value.

34 Trade and other payables29 April 30 April

2007 2006£’000 £’000

Trade payables(1) 139,416 122,978Amounts owed to related undertakings 1,758 1,929Other taxes including social security costs 23,764 3,869Other payables 29,038 10,538Accruals and deferred income(1) 115,968 54,770

309,944 194,084

(1) Includes group restructuring, share issuance and initial public offering expenses of £30.7 million.

The Directors consider that the carrying amount of trade and other payables approximates to their fair value.

35 AcquisitionsDetails of principal acquisitions for the 52 weeks ended 29 April 2007 are set out below.

Percentage of Nature ofDate of acquisition equity acquired activity

Focus Golf Systems Inc 4 May 2006 100 WholesaleOriginal Shoe Company Limited 5 May 2006(1) 100 RetailDunlop International Limited 1 July 2006 100 LicensingPBF International Limited 13 July 2006 50 WholesaleAntigua Enterprises Inc 6 October 2006(2) 5 WholesaleKangol Group Limited 13 October 2006 100 LicensingStreetwise Sports Company Limited 8 December 2006 100 RetailSports Direct International BV 28 December 2006 100 RetailE Walters UK Limited 11 February 2007 100 Wholesale

(1) A further tranche of shares in Original Shoe Company Limited was acquired on 7 June 2006.

(2) This was an additional acquisition which takes the cumulative holding to 65%.


The aggregate fair value of consideration paid, assets and liabilities acquired and resulting goodwill in respect of the above acquisitions is detailedbelow.

Total£’000

Cash consideration including costs 20,190Less: fair value of net assets acquired (847)

Goodwill 19,343

The goodwill is attributable to the premium paid to strengthen the Group’s existing business segments of retail and brands, which is in line with theGroup’s strategy.

Carrying Fair value ofvalues at Fair value net assets

acquisition adjustment acquired£’000 £’000 £’000

Property, plant and equipment 10,078 (3,268) 6,810Intangible assets 4,280 15,600 19,880Inventories 14,812 – 14,812Trade and other receivables 6,790 – 6,790Cash and cash equivalents (2,557) – (2,557)Borrowings (7,197) – (7,197)Trade and other payables (26,325) – (26,325)Deferred tax liability (1) (4,680) (4,681)Provisions – (6,685) (6,685)

(120) 967 847

Separately identifiable intangible assets, primarily representing intellectual property acquired, amounting to £15,600,000 (deferred tax liabilitythereon totalling £4,680,000) were recognised as a fair value adjustment on acquisition.

Dilapidations and overseas lease provisions totalling £6,685,000 were recognised as a fair value adjustment on acquisition.

£65,541,000 of revenue and £7,320,000 of operating profit has been included within the Group’s financial statements for the period in respect ofthe above acquired entities since their dates of acquisition.

If the above acquired entities had been acquired at the beginning of the period £93,615,000 of revenue and £12,984,000 of operating profit wouldhave been included within the Group’s financial statements.

Cash flows arising from acquisitions are as follows:

30 April2007

£’000

Cash consideration 20,190Bank overdraft acquired 2,557

Net cash outflow in the cash flow statement 22,747



36 Cash inflows from operating activities52 weeks 53 weeks


2007 2006£’000 £’000

Profit before taxation 60,480 96,318Net finance costs 38,632 14,445Investment income (1,790) (2,624)Share of profit of associated undertakings and joint ventures (3,422) (3,406)

Operating profit 93,900 104,733Depreciation 30,904 32,165Amortisation charge 3,584 968Excess of fair value on acquisition over consideration – (570)Profit on disposal of property, plant and equipment – (159)Defined benefit pension plan current service cost 175 331Defined benefit pension plan employer contributions (2,136) (424)

Operating cash inflow before changes in working capital 126,427 137,044Decrease/(increase) in receivables 16,196 (17,972)Decrease/(increase) in inventories 2,494 (51,295)Increase in payables 54,144 18,156

Cash inflows from operating activities 199,261 85,933

37 Operating lease arrangementsAs at 29 April 2007 the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, whichfall due as follows:

29 April 30 April2007 2006

£’000 £’000

Land and buildingsWithin one year 66,129 66,878In the second to fifth years inclusive 250,509 258,748After five years 358,504 415,318

675,142 740,944

The Group sub-lets certain stand-alone retail stores which are no longer operated by the Group. The property rental income earned during the 52 weeks ended 29 April 2007 was £1,435,000 (2006: £1,177,000).

As at 29 April 2007, the Group had contracts with sub-tenants for the following future minimum lease rentals:

29 April 30 April2007 2006

£’000 £’000

Land and buildingsWithin one year 2,595 2,595In the second to fifth years inclusive 9,200 9,722After five years 15,316 17,382

27,111 29,699

38 Capital commitmentsThe Group had no capital commitments as at 29 April 2007 (2006: £nil).


39 Contingent assets and liabilitiesAs a matter of course the Group undertakes actions in numerous parts of the world to protect its trade mark rights and in connection with theGroup’s licensees. Such actions are usually resolved in the ordinary course of business. The Group is, however, party to a dispute and has providedfor an amount representing the financial estimation of the potential loss if the outcome was not to be in its favour. The Group believes that toprovide further infomation would be seriously prejudical to the case.

40 Related party transactionsThe Group entered into the following material transactions with related parties:

The Group has taken advantage of the exemptions contained within IAS 24 – Related Party Disclosures from the requirement to disclosetransactions between group companies as these have been eliminated on consolidation.

52 weeks ended 29 April 2007

Trade and Trade andother other

Related party Relationship Sales Purchases receivables payables£’000 £’000 £’000 £’000

Pan World Brands Limited Common control 564 (16) 200 –Heatons Associate 18,930 – 1,428 –No Fear International Limited Joint venture 329 (10) – (1,029)PBF International Limited Joint venture 4,383 (1,756) 1,300 (839)Mike Ashley Director – – – (497)

On 27 February 2007, Stirlings (Argyle Street) Limited was sold by Dunlop Slazenger Group Limited, a subsidiary of the Company, to Mike Ashleyfor cash consideration of £2,900,000. No profit or loss resulted from this transaction from the Group’s perspective.

No interest was charged on Mike Ashley’s director’s account with the Group.

Mike Ashley leases certain properties to various companies in the Group which are operated as retail and distribution premises and as offices.

The cash proceeds from the issue of shares on 2 March 2007 totalling £929 million were utilised to acquire Mike Ashley’s shares in Sports WorldInternational Limited.

The maximum amount outstanding from Mike Ashley during the period was £57.3 million.

Compensation paid to key management of the Group was £16,043,287, including pension contributions of £9,287.

53 weeks ended 30 April 2006

Trade and Trade andother other

Related party Relationship Sales Purchases receivables payables£’000 £’000 £’000 £’000

Pan World Brands Limited Common control 7,278 (6,429) 1,710 (2)Hickman Properties Limited Common control – – 500 –Swim Bike Run Services Limited Common control – – 48 –Heatons Associate 5,519 – 940 –No Fear International Limited Joint venture – – 133 (571)Mike Ashley Director – – 5,013 –

No interest was charged on Mike Ashley’s director’s account with the Group.

Mike Ashley leases certain properties to various companies in the Group which are operated as retail and distribution premises. A commercial rentis charged in respect of these leases.

Compensation paid to key management of the Group was £1,176,732, including pension contributions of £9,404.

Details of transactions between the Group and its pension schemes are disclosed in note 30.



41 Principal subsidiary undertakingsThe principal subsidiary undertakings of the Company at 29 April 2007 were as follows:

Percentage ofCountry of issued share

Name incorporation capital held Nature of business

Antigua Enterprises Inc* USA 65 Sporting and leisure goods wholesale and licensingBrands & Fashion NV* Belgium 100 WholesaleBrands Inc Limited* England 100 WholesaleBrands Holdings Limited England 100 Holding companyCDS Holdings SA Belgium 100 Holding companyDonnay International SA* Belgium 100 Sporting and leisure goods wholesale and brand licensingDunlop Slazenger Group Limited* England 100 Wholesale and licensingExsports Limited* England 100 Sporting and leisure goods retailE Walters UK Limited* England 100 Wholesale and licensingGilesports plc* England 100 Sporting and leisure goods retailHargreaves (Sports) Limited* England 100 Sporting and leisure goods retailInternational Brand Management Limited England 100 Brand management and licensingKangol Holdings Limited* England 100 LicensingKarrimor Limited* England 80 Wholesale and licensingLonsdale Boxing Limited* England 100 Wholesale and licensingLonsdale Sports Limited* England 80 LicensingOriginal Shoe Company Limited England 100 Footwear and fashion retailSmith & Brooks Holdings Limited* England 60 Wholesale and licensingSopotnik Trade doo* Slovenia 100 WholesaleSports Essentials Limited* England 100 WholesaleSports World International Limited England 100 Sporting and leisure goods retailSports 2000 doo* Slovenia 80 Sporting and leisure goods retailStreetwise Sports Company Limited* England 100 Sporting and leisure goods retailThe Trademark Licensing Company Limited* England 100 LicensingTY McGurk (Sports) Limited* England 100 Sporting and leisure goods retail

* Held by an intermediate subsidiary.

All subsidiaries have coterminous year ends.

All principal subsidiary undertakings operate in their country of incorporation.

A full list of the Group’s operating subsidiary undertakings will be annexed to the next Annual Return filed at Companies House.

There are no significant restrictions on the ability of the subsidiary undertakings to transfer funds to the parent, other than those imposed by thelegal requirements.

42 Ultimate controlling partyThe Group is controlled by Mike Ashley through his 57% shareholding in the Company.


43 Post balance sheet eventsThe following material post balance sheet events occurred after 29 April 2007 to the date of this Annual Report:

On 7 June the Group announced the acquisition of a 4.9% stake in Amer Sports Corp, a manufacturer and marketer of sports equipment, technicalapparel and footwear. On 1 August the Group announced that it had increased that stake to 10.6%.

A dividend of 1.03p per share was paid on 31 July 2007 to shareholders on the register on 29 June 2007.

On 28 June 2007 the Group announced that it had entered into a definitive agreement to merge a wholly owned subsidiary of it with EverlastWorldwide Inc at a cash price of $30 per share, subject to the approval of the shareholders of Everlast and other customary conditions, includingany trust approvals. On 2 July the Company increased its offer to $33 per share, a total equity value of approximately $149.3m, which the board ofEverlast approved.

On 12 July 2007, the Group acquired 60% of the ordinary shares in Field & Trek (UK) Limited, a UK outdoor clothing and equipment retailer, forcash consideration of £5,000,000. As part of the acquisition, the Group has the option to acquire the remaining 40% of the ordinary shares for afurther £5,000,000.

On 24 July 2007 the Company announced that it may utilise its power to buy the Company’s shares in the market and place them in treasury.

On 26 July 2007 the Group announced the acquisition of a 1% stake in Adidas AG, a leading manufacturer and marketer of footwear, apparel andaccessories for many sports.

At the date of authorisation of these financial statements further details surrounding the assets acquired and any resulting goodwill from thisacquisition is deemed to not be practical as the directors are currently in the process of making this assessment.

44 Reconciliation of net assets and profit under UK GAAP to IFRSAs explained in Note 1: Accounting Policies the Group did not legally exist prior to March 2007. To properly reflect the substance of thecombination of Sports World International Limited, Brands Holdings Limited, International Brand Management Limited and CDS Holdings SA (the“Continuing Business Entities”) the directors have followed the principles of merger and reverse acquisition accounting to present the results,position and cash flows of the Continuing Business Entities as if it had always existed. As a direct consequence there was no requirementhistorically for the directors to prepare and file UK GAAP consolidated financial statements for the Continuing Business Entities. For reasons oftransparency the directors present below equity, net asset and profit reconciliations from previously unpublished UK GAAP financial information toIFRS as re-presented in IAS 1 format:

Reconciliation of equity at 25 April 2005

IFRS transition adjustmentsUK GAAP IFRS

25 April 25 April2005 1 2 3 2005

£’000 £’000 £’000 £’000 £’000

ASSETSNon-current assetsIntangible assets 44,626 – – – 44,626Property, plant and equipment 165,728 – – – 165,728Investments in associated undertakings 7,456 – – – 7,456Deferred tax asset 7,801 388 – – 8,189

225,611 388 – – 225,999

Current assetsInventories 158,712 – – – 158,712Trade and other receivables 76,848 – – – 76,848Cash and cash equivalents 21,393 – – – 21,393

256,953 – – – 256,953

TOTAL ASSETS 482,564 388 – – 482,952



44 Reconciliation of net assets and profit under UK GAAP to IFRS (continued)IFRS transition adjustments

UK GAAP IFRS25 April 25 April

2005 1 2 3 2005£’000 £’000 £’000 £’000 £’000

EQUITY AND LIABILITIESEquity attributable to equity holders of the CompanyShare capital 1,000 – – – 1,000Merger reserve 43 – – – 43Retained earnings 223,259 (904) 449 (2,242) 220,562

224,302 (904) 449 (2,242) 221,605Minority interests 3,412 – – – 3,412

Total equity 227,714 (904) 449 (2,242) 225,017

Non current liabilitiesProvisions 20,352 – – – 20,352Borrowings 4,132 – (641) – 3,491Other payables 240 – – – 240Retirement benefit obligations 16,170 – – – 16,170Deferred tax liabilities 5,458 – 192 2,242 7,892

46,352 – (449) 2,242 48,145

Current liabilitiesDerivative financial liabilities – 1,292 – – 1,292Trade and other payables 170,591 – – – 170,591Borrowings 29,005 – – – 29,005Current tax liabilities 8,902 – – – 8,902

208,498 1,292 – – 209,790

Total liabilities 254,850 1,292 (449) 2,242 257,935

TOTAL EQUITY AND LIABILITIES 482,564 388 – – 482,952

1. The Group has not taken advantage of the exemption under IFRS 1 of not restating its comparatives in respect of IAS 32, ‘FinancialInstruments: Presentation’ and IAS 39, ‘Financial Instruments: Recognition and Measurement’. This transitional adjustment is to fair valueaccount as at the balance sheet date in respect of forward foreign currency purchase contracts held by the Group resulting in a derivativefinancial liability being recognised.

2. As per adjustment 1 above, the Group has fully adopted IAS 32 and IAS 39 and consequently has applied a fair value adjustment in respect ofinterest free loans as at the date of transition to reflect the cost of the interest free loans if interest rates were applied based on the borrowingfacilities available to the Group at the date of transition. The loans are subsequently accounted for at amortised cost as required by IAS 39.

3. Deferred tax liability arising on unremitted earnings of an associate in accordance with IAS 12 as the Group has no control over when earningsare to be remitted back to the Group.


Reconciliation of equity at 30 April 2006IFRS transition adjustments

UK GAAP IFRS30 April 30 April

2006 1 2 3 4 5 6 2006£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

ASSETSNon-current assetsProperty, plant and equipment 205,122 – – – – – – 205,122Intangible assets 43,685 5,109 570 – – – – 49,364Investments in associated undertakings 18,408 – – – – – – 18,408Financial assets 13,327 – – – – 2,011 – 15,338Deferred tax asset 10,868 – – 3,238 – – – 14,106

291,410 5,109 570 3,238 – 2,011 – 302,338

Current assetsInventories 219,065 – – – – – – 219,065Trade and other receivables 98,021 – – – – – – 98,021Cash and cash equivalents 48,875 – – – – – – 48,875

365,961 – – – – – – 365,961

TOTAL ASSETS 657,371 5,109 570 3,238 – 2,011 – 668,299

EQUITY AND LIABILITIESEquity attributable to equity holdersof the CompanyShare capital 1,000 – – – – – – 1,000Foreign currency translation reserve (947) – – – – – – (947)Merger reserve 43 – – – – – – 43Retained earnings 289,106 5,109 399 (7,560) 319 1,408 (3,070) 285,711

289,202 5,109 399 (7,560) 319 1,408 (3,070) 285,807Minority interests 5,396 – – – – – – 5,396

Total equity 294,598 5,109 399 (7,560) 319 1,408 (3,070) 291,203

Non current liabilitiesBorrowings 3,083 – – – (455) – – 2,628Other payables 1,032 – – – – – – 1,032Retirement benefit obligations 15,179 – – – – – – 15,179Deferred tax liabilities 9,135 – 171 – 136 603 3,070 13,115Provisions 23,092 – – – – – – 23,092

51,521 – 171 – (319) 603 3,070 55,046

Current liabilitiesDerivative financial liabilities – – – 10,798 – – – 10,798Trade and other payables 194,084 – – – – – – 194,084Borrowings 99,782 – – – – – – 99,782Current tax liabilities 17,386 – – – – – – 17,386

311,252 – – 10,798 – – – 322,050

Total liabilities 362,773 – 171 10,798 (319) 603 3,070 377,096

TOTAL EQUITY AND LIABILITIES 657,371 5,109 570 3,238 – 2,011 – 668,299

1. Under IFRS 3, goodwill is not amortised but instead subject to annual impairment testing. Consequently, the goodwill balances were reviewedfor impairment at 24 April 2005 and 30 April 2006 and no impairment adjustments were identified. The amortisation charge previouslyrecognised under UK GAAP has been reversed.




44 Reconciliation of net assets and profit under UK GAAP to IFRS (continued)2. As per 1 above, write back of negative goodwill balance arising on acquisitions as required by IFRS 3 and reclassified from negative goodwill

previously capitalised under UK GAAP.

3. The Group has not taken advantage of the exemption under IFRS 1 of not restating its comparatives in respect of IAS 32 and IAS 39. Thistransitional adjustment is to fair value account as at the balance sheet date in respect of forward foreign currency purchase contracts held bythe Group resulting in a derivative financial liability being recognised.


5. The Group has applied a fair value adjustment in respect of available-for-sale financial assets held as at 30 April 2006 in accordance with IAS 39.


IFRS transition adjustmentsUK GAAP IFRS

53 weeks ended 53 weeks ended30 April 30 April

2006 1 2 3 4 5 2006£’000 £’000 £’000 £’000 £’000 £’000 £’000

Revenue 1,194,736 – – – – – 1,194,736Cost of sales (738,057) – – – – – (738,057)

Gross profit 456,679 – – – – – 456,679Selling, distribution and administrative expenses (357,301) 5,109 570 – – – (351,622)Other operating income 3,044 – – – – – 3,044Exceptional items (3,368) – – – – – (3,368)

Operating profit 99,054 5,109 570 – – – 104,733Investment income 2,624 – – – – – 2,624Finance income 3,387 – – – – – 3,387Finance costs (8,140) – – (9,506) (186) – (17,832)Share of profit of associated undertakings 3,406 – – – – – 3,406

Profit before taxation 100,331 5,109 570 (9,506) (186) – 96,318Taxation (33,357) – (171) 2,852 56 (828) (31,448)

Profit for the financial year 66,974 5,109 399 (6,654) (130) (828) 64,870

Equity holders of Sports Direct Group 64,990 5,109 399 (6,654) (130) (828) 62,886Minority interest 1,984 – – – – – 1,984

Profit for the financial year 66,974 5,109 399 (6,654) (130) (828) 64,870

1. Under IFRS 3, goodwill is not amortised but instead subject to annual impairment testing. Consequently, the goodwill balances were reviewedfor impairment at 24 April 2005 and 30 April 2006 and no impairment adjustments were identified. The amortisation charge previouslyrecognised under UK GAAP has been reversed.

2. Under IFRS 3, negative goodwill should not be amortised. Transitional adjustment to write back negative goodwill arising on acquisitions asrequired by IFRS 3 and reclassified from negative goodwill previously capitalised under UK GAAP.

3. The Group has not taken advantage of the exemption under IFRS 1 of not restating its comparatives in respect of IAS 32 and IAS 39. Thistransitional adjustment is to fair value account as at the balance sheet date in respect of forward foreign currency purchase contracts held bythe Group resulting in a derivative financial liability being recognised.



Significant changes to the cash flow statement for the 53 weeks ended 30 April 2006None of the adjustments arising from IFRS relates to cash and therefore there is no impact on reported cash flows.

We have audited the parentcompany financial statements ofSports Direct International plc forthe period from incorporation on21 December 2006 to 29 April2007 which comprise the balancesheet and notes 1 to 8.

These parent company financialstatements have been preparedunder the accounting policies setout therein. We have also auditedthe information in the Directors’Remuneration Report that isdescribed as having been audited.

We have reported separately onthe Group financial statements ofSports Direct International plc forthe period ended 29 April 2007.

This report is made solely to theCompany’s members, as a body,in accordance with Section 235 ofthe Companies Act 1985. Ouraudit work has been undertakenso that we might state to theCompany’s members thosematters we are required to stateto them in an auditor’s report andfor no other purpose. To thefullest extent permitted by law, wedo not accept or assumeresponsibility to anyone otherthan the Company and theCompany’s members as a body,for our audit work, for this report,or for the opinions we haveformed.

Respective responsibilities ofdirectors and auditors

The directors’ responsibilities forpreparing the Annual Report, theDirectors’ Remuneration Reportand the parent company financialstatements in accordance with

United Kingdom law andAccounting Standards (UnitedKingdom Generally AcceptedAccounting Practice) are set outin the Statement of Directors’Responsibilities.

Our responsibility is to audit theparent company financialstatements and the part of theDirectors’ Remuneration Report tobe audited in accordance withrelevant legal and regulatoryrequirements and InternationalStandards on Auditing (UK andIreland).

We report to you our opinion as towhether the parent companyfinancial statements give a trueand fair view and whether theparent company financialstatements and the part of theDirectors’ Remuneration Report tobe audited have been properlyprepared in accordance with theCompanies Act 1985. We alsoreport to you whether in ouropinion the information given inthe Directors’ Report is consistentwith the financial statements. Theinformation given in the Directors’Report includes that specificinformation presented in the ChiefExecutive’s Review and theFinancial Review that is crossreferred from the Business reviewand future development section ofthe Directors’ Report.

In addition we report to you if, inour opinion, the Company has notkept proper accounting records, ifwe have not received all theinformation and explanations werequire for our audit, or ifinformation specified by lawregarding directors’ remuneration

and other transactions is notdisclosed.

We read other informationcontained in the Annual Reportand consider whether it isconsistent with the audited parentcompany financial statements.The other information comprisesonly the Directors’ Report, theunaudited part of the Directors’Remuneration Report, the ChiefExecutive’s Review and theFinancial Review. We consider theimplications for our report if webecome aware of any apparentmisstatements or materialinconsistencies with the parentcompany financial statements.Our responsibilities do not extendto any other information.

Basis of audit opinion

We conducted our audit inaccordance with InternationalStandards on Auditing (UK andIreland) issued by the AuditingPractices Board. An audit includesexamination, on a test basis, ofevidence relevant to the amountsand disclosures in the parentcompany financial statements andthe part of the Directors’Remuneration Report to beaudited. It also includes anassessment of the significantestimates and judgments made bythe directors in the preparation ofthe parent company financialstatements, and of whether theaccounting policies areappropriate to the Company’scircumstances, consistentlyapplied and adequately disclosed.

We planned and performed ouraudit so as to obtain all the


Report of the Independent Auditor to the membersof Sports Direct International plc

information and explanationswhich we considered necessary inorder to provide us with sufficientevidence to give reasonableassurance that the parentcompany financial statements andthe part of the Directors’Remuneration Report to beaudited are free from materialmisstatement, whether caused byfraud or other irregularity or error.In forming our opinion we alsoevaluated the overall adequacy ofthe presentation of information inthe parent company financialstatements and the part of theDirectors’ Remuneration Report tobe audited.

Opinion

In our opinion:

● the parent company financialstatements give a true and fairview, in accordance with UnitedKingdom Generally AcceptedAccounting Practice, of the stateof the company’s affairs as at 29April 2007;

● the parent company financialstatements and the part of theDirectors’ Remuneration Report tobe audited have been properlyprepared in accordance with theCompanies Act 1985; and

● the information given in theDirectors’ Report is consistentwith the financial statements.

GRANT THORNTON UK LLPREGISTERED AUDITORCHARTERED ACCOUNTANTS

LONDON

3 August 2007


2007Notes £’000

Fixed assetsInvestments 2 988,255

Current assetsDebtors 3 48,850Cash at bank 102

48,952Creditors: amounts falling due within one year. 4 (32,427)

Net current assets 16,525

Net assets 1,004,780

Capital and reservesCalled up share capital 5 72,000Share premium 6 874,300Permanent contribution to capital 6 50Capital redemption reserve 6 50Profit and loss account 6 58,380

Shareholders’ funds 7 1,004,780


The financial statements were approved by the board on 3 August 2007 and were signed on its behalf by:

Bob Mellors

Director


Company Balance Sheetas at 29 April 2007

1 Accounting policiesThese accounts have been prepared in accordance with applicable United Kingdom accounting standards. A summary of the more importantaccounting policies adopted are described below.

Basis of accountingThe accounts have been prepared under the historical cost convention.

As permitted by Section 230 of the Companies Act 1985, a profit and loss account of the Company is not presented. The Company’s profit for theperiod from incorporation on 21 December 2006 to 29 April 2007 was £58,380,000.

InvestmentsFixed asset investments are stated at cost less any provision for impairment.

Cost represents cash consideration or the amount of ordinary shares issued by the Company at nominal value after taking account of merger reliefavailable under s131 of the Companies Act 1985 plus related acquisition costs capitalised at fair value.

Deferred taxationDeferred tax is provided for on a full provision basis on all timing differences, which have arisen but not reversed at the balance sheet date. Notiming differences are recognised in respect of gains on sale of assets where those gains have been rolled over into replacement assets. A deferredtax asset is not recognised to the extent that the transfer of economic benefit in future is uncertain.

Deferred tax is calculated on a non-discounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse,based on tax rates and laws enacted or substantively enacted at the balance sheet date.

Foreign currenciesItems arising from transactions denominated in foreign currencies are translated at the rate of exchange ruling at the date of the transaction. At thebalance sheet date all monetary assets and liabilities denominated in foreign currencies are translated at the closing rate or at the rate of exchangeat which the transaction is contracted to be settled in the future. All exchange differences are dealt with in the profit and loss account.

DividendsDividends on the Company’s ordinary shares are recognised as a liability in the Company’s financial statements, and as a deduction from equity, inthe period in which the dividends are declared. Where such dividends are proposed subject to the approval of the Company’s shareholders, thedividends are only declared once shareholder approval has been obtained.

Equity instrumentsAn equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equityinstruments issued by the Company, with the exception of those accounted for via merger relief available under s131 of the Companies Act 1985,are recorded at the proceeds received, net of any direct issue costs.

Income from group undertakingsIncome from group undertakings is recognised when qualifying consideration is received from the group undertaking.

Related party transactionsThe company has taken advantage of the exemption in Financial Reporting Standard 8 from reporting related party transactions with its parent andfellow subsidiary undertakings.

Share-based paymentsThe Company has applied the requirements of FRS 20, “Share-based Payment”. The Company issues equity-settled share-based payments tocertain directors and employees of the Company and its subsidiaries. These are measured at fair value at the date of grant which is expensed to theconsolidated income statement on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest.

Fair value is measured by use of a Monte Carlo method. The expected life used in the model has been adjusted, based on management’s bestestimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations. No share-based payment charge wasrecognised for the 52 weeks ended 29 April 2007 as the directors did not consider it material to the Group’s financial results or position.

Notes to the Company financial statements


2 Investments2007

£’000

Shares in group undertakings:On incorporation –Additions:Brands Holdings Limited Share for share exchange 3,132CDS Holdings S.A Share for share exchange 612International Brand Management Ltd Share for share exchange 22Sports World International Limited Cash, share for share exchange and non cash assets 969,215Acquisition costs 15,274

As at 29 April 2007 988,255

None of the Company’s investments are listed.

The Company is the principal holding company of the Group. The principal subsidiary undertakings of the Company are set out in note 41 to theGroup financial statements.

3 Debtors2007

£’000

Amounts owed by group undertakings 47,862Other debtors 530Prepayments 458

48,850

4 Creditors: amounts falling due within one year2007

£’000

Trade creditors 4,579Amounts owed to group undertakings 763Accruals 27,085

32,427

5 Called up share capital2007

£’000

Authorised999,500,010 ordinary shares of 10p each 99,950499,990 redeemable preference shares of 10p each 50

100,000

Called up and fully paid720,000,000 ordinary shares of 10p each 72,000

The Company was incorporated on 21 December 2006 with an authorised share capital of £1,000, divided into 10,000 ordinary shares of 10p each,of which 10 ordinary shares were issued at the date of incorporation.

On 8 February 2007, the authorised share capital of the Company was increased to £50,000 by the creation of 490,000 new ordinary shares of10p each.

On 8 February 2007, the authorised share capital of the Company was reorganised into 499,990 redeemable preference shares of 10p each and 10ordinary shares of 10p each.

On 8 February 2007, the Company issued 499,990 redeemable preference shares at par.


Notes to the Company financial statements(continued)

5 Called up share capital (continued)On 26 February 2007, the authorised share capital of the Company was increased from £50,000 to £100,000,000 by the creation of 999,500,000new ordinary shares of 10p each.

On 2 March 2007, the Company was admitted to the Official List and to trading on the London Stock Exchange and issued 309,600,000 ordinaryshares at £3 per share.

On 2 March 2007, the Company issued 326,303,990 ordinary shares at par in exchange for 478,210 ordinary shares of £1 each in Sports WorldInternational Limited.

On 2 March 2007, the Company issued 37,656,000 ordinary shares at par in exchange for the entire ordinary share capital of £1 each of BrandsHolding Limited, International Brand Management Limited and CDS Holdings SA.

On 2 March 2007, the Company redeemed its 499,990 redeemable preference shares of 10p each at par.

On 29 March 2007, the Company issued 46,440,000 ordinary shares at par in exchange for 68,060 ordinary shares of £1 each in Sports WorldInternational Limited.

6 ReservesShare Permanent Capital

premium contribution redemption Profit andaccount to capital reserve loss account

£’000 £’000 £’000 £’000

On incorporation – – – –Shares issued 897,840 – – –Share issue costs (23,540) – – –Permanent contribution to capital – 50 – –Redemption of non-equity shares – – 50 (50)Share-based payment – – – –Profit for the financial period – – – 58,430

At 29 April 2007 874,300 50 50 58,380

M J W Ashley made a further £50,000 cash payment to the Company as a permanent contribution to capital on 8 February 2007 under a deed ofcapital contribution.

7 Reconciliation of movement on shareholders’ funds2007

£’000

On incorporation –Shares issued 969,890Share issue costs (23,540)Redemption of non-equity shares (50)Permanent contribution to capital 50Profit for the financial period 58,430

Closing shareholders’ funds 1,004,780

8 Post balance sheet eventsA dividend of 1.03p per share has been declared and approved and was paid on 31 July 2007 to shareholders on the register on 29 June 2007.

On 24 July 2007 the Company announced that it may utilise its power to buy the Company’s shares in the market place and place them in treasury.


IFRS IFRS UK GAAP UK GAAP UK GAAP52 weeks 53 weeks 52 weeks 52 weeks 52 weeks

ended ended ended ended ended29 April 30 April 24 April 25 April 27 April

2007 2006 2005 2004 2003£’000 £’000 £’000 £’000 £’000

Continuing operations:Revenue 1,347,144 1,194,736 971,062 676,875 499,388Cost of sales (751,003) (738,057) (589,225) (398,694) (315,368)

Gross profit 596,141 456,679 381,837 278,181 184,020Selling, distribution and administrative expenses (445,198) (351,622) (317,854) (226,429) (141,866)Other operating income 1,783 3,044 1,263 1,205 2,531

Costs of admission to the London Stock Exchange (586) – – – –Past performance bonuses (56,400) – – – –Profit on disposal of certain retail concessions 4,160 – – – –Leofelis legal claim (6,000) – – – –Reorganisation costs – (3,368) – – –Profit on disposal of intangible assets – – 10,000 – –Impairment of intangible fixed assets – – (4,849) – –

Exceptional items (58,826) (3,368) 5,151 – –

Operating profit 93,900 104,733 70,397 52,957 44,685Investment income 1,790 2,624 1,179 575 –Finance income 3,449 3,387 3,873 1,091 1,000Finance costs (42,081) (17,832) (4,497) (1,610) (153)Share of profit of associated undertakings and joint ventures 3,422 3,406 2,440 1,925 –

Profit before taxation 60,480 96,318 73,392 54,938 45,532Taxation (20,689) (31,448) (17,301) (18,885) (12,245)

Profit for the period 39,791 64,870 56,091 36,053 33,287

Equity holders of the Group 40,342 62,886 55,235 36,304 33,287Minority interests (551) 1,984 856 (251) –

Profit for the period 39,791 64,870 56,091 36,053 33,287

Notes to the consolidated income statement five year record:1 Information for the 52 weeks ended 29 April 2007 and the 53 weeks ended 30 April 2006 is presented under IFRS.

2 Information for the 52 weeks ended 24 April 2005, the 52 weeks ended 25 April 2004 and the 52 weeks ended 27 April 2003 is presentedunder UK GAAP.

3 The five year record has been prepared on the same basis as the financial statements for the 52 weeks ended 29 April 2007, as set out inNote 1, Basis of preparation, of the consolidated financial statements. In particular, the principles of reverse acquisition accounting and mergeraccounting have been adopted.


Consolidated Five Year Record

Unaudited Income Statement

Registrar and transfer officeCapita Registrars, Northern House, Woodsome Park, Fenay Bridge, Huddersfield, HD8 0LA,

telephone 0870 162 3130.

Company Secretary and registered officeMichael Oliver, Sports Direct International plc, Unit A, Brook Park, Meadow Lane, Shirebrook, Mansfield, Nottinghamshire, NG20 8RY,

telephone 0870 333 9400.

Sports Direct International plc is registered in England and Wales, (No. 6035106).

SolicitorsFreshfields Brukhaus Derringer, 65, Fleet Street, London EC1A 1HQ

BrokersCredit Suisse Securities (Europe) LimitedOne Cabot SquareLondon E14 4QA

Merrill Lynch InternationalMerrill Lynch Financial Centre2 King Edward Street,London EC1A IHQ

Principal BankersBank of ScotlandCorporate BankingPO Box No 39900Bishopsgate Exchange155 BishopsgateLondon EC2M 3YB

AuditorsGrant Thornton UK LLPGrant Thornton HouseMelton StreetEuston SquareLondonNW1 2EP

Shareholder Information


Unsolicited mailThe Company is obliged by law to make its share register publicly available and as a consequence some shareholders may receive unsolicited mail,including from unauthorised investment firms. For more information on unauthorised investment firms targeting UK investors, visit the website ofthe Financial Services Authority at www.fsa.gove.uk/consumer.

If you wish to limit the amount of unsolicited mail you receive contact:

The Mailing Preference ServiceFREEPOST 29 (Lon 20771)LondonW1E 0ZT

Tel: 020 7291 3310 or register on-line at www.mpsonline.org.uk.

Annual General MeetingThe Annual General Meeting of the Company will be held at 3.00pm on Monday 10th September 2007 at Sports Direct International plc, theauditorium, Unit D, Brook Park, Meadow Lane, Shirebrook, Mansfield, Nottinghamshire, NG20 8RY. Each shareholder is entitled to attend and voteat the meeting, the arrangements for which are described in a separate notice.

Dividend paymentsAn interim dividend of 1.03p per share in respect of 2006-07 was paid on 31 July 2007 to shareholders on the register on 29 June 2007. No finaldividend will be proposed.

ResultsFor the year to 27 April 2008.

Interim management statement: 10 September 2007.Half year results announced: 19 December 2007.Christmas trading and interim management statement: week commencing 21 January 2008.Preliminary announcement of full year results: July 2008.Annual report circulated: July/August 2008.


Shareholder Information (continued)

Brook ParkMeadow LaneShirebrookMansfieldNG20 8RYwww.sportsdirect.com

annual report and accounts 2007 - zonebourse.com€¢ post year end merger agreement for $182.3m...

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