10th July 2008

Sports Direct International plc 

("Sports Direct", "the Company" or "the Group")

Preliminary Results

Sports Direct International plc, the UK's leading sports retailer, announces its preliminary results for the 52 week period ended 27 April 2008.

(1) Underlying EBITDA, underlying profit before taxation and underlying EPS excluding realised foreign exchange in selling and administration costs, exceptional costs and the profit on sale of investments.

(2) Underlying profit before taxation and underlying EPS also excludes losses relating to the IAS 39 fair value adjustment on forward currency contracts in financing costs.

(3) Reported profit before tax includes profit on sale of strategic investments, and exceptional costs.

(4) 2007 preliminary results reported underlying EBITDA as £190.6m as the realised exchange loss of £23.5m was not excluded. Subsequently, the definition of underlying EBITDA was changed and will remain as defined in note (1) above going forward.

Dave Forsey, Chief Executive said:

"The trading environment in Sports Direct's first year as a listed company has been the hardest we have faced in our history, inevitably impacting our results.  This is, of course, disappointing, however despite these challenges we delivered slightly ahead of our recent expectations, remaining very profitable and cash generative.

"We remain focused on overcoming the current challenges while continuing to grow our business. We made strong progress on this during the year driving our international interests through the acquisition of Everlast and agreements with Retail Corp and ITAT. 

"Currently we are targeting 2009 Group underlying EBITDA to be at a similar level to the period just reported."

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Chairman's Statement

The Group has not been alone in operating in an increasingly challenging UK retail environment during the past year.  The Group has been impacted by 2007 being the wettest summer weather since records began. In addition, the failure of the home nations' to qualify for Euro 2008 and the difficult comparatives with the strong sales generated from the 2006 FIFA World Cup in the previous financial year, together with an increasingly difficult consumer environment, have contributed towards making this the most difficult trading period in our history. 

The Board took steps to mitigate the impact of these factors and believes it has made considerable progress during the year through the flexibility of the business model.  This includes the acquisition of Everlast, which has provided a significant platform for growth for the Group's business in the US, a strategic alliance in China, which is an exciting opportunity to develop the Group's presence in that market, and the continued development of our fully integrated group headquarters at Shirebrook. We have also strengthened our relationships with our partner branded goods suppliers considerably and believe we have a unique UK and international retail offering, which combined with our brand power and relationships with our suppliers, will assist us to achieve the international growth we are aiming for.

Board Changes

The Group announced the following Board changes during the year. I was appointed acting non-executive Chairman of the Board on 31 May 2007 on the departure of David Richardson. On 25 October 2007, Malcolm Dalgleish and Dave Singleton were appointed as independent non-executive directors.  Malcolm has significant retail real estate experience and Dave brings valuable experience of international sports brand operations. On that date Chris Bulmer stepped down from her role as independent non-executive director. 

We are continuing to seek opportunities to strengthen the Board with non-executive appointments.  

Dividend

The Board recommends a final dividend for the year ended 27 April 2008 of 2.44 pence per share to shareholders on the register on 3 October 2008 to be paid on 31 October 2008.  The interim dividend was 2.06 pence per share making a total dividend in respect of the year of 4.5 pence per share.

Simon Bentley

Acting non-executive Chairman

10 July 2008

Chief Executive's Review

Overview of Financial Performance

In the 52 weeks ended 27 April 2008, Group revenue was down 6.5% at £1.26bn compared with revenues of £1.35bn for the 52 weeks ended 29 April 2007 (2007). The driver of this decline was the fall in UK Retail revenues, down 10.5% to £957.7m (2007: £1.07bn).  

The Group strengthened revenues in other core business segments. International retail was up 20.8% to £77.3m (2007: £64.0m); on a currency neutral basis this increase was circa 15%. Brands wholesale revenues were up 11.0% to £171.5m (2007: £154.5m) and licensing revenues were up 21.3% to £21.1m (2007: £17.4m), both largely due to Everlast.

Group gross margin for the Group fell by 70 basis points from 44.3% to 43.6%. The Retail business maintained the same margin as last year at 44.3%. UK Retail margin grew to 45.7%, despite the challenging trading environment in the UK. However, we were unable to increase the Group margin as had been originally anticipated at the start of the year.

While revenue was higher, gross margin in the Brands division fell from 44.2% to 40.2% as a result of discounting prices in order to maintain sales volumes when demand decreased in the second half. 

Foreign exchange has had the reverse impact on these financial statements as in the previous year. Administration costs include a realised exchange profit of £3.5m compared to a loss of £23.5m in the preceding year. The realised exchange profit includes £15m from the increased value of the euro on the strategic investments sold in the year. The revaluation required under IFRS is included in finance costs and this unrealised loss amounted to £5.2m as opposed to £31.7m in 2007. These amounts are excluded from the definition of underlying profit used in the business and as reported here. 

Underlying EBITDA for the year fell 29.9% to £150.2m (2007: £214.1m) last year.  Underlying profit before tax fell 51.1% from £174.5m to £85.4m.

There is a very significant difference between underlying and the higher reported profits. Underlying profits exclude exceptional items (such as IPO costs), realised exchange profit/loss and IFRS revaluation of foreign currency contracts which reduced the 2007 profits by £5.2m, £23.5m and £31.7m respectively. No exceptional items have been incurred in 2008.  Reported profit before tax includes investment income of £41.4m, which is the realised profit made by the Group through the disposal of strategic investments. The interest cost of holding the investments sold amounted to £6.1m.

Capital expenditure amounted to £131.8m (2007: £61.6m). This included acquisitions of retail property, plant and equipment, including £91.0m (2007: £50m) on new and refurbished stores, and £31.9m (2007: Nil) on a freehold office in London. This office is largely let to third parties. The remaining balance covered further spend at Shirebrook, and IT hardware in our Brands division. In addition the share buy back programme absorbed £201.5m of cash.

Within the period, the Company renewed its banking facilities until 2011. We continue to operate comfortably within our bank covenants. 

Net debt in the period increased to £465.2m (2007: £38.1m).  Including marketable securities, the net debt at 27 April 2008 was £399.5m.

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