15
CHAIRMAN’S
STATEMENT
OVERVIEW
The Group’s nancial performance has been disappoinng in what has been a tough year for trading and external aenon on the business.
With this performance, it is with regret that I note that we did not achieve the FY16 EBITDA target of £420m in relaon to the Group’s
2015 Share Scheme for eligible employees. The Board is currently working on developing a new incenve scheme to replace this, and
ahead of this I would like to thank all of our people for their connued hard work and commitment during what has been a dicult me.
OUR VALUES AND PEOPLE
Sports Direct has been built on the experse and passion of our people from day one. The Group’s values are: operang as one team;
planning for success; striving to lead and energise others; doing things the right way; creang a good impression; wowing our customers;
and, delivering results. Our values and the development of our people have underpinned our high performance and high reward culture,
which has driven the Group’s success since it was founded in 1982.
During the year the Group received serious cricism regarding some of its workplace pracces, parcularly in relaon to its agency
workers in the warehouse of the Group’s Shirebrook campus, which we have taken very seriously. The Board made it a priority to
undertake a review of what was raised and from the preliminary ndings a number of measures were put in place to address the concerns.
These included an increase in pay for the Group’s directly employed UK employees and directly engaged casual workers from being on the
Naonal Minimum Wage to being above the Naonal Minimum Wage from 1 January 2016. This was implemented without any reducon
in exisng benets.
Since the end of FY16, the Group’s Execuve Deputy Chairman, Mike Ashley, has given evidence to the Business, Innovaon and Skills
Select Commiee regarding the asserons made in relaon to the Company’s workplace pracces. The Board has set in moon a review of
the specic concerns.
Addionally following year end, the Board was informed of the decision of the Chief Execuve, Dave Forsey, to forego the vesng of 1m
shares due to him in September 2017 under the Execuve Share Scheme. At the me of the announcement this represented a value of
approximately £3.6m. The Board believes that this decision is very much reecve of the Execuve Directors sharing risk with shareholders
and taking responsibility for results that fell short of their expectaon.
STRATEGIC ACQUISITIONS AND INVESTMENTS
The Board remains commied to our organic and inorganic growth strategy, and will connue to maintain an appete for strategic
opportunies alongside the work being conducted on the review of the Group’s people strategy.
The Group’s acquision and investments strategy, parameters and decision-making is performed by the Board, and delegated at a certain
materiality level to be performed by the Execuve Directors within the agreed strategy. The Group is focused on opportunies that will
deliver extensions or enhancements to our customer oering, broaden or enhance our commercial relaonships, broaden or enhance
our retail channels, selecvely grow our market share, further diversify our operaons, further expand our gross margin, and/or deliver
operaonal eciencies. Given the breadth of our business, our strategic benets can be varied and extensive, and the Group employs an
array of mechanisms to facilitate strategic discussions with potenal partners towards varied strategic goals.
This year we were pleased to announce the acquision of the remainder of the Heatons business in Northern Ireland and the Republic of
Ireland, which will build upon the Group’s exisng relaonship with Heatons and strengthen our presence in one of the fastest growing
economies in Europe. We also announced the extension of our strategic investment interest in Debenhams Retail plc (Debenhams).
Through this investment interest we have developed a commercial relaonship with Debenhams and currently have nine concessions
throughout Debenhams stores, which provide mutual benets for both pares.
BOARD PRIORITIES
In FY16, our priories have been focused on leadership; remuneraon for performance and enhancing the working condions of our
people as I have discussed; and, working with the Execuve Directors to develop strategic priories and plans for the Group.
In terms of the Board’s focus on leadership, our search for independent directors to add complementary experse and further diversify the
board is ongoing, and forms part of the Board’s succession plans.
We connue to be very appreciave of the work and eorts of our Acng Chief Financial Ocer, Ma Pearson. Ma is sll acng in this
role and the Board expects to be able to make a decision on his role in due course.
POTENTIAL SHARE BUYBACK
Further to the authority to repurchase shares granted by the Company’s shareholders at its 2015 Annual General Meeng (AGM), and in
light of current volality in equity markets, the Company announced on 7 July 2016 that it is considering commencing a share buyback, the
purpose of which would be to reduce its share capital.
MIKE ASHLEY’S SHAREHOLDING
In response to repeated press speculaon about his intenons with regards to his shareholding in Sports Direct, Mike Ashley has conrmed
to the Board that he has no current intenon of taking the Company private, and has indicated his willingness for the Company to conrm
this statement publicly.
DIVIDEND
The Board has decided not to propose a dividend in relaon to FY16. The Board remains of the opinion that it is in the best interests of the
Group and its shareholders to preserve nancial exibility, facilitang future investments and other growth opportunies. The payment of
dividends remains under review.
Dr. Keith Hellawell. QPM
Non-Execuve Chairman
7 July 2016