ANNUAL REPORT AND ACCOUNTS CONTENTS

OVERVIEW 2 HIGHLIGHTS 6 OUR BRANDS 30 WHERE WE ARE 36 EXECUTIVE CHAIRMAN’S STATEMENT STRATEGIC REPORT 44 BUSINESS MODEL 46 OUR STRATEGY 51 PRINCIPAL RISKS 79 BUSINESS REVIEW 83 FINANCIAL REVIEW 88 PROPERTY AND STORES REVIEW 96 CORPORATE AND SOCIAL RESPONSIBILITY 140 THE JD FOUNDATION 154 SECTION 172 STATEMENT GOVERNANCE 160 THE BOARD 162 DIRECTORS’ REPORT 168 CORPORATE GOVERNANCE REPORT 176 AUDIT COMMITTEE REPORT 179 DIRECTORS’ REMUNERATION REPORT FINANCIAL STATEMENTS 210 STATEMENT OF DIRECTORS’ RESPONSIBILITIES 212 INDEPENDENT AUDITOR’S REPORT 226 CONSOLIDATED INCOME STATEMENT 226 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 227 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 228 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 229 CONSOLIDATED STATEMENT OF CASH FLOWS 230 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 313 COMPANY BALANCE SHEET 314 COMPANY STATEMENT OF CHANGES IN EQUITY 314 NOTES TO THE COMPANY FINANCIAL STATEMENTS GROUP INFORMATION 326 FINANCIAL CALENDAR 327 SHAREHOLDER INFORMATION 328 FIVE YEAR RECORD 329 ALTERNATIVE PERFORMANCE MEASURES NYNEW STORE IN c

HIGHLIGHTS REVENUE TOTAL DIVIDEND PAYABLE PER ORDINARY SHARE GROUP REVENUE BY £ 6,167.3m 1.44p GEOGRAPHICAL MARKET £6,110.8m 0.28P** £4,717.8m 1.71p UK EUROPE US REST OF THE WORLD £3,161.4m 1.63p 41% 26% 29% £2,378.7m 1.55p 4% 2021 2021 2020 2020 2019 2019 2018 2018 2017 2017

PROFIT BEFORE TAX AND EXCEPTIONAL ITEMS* PROFIT BEFORE TAX £421.3m £324.0m £438.8M £348.5M £355.2m £339.9m £307.4m £294.5m £244.8m £238.4m 2021 2021 2020 2020 2019 2019 2018 2018 2017 2017

BASIC EARNINGS PER ORDINARY SHARE ADJUSTED BASIC EARNINGS PER ORDINARY SHARE* 23.05p 32.19p 25.29P 34.26P 26.90p 28.44p 23.83p 25.15p 18.38p 19.04p 2021 2021 2020 2020 2019 2019 2018 2018 2017 2017

NET ASSETS NET CASH* £1,496.4m £795.4m £1,289.2M £429.9M £1,076.8m £125.2m RETAIL MULTI CHANNEL WHOLESALE £834.3m £309.7m 57% 40% 3% £578.8m £213.6m 2021 2021 2020 2020 GROUP REVENUE BY 2019 2019 2018 2018 CHANNEL 2017 2017

2 3

*Throughout the Annual Report ‘*’ indicates the first instance of a term defined and is explained in the Alternative Performance Measures on page 329. Exceptional items are disclosed in Note 4 of the financial statements.

** Final dividend withheld as cash was preserved due to COVID-19 outbreak. TIMELINE

1981 1989 1996 2005

JD Sports began JD Sports opened JD Sports Fashion 57.5% of JD Sports with its first store its first store on Plc was listed on Fashion Plc was in Bury, Greater Oxford Street, the London Stock bought by the Manchester. London. Exchange. Pentland Group.

2012 2011 2010 2009 JD Sports Fashion Plc acquired The JD Group acquired Chausport, a French sports Sprinter, a leading retailer; the Group’s first Spanish sports retailer, international presence and entry The JD Group expanded specialising in footwear, JD Sports opened into Europe. into the Outdoor market apparel and equipment; its first JD store in with Blacks and Millets the Group’s first entry Lille, France; our joining the Group. into Spain. first store in Europe.

2016 2017 2018 2019 The JD Group launched its first The JD Group acquired The JD Group acquired The JD Group acquired Finish The JD Group was JD Sports store in Malaysia; the Go Outdoors, the UK’s Hot-T, a South Korean Line in the United States, a promoted to the Group’s first entry into Asia Pacific. ‘destination’ for everything retailer of sports branded sports fashion retailer with 4 FTSE100 list of largest JD now has stores in Australia, outdoors. footwear. a store presence across 44 businesses in the UK. Singapore and Thailand. states. JD Sports opened its first 5 JD stores in the USA: The JD Group also opened its Chicago, Houston, Columbus, first gym as part of JD Gyms; an affordable yet stylish gym concept. Washington and Indianapolis.

2021 2020

The JD Group now has over The JD Group acquired Shoe Palace, JD opened its 2,600 stores in 20 territories, a retailer of branded sports footwear first store in including over 850 JD stores, as and apparel based on the West Times Square, we continue to expand. Coast of the U.S. On acquisition, New York, USA; Shoe Palace had 167 stores, most of JD’s first flagship which are in California, with a strong in the U.S. connection with Hispanic and Latino communities.

4 5 OUR BRANDS

6 WHO WE ARE

JD is a sports fashion, multichannel retailer of branded sports and casual wear, combining globally recognised brands such as Nike, adidas, Puma and The North Face, with strong private labels such as Pink Soda and Supply & Demand to provide an elevated consumer experience. JD is STORES an industry leading retail business which 853 combines the best of physical and digital retail to give a compelling consumer proposition which enables its customers to shop seamlessly across all channels. JD now has over 850 stores in 19 territories worldwide with the first store in New Zealand expected to open later in the year. 19TERRITORIES ACROSS THE GLOBE

8

ESTABLISHED IN 1981 WITH A SINGLE STORE IN THE NORTH WEST OF ENGLAND, JD SPORTS FASHION PLC IS A LEADING INTERNATIONAL MULTICHANNEL RETAILER OF SPORTS, FASHION AND OUTDOOR BRANDS.

8 9 Established in 2000, Size? specialises in Footpatrol is famous for supplying the supplying the finest products from the best sneaker fraternity with the most desirable brands in footwear, apparel and accessories. footwear, apparel and accessories Initially set up to trial edgier product specialising in new and classic sneakers, collections before introducing them to the limited editions, Japanese exclusives and mass market through the JD fascia, the rare deadstock. The original Footpatrol Size? offer has since grown to include its STORES store is based in the heart of Soho on STORES 33 Berwick Street which is complemented 2 own roster of highly sought-after worldwide exclusive product releases. Outside of the with a second store on the fashionable UK and Republic of Ireland, Size? has stores Rue de Temple in Paris. Footpatrol also has in Belgium, Denmark, France, Germany, Italy, dedicated local language sites for seven the Netherlands and Spain. Size? is planning other countries including the Netherlands to open its first store in North America later and Germany. in the year with a store in Toronto, Canada.

10 11 Chausport operates throughout France Sprinter is one of the leading sports retailing leading international footwear retailers in Spain selling footwear, apparel, brands such as adidas, Nike and Timberland accessories and equipment for a wide range to a more family focused customer through of sports as well as lifestyle casual wear a network of 66 stores and a trading and childrenswear. Their offer includes both website. international sports brands and successful 66STORES private labels. STORES163

12 13 Sport Zone is a well-established and Sports Unlimited Retail operates in the leading multibranded sports retailer in Netherlands under the Perry Sport and Portugal offering a wide apparel, footwear, Aktiesport fascias. Aktiesport is the largest accessories and equipment range across sports retail business in the Netherlands multiple sports. with a sharp focus on selling football and lifestyle goods from various brands such as Nike, adidas, Under Armour and FILA. Perry STORES 107STORES Sport is a sports and adventure retailer with 95 a focus on functional sports, sports lifestyle and adventure simultaneously.

14 15 Finish Line is one of the largest retailers of Shoe Palace is a retailer of branded sports premium, multibranded athletic footwear, footwear and apparel located on the West apparel and accessories in the United States. Coast of the United States. Shoe Palace Finish Line trades from over 460 branded currently has 167 stores, the vast majority retail stores in more than 40 US states and of which trade under the Shoe Palace banner. More than half of the stores are Puerto Rico and is also the exclusive partner of athletic shoes for Macy’s. 464STORES located in California, although there is also STORES167 an established retail presence in Texas, Nevada, Arizona, Florida, Colorado, New Mexico and Hawaii, with the store network supported by a developing e-commerce platform. Shoe Palace prides itself on its consumer connection with Hispanic and Latino communities and its strong social media presence.

16 17 Livestock is renowned in Canada for being JD Gyms offers seriously stylish, seriously the premier destination in the country affordable, award winning facilities for limited release and classic sneakers. across 38 prime locations and plays host Accompanied by a premium apparel to a bespoke mix of industry leading offering, Livestock has four stores and a fitness equipment and an exciting range of fitness classes. The 38 sites include website trading as www.deadstock.ca. This business will provide the platform for the seven sites which previously operated 38LOCATIONS STORES 4 as Xercise4Less. A further 32 gyms development of JD Group fascias in Canada. were still branded as Xercise4Less at the year-end although 12 of these have subsequently been converted to JD.

18 19 Tessuti is a leading retailer of high fashion, Scotts retails fashion and sport led brands aspirational brands catering to both men with authority to older, more affluent male and women. Tessuti offers its consumers consumers largely beyond school age, a unique shopping experience through stocking brands such as Lacoste, Fred Perry, its website and concept stores and is Pretty Green and Paul & Shark. a consumer destination for luxury and desirable high fashion items, ranging from STORES STORES2 footwear and accessories to apparel. Tessuti 39 20 stocks brands such as Hugo Boss, Polo Ralph Lauren, Parajumpers and Stone Island.

20 21 Mainline Menswear is an online niche retailer Blacks is a long established retailer of of premium branded men’s apparel and specialist outdoor apparel, footwear and footwear, stocking brands such as Armani, equipment. Blacks primarily stock more Hugo Boss and Ralph Lauren. technical products from premium brands such as Berghaus and The North Face helping outdoor participants, from weekend family users to more avid explorers, reach STORES their goals, no matter how high. 57

22 23 Millets supply a more casual outdoor Go Outdoors (‘GO’) focuses on innovation customer who seeks value for money, and authenticity whilst never losing sight providing for a wide range of recreational of the consumer expectation for value. activities with an emphasis on exclusive GO helps people to step into the outdoors brands, such as Peter Storm and Eurohike. whether it’s to go walking, camping, cycling or fishing. From unique product areas to 93STORES strong exclusive brands such as Hi-Gear, 66STORES North Ridge and Freedom Trail, GO is constantly looking for fresh ideas to keep things fun. A number of GO stores also now benefit from specialist sections for fishing and equestrian leveraging off the specialist knowledge and reputation at Fishing Republic and Naylors respectively.

24 25 Tiso is Scotland’s leading adventure sports Fishing Republic aims to supply the best retailer specialising in outdoor, mountain, choice and value in UK angling. Trading from skiing and cycling. Originally founded in three stores and a number of concessions 1962, their reputation for quality has been within our Go Outdoors stores, Fishing established over 58 years. The Tiso group Republic prides itself on providing expert is based in Scotland but includes the iconic advice and guidance. A vast range of George Fisher store in the English Lake STORES products are available both in-store and via STORES District. 13 3 the online tackle shop covering all angling disciplines, from carp and coarse, to sea, fly and predator fishing.

26 27 Naylors has built a solid reputation for providing quality equestrian apparel, footwear, tack and horse supplies. Whether you are a happy hacker, a competitive rider, or simply love to get outdoors in the countryside, Naylors is your go-to store, for all things equestrian, country and 3STORES pets. Naylors stock the biggest brands in the industry including Ariat, Horseware, WeatherBeeta, Barbour and Dubarry.

28 29 FROM THE NORTH WEST OF ENGLAND TO THE WEST COAST OF THE US The Group has over 2,600 stores 2,636 across a number of retail fascias and STORES is proud of the fact that it always provides its customers with the latest products from the very best brands. The Group embraces the latest online and in-store digital technology providing it with a truly multichannel, international platform for future growth.

SWEDEN

FINLAND CANADA DENMARK UNITED KINGDOM AUSTRIA REPUBLIC OF IRELAND FRANCE

BELGIUM THE NETHERLANDS

SPAIN GERMANY

PORTUGAL ITALY SOUTH KOREA US

THAILAND

MALAYSIA

SINGAPORE

Where we are AUSTRALIA

30 31 SPORTS FASHION FASCIAS

JD UK AND ROI STORES 000 SQ FT OTHER ASIA PACIFIC STORES 000 SQ FT

2021 400 1,669 2021 – –

2020 402 1,649 2020 2 8

JD EUROPE STORES 000 SQ FT FINISH LINE (OWN) STORES 000 SQ FT

2021 335 947 2021 464 1,564

2020 304 838 2020 508 1,722

JD ASIA PACIFIC STORES 000 SQ FT FINISH LINE (MACY’S) STORES 000 SQ FT

2021 69 291 2021 290 281

2020 64 268 2020 295 286

JD US STORES 000 SQ FT SHOE PALACE (ii) STORES 000 SQ FT

2021 49 204 2021 167 491

2020 11 47 2020 – –

SIZE STORES 000 SQ FT LIVESTOCK STORES 000 SQ FT

2021 33 48 2021 4 8

2020 37 54 2020 – –

SUB-TOTAL JD AND SIZE STORES 000 SQ FT TOTAL STORES 000 SQ FT

2021 886 3,159 2021 2,396 8,868

2020 818 2,856 2020 2,203 8,191

(i) Chausport (France), Sprinter (Spain), Sport Zone (Portugal) and Perry Sport / Aktiesport (the Netherlands). (ii) Shoe Palace includes four stores trading as Nice Kicks. FASHION UK STORES 000 SQ FT

2021 154 504

2020 153 494

OTHER EUROPE(i) STORES 000 SQ FT

2021 431 2,861

2020 427 2,825

32 33 OUTDOOR FASCIAS

BLACKS STORES 000 SQ FT

2021 57 204

2020 57 204

MILLETS STORES 000 SQ FT

2021 93 195

2020 97 203

ULTIMATE OUTDOORS STORES 000 SQ FT

2021 5 113

2020 6 146

TISO STORES 000 SQ FT

2021 13 93

2020 13 93

GO OUTDOORS STORES 000 SQ FT

2021 66 1,880

2020 67 1,945

FISHING REPUBLIC STORES 000 SQ FT

2021 3 15

2020 5 22

NAYLORS EQUESTRIAN STORES 000 SQ FT EXECUTIVE 2021 3 25 2020 – – CHAIRMAN’S TOTAL STORES 000 SQ FT STATEMENT 2021 240 2,525

2020 245 2,613

34 35 transforming both the awareness of the SIGNIFICANT M&A TRANSACTIONS EXECUTIVE CHAIRMAN’S STATEMENT Group and our reputation with potential partners. We are already seeing positive LIVESTOCK consequences of this with the Group At the beginning of the period, we at home, it is our belief that the growth GROUP DEVELOPMENTS complementing its existing fascias in the acquired Onepointfive Ventures Limited in casualwear and sportswear is not a United States with the acquisition of the in Canada which consists of four stores INTRODUCTION temporary phenomenon with the culture Shoe Palace business, which completed in trading as Livestock and a website trading The global COVID-19 pandemic and, more of casual attire in working and social December 2020, and the DTLR business, as Deadstock. Based in Vancouver, this recently, the UK’s formal exit from the environments gathering momentum over a which completed after the year end in business and its management team will European Union have presented a series number of years. March 2021. Recognising the importance provide the platform to develop JD group of unprecedented challenges which have • Multichannel approach provides a of being able to offer sellers certainty fascias in Canada with the first Size? store severely tested all aspects of our business competitive advantage: Regardless of the on execution in future competitive expected to open later in the Spring. including our multichannel capabilities, the fact that stores in a number of markets deal processes, the Group undertook a robustness of our operational infrastructure have been closed for extended periods of successful placing shortly after the end and the resilience of our colleagues. XERCISE4LESS time, we believe it is clear that we will build of the financial year with 58.4 million However, at all times, the Group has strived During the year we significantly increased the strongest connection with consumers new shares admitted to the market on 8 to do the right thing for all stakeholders. our critical mass and national presence with and gain competitive advantage by February 2021, a process which has raised the acquisition, out of administration, of an Notwithstanding these well publicised operating stores in tandem with a strong approximately £456.0 million (after costs). initial 50 gyms which had previously traded challenges, a number of positive themes online offer. Stores provide a platform Our positive outlook is reflected by the fact as Xercise4Less for a total consideration have been increasingly apparent through to physically showcase product, offer that, even with the unique circumstances of of £24.2 million. We have subsequently the year which gives us confidence that, consumers the opportunity to see and try store closures for a substantial period of the returned 11 of the acquired sites back to the as we begin to emerge from the worst of the product, and give us the operational year, the Group has retained substantially relevant landlords and currently anticipate the disruption, JD is at the pinnacle of the flexibility and agility to offer an enhanced all of its record profitability from the prior retaining at least 36 of the remaining gyms global sports fashion industry. We have a speed of service for online orders. year with a profit before tax and exceptional longer term, although negotiations on new market leading multichannel proposition • JD is highly regarded by the brands: items of £421.3 million (2020: £438.8 leases are still ongoing on a small number which continues to enhance its relevance JD has a positive relationship and is million). On a proforma basis under IAS 17 of sites. The programme of works to convert to consumers and has the necessary agility of increasing relevance to a significant ‘Leases’, with rents recognised according to these gyms to the JD fascia was accelerated to progress in an environment where the number of international brands who contractual terms, the headline profit before through the most recent temporary retailing of international brands may see recognise that we share their vision of an tax and exceptional items would have been closure period with a total of 19 clubs now permanent global structural change. elevated marketplace and that we look £38.8 million higher at £460.1 million (2020: converted to the JD format. • Deep consumer connection: The deep to nurture collaborative affiliations over £26.8 million higher at £465.6 million). bond between JD and its consumers is the long term. They also acknowledge This is a pleasing result although it SHOE PALACE one that has been nurtured over a number that we actively seek to enhance the should be recognised that transitioning The transaction to acquire the Shoe Palace of years. Regardless of the events of the equity of a brand through a compelling multichannel businesses to operate business completed on 14 December past year, our loyal customers expect and differentiated proposition in stores purely online for a large part of the year 2020. Based in San Jose, California, Shoe to engage with us through any channel and online which gives a rich experience necessitated additional costs principally Palace was established in 1993 by the and be presented with an innovative and consistent with the premium nature of the from customer acquisition marketing and Mersho family and, on acquisition, had 167 exciting product mix that meets their style product mix. These brands particularly operating a more manual fulfilment process stores, the vast majority of which trade aspirations. Our teams have risen to the value the fact that we have a unique in our warehouses; a process which is even under the Shoe Palace banner. More than challenges associated with the frequent relationship with our customer base that more challenging with strict rules on social half of the stores are located in California, shift in demand between channels resulting helps give immediate credibility to new distancing. Additional costs were also although there is also an established retail in a strong retention of sales across our styles and ranges. incurred in providing enhanced health and presence in Texas, Nevada, Arizona, Florida, various markets, but particularly in the UK • Strong awareness comes from safety measures at all locations, including Colorado, New Mexico and Hawaii, with the and United States. We also continue to international momentum: The COVID-19 stores, and catering for flexible working store network supported by a developing invest in data analytics to further enhance pandemic is likely to be the catalyst that arrangements for colleagues. e-commerce platform. our insight of the consumer. will drive further consolidation within the The acquisition of Shoe Palace significantly • Benefit of width in the category offer: global retailing of the international sports enhances our connection with the Spanish Apparel sales, principally casualwear and brands. The Group is in a strong position speaking communities on the West Coast sportswear, performed strongly in the year to play a full part in this process with the and in the Southern border states and is with sales of apparel ranges representing Group’s acquisition of Finish Line in the therefore an excellent complementary more than 50% of revenues in the UK. United States in 2018, combined with the fit with our existing Finish Line and JD Whilst we must obviously acknowledge the rapid progress that we have made across businesses whose consumer connection is increased levels of working and exercising a number of other international markets, at its strongest in the industrial states in the North and East of the United States.

36 37 EXECUTIVE CHAIRMAN’S STATEMENT

DTLR UPDATE ON FOOTASYLUM SUPPLY CHAIN DEVELOPMENTS AND COVID-19 LEASE NEGOTIATIONS On 31 January 2021, we exchanged contracts The Competition and Markets Authority BREXIT It has been well publicised that we have on the conditional acquisition of DTLR Villa (‘CMA’) announced in its Final Report in We successfully kept our warehouses withheld the payment of some rents across LLC which is based in Baltimore, Maryland. May 2020 that it had decided to prohibit running throughout the pandemic by our global retail estate this year where At exchange, this business had 247 stores the merger with Footasylum and that, adopting new operating procedures and we have been forced to close stores as a trading primarily as DTLR across 19 states. consequently, it required the Group to investing in the necessary modifications result of the pandemic. We have worked The transaction was subject to certain fully divest its investment. This decision which ensured the safety of our colleagues tirelessly with our landlord partners in all conditions, including those related to the was subsequently quashed on appeal in whilst on site. However, given that markets to find solutions to support the Hart–Scott–Rodino Antitrust Improvements November 2020 by the Competition Appeal sales through online channels will, in all business through these closure periods. We Act, with formal completion taking place on Tribunal (‘CAT’) who determined that the probability, remain at an elevated level and have now reached agreement in the vast 17 March 2021. case should be passed back to the CMA for that our warehouses may need to operate majority of cases and continue to engage As with Shoe Palace, we fully recognise full reconsideration. Subsequently, the CMA with social distancing restrictions for the with the small number of those landlords and appreciate the rich connection that asked both the CAT and the Court of Appeal foreseeable future, we have concluded that who, to date, have not been prepared to DTLR has with the communities where its for leave to appeal the CAT’s decision we require additional warehousing capacity share any of the financial burden during this stores are located. Therefore, this is another but, on each occasion, this was refused. in the UK which can be dedicated to the challenging time when our stores have not excellent complementary fit to our existing Accordingly, the merger with Footasylum fulfilment of online orders. In this regard, been trading. businesses, strengthening our connection will now be re-examined by the CMA; a we have signed a Letter of Intent with with the African American communities in process expected to take several months. Clipper Logistics Plc for Clipper to provide GOVERNMENT SUPPORT the North and East of the United States. The continuation of the temporary store a range of logistics operations, including The Group acknowledges the various public closures into the new financial year together warehousing and e-fulfilment. These new sector initiatives which were put in place with the reduction in the support available services are planned to commence later in in a number of territories where it operates SIZEER the year. At this point, our warehouse at On 11 March 2021, we exchanged contracts for local authority rates have inevitably to provide support to businesses on had a negative impact on the expectations Kingsway will largely focus on the supply taxation, including those related to property on the conditional acquisition of a 60% of product for physical stores which better stake in Marketing Investment Group for the performance of Footasylum in the occupation, and the costs of employment. year to 29 January 2022. Furthermore, suits the current automation equipment at This support included the furlough scheme, Spółka Akcyjna which is based in Krakow, the site. Poland. At exchange, this business had 410 there is inevitably considerable uncertainty and its equivalents in other countries, stores trading as either Sizeer or 50 Style as to whether levels of footfall into the Further, the terms of the UK’s trading which achieved their objectives of across nine countries in Central and Eastern Footasylum stores, which attract an older agreement with the European Union conserving jobs as, without this support, Europe. Completion of this acquisition is demographic than JD, will recover to historic mean that we no longer enjoy ‘tariff it is likely we would have had to make subject to receiving clearance from the levels which could adversely impact the free’ frictionless trading with our former tens of thousands of our colleagues, relevant competition authorities which is longer term viability of certain stores. As a European partners. As a consequence, particularly those who work in stores, anticipated before the end of May 2021. consequence, the financial projections no we are now incurring some duties and redundant. To help minimise the financial Once completed, this acquisition will provide longer support the carrying value of the disruption from Customs checks on the impact on affected colleagues, the Group us with an infrastructure and management fascia name and goodwill which arose on transfer of goods from the UK into EU has voluntarily enhanced the furlough team for the future development of JD in the acquisition with a charge of £55.6 million countries. We have been able to reduce payments in the UK for those colleagues Central and Eastern Europe. recognised in relation to the impairment of our exposure to the adverse consequences paid above the £2,500 monthly cap. these assets. of Brexit by opening an 80,000 sqft During the year, the Group was granted In the meantime, whilst the results of warehouse in Belgium in Autumn 2020 a £300 million facility under the UK Footasylum continue to be consolidated which is fulfilling a large proportion of Government’s Covid Corporate Financing within the Group’s financial statements, we our core ranges and fastest moving lines Facility Scheme. The Group did not access continue to observe the CMA’s ongoing required for stores in Mainland Europe. This this facility at any time with the scheme enforcement undertakings which oblige site is functioning very well but it does not closing on 22 March 2021. us to operate the Footasylum business provide a solution for either online orders or separately from the rest of the Group. product destined for the Republic of Ireland. In this regard, we are currently fitting out a 65,000 sqft warehouse near Dublin which will become operational in the second half of this year. We also continue to review opportunities for a larger permanent facility in Europe which can process substantially all of the volume required for stores and online orders in Mainland Europe although it will likely be Autumn 2022 before an enlarged facility would be available for use.

38 39 EXECUTIVE CHAIRMAN’S STATEMENT

PEOPLE employees of the Group, at all levels, reflect undiminished with the ESG section within CURRENT TRADING AND OUTLOOK We are indebted to all of our teams in our the diverse nature of our consumers and this Annual Report detailing our further After a difficult start to the year with a different territories for their determination of our communities. It is the Board’s strong achievements in the year and our objectives further period of store closures in a number and resilience in dealing with the potentially belief that if all colleagues of the Group feel for future years. A key tool within the of markets and the operational disruption life changing challenges of the past year supported and respected and are inspired communication process is our corporate from Brexit, it is pleasing to report that and we fully acknowledge the contribution to grow and develop as individuals then this website which has been re-purposed over stores in our domestic market have now that our colleagues made in delivering this will ultimately serve our business better and the last two years to provide detailed started to re-open. We are absolutely excellent result. We particularly recognise promote the long term success of the Group. explanations and case studies highlighting confident that JD’s premium multi-brand the efforts of our colleagues who work in The Group is absolutely committed to our progress on ESG matters. proposition retains its consumer appeal and our logistics and retail operations whose promoting policies which ensure that we look forward to welcoming customers roles do not lend themselves to working Our achievements in the year include: colleagues and customers are treated back into stores in our remaining markets in from home and who have perhaps had to equally regardless of ethnicity, social origin, • The Group achieved an ‘A-’ rating for our due course. We are encouraged with trading deal with the greatest amount of change gender, sexual orientation, disability or age. 2020 Carbon Disclosure Project (‘CDP’) to date in the new year with levels of sales in their roles. Whilst there may be some Following the tragic death of George Floyd Climate Change assessment which retention in those markets which have cause for optimism at this time, we are not in the United States, we worked with our outperformed our sector benchmark by experienced closures running slightly ahead complacent about the ongoing threat to teams around the world and with both the three grades. of those in Spring 2020. health from COVID-19 and I want to assure JD Foundation and the Finish Line Youth • We attained a ‘B’ rating for our first Our recent completed acquisitions of Shoe all our colleagues that their safety, and that Foundation to ensure that, across the Group, submission within the CDPs ‘Water Palace and DTLR in the United States of our consumers, has been and will always we play an integral part in what is hopefully Security’ category which outperformed together with the conditional acquisition be our number one priority. a united global approach to eradicate not our sector benchmark by two grades. of Sizeer in Central and Eastern Europe are In a rapidly changing global environment, just racism but all forms of discrimination • The Group achieved recognition as a important steps in our evolution which will our colleagues will have both challenges from society. ‘Committed’ supporter by the Science transform our consumer connection in these and opportunities in the future. It is vital We have launched our Inclusivity Campaign Based Targets initiative (SBTi) board in markets and further develop our key brand therefore that we continue to attract the which will support our promise to educate December 2020. relationships. We look forward to working best talent for our business. In this regard, and train our colleagues, with a focus on with our new colleagues in these businesses we are delighted to be part of the UK • We launched our ‘#IAmSustainable’ key topics such as Equality, Diversity, Biases to further enhance their market leading Government’s ‘Kickstart Scheme’ and will be learning programme, with the aim of and Cultural Intelligence. Alongside the propositions. helping our colleagues become better providing national work placements across introduction of our Diversity & Inclusion protectors of the planet, whilst also Whilst we must recognise the substantial our Retail Stores, Distribution Centre and forums for our colleagues, we are committed achieving valuable skills accreditation. level of temporary store closures to date Head Office throughout the year for 16–24 to engage, learn and promote dialogue and ongoing, we remain confident that year olds on Universal Credit who have around potentially sensitive subjects in order • The Group achieved an independently we are well placed to benefit from the been impacted by the negative effects of to improve understanding and awareness audited ‘zero to landfill’ accreditation opportunities that prevail and, at this early the pandemic on the employment market. throughout the business. for our largest directly operated site stage, our current best estimate is that the As retailers of the latest and most exclusive (Kingsway Distribution Centre). sports fashion and outdoor clothing, Group headline profit before tax for the full footwear and equipment we offer many ENVIRONMENTAL, SOCIAL AND • The Group has reduced its use of virgin year to 29 January 2022 will be in the range different career opportunities for young GOVERNANCE UPDATE polyester in its private label manufacturing of £475 million to £500 million. Prior to the Group’s entry into the FTSE 100, whilst increasing the use of responsibly people who want to develop in a fast-paced Our next scheduled update will take place the Group founded a formal Environmental, sourced cotton. and exciting company and Kickstart is the upon the announcement of our Interim Social and Governance (‘ESG’) Committee to perfect way for them to get a flavour of our • In October 2020, the JD Foundation Results which is scheduled for 14 September drive a step-change in the transparency and operations whilst being fully supported to (our primary vehicle for social and 2021. gain the essential skills that they will need in performance comparison on ESG matters community support) announced a two- the future. within the Group. The ESG Committee year partnership with Blueprint For All determines ESG-related strategy, risk (formerly known as the Stephen Lawrence The Board welcomes the initiative and focus assessment and the monitoring of ESG of the Parker Review and will engage with Charitable Trust) as part of our Diversity performance across the Group’s respective and Inclusion programme. the Parker Review as appropriate, just as it fascias and territories. The ESG Committee Peter Cowgill did with the Alexander-Hampton Review in is also responsible for the assessment and Executive Chairman recent years. The Board strives to build a publication of our ESG-related principal risks 13 April 2021 diverse and inclusive team and to promote and the communication of our strategy to a diverse and inclusive culture throughout colleagues, customers and investors. the business. The success of the Group is in its ability to speak to and identify with its Whilst our physical stores have seen consumers and, as such, it is crucial that the significant interruption during the year, our desire to continue making progress is

40 41 STRATEGIC REPORT

42 43 BUSINESS MODEL 54,385 COLLEAGUES 20TERRITORIES KEY INPUTS

TECHNOLOGY INTERNATIONAL THIRD PARTY OWN BRANDS SUPPLY CHAIN AND IT BRANDS LOGISTICS 2,636 INFRASTRUCTURE STORES

The Group’s principal JD fascia is widely recognised as the leading retailer of branded and own brand sports fashion apparel and footwear in the UK and Ireland. Increasingly, the JD fascia is attracting a similar reputation internationally.

KEY COMMERCIAL ACTIVITIES REVENUE CHANNELS

DESKTOP, RETAIL MERCHANDISING BUYING MARKETING MULTICHANNEL PROPERTY DISTRIBUTION TABLET AND INSTORE STORES APPS MOBILE DEVICES OPTIMISED WEBSITES

• Providing customers with exclusive ranges from the best brands in sports fashion and outdoor. • Market leading online and in-store technology. STORE COLLECTION • World class standards. OR HOME DELIVERY

44 45 OUR STRATEGY

GLOBAL EXPANSION ASIA PACIFIC We look to protect profitability by believe this multichannel capability is a key The Group’s principal JD fascia has been There has been further expansion in maintaining a rigorous analytical approach differentiator for our business. widely recognised for a number of years as Australia with an additional six stores to managing product rate of sale and Our digital and social media channels are the leading retailer of branded and private opening in the year. minimising markdown. Whilst we will important destinations for our customers label sports fashion apparel and footwear Extending the global reach of our JD fascia promote product where appropriate, we aim with in-store digital devices (kiosk, web tills in the UK and Ireland. Increasingly, the is viewed positively by the international to avoid short-term reactive discounting and iPad’s) also giving customers additional JD fascia is attracting a similar reputation brands, both existing and new, and we look unnecessarily when our proposition is well options to purchase in store as they enable internationally where we now have more to leverage that positive regard for our differentiated. access to the full product range on the than 850 stores across 19 countries with JD proposition by negotiating enhanced access website and the full inventory held in the Group fascias scheduled to open in Canada to new and often exclusive products, further STORE PORTFOLIO warehouse. Our multichannel capabilities and New Zealand later in 2021. increasing the differentiation in our offer. We are engaged in omnichannel retail with also now include the ‘Pick from Store’ the retail estate being essential to brand Further details are provided in the Property option giving customers access to the full EUROPE and product awareness, the customers’ and Stores Review on page 88. stock listing regardless of location. Our previously stated ambition of overall digital experience and our ability to opening one store on average per week provide multiple delivery points. We believe COVID-19 IMPACT across Europe was impacted by the MARKET POSITION that the combination of a largely exclusive We ensure that the JD retail fascia retains The penetration of online sales as a COVID-19 outbreak but, despite this, product offering, presented in a well fitted proportion of total sales in a business varies JD has achieved further expansion this its dynamic appeal and forges a deep store with world class standards of retail connection with its consumers through the depending on a number of factors including year with a net increase of 31 stores theatre, are major drivers of footfall to our customer demographics, geographical across its existing territories. We would continual investment in our physical store stores. portfolio, digital platforms and creative reach, technological capability and relative anticipate regaining our previous Stores give a platform to showcase product, maturity of the website. We see the greatest development momentum in 2021. marketing. We continually look to further elevate the market position of the JD provide consumers with the opportunity penetrations in our specialist Size? business, fascia and enhance the experience for the to physically see and try the product, and which has a significant international NORTH AMERICA customer through the constant nurturing give us the operational flexibility and agility following, and Finish Line, which distributes The development of JD in the United States of global branded supplier relationships, to offer an enhanced speed of service for product across the whole geography of has also continued to gain momentum existing and new, which we can develop online orders. We will continue to invest in the United States and has had ‘Pick from with a further 37 stores converted from and exploit to ensure our overall product property with a focus on the international Store’ capabilities for a number of years. Finish Line to JD in the year complemented range remains both authentic and uniquely expansion of the JD fascia. The United States is widely regarded as by the opening of the JD Times Square appealing with our stores being highly Considerable time and financial resources the most mature market in the world for flagship store in the second half of the year. differentiated destinations. are invested in expanding and refurbishing online trading with our digital team at Finish Notwithstanding the operational restrictions our retail property portfolio although Line highly regarded within the industry. caused by COVID-19, it remains our intention Our core business strength is branded sports we continue to work with landlords on As such, it is not surprising that, of all our to convert a further 50 stores to JD in the fashion and outdoor retail presented in an ensuring that our portfolio of leases has global businesses, it was Finish Line and JD year to January 2022. omnichannel environment. Where we use in the United States that saw the greatest private labels, we will seek to present them the maximum flexibility and the lowest Further afield, the acquisition of Onepointfive retention rate through the temporary as complementary to third party brands committed cost possible. The movements Ventures Limited in Canada will provide closure period in the first half with online giving us additional options in ranging in store numbers and square footage at the the platform to develop JD Group fascias revenues equivalent to approximately and price architecture. We seek to build start and end of the period are documented in Canada where we anticipate opening our 75% of the combined physical and digital very strong market positions and we look in the ‘Where We Are’ section on page 32. first store in the second half of 2021. revenues in the prior year. to maintain these through a continuous For further details please refer to the and intensely analytical approach to Property and Stores review on page 88. In terms of our core JD fascia then online understanding business performance. sales represented 50% (2020: 22%) of total fascia sales in the core markets of We update our brand line up regularly, MULTICHANNEL endeavouring to be the partner of choice to the UK and Republic of Ireland (excluding The continuing international growth in kiosk sales). During the initial closure as many brands as possible with as much physical store space is complemented by exclusive product as possible. The Board period in the Spring approximately 70% of ongoing investment in our international the combined store and online revenues considers that continuing supply from Nike multichannel capability through a and adidas, being the main suppliers of third from the prior year were retained through significant multicurrency and multilanguage solely digital channels. This retention rate party branded sporting products, to the website estate. We utilise our digital Group’s core sports fashion retail operation increased to 100% through November when platforms to maximise our reach and stores in the UK were closed again. is essential to the business of the Group. impact to consumers at a domestic and international level with consumers able to In Europe, online JD fascia sales shop seamlessly across all channels. We represented 29% (2020: 15%) of total

46 47 OUR STRATEGY

fascia sales. Across Europe, the average INVESTMENT IN NEW BUSINESSES ENVIRONMENTAL, SOCIAL AND This allows our ESG plans and strategy to retention of sales through the period of the Any new business which we invest in will GOVERNANCE (ESG) STRATEGY be reviewed and scrutinised by a wider temporary store closures in the Spring was have relevance to our core strength and all Subsequent to the Group’s FTSE 100 audience of Directors, the majority of approximately 35% with a stronger retention businesses in the Group need to be capable entry, we have made further commitments whom hold multiple Non-Executive Director in Northern Europe where online is more of enhanced profitability in the medium to improve our sustainability and positions with other organisations, thus mature. term. For details of the acquisitions made environmental performance by establishing allowing our Chief Financial Officer and in the period, please refer to Note 11. Our an ESG Committee. The Committee ESG Committee access to wider experience, BREXIT ultimate objective is to deliver long term determines our future ESG strategy feedback and comparative environmental The transition period ended during the sustainable earnings growth to enhance and monitors adherence to our existing performance information. financial year on 31 December 2020. The Total Shareholder Returns (‘TSR’) through documented Sustainability and ESG key direct and indirect risks associated share price performance and dividends, standard. Progress and updates from the with the range of outcomes at the end whilst retaining our financial capability to ESG committee are communicated to the of this transition period along with the invest in the growth and the sustainability of Board at scheduled Group board meetings mitigating activities that have been, or will our propositions. Recent TSR performance is by our Chief Financial Officer. be implemented, by the Group are detailed shown in the graph within the Remuneration further in the Principal Risks section on Report on page 202. page 51. INFRASTRUCTURE AND RESOURCES Details of the significant investments we continue to make in logistics are included in Supply chain the Executive Chairman’s Statement on page 39, the Working Capital and Cash section of the Financial Review on page 84 and the Principal Risks section on page 51.

52 week period 52 week period ended 30 ended 1 Own-brand sourcing and January 2021 February 2020 Colleague Quality Assurance Corporate £m £m welfare, governance support and and Number of items processed by: training People ESG Legal and compliance Kingsway Services Committee General Distribution Centre 82.7 94.8 (HR) Counsel Belgian Distribution Centre 3.9 – GROUP Middlewich BOARD Distribution Centre 9.6 9.0 Group Investor Finance Relations Financial Regulatory / planning and shareholder analysis engagement

Group Procurement and Environment

Group wide retail and support operations

The actual and potential ESG-related risks faced by our business (including use of climate- change scenario analysis) are provided within pages 56 to 71. 48 49 OUR STRATEGY PRINCIPAL RISKS ASSESSMENT OF PRINCIPAL RISKS AND transition period which left very little time FINANCIAL KEY PERFORMANCE INDICATORS UNCERTAINTIES to prepare for the actual new operating The Directors confirm that they have agreements. Indeed, some important Note 2021 £m 2020 £m Change % carried out a robust assessment of the guidance was only released on the night Revenue 6,167.3 6,110.8 0.9% principal risks and uncertainties facing of the exit from the transition agreement Gross profit % 48.0% 47.0% the Group, including those that would itself. However, our detailed planning meant Operating profit 385.0 426.6 (9.8%) threaten its business model, future that we were well prepared in terms of the Operating profit (before exceptional items)*  482.3 516.9 (6.7%) performance, solvency or liquidity. The new documentation that may be required Profit before tax and exceptional items 421.3 438.8 (4.0%) principal risk areas remain the same as although there is still some disruption Profit before tax 324.0 348.5 (7.0%) reported last year albeit impacted by the from Customs checks on the transfer of Basic earnings per ordinary share 23.05p 25.29p additional complexities of the COVID-19 goods from the UK into the EU. Further, pandemic and the end of the Brexit the terms of the UK’s trading agreement Adjusted earnings per ordinary share 10 32.19p 34.26p transition period. These principal risks are with the European Union mean that we Total dividend payable per ordinary share  1.44p 0.28p described below along with explanations have also lost ‘tariff free’ trading with our Net cash at end of period 29 795.4 429.9 of how they are managed / mitigated. former European partners. We have a clear plan to expand our European supply chain operations which will mitigate against the On behalf of the Board SUPPLY CHAIN RISKS As with other retailers and distributors disruption and duties on transferring goods into retail businesses, the Group’s core into the European Union although this will retail business is highly seasonal and the likely take up to two years to implement most important trading period in terms fully and it will result in significant additional Peter Cowgill fixed cost. Executive Chairman of sales, profitability and cash flow in its 13 April 2021 Sports Fashion fascias continues to be the Christmas season. Lower than expected COVID-19 performance in this period may have an COVID-19 has impacted our supply chain adverse impact on results for the full year in 2020/21 and this is outlined throughout and may result in excess inventories that are the Annual Report where relevant. Our difficult to liquidate. global warehousing operations have been The Group seeks to manage this risk by impacted throughout by the ongoing monitoring the stock levels and managing requirement to maintain strict social the peaks in demand constantly with regular distancing. Colleague safety and wellbeing sales reforecasting. As the Group continues has been, and continues to be, our number to grow and expand, the seasonal peak at one priority. We have significantly reduced Christmas becomes further exaggerated the number of colleagues on site at any one necessitating even greater flexibility in time to ensure that social distancing can be the Group’s warehouse and distribution maintained, and we will continue to make network. Consequently, the risk to store further modifications as necessary to our replenishment and multichannel fulfilment operations to ensure that we are operating from both equipment and system failure, safely and effectively. Further, given that our together with the inherent risk of having all warehouses may need to operate with social the stock in one location increases. distancing restrictions for the foreseeable future, we have concluded that we require additional long term warehousing capacity BREXIT in the UK which can initially be dedicated to Colleagues were selected from each area the fulfilment of online orders. In this regard, of the business to collectively work with we have signed a Letter of Intent with external advisors and prepare for the Clipper Logistics Plc for Clipper to provide possible changes that could be required a range of logistics operations, including as a result of the various different Brexit warehousing and e-fulfilment. The new scenarios. Ultimately, the UK Government services are planned to commence later in reached an agreement with the European the year. Union shortly before the end of the

50 51 PRINCIPAL RISKS RISK AND IMPACT CHANGE MITIGATING ACTIVITIES LINK IN RISK TO OUR EXPOSURE STRATEGY 2020/21 AVAILABILITY OF CONTAINERS BEFORE Approximately 90% of the product which the Group sells is product bought from third party MITIGATING ACTIVITIES brands. These brands control the supply chain for these ranges and so the Group is only responsible for the supply chain on its private label ranges. As with other businesses, we have witnessed an increase in the cost of securing shipping containers. Where possible, we look INTELLECTUAL PROPERTY The Group works with third party MARKET POSITION to avoid short-term fluctuations in the cost of these containers by securing capacity in bulk The Group’s trademarks organisations to ensure that the in advance. and other intellectual Group’s intellectual property is During the COVID-19 pandemic, there has been a global shortage of equipment in the right property rights are critical registered in all relevant territories. ports to meet demand, resulting in supply and demand pricing from shipping lines and non- in maintaining the value The Group also has a well-established shipment of those containers on contracted rates. We have worked with all parties to ensure of the Group’s private Profit Protection team which actively that we minimise these costs whilst ensuring continued supply of product. labels. Ensuring that the works to prevent counterfeit product The supply chain risks and uncertainties that are specific to the Group and the markets in Group’s businesses can use being passed off as legitimate. which its businesses operate are detailed further below: these brands exclusively is critical in providing a point of differentiation to RISK AND IMPACT CHANGE MITIGATING ACTIVITIES LINK our customers and without IN RISK TO OUR EXPOSURE STRATEGY this exclusivity we believe 2020/21 that footfall into the stores, BEFORE visits to our websites and MITIGATING ACTIVITIES ultimately conversion of these visits into revenues

MARKET POSITION would all be reduced. KEY SUPPLIERS AND The Group seeks to ensure it is not BRANDS overly reliant on a small number of The retail fascias offer a athletic brands by constantly adding proposition that contains new brands to its offer and by offering a mixture of third party a stable of evolving private labels. and private label product. Where possible, the Group’s retail The Group maintains and fascias also work in partnership is dependent on long term with the third party brands in their supplier relationships. business on the design of bespoke The retail fascias are product which is then exclusive to the heavily dependent on the Group’s fascias. products and the brands Furthermore, the Group continues to themselves being desirable actively seek additional brands which to the customer if the it can either own or license exclusively. revenue streams are to grow. Therefore, the Group needs all of its third party and private labels, including brands licensed exclusively to it, to maintain their design and marketing prominence to sustain that desirability. The Group is also subject to the distribution policies operated by some third- party brands both in terms of the fascias which can sell the ranges and, more specifically, the individual towns or retail centres.

52 53 PRINCIPAL RISKS RISK AND IMPACT CHANGE MITIGATING ACTIVITIES LINK IN RISK TO OUR RISK AND IMPACT CHANGE MITIGATING ACTIVITIES LINK EXPOSURE STRATEGY IN RISK TO OUR 2020/21 EXPOSURE STRATEGY BEFORE 2020/21 MITIGATING BEFORE ACTIVITIES MITIGATING ACTIVITIES EUROPEAN WAREHOUSE The Group has taken the following INFRASTRUCTURE AND RESOURCES UK WAREHOUSE To address the inherent risk of having INFRASTRUCTURE AND RESOURCES OPERATIONS action to mitigate the impact of Brexit OPERATIONS significant amounts of stock in one The terms of the UK’s trading whilst also further reducing the risk A large proportion of the location the Group has ensured that agreement with the European of having the stock in one location Group’s stock was previously the following mitigating activities are Union mean that we have lost (as identified in the UK warehouse held in the Group’s Kingsway in place: ‘tariff free’ trading with our operations risk): Distribution Centre in the former European partners. As A conceptual Business Continuity 1 An 80,000 sq. ft facility based in UK. Having the stock in 1 a consequence, we are now Belgium became operational in Plan has been in place for a incurring some duties and one location with increased number of years. Autumn 2020 and now fulfils a large automation in the picking disruption from Customs checks proportion of the fast moving core A full support contract with our on the transfer of goods from the process has brought 2 ranges for stores in Mainland Europe, significant benefits in automation equipment providers is UK into the EU. reducing the risk to store terms of capacity, universal in place which includes a 24/7 The Group previously operated replenishment in the Kingsway product availability and presence from qualified engineers with a highly integrated stock Distribution Centre. quicker deliveries to our thereby enabling immediate attention management infrastructure for The Belgium facility is not large stores. However, there to any equipment issues. The Group 2 its stores across Europe where enough to handle all the volumes is an increased risk to also pays for enhanced ‘hypercare’ the stock requirement for the required for stores in mainland Europe store replenishment and support over the seasonal peak period JD stores outside of the UK was nor does it provide a solution for multichannel fulfilment from from Black Friday in November to after aggregated with that of the UK either online orders or product both equipment and system Christmas. stores with one consolidated destined for the Republic of Ireland. In failure, together with the The Kingsway Distribution Centre order then sent to the supplier. 3 this regard we have now secured a inherent risk of having all the extension has a two-hour fire All stocks were then delivered to 65,000 sq. ft. warehouse near Dublin stock in one location. resistant wall between the original the Group’s primary Kingsway which will become operational in the The construction of an building and the extension. The warehouse with different import second half of the 2021/22 financial extension to the Kingsway Group’s insurers were involved at every processes for third party brands year. Distribution Centre was stage of the project. and the Group’s owned and Work is ongoing to secure a larger completed in the previous There is now a separate dedicated licensed brands. 3 4 permanent facility in Europe financial year including the facility for the Group’s Outdoor Third Party Brands: These orders which can process substantially all of installation of additional businesses (excl. Tiso which will are largely placed on a landed the volume required for stores and automation equipment. maintain its facility in Edinburgh). This cost basis with the suppliers online orders in mainland Europe This enables a large part facility, based in Middlewich, has a dealing with the import process although it will likely be Autumn 2022 of the fulfilment for stores footprint of 353,000 sq. ft. and and the accounting for any before an enlarged facility would and online to be processed became operational, initially for the Go duty. Some of these goods are begin to be available for use. A larger independently in different Outdoors business in late Spring 2019 delivered direct to the Group facility in Europe will make our future locations thereby providing with the Blacks and Millets fascias from the original factory whilst European logistics more streamlined greater flexibility and transferring into this facility in the first some are routed through the and will ensure that the vast majority resilience. quarter of 2020. The removal of Brands own warehouses located of the potential duties are mitigated. Outdoor product which is often not of both in the UK and mainland a size, shape and weight compatible Europe. The Group also often with automation equipment will help only receives stocks for launches simplify the operations at our just before the launch date. Kingsway Distribution Centre. Owned and Licensed Brands: These orders are largely placed 5 We have signed a Letter of Intent with Clipper Logistics Plc for on a ‘Free on Board’ basis with Clipper to provide a range of logistics the Group then processing the operations, including warehousing and necessary import documentation e-fulfilment. The new services are and accounting for the duties. planned to commence later in the year. The majority of the Group’s retail stores across Europe were previously supplied with stock by the Group’s principal Kingsway 54 Distribution Centre. PRINCIPAL RISKS

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) RISKS This year, the Group has commenced the The Group recognises the TCFD Improving the sustainability and environmental performance of the Group has been an requirements of the Task Force on Climate- recommendation to quantify financial integral facet of our business plan over recent years with efforts intensifying due to both related Financial Disclosures (TCFD) within impact of strategic climate-related risks. external pressures and our increasing global footprint. The Group continues to adhere to our reporting by mapping our ESG-related Considerable time has been invested in our Environmental, Social and Governance (ESG) best practice by identifying and detailing progress against the structures provided by attempts to fulfil this requirement. However, climate-related and social impact risks. the TCFD see page 110 for summary. our research into quantifying climate risks In our 2020 Annual Report, the Group aggregated our known ESG risks, impacts and The Group continues to use globally- identified that (owing to the current lack mitigating activities within a new ‘ESG’ risk section, a measure that received a very positive recognised independent benchmarks to of standard calculation method) there are response from our shareholders. assess our ESG performance and to help large variances in the interpretations and identify ESG-related risks. Recognition of estimates from the leading brands that the prioritisation of environmental and have provided estimates. As TCFD becomes ESG RISK IDENTIFICATION AND MANAGEMENT social considerations within our corporate more widely adopted (or mandatory), we anticipate that more accurate, verifiable ESG RISK IDENTIFICATION – SOURCES: strategy has been evidenced via the Carbon Disclosure Project (CDP) assessment of our climate-related financial planning risks can FORMAL: INFORMAL: Carbon Management, Water Security and be provided. The Group continues to discuss • International NGOs (e.g. United Nations) • Media coverage Forests disclosures. climate-related risks within our regular • Global inter-governmental organisations • Customer feedback financial planning activities, primarily via the • National-level government/regulatory • Industry forum feedback (e.g. British Retail Robust governance, transparency and Group ESG committee, chaired by our Chief consultations Consortium) accountability principles underpin our Financial Officer. • National government notifications • Supplier engagement approach across all areas of the business. • Financial Conduct Authority updates • Independent market reports Understanding and assessing ESG risks • Independent benchmarks (e.g. Carbon supports our efforts to mitigate and manage Disclosure Project) accordingly, benefitting both the Group, and • Global, issue-based initiatives (e.g. RE100 the local environments in which we operate. – renewable energy targets We have identified specific ESG ‘Risk and • Audit recommendations Impacts’ within the section below. For the 2021 Annual report, we have categorised the ESG risks as ‘short’, ‘medium’ and Risk identified ‘long term’.

Review supply chain compliance

Embed compliance model (own Feedback from operations) ESG Committee

Identify potential Assess supply future chain (external) developments exposure

Verification of Risk presented to financial risk ESG Committee

Engage suppliers Impact and and independent mitigation strategy topic experts agreed

Short term Medium term Long term Risk included in the Annual Report 56 57 PRINCIPAL RISKS RISK AND IMPACT CHANGE MITIGATING ACTIVITIES LINK IN RISK TO OUR RISK AND IMPACT CHANGE MITIGATING ACTIVITIES LINK EXPOSURE STRATEGY IN RISK TO OUR 2020/21 EXPOSURE STRATEGY BEFORE 2020/21 MITIGATING BEFORE ACTIVITIES MITIGATING ACTIVITIES ENVIRONMENTAL – CLIMATE CARBON EMISSIONS (CONTINUED) ENVIRONMENTAL (ESG) ENVIRONMENTAL – CLIMATE CARBON EMISSIONS ENVIRONMENTAL (ESG) CHANGE (CONTINUED) Nike Inc has a 2030 Science-Based CHANGE The Group has direct control of a As a consequence of the Target to reduce its carbon footprint The 2016 Paris Agreement limited number of non-retail sites US re-joining the Paris by 65% in owned or operated spaces called for science based but proactively manages the energy Agreement, we envisage that and by 30% across their extended 1 targets to limit global use and carbon emissions of our it will also introduce additional supply chain . Nike has also set a warming at a maximum level global retail businesses (within leased legislation for businesses, target of 70% absolute reduction of of 2°c increase. A level of buildings). related to carbon emissions Greenhouse Gases in owned or self- 1.5°c global warming impacts and the 1.5°c scenario. operated facilities by end of FY25 and The Group analyses the robustness measures to decrease energy use and on natural and human of its Climate Change strategy, risk The largest risk to the Group systems and accordingly of not achieving our emission CO2e emissions 35% per kg in textile assessment and performance via dyeing and finishing processes. recommendations are in place the established, independent global reduction targets is linked for mitigation pathways to try benchmark of the Carbon Disclosure to the ability of our largest adidas has committed to an annual and restrict global warming Project (CDP). merchandise suppliers to absolute CO2e reduction of 3% and to the 1.5°c scenario. achieve their own carbon has also committed to achieving a During the financial year, the Group reduction targets. Our 30% reduction in CO2 emissions by Within the UK, the 2019 UK achieved an improved CDP Carbon Climate Act and Carbon suppliers account for over 2030, thus paving their way to climate Management score of ‘A-’, establishing 2 Reduction Commitment 71% of Group’s Scope Three neutrality by 2050 . the Group as a ‘leader’ with its emissions targets, with Nike (including ‘Streamlined approach to this essential risk category. Our continued progress in identifying, Energy and Carbon and adidas accounting for the managing, and reducing Scope Reporting’) has already been The Group takes a pro-active approach largest percentage. Three emissions mitigates Group implemented, and the Group to emission reductions, procuring In the event that our risk associated with operating cost remains fully compliant with renewable energy wherever viable. This suppliers were not on track increases relating to environmental its requirements. commitment was further embedded to achieve their disclosed legislation. within our strategy via the Group carbon reduction targets, joining the RE100 in 2019. The RE100 The Group continues to transition SHORT TERM: the Group would have to is a collection of the world’s largest any non-renewable energy sites as We anticipate further invest in additional energy companies committed to achieving soon as legacy contracts or local legislation within the UK and performance certificates 100% renewable energy usage. infrastructure permits. Our planned Europe in support of the 1.5°c and energy-reducing 2021 Science Based Targets have scenario planning. This may In December 2020, the Group joined infrastructure in order to made a provision for the continued include but not be limited the Science Based Target (SBT) group achieve both our own targets, financial and operational barriers to to net-zero emission targets as a ‘committed’ member. The Group and those mandated by the using renewable energy in certain Asia- being brought forward from will submit our Scope One-Three SBTs governments within our Pacific territories. 2050, and the introduction to the SBT advisory group in 2021. operating territories. of mandatory science based Scope Three emissions account for The Group is aware that a targets. 99% of the Group’s carbon emissions, number of our operating with ‘Purchased goods and services’ territories (including Australia, MEDIUM TERM: (our suppliers) accounting for over South Korea and Singapore) Within the UK and Europe, two-thirds of this value. The Group has are subject to high costs for we envisage increasing worked with a sustainability specialist renewable energy, owing levels of localised policy and consultant to complete a screening to limited availability and regulation. Examples include exercise. This exercise identified the regulatory complexity. local councils and transport volume of Scope Three emissions by In addition to state-level authorities operating ‘Clean supplier and we will be monitoring our legislation and targets, we air zones’ and related largest suppliers to ensure that they anticipate that investors may emission-reduction initiatives. deliver their stated carbon reduction seek to introduce additional Business logistics services will targets. climate-related targets and/ be one of the prominent areas or reporting frameworks as targeted by such schemes. part of ‘green credential’ verification.

58 1 https://purpose.nike.com/fy20-nike-impact-report 59 2 https://report.adidas-group.com/2020/en/servicepages/downloads/files/annual-report-adidas-ar20.pdf PRINCIPAL RISKS RISK AND IMPACT CHANGE MITIGATING ACTIVITIES LINK IN RISK TO OUR RISK AND IMPACT CHANGE MITIGATING ACTIVITIES LINK EXPOSURE STRATEGY IN RISK TO OUR 2020/21 EXPOSURE STRATEGY BEFORE 2020/21 MITIGATING BEFORE ACTIVITIES MITIGATING ACTIVITIES ENVIRONMENTAL – The Group submitted its second ENVIRONMENTAL (ESG) ENVIRONMENTAL – CLIMATE The Group has continued to develop ENVIRONMENTAL (ESG) BIODIVERSITY, RESOURCES response to the ‘Forests’ CDP. The CHANGE (CONTINUED) our corporate website throughout the AND WATER SECURITY industries with the largest impact on period, garnering positive feedback biodiversity continue to be agriculture LONG TERM: from a wide range of investors. The BIODIVERSITY, IMPACT ON and manufacturing. HABITATS & FORESTS In the event that the targets implementation of Science Based For our own footwear and accessories Growing human demand of the Paris Agreement are Targets and commencement of TCFD brands we supply and monitor a for natural resources may not being met, the Group reporting facilitates continued Group ‘supplier manual’ including policies negatively impact the anticipates the potential for progression. Our high CDP scores on modern slavery, procurement biodiversity system. additional supply chain and vs. sector and international averages and global environmental footprint infrastructure costs relating to: evidences that the Group has been reduction. Standards to be met include Merchandise independently verified as a strong ESG COTTON/POLYESTER – Reach (Registration, Evaluation & Increased costs from performer. PRIVATE LABEL Authorisation of Chemicals) and ‘environmental tariffs’ levied The fashion industry depends suppliers of leather manufactured on factories or territories, and on natural resources including goods must adhere to Leather Working ‘passing on’ of operational cotton as well as other Group (LWG) standards. oil based fibres such as costs incurred as part of During the period, the Group has polyester. Making sustainable potential new tariffs and laws. reduced its use of virgin polyester products can directly impact and increased the use of responsibly Additional taxation may farmers, the use of pesticides sourced cotton (‘sustainable cotton’). be incurred on goods and water. Using recycled Sustainable cotton ensures; i) that sourced from territories polyester can offer many farmers are trained on methods without renewable energy sustainable benefits vs virgin of water reduction ii) farms are infrastructure. polyester. economically irrigated and iii) the Group operations receipt and payment of fair wages. Potential additional costs may impact the Group’s own infrastructure and leased premises as a result of investment in carbon-reducing technology. Weather-related impact Increases in ‘extreme’ weather events may lead to increases in insurance premiums, and margin reduction associated with an increased number in lost trading days. This could also result in disruption to our supply chain, impacting raw material supply, labour availability, production capability and distribution of goods.

60 61 PRINCIPAL RISKS RISK AND IMPACT CHANGE MITIGATING ACTIVITIES LINK IN RISK TO OUR RISK AND IMPACT CHANGE MITIGATING ACTIVITIES LINK EXPOSURE STRATEGY IN RISK TO OUR 2020/21 EXPOSURE STRATEGY BEFORE 2020/21 MITIGATING BEFORE ACTIVITIES MITIGATING ACTIVITIES ENVIRONMENTAL – The Group’s approach to plastic ENVIRONMENTAL (ESG) ENVIRONMENTAL – The Group joined the Better Cotton ENVIRONMENTAL (ESG) BIODIVERSITY, RESOURCES continues to encompass the three BIODIVERSITY, RESOURCES Initiative (BCI) in the last quarter of AND WATER SECURITY classic principles of ‘reduce, re- AND WATER SECURITY 2020. Our goal is for 80% of our cotton (CONTINUED) use and recycle’. The Group’s most (CONTINUED) to be sourced through the programme commonly used plastic bag (the JD by 2022, recognising the importance PLASTIC ‘duffle’) represents a fantastic example SHORT TERM: of working with a global not-for-profit Demand for plastic reduction of how a design-led plastic product Where immediate international organisation and the largest cotton and recycling continued to can generate continued re-use from labour-related risks have sustainability programme in the world. increase during the period. customers. During the period, our JD been identified, the Group Consumer focus on plastic fascia has trialled flexi-loop bags with The Group’s private label manufactured continues to receive guidance reduced somewhat due to 70% recycled content. garments are now accredited via a from leading non-government the impact of COVID-19, ‘Sustainability flag’ process. Over four The Group has very few single-use organisations (such as the but national-level legislation million garments were categorised bags remaining and continues to Better Cotton Initiative) continued to progress. against our sustainability goals, reduce or remove single-use items in order to implement featuring Gold, Silver and Bronze from acquisition businesses. Almost all appropriate solutions. SHORT TERM: award criteria. customer bags used by the Group are The Group anticipates >50% recycled or categorised as ‘bags The Group has completed the CDP WATER REDUCTION further taxation on single-use for life’. ‘Water Security’ survey, achieving a ‘B’ items and an increase in the The fashion sector is the The Group complies with all territory score, outperforming the fashion and threshold standard of bags and second largest consumer of level bag legislation. Within England, luxury goods sector by two grades. packaging termed ‘reusable’ the world’s water supply and Wales and Scotland, 100% of proceeds and ‘recyclable’. there is an ever-growing issue Nike exceeded its target of a 20% from plastic bag sales are passed to of water scarcity.3 reduction in freshwater use in The JD Foundation, supporting youth, textile dyeing and finishing (L/kg p/ MEDIUM TERM: mental health and social justice causes production unit) achieving 30% in its MEDIUM TERM: Whilst much of the UK and throughout our communities. The most recent report4. adidas continues The Group acknowledges Europe has moved to using proceeds from carrier bags in Northern to drive water efficiency initiatives, that large organisations will paper-based bags, the Group Ireland are remitted to the Northern achieving accumulated water savings be required via legislation, or anticipates that, due to its Ireland Executive as required by law. of 35% per employee between 2008 consumer pressure to improve impact on natural resources, and 20205. the reporting on water usage such as water, paper bags will and reduction measures. We engaged with the WWF Water also be subject to mandatory Risk Filter during the period, allowing minimum charges within the the Group to assess our water risk in next few years, both across LONG TERM: sourcing countries used for private Europe and the UK. We envisage that water usage label manufacturing. reporting may follow the route of carbon reporting via LONG TERM: a tiered system of primary, The Group considers that the secondary and tertiary usage. UK re-processing and recycling infrastructure is below the standards of mainland Europe and Scandinavia. This increases the likelihood of the UK government using taxes as its primary means to achieve

3 https://www.businessinsider.com/fast-fashion-environmental-impact-pollution-emissions-waste-water-2019-10?r=US&IR=T reductions in plastic and other 4 https://purpose.nike.com/fy20-nike-impact-report waste usage. 5 https://report.adidas-group.com/2020/en/servicepages/downloads/files/annual-report-adidas-ar20.pdf

62 63 PRINCIPAL RISKS RISK AND IMPACT CHANGE MITIGATING ACTIVITIES LINK IN RISK TO OUR RISK AND IMPACT CHANGE MITIGATING ACTIVITIES LINK EXPOSURE STRATEGY IN RISK TO OUR 2020/21 EXPOSURE STRATEGY BEFORE 2020/21 MITIGATING BEFORE ACTIVITIES MITIGATING ACTIVITIES SOCIAL – HUMAN RIGHTS, The pandemic disrupted travel (a vital SOCIAL (ESG) ENVIRONMENTAL – The Group is committed to an internal ENVIRONMENTAL (ESG) LABOUR STANDARDS part of our ethical sourcing policy) BIODIVERSITY, RESOURCES circular economy model to ensure the AND RESPONSIBILITY but progress continued on corrective AND WATER SECURITY minimisation and eradication of landfill (CONTINUED) action plans, managing the sourcing (CONTINUED) waste across our business. We have The Group recognises that challenges presented to the best of our already achieved ‘zero waste to landfill’ building fair relationships with ability. ENHANCED RETAILER TAKE certification for our UK distribution their suppliers is critical to The Group has an ‘Ethical Code of BACK centre and continue to re-use, maintaining standards across Practice’, the purpose of which is to With growing focus and repurpose and recycle across all of our the global workforce. The establish a procedure for protecting pressure on ‘circular economy’ operations. COVID-19 pandemic has halted individuals who work within our supply enablement, there is increasing the successful, interactive chain and providing assurance that expectation from consumers face to face collaborations our products are manufactured in safe on store take back schemes. completed in 2019. and fair conditions. We will take the The Group further anticipates The rights of people working appropriate and remedial action(s) additional regulatory measures in the supply chain of the required if a supplier cannot commit such as ‘Extended Producer international brands is subject to the same standards and principles. Responsibility’, whereby brand to increased scrutiny by the However, the Group remains cautious owners and manufacturers are media and other bodies. about making short-term reactionary required to take on additional Adverse reports may influence decisions to media reports as the responsibility for the recycling consumer decision making. removal of employment opportunities or disposal of end of life is unlikely to enhance the protection products and packaging. of rights, cultural respect and fair treatment of workers within our supply chain. In order to achieve long-term, SOCIAL RISKS sustainable improvements in labour rights across the supply chain, it is RISK AND IMPACT CHANGE MITIGATING ACTIVITIES LINK imperative that the Group, our brands IN RISK TO OUR and other relevant governmental EXPOSURE STRATEGY 2020/21 bodies continue to work with host BEFORE countries to improve conditions for MITIGATING ACTIVITIES workers. The JD business has successfully SOCIAL – HUMAN RIGHTS, Identification and prevention of SOCIAL (ESG) mapped the second and third tiers LABOUR STANDARDS AND Modern Slavery is a key priority of its manufacturing supply chain to RESPONSIBILITY throughout our supply chain. The include mills and dye houses. Our Tier Group actively investigates several Four (print houses) have been partially HUMAN RIGHTS & LABOUR tiers of processing within our private included within the 2021 transparency STANDARDS label supply chain (including agents, map at www.jdplc.com. This is a Respecting human rights factories, mills, dye houses and print complex part of the manufacturing within the Group and across houses) and is committed to further supply chain and will be updated every our supply chain is a key transparency. half year to adapt to the changing part of running a successful seasonal product categories. This will organisation. Human rights are be progressed with the subsidiaries in fundamental principles which the Group during 2021 and 2022. allow individuals to lead a dignified and independent life, free from abuse and violations.

64 65 PRINCIPAL RISKS RISK AND IMPACT CHANGE MITIGATING ACTIVITIES LINK IN RISK TO OUR RISK AND IMPACT CHANGE MITIGATING ACTIVITIES LINK EXPOSURE STRATEGY IN RISK TO OUR 2020/21 EXPOSURE STRATEGY BEFORE 2020/21 MITIGATING BEFORE ACTIVITIES MITIGATING ACTIVITIES SOCIAL – HUMAN RIGHTS, The Group works with its suppliers to SOCIAL (ESG)

SOCIAL (ESG) LABOUR STANDARDS ensure that the products being sourced SOCIAL – HUMAN RIGHTS, With regards to Modern Slavery in AND RESPONSIBILITY satisfy increasingly stringent laws and LABOUR STANDARDS the UK, the Group has focused on the (CONTINUED) regulations governing issues of health AND RESPONSIBILITY Kingsway Distribution Centre and we and safety, packaging and labelling and (CONTINUED) have implemented several procedural other social and environmental factors. based strategies. Furthermore, the Furthermore, adequate levels of stock Group has joined the Gangmasters are maintained to cover short periods and Labour Abuse Authority (GLAA) of supply delay. and hosted events on site, with participation from our third-party Compliance is monitored by the suppliers. We hope to be able to Group’s Head of Quality and Ethics progress this project in 2022. who has extensive experience in this area. The Group has established a cross To mitigate and prevent labour standard functional approach to compliance breaches, the Group promotes an ensuring that the sourcing and design Ethical Code of Practice for all private teams work collaboratively to ensure label suppliers, outlining minimum compliance is built into the design required standards including wages process. being paid in line with local laws. SOCIAL (ESG) The Ethical Code of Practice also HEALTH AND SAFETY The Group Health and Safety ensures worker protection and The health and safety of our Committee meets on a quarterly basis. provides assurance that our products customers and colleagues is The Committee is chaired by the are manufactured within safe and fair of the utmost importance. Group Health and Safety Manager with conditions. Policies are implemented attendees including the Chief Financial in conjunction with training Officer, Company Secretary and Group RELIANCE ON NON-UK The Group pro-actively manages risk programs to protect our Property Director. The Group Health MANUFACTURERS within its own supply chain for private employees and customers. and Safety Manager appraises the The majority of both third- label and licensed products. For our Personal injuries, distress and Board of material issues and incidents party branded product and largest third-party brand partners, fatalities could result from on a periodic basis. the Group’s private label the Group collates disclosures and a failure to establish and Targets are set by the Board to product is sourced outside of statements (such as supply chain risk maintain safe environments. enable measurement of performance. the UK. The Group is therefore and ESG-related issues) on material Performance against targets, incidents, exposed to the risks associated matters including, but not limited to, COVID-19 and legal claims that arise are reported with international trade and Modern Slavery, codes of practice, The COVID-19 pandemic has to the Board. transport as well as different carbon emissions and water security. presented significant health legal systems and operating A consolidated view of risks and The Group also works closely with its and safety challenges. We standards. opportunities identified is periodically principal insurers who undertake regular continue to develop and provided to our ESG Committee for risk reviews both in the store portfolio establish revised working review and appropriate action. and in the distribution centres. practices to ensure the safety The Group uses third-party accredited of our colleagues, customers auditors to continuously audit the and visitors. factories it uses for its private label business. The Group’s factories are also screened and verified prior to being included within our sourcing strategy.

66 67 PRINCIPAL RISKS RISK AND IMPACT CHANGE MITIGATING ACTIVITIES LINK IN RISK TO OUR RISK AND IMPACT CHANGE MITIGATING ACTIVITIES LINK EXPOSURE STRATEGY IN RISK TO OUR 2020/21 EXPOSURE STRATEGY BEFORE 2020/21 MITIGATING BEFORE ACTIVITIES MITIGATING ACTIVITIES GOVERNANCE – The Group is committed to acting GOVERNANCE (ESG)

SOCIAL (ESG) professionally, fairly and with integrity HEALTH AND SAFETY There is a comprehensive induction ANTI-CORRUPTION, in all its business dealings. The Group (CONTINUED) and training program for all staff RISK MANAGEMENT, covering Health and Safety issues. REGULATORY AND has an Anti-corruption and bribery COMPLIANCE policy and also works closely with its The Health and Safety team have Profit Protection team to monitor and assessed the risks faced by our ANTI-CORRUPTION AND investigate any convictions and issues. colleagues, customers and other ANTI-BRIBERY visitors as a result of COVID-19. The Group could face the The documented risk assessments risk across its employees produced for our retail, office and of breaching rules and distribution environments set out the regulations to conduct control measures required to reduce responsible business. This can the risk of potential exposure to include risks of corruption and COVID-19 virus. bribery. From the initial risk assessment, the appropriate teams developed TAX TRANSPARENCY Our Group aims to ensure that it operating procedures, visual The Group operates on a pays the right amount of tax in each messaging, procured personal global scale across many country in which it operates and does protective equipment and hygiene countries, with tax policies that not engage in arrangements which products appropriate to their area of vary for each country, this can are artificial or contrived. We actively the business but following a consistent result in potential tax risks. identify, evaluate, manage and monitor Group approach. tax risks where appropriate and strive to remain low-risk. Where there is As Government guidance has changed, significant uncertainty or complexity the risk assessments and control in relation to risk, external advice may measures have been updated. This be sought from professional advisors in turn has informed changes in the and discussed with the relevant tax procedures of the teams around the authority. business, ensuring consistency across the Group. The control measures in place for our retail stores are published on our customer facing websites. Those in place for colleagues working in distribution and office based roles are communicated and regularly updated through internal channels.

68 69 PRINCIPAL RISKS RISK AND IMPACT CHANGE MITIGATING ACTIVITIES LINK IN RISK TO OUR RISK AND IMPACT CHANGE MITIGATING ACTIVITIES LINK EXPOSURE STRATEGY IN RISK TO OUR 2020/21 EXPOSURE STRATEGY BEFORE 2020/21 MITIGATING BEFORE ACTIVITIES MITIGATING ACTIVITIES GOVERNANCE – The Group actively monitors adherence GOVERNANCE (ESG)

GOVERNANCE (ESG) to its existing regulatory requirements GOVERNANCE – The Group Data Protection Officer ANTI-CORRUPTION, and has a number of internal policies ANTI-CORRUPTION, (DPO) has ultimate responsibility RISK MANAGEMENT, and standards to ensure compliance RISK MANAGEMENT, for data protection compliance REGULATORY AND where appropriate. The Group has REGULATORY AND matters across the Group. This role is COMPLIANCE (CONTINUED) a legal team to ensure that various COMPLIANCE (CONTINUED) supported by the Group’s legal team, REGULATORY AND information security team, HR and aspects of the business are aware of COMPLIANCE DATA PROTECTION Profit Protection team who ensure that their regulatory obligations and have The Group operates in a COMPLIANCE all compliance measures are adhered a clear understanding of the measures fast-paced retail environment The General Data Protection to and maintained and updated as they need to implement to ensure which is subject to various Regulation (GDPR), which appropriate. compliance. External and specialist significantly increased the legislation, codes of practice, legal advice is obtained where A number of ‘data protection Group’s risk exposure in the guidance and standards necessary. champions’ have been nominated including, but not limited to, event of non-compliance with The Group’s legal team provides to ensure these measures are the listing rules, consumer data protection requirements training where required and operates implemented effectively in each area of protection and trading has been in force for three a confidential whistleblowing hotline the business. standards legislation, years now. As such, the for colleagues to raise concerns in advertising regulations, Information Commissioner’s The Group utilises its ongoing confidence. The Group expects all product safety and quality Office has now firmly programme of compliance measures, suppliers to comply with its Conditions standards, carbon emission established its enforcement which includes regular audits and of Supply which clearly sets out its reporting, bribery and practices with regard to training, to ensure compliance with the expectations of its suppliers and corruption requirements, GDPR and, following a data protection legislation. The legal includes an Ethical Code of Practice market abuse regulation, period of increased focus on team regularly advise on the manner which all suppliers must adhere to. data protection legislation, in which the data protection legislation competition law and health is being enforced by the relevant and safety law. The legal team will continue to work there remains a heightened with external advisors to ensure that regulatory bodies in each territory and The Group recognises that awareness of data protection procedures are in place to monitor keeps abreast of any developments failure to comply with these rights and protections legal and regulatory changes with in this area. The Group also has an legal frameworks may result amongst data subjects, regards to Brexit. The Group will extensive body of data protection in financial or reputational primarily the Group’s implement appropriate measures to policies which are updated as required. damage to the business. employees and customers. ensure continued compliance with laws The Group is obliged to have Further, as a result of Brexit, and regulations. laws and regulations could an extensive programme The Group is also fully complying diverge between the UK of measures to ensure with the Competition and Market and EU leading to increased compliance with all data Authorities who announced in operational complexity protection legislation December 2020 that they were and a greater risk of non- across the Group and to investigating suspected anti- compliance. regularly review the Group’s competitive behaviour in relation to compliance. This ongoing the price at which Rangers FC-branded review process must include replica football kit was sold in the (i) the carrying out of audits United Kingdom. to test compliance and to refresh processes and materials where necessary; and (ii) training the Group’s employees to ensure there is sufficient awareness of the Group’s data protection obligations.

70 71 PRINCIPAL RISKS PROPERTY RISKS RISK AND IMPACT CHANGE MITIGATING ACTIVITIES LINK IN RISK TO OUR RISK AND IMPACT CHANGE MITIGATING ACTIVITIES LINK EXPOSURE STRATEGY IN RISK TO OUR 2020/21 EXPOSURE STRATEGY BEFORE 2020/21 MITIGATING BEFORE ACTIVITIES MITIGATING ACTIVITIES RETAIL PROPERTY FACTORS Assigning the lease or finding a sub- STORE PORTFOLIO

STORE PORTFOLIO (CONTINUED) tenant is not without risk because if the RETAIL PROPERTY FACTORS Wherever possible, the Group will seek incoming retailer fails then the liability The retail landscape has seen a number of protections when agreeing to pay the rent usually reverts to the significant changes in recent to new property leases: head lessee. The Group monitors the years with a high volume of • New leases taken out for a maximum financial condition of the assignees retail units becoming vacant period of 10 years. closely for evidence that the possibility consequent to a number of • Break option no later than halfway of a store returning is more than retail insolvencies. We firmly through the lease with three year remote. The Board reviews the list of believe that retail occupancy breaks becoming increasingly the assigned leases regularly to assess the levels will decrease norm. probable risk of the store returning to significantly as a direct • Capped rent reviews. the Group under privity of contract. consequence of COVID-19. • Rents which flex with turnover in the The Group continues to invest in store The Group can be financially store. refurbishment, visual merchandising, exposed where it has As a consequence of COVID-19, retail theatre, customer service and committed itself to a long the Group is actively managing the digital integration to enhance the lease in a location which, as property risks and is engaging with consumers’ in store retail experience. a result of external factors, all of its landlords, regardless of the now has high vacancy rates remaining lease term. making it less attractive to When the Group determines that TECHNOLOGICAL RISKS the customer which can drive the current store performance is The Group continues to enhance its multichannel proposition and the threat of cyber crime is further reductions in footfall unsatisfactory then an assessment is constantly evolving resulting in an increased risk exposure before mitigating activities. and potentially lower sales made on whether the Group wants to volumes in the future. continue trading in that location. If it RISK AND IMPACT CHANGE MITIGATING ACTIVITIES LINK Additionally, there could be a does then the landlord is approached IN RISK TO OUR further shift of revenue from to see whether we can reach an EXPOSURE STRATEGY 2020/21 bricks and mortar stores to agreement on a reduction in the rent or BEFORE e-commerce as consumer a change to a turnover based rent. MITIGATING ACTIVITIES preferences change over If it is considered that the best solution time. The COVID-19 pandemic

is to exit the store completely then the AND MULTICHANNEL STORE PORTFOLIO IT SYSTEMS The Group manages this risk by may have accelerated this landlord is approached with a view to a The Group relies heavily on combining the best available premise shift in consumer preferences. complete surrender of the lease. If this its IT systems and networks solutions with active cloud provisioning is not possible then the Group would and those of its partners to form a robust architecture. The alternatively seek to assign the lease to service its customers principal IT services are hosted in or sublet to another retailer. The Group throughout the year across all enterprise grade data centres with high is mindful of general economic factors channels. availability and reliability at the core of and the already wide availability their design. In addition, there are robust of retail unit’s consequent to the Any long-term interruption backup and disaster recovery capabilities bankruptcy or other restructuring in the availability of core in place which are tested periodically processes of other retail businesses. enterprise systems would have a significant impact on throughout the year. the retail businesses. Outside of the core ERP system, in previous financial years the Eurostop ERP system was implemented for a number of our subsidiaries. This drive to achieve consistency on ERP developments across the Group has continued in FY21 by successfully installing the Eurostop ERP system in Onepointfive Ventures Limited in Canada. 72 73 PRINCIPAL RISKS PERSONNEL RISKS

RISK AND IMPACT CHANGE MITIGATING ACTIVITIES LINK RISK AND IMPACT CHANGE MITIGATING ACTIVITIES LINK IN RISK TO OUR IN RISK TO OUR EXPOSURE STRATEGY EXPOSURE STRATEGY 2020/21 2020/21 BEFORE BEFORE MITIGATING MITIGATING ACTIVITIES ACTIVITIES MULTICHANNEL CYBER SECURITY The Group continues to invest in PERSONNEL To help achieve this continued service, SOCIAL RESPONSIBILITY CORPORATE AND Cybercrime is becoming more protecting our sites, systems, and The success of the Group the Group has competitive reward sophisticated with the risk customer data from exposure to cyber is dependent upon the packages for all staff. increasing across all markets. attacks. There has also been a strong continued service of its key More specifically for the retail Any cyber-attack or breach focus on increasing the level of cyber management personnel and businesses, the Group also has a of data may result in the security education and awareness across upon its ability to attract, long established and substantial short-term loss of revenue all Group staff, with a particular focus motivate and retain suitably training function which seeks to and diverted resources, while on the increased risk when working qualified employees. develop training for all levels of retail there is also the risk of a remotely due to the COVID-19 pandemic. employees and thereby increase longer-term negative impact Regular independent assessments of the morale and improve staff retention. on customer confidence and Group’s security posture are undertaken This ensures that knowledge of the the Group’s reputation. to ensure that the correct people, Group’s differentiated product offering processes and technology are in place is not lost, thereby enhancing customer to mitigate against the ever-changing service. threat landscape. The Board regularly considers the

AND RESOURCES INFRASTRUCTURE actions required to ensure there is Through a program of continuous COVID-19 AND REMOTE succession planning for all key roles. WORKING improvement, key parts of the Group’s The significant increase in critical IT infrastructure have been the number of staff working enhanced to support the increase in remotely due to the impact of remote workers including network the COVID-19 pandemic has capacity, and the ability to access more introduced both new security key applications from any location risks and new challenges without compromising on security. ECONOMIC & FINANCIAL RISKS centered around maintaining To address the change in daily working As with other retailers and distributors into retail businesses, the demand for the Group’s products staff productivity. practices, a plethora of training sessions is influenced by a number of economic factors, notably interest rates, the availability of consumer and additional support material have credit, employment levels and ultimately, disposable income. These economic factors are impacted been made available to all staff around by events outside of the Group’s control, in particular the COVID-19 pandemic and Brexit. The Group the use of new technology to ensure seeks to manage this risk by offering a highly desirable and competitively priced product range, they are able to communicate and which is highly differentiated from that of the Group’s competitors. collaborate with colleagues regardless of As the Group continues to expand internationally, the risk of exposure to fluctuations in foreign their working location. exchange rates increases. The economic and financial risks and uncertainties that are specific to the Group and the markets in which its businesses operate are as follows:

74 75 PRINCIPAL RISKS ASSESSMENT OF THE GROUP’S Furthermore, the global COVID-19 pandemic PROSPECTS has presented a series of unprecedented RISK AND IMPACT CHANGE MITIGATING ACTIVITIES LINK The Board regularly reviews the current challenges which have severely tested IN RISK TO OUR financial position and performance and all aspects of our business including our EXPOSURE STRATEGY 2020/21 assesses the future prospects of the Group. multichannel capabilities, the robustness BEFORE As part of this assessment the Board of our operational infrastructure and the MITIGATING reviews the Group’s income and expenditure resilience of our colleagues. Whilst COVID-19 ACTIVITIES projections, cash flows and other key has inevitably constrained our short-term financial ratios along with the potential progress, we firmly believe that we have AND BREXIT GLOBAL EXPANSION, MARKET POSITION TREASURY AND FINANCIAL The Belgium Distribution Centre has impact of, and challenges presented by, the a robust premium branded multichannel The Group is exposed to created a natural hedge for Euros as principal risks outlined on page 51 to 76. proposition with our loyal consumers fluctuations in foreign the fast-moving core ranges for stores The Group’s strategy along with the comfortable engaging with us in any exchange rates. in Mainland Europe that are delivered factors likely to affect the development, channel. into the facility are increasingly Branded product for the JD performance and position of the businesses For the purposes of both Viability and sourced in Euros. Nike orders delivered fascia throughout Europe are detailed throughout the Strategic Report Going Concern Reporting, the Directors into the Belgium DC will be placed in is purchased mainly by JD on pages 42 to 158. have prepared severe but plausible Euros from July 2021. Sports Fashion Plc which is downside scenarios which cover the same the main UK trading business. This has resulted in a reduction in the VIABILITY REPORTING period as the base case, including specific This business then sells to the volume of surplus Euros that are then In accordance with the requirements of the consideration of a range of impacts that international businesses in required to be converted back into UK Corporate Governance Code, the Board could arise from the continued COVID-19 their local currencies. Given sterling. The further expansion of our has assessed the viability of the Group for a pandemic. These scenarios included more the current geographical European logistics capabilities will period of three years to 3 February 2024. prolonged store closures, transition from location of the Group’s stores further enhance the natural hedging physical sales to online and disruptions to this results in a significant and reduce the exposure of Sterling/ A period of three years has been selected supply chain causing delays in receiving Sterling/Euro exposure in Euro. as the Board considered this to be an stock. As part of this analysis, mitigating appropriate period to assess performance the UK trading business for Surplus Euros are also used to fund the actions within the Group’s control should and the potential impact of key risks in a the Euros which are remitted international store developments thus these severe but plausible scenarios fast-paced retail environment. The three back for stock purchases. alleviating the need for local third- occur have also been considered. These year period also strikes a balance between There is also exposure in party financing. forecast cash flows indicate that there the time horizons across the different remains sufficient headroom in the forecast relation to Sterling/US Dollar The resulting Euros that will continue aspects of the Group, such as short-term period for the Group to operate within the consequent to the sourcing to flow back to the UK are converted detailed financial budgets and forecasts, committed facilities and to comply with of private label merchandise, back to sterling with hedging now put medium-term financing considerations and all relevant banking covenants during the where suppliers are located in place for approximately 75% of the retail space planning. forecast period. principally in the Far East anticipated surplus for the year to 29 For the purposes of Viability Reporting, the or Indian Sub-Continent. January 2022. This leaves some Euros Board has focused on the operational risks Strengthening of the US available should the Group need to included in the supply chain section of the Dollar relative to Sterling move quickly to take advantage of principal risks outlined on page 51 to 76. The makes product sourced in this an acquisition or other investment Board has evaluated the impact of these currency more expensive thus opportunity. reducing profitability. risks actually occurring based on severe but The Group sets a buying rate for the plausible scenarios. The evaluation included purchase of private label goods in performing sensitivity analysis by flexing US dollars at the start of the buying the main assumptions in each scenario season (typically six to nine months individually.

before the product actually starts to appear in the stores) and then enters into a number of local currency/US dollar contracts, using a variety of instruments, whereby the minimum exchange rate on the purchase of dollars is guaranteed. Hedging has now been put in place for approximately 95% of the anticipated requirement for the year to 29 January 2022.

76 77 PRINCIPAL RISKS BUSINESS REVIEW

CONCLUSION The Directors have prepared cash flow Sports Fashion Outdoor Unallocated2 Total forecasts for the Group covering a period of IFRS 16 IAS 17 IFRS 16 IAS 17 IFRS 16 IAS 17 VIABILITY STATEMENT at least 12 months from the date of approval Period to 30 January 2021 £m £m £m £m £m £m £m Based on the results of the analysis detailed of the financial statements, which indicate Revenue 5,808.0 5,808.0 359.3 359.3 – 6,167.3 6,167.3 above, the Board has confirmed that the that the Group will be able to operate Gross profit % 48.4% 48.4% 42.2% 42.2% – 48.0% 48.0% Group can maintain profitability in each within the level of its agreed facilities and EBITDA scenario and would not exceed the funding covenant compliance. These forecasts before exceptional items 955.1 636.2 35.1 13.1 – 990.2 649.3 facility that is available to the Group. include a number of assumptions including Depreciation (454.9) (151.2) (32.9) (11.8) – (487.8) (163.0) The Board therefore has a reasonable gross profit margins and the response Amortisation1 (15.5) (15.5) (4.6) (4.6) – (20.1) (20.1) expectation that the Group will be able to of customers to transition from physical Operating profit / (loss) continue in operation and meet its liabilities sales to online and vice versa as lockdown before exceptional items 484.7 469.5 (2.4) (3.3) – 482.3 466.2 as they fall due over the three year period restrictions ease. Net interest expense (51.2) – (3.7) – (6.1) (61.0) (6.1) of the assessment. Profit / (loss) before tax The Directors have considered all of the and exceptional items 433.5 469.5 (6.1) (3.3) (6.1) 421.3 460.1 factors noted above, including the inherent Exceptional items (76.9) (76.9) (20.4) (27.9) – (97.3) (104.8) GOING CONCERN uncertainty in forecasting the impact of Profit / (loss) before tax 356.6 392.6 (26.5) (31.2) (6.1) 324.0 355.3 The financial statements are prepared on the COVID-19 pandemic, and are confident a going concern basis, which the Directors that the Group has adequate resources to 1 This is a non-trading charge relating to the amortisation of various fascia names and brand names which arise consequent to the accounting of acquisitions made over a number of years. These charges are as follows: believe to be appropriate for the following continue to meet all liabilities as and when • Sports Fashion: £15.5 million (2020: £5.4 million) reasons. they fall due for a period of at least 12 • Outdoor: £4.6 million (2020: £4.5 million) 2 The Group considers that net funding costs are cross divisional in nature and cannot be allocated between the segments on a meaningful basis. At 30 January 2021, the Group had net months from the date of approval of these cash balances of £795.4 million (2020: financial statements. £429.9 million) with available committed UK SPORTS FASHION the year in Exeter, Plymouth and Brighton. borrowing facilities of £700 million (2020: We intend to continue with this programme £700 million) of which £nil (2020: £nil) UK AND REPUBLIC OF IRELAND in the new financial year with new larger has been drawn down (see Note 19) and JD & SIZE? format stores scheduled to open in a US facilities of approximately $300 million Neil Greenhalgh We are encouraged by the resilient nature number of key locations including Belfast, of which $nil was drawn down (2020: Chief Financial Officer of trading in our core UK and Republic of Edinburgh and Stratford, East London. $nil). These facilities are subject to certain 13 April 2021 Ireland market throughout the year. During PREMIUM FASHION covenants (see Note 19). With a UK facility the initial closure period in the Spring Our premium brand Fashion businesses of £700 million available up to 6 November approximately 70% of the combined store are an important part of our Group, further 2024 and a US facility of approximately and online revenues from the prior year were elevating our overall proposition. Mainline $300m available up until 18 June 2023, retained through solely digital channels. This Menswear, which to all extents is a pureplay the Directors believe that the Group is retention rate increased to 100% through online business, had a very strong year in well placed to manage its business risks November when stores in the UK were particular with new customers attracted by successfully despite the current uncertain closed again. There is cause for optimism its reputation for a high quality digital and economic outlook. in the future of our store estate though as, customer service experience. Elsewhere, in even with materially lower footfall into many Since the year end, the Company completed those businesses which have both physical city centres and major shopping malls, sales the placing of new ordinary shares in and digital offers, we are reassured by the in like for like stores grew by more than 4% the capital of the Company raising gross fact that the retention of sales through in the Q3 period from August to October, proceeds of approximately £456.0 million the various temporary closure periods was which was largely a period free from after costs. In addition, the Group has broadly consistent with that seen in JD. We restrictions. completed acquisitions in the new year to continue to make selective complementary date with aggregate cash consideration Recognising the benefits that accrue from acquisitions in this area where they expand paid of approximately £380 million. At investing in our retail estate in terms of our geographical presence or brand the date of approval of these financial consumer engagement, we have continued relationships. statements the Group had net cash of with our programme of upsizes in key £709.5 million as at 6 April 2021. locations with bigger stores opened during

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GYMS The retention of sales through this closure ASIA PACIFIC benefitted gross margins in the second The lockdowns in the year have brought into period in these countries was approximately JD half of the year. sharper focus the physical and mental health 60%, which is slightly ahead of the retention We are pleased with the further positive • We are encouraged by the development benefits of regular exercise. Therefore, that we saw in the Spring. There continue developments in Australia with 30 stores of JD in the United States with 49 stores we are pleased to welcome our members to be partial closures or restricted trading now trading (2020: 24) after six stores trading at the end of the year (2020: 11) back to our clubs in England which have hours elsewhere including Italy, France and were opened in the year. Other than the including the conversion of 37 former now re-opened and look forward to re- Spain. temporary closure of seven stores in the Finish Line stores, the majority of which Melbourne area through September and opening in the other nations shortly. We As would be expected, as a direct result of were converted in the lower cost ‘badge October, the stores in Australia were largely are confident that our JD and X4L clubs the COVID-19 outbreak, the number of new flip’ style, complementing the opening of able to remain open throughout the year. offer a safe environment for our members, store openings this year was reduced with our first flagship store in Times Square, with significant investments made in 31 net new stores opened during the year, Elsewhere, the performance in our other New York. It is our intention to convert up reconfiguring the space in our clubs to which included a flagship style store on the territories was negatively impacted by to 50 more Finish Line stores to JD in the facilitate social distancing and providing key shopping street of Rue de Rivoli in the the lack of tourism from China which is a current financial year. sanitisation stations. centre of Paris. We expect to increase the strong driver of footfall in Malaysia and It is inevitable that the COVID-19 pandemic number of new stores in the new financial South Korea in particular. We would not FINANCIAL PERFORMANCE resulted in a temporary slowing of the year with openings closer to our previously expect the performance in these markets Whilst COVID-19 has inevitably constrained organic club opening programme with stated ambition of one new store per week to materially improve until there is a re- our short term progress, we firmly believe only one new gym, being a second club in on average. opening of the tourist sector. that we have a robust premium branded Glasgow, opening during the year. We are SPRINTER & SPORT ZONE multichannel proposition with our loyal optimistic that we will return to previous As with JD, online trading is less mature for NORTH AMERICA consumers comfortable engaging with levels of activity in the new financial year Sprinter and Sport Zone across Iberia and, FINISH LINE & JD us in any channel. The resilience of our with at least five further organic clubs consequently, only 20% of the combined The Finish Line and JD businesses have had businesses is reflected in the fact that, opening this year complementing further physical and digital revenues in the prior an exceptional year. There are a number of despite the challenges of the year, the conversions of the acquired X4L clubs. year were retained online in the period of reasons for this: profitability in Sports Fashion has largely EUROPE the national store closures in the Spring. • The United States is widely regarded as been maintained with a profit before tax and exceptional items of £433.5 million JD & SIZE? We were encouraged though with trading the most mature market in the world for (2020: £468.5 million). On a proforma basis Across Europe, the average retention through the second half of the year, prior online trading with our digital team at under IAS 17 ‘Leases’ the profit before tax of sales through the period of the to the second national closure in Portugal Finish Line highly regarded within the and exceptional items would have been temporary store closures in the Spring in early January 2021, with total growth industry. As such, it is not surprising that, £469.5 million (2020: £492.2 million). was approximately 35% with a stronger across the region of around 10%. There of all our global businesses, it was Finish retention in Northern Europe where online have also been further temporary closure Line and JD in the United States that Included within the result is a very positive is more mature. Footfall was initially slow periods in Spain although these have been saw the greatest retention rate through performance from the Finish Line and to recover as stores re-opened although it at the local rather than national level with the temporary closure period in the first JD businesses in the United States with progressively improved through the Summer some restrictions limited to weekends half with online revenues equivalent to the Government stimulus in the first half and early Autumn. Like for like store sales only. Restrictions across both Spain and approximately 75% of the combined of the year driving a material, but short were positive in Q3 in many markets Portugal have now begun to ease and we physical and digital revenues in the prior term, impact on performance with total although the significant exception to this are confident that we are well placed to year. revenues from these businesses increasing were the stores in Iberia where a large part progress positively. • Consistent with other national retailers to £1,704.3 million (2020: £1,601.5 million) of employment, and consequently the wider in the United States, our businesses and the profit before tax and exceptional economy, is linked to tourism. Restrictions benefitted significantly from May to July items increasing significantly to £156.6 were reintroduced before Christmas in a from the fiscal stimulus made available by million (2020: £94.2 million). Elsewhere number of markets including the closure of the Federal Government. Total revenues in North America, in the six week period all stores in Germany and the Netherlands. across physical and digital channels after completion, the Shoe Palace business increased by nearly 50% in this period. has contributed a profit before tax and This strong demand resulted in sector exceptional items of £13.9 million with wide lower inventory levels which are not revenues of £56.1 million. expected to normalise until later in 2021. Overall gross margins increased within Consequently, there was less promotional Sports Fashion by 1.0% to 48.4% (2020: activity through the rest of the year than 47.4%). This is largely due to a stronger might have been expected which has margin in the United States with strong

80 81 BUSINESS REVIEW FINANCIAL REVIEW

demand resulting in lower levels of The Go Outdoors, Blacks, Millets and IFRS 16 Proforma IAS 17 promotional activity in the overall market Ultimate Outdoors businesses now operate 2021 2020 2021 2020 compared to previous years. on common merchandising systems with £m £m £m £m Revenue 6,167.3 6,110.8 6,167.3 6,110.8 After recognising exceptional items in the shared commercial resources. Further, Gross profit % 48.0% 47.0% 48.0% 47.0% period of £76.9 million (2020: £40.6 million) all stock is now fulfilled from a separate EBITDA before exceptional items 990.2 979.8 649.3 623.6 principally relating to the impairment of dedicated warehouse at Middlewich. This Depreciation / amortisation (507.9) (462.9) (183.1) (151.8) intangible assets arising on the acquisition operational integration provides the most Operating profit before exceptional items 482.3 516.9 466.2 471.8 of the Footasylum business in previous cost efficient platform for these businesses Net interest expense (61.0) (78.1) (6.1) (6.2) years, the profit before tax in Sports Fashion to develop. Profit before tax and exceptional items 421.3 438.8 460.1 465.6 was £356.6 million (2020: £427.9 million). We are encouraged by the performance Exceptional items (97.3) (90.3) (104.8) (90.3) of all of our Outdoor businesses in the Profit before tax 324.0 348.5 355.3 375.3 second half of the year. In the Q3 period, OUTDOOR Basic earnings per ordinary share 23.05p 25.29p 26.26p 27.44p which was largely a period free from trading We acknowledge that the restructure of Go Adjusted earnings per ordinary share 32.19p 34.26p 36.19p 36.41p restrictions, we saw sales growth across the Outdoors in the first half of the year was a Total dividend payable per ordinary share 1.44p 0.28p 1.44p 0.28p combined physical and digital channels of difficult process. However, we believe that Net cash at period end (a) 795.4 429.9 795.4 429.9 it was a necessary exercise as the inflexible more than 10%. Many of our stores had to a) Net cash consists of cash and cash equivalents less interest-bearing loans and borrowings and uncompetitive terms of the historic be closed again at various times through Q4 property leases in the business meant that with total sales retention through the closure REVENUE, GROSS MARGIN AND PROFIT BEFORE TAX Go Outdoors was in danger of becoming a periods of approximately 80%, which was OVERHEADS Profit before tax and exceptional items material drain on Group profitability for the ahead of the retention rates that we saw in Notwithstanding the temporary closure decreased slightly to £421.3 million (2020: foreseeable future. The Group protected the initial closure period in the Spring. of stores in a number of countries at £438.8 million). the interests of creditors in this process various times in the year, total revenue by honouring all liabilities with regards to The profit before tax and exceptional for the Group increased by approximately branded stock suppliers, employees, HMRC items includes a profit of £170.5 million 1% in the year to £6,167.3 million (2020: taxation, customer returns and historic (2020: £94.2 million) from our combined £6,110.8 million). This includes total gift card sales. Further, all pre-existing Go businesses in the United States of which Peter Cowgill revenues of £1,760.4 million from our Outdoors employees transferred across to Shoe Palace contributed £13.9 million in the Executive Chairman combined businesses in the United States the new business with their previous terms six weeks post acquisition. 13 April 2021 (2020: £1,601.5 million) of which Shoe and conditions of employment preserved. Palace, which was only part of the Group Group profit before tax decreased by To date, two significantly loss-making stores for approximately six weeks following approximately 7% to £324.0 million (2020: have been closed with new terms either its acquisition on 14 December 2020, £348.5 million). completed or substantially agreed on a contributed £56.1 million. Given the Proforma Results Under IAS17 ‘Leases’ further 53 stores. Dialogue continues with temporary closure periods in the year, it On a proforma basis under IAS 17 ‘Leases’, landlords on the remaining stores. would not be meaningful to present sales with rents recognised according to This restructure has given Go Outdoors a on a like for like basis. contractual terms, the headline profit before positive platform from which to develop Total gross margin in the year of 48.0% tax and exceptional items for the Group and we intend to invest in all aspects of the was slightly ahead of the prior year would have been £38.8 million higher at business to provide an instore and digital (2020: 47.0%) largely due to a stronger £460.1 million (2020: £26.8 million higher experience which inspires consumers to margin in the United States with strong at £465.6 million). After exceptional items get outdoors. We will do this by presenting demand consequent to the federal totalling £104.8 million (2020: £90.3 authoritative product offers in key fiscal stimulus driving lower levels million), the profit before tax on the same categories. This includes fishing where we of promotional activity in the overall proforma basis would have been £355.3 have now started to integrate the Fishing market compared to previous years. million (2020: £375.3 million). Republic business into larger Go Outdoors stores by creating specialist areas for fishing products. In December 2020, we further delivered on this approach through the acquisition of the highly regarded Naylors equestrian business which, on acquisition, had three standalone stores. As with Fishing Republic, it is our intention to include Naylors branded equestrian areas in Go Outdoors stores where space allows.

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There were exceptional items in the year of £97.3 million (2020: £90.3 million). These spend in the period of £73.5 million (2020: exceptional items comprised: £106.5 million). It is significant that whilst IFRS 16 Proforma IAS 17 the overall spend on our retail fascias 2021 2020 2021 2020 may have reduced, the spend across our £m £m £m £m combined retail fascias in North America Impairment of goodwill and fascia names (1) 56.2 43.1 56.2 43.1 actually increased slightly to £21.0 million Movement in fair value of put and call options (2) 20.7 31.4 20.7 31.4 (2020: £20.4 million). Restructuring of Go Outdoors (3) 20.4 – 27.9 – The Group’s principal bank facilities Integration of Outdoor systems continue to comprise a £700 million and warehousing (4) – 7.2 – 7.2 committed syndicated Revolving Credit Integration of Sport Zone into Sprinter infrastructure (5) – 8.6 – 8.6 Facility (‘RCF’) in the UK, which expires on Total exceptional charge 97.3 90.3 104.8 90.3 6 November 2024 and a syndicated Asset 1. The impairment in the current period principally constitutes a charge of £55.6 million relating to the impairment of the goodwill and fascia name Based Lending Facility (‘ABL’) in the United arising in prior years on the acquisition of Footasylum. The impairment in the prior period relates to the impairment of the goodwill arising in prior States which has a maximum revolving years on the acquisition of Go Outdoors Topco Limited and Choice Limited. 2. Movement in the fair value of the liabilities in respect of the put and call options. advance amount of approximately $300 3. The net impact consequent to the restructuring of Go Outdoors in the period including a charge of £33.3 million in relation to the impairment million and expires on 18 June 2023. Neither of intangible assets, a charge of £4.9 million in relation to the impairment of leasehold improvements and a credit of £17.8 million in relation to the extinguishment of lease commitments (the credit in relation to the extinguishment of lease commitments under IAS 17 ‘Leases’ was £10.3 million). facility was drawn down at the period end 4. Costs arising from the integration and consolidation of the principal IT systems, warehousing and other infrastructure in Go Outdoors. (2020: UK RCF £nil; US ABL $nil). 5. Costs associated with transferring the stocks and other operations of Sport Zone into the Sprinter infrastructure. Subsequent to the period end, the Group CASH AND WORKING CAPITAL year. Therefore, stocks in the like for like undertook a successful placing with 58.4 The net cash balance at the end of the businesses of £762.8 million are £49.0 million new shares admitted to the market period was £795.4 million (2020: £429.9 million lower than the previous year largely on 8 February 2021, a process which has million) with very strong cash generation in as a result of lower stocks in the combined raised approximately £456.0 million (after the United States reflecting the exceptional Finish Line and JD business in the United costs). trading in that country, particularly through States where the period end stocks of We will continue to use our cash the first half. The net cash at 30 January $167.7 million were approximately 40% resources to make selective acquisitions 2021 is stated net of £68.9 million ($94.9 lower than the previous year (2020: $282.2 and investments where they benefit our million) in relation to deferred consideration million). As with other retailers in the United strategic development. on the acquisition of Shoe Palace which is States, we have recently experienced due to be paid, with no conditionality or some minor delays in receiving product dependence on performance criteria, to the due to delays at ports. To date, this is not Mersho Brothers on various dates through materially constraining the overall financial 2021. The net cash position at the period end performance with margins ahead of prior is also stated before the cash consideration year levels. Some new product launches paid on completed acquisitions in the new have had to be pushed back though and year to date, which total approximately we continue to work with our international £380 million. The net cash also includes brand partners to ensure the timely flow of a number of temporary factors which, in product. aggregate across the Group, total in excess COVID-19 has inevitably had a significant of £125 million and will likely reverse in the impact on the projects which we have first half of the year to 29 January 2022. This undertaken in the period with gross capital total principally relates to deferred rents as expenditure (excluding disposal costs) we continue to reach agreements with the decreased to £132.0 million (2020: £177.2 relevant landlords. million) as construction activity, including Stocks at the end of the period of £813.7 the fitting out of stores, was temporarily million are broadly consistent with the paused on occasions in a number of prior year (2020: £811.8 million). However, countries. Despite these challenges, the this includes £50.9 million of stocks in primary focus of our capital expenditure businesses which were acquired in the remains our physical retail fascias with a

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TREASURY FACILITIES any potential acquisition activity to be TAXATION Interest rate hedging has not been put in funded in Euros, is €450 million. Hedging We are committed to paying our fair share place on the current facility. The Directors contracts are in place to sell €336.0 of tax to build a successful and sustainable continue to be mindful of the potential for million meaning that the Group is currently business. Our approach to responsible tax rises in UK base rates but, at present, given exposed on exchange rate movements management is to pay the correct amount the highly seasonal nature of the Group’s for €114.0 million of the current year’s of tax in the right jurisdictions within the core cashflows, they do not believe that a estimated surplus. applicable statutory deadlines. The tax we long term interest hedge is appropriate. This pay reflects the underlying commercial position continues to be reviewed regularly. DIVIDENDS AND EARNINGS PER SHARE transactions across our global business. Working capital remains well controlled with Given the significant contribution to Whilst the UK mainstream corporation tax suppliers continuing to be paid to agreed profitability from the Group’s international rate is 19%, the effective rate of tax on profit terms and settlement discounts taken operations, particularly those in the United from continuing operations for the Group whenever due. States, the Board have concluded, after has increased from 28.1% to 29.1% due to a careful and considered review, that it impairments of goodwill on consolidation, FOREIGN EXCHANGE EXPOSURES is appropriate to resume the payment the increase in the value of put options, the The Group has two principal foreign of dividends. However, the Board also level of overseas profits in some territories exchange exposures: recognises that, in the current situation, which are subject to higher rates of dividends should be modest with funding corporation tax than the UK, in particular • The sourcing of private label merchandise retained for our ongoing development the US, and losses which, in the current from either the Far East or Indian Sub- opportunities. Accordingly, the Board climate, have not been recognised. Continent which usually has to be paid proposes paying a final dividend of 1.44p Excluding both exceptional items and prior for in US Dollars. A buying rate is set at (2020: nil) per ordinary share which is at year adjustments from the tax charge, the the start of the buying season (typically the same level as the final dividend made effective core rate from continuing activities six to nine months before product is after the year to 2 February 2019. Subject has increased from 25.2% to 28.2%. This delivered to stores). At this point, the to shareholder approval at our AGM, the core effective rate continues to be above Group aims to protect the anticipated US proposed final dividend will be paid on the UK standard rate due to the effects of Dollar requirement at rates at, or above, 2 August 2021 to all shareholders on the the above. the buying rate through appropriate register at 25 June 2021. foreign exchange instruments. The Group’s forecast requirement for US Dollars in The adjusted earnings per ordinary share the period to January 2022 is now $350 before exceptional items decreased by 6.0% million. Cover is in place for $331.6 million to 32.19p (2020: 34.26p). meaning that the Group is currently The basic earnings per ordinary share Neil Greenhalgh exposed on exchange rate movements decreased by 8.9% to 23.05p (2020: Chief Financial Officer for $18.4 million of the current year’s 25.29p). 13 April 2021 estimated requirement. • The Group is also exposed to the movement in the rate of the Euro from the sale of its UK sourced stocks to its subsidiaries in Europe. However, the Group has an element of a natural hedge on this exposure as the Euros received for that stock are then reinvested back in those European subsidiaries to fund the development of both new stores and refurbishments. The anticipated surplus over and above the planned investment levels in the period to January 2022, pre

86 87 PROPERTY AND STORES REVIEW

PROPERTY DEVELOPMENTS Austria: Following the opening of JD’s SPORTS FASHION The property developments of note in the first store in Austria in 2019, we have year to 30 January 2021 were as follows: added a further three stores including a store in Shopping City Sud, the largest JD COVID-19 LEASE NEGOTIATIONS • UK & Republic of Ireland – Nine new shopping centre in Austria. JD is a world class retail fascia with an It has been well publicised that we stores were opened in the period with elevated multichannel proposition. A have withheld the payment of some 11 stores permanently closed. Despite • Asia Pacific – At the period end there unique and constantly evolving sports rents across our global retail estate the challenges of COVID-19 we have were 69 stores trading as JD across the and fashion premium brand offer is this year where we have been forced continued to enhance our proposition in region following a net increase of five presented in a vibrant retail theatre to close as a result of the COVID-19 smaller cities and larger provincial towns stores during the period: with innovative digital technology. pandemic. We have worked tirelessly by replacing six of the 11 closures with Australia: We opened six stores in the larger stores. Ensuring that we remain IMPACT OF COVID-19 with our landlord partners in all year taking the total number of stores in in positions with the highest footfall and As a result of the COVID-19 pandemic, markets to find solutions to support Australia to 30. We are planning a similar have sufficient space to present our full there have been periods of store the business through these closure number of new stores in 2021 with one offer in major markets remains a key closures in a number of markets periods. We have now reached store open already in Adelaide which strategy. In addition, we completed the during 2020 and this has continued agreement in the vast majority of is our first store in that city. Elsewhere, renegotiations of new terms on 26 stores into 2021. Whilst the stores have cases and continue to engage with we intend to strengthen our presence in during the year with an average saving of been closed, consumers have readily the small number of those Landlords the suburban areas surrounding Sydney, more than 25% achieved. switched to online channels reflecting who, to date, have not been prepared Melbourne, Brisbane and Perth. to share any of the financial burden the benefits of the agile omni- • Europe – At the start of the financial South Korea: During the year we added during this challenging time when our channel approach that the Group has year there were over 300 stores in 12 two stores and closed three, with the stores have not been trading. developed over a number of years. countries and JD has increased its store strategy being to focus on locations with There may be a more permanent presence further with a net increase of 31 a high volume of tourist footfall such as shift in consumer preference in the stores across its existing territories. Our the Lotte World Mall, Seoul. future from bricks and mortar stores previously stated ambition of opening one • North America – COVID-19 has not to e-commerce, however, we believe store on average per week across Europe changed our overall view on the strategic it is clear that future competitive was impacted by the COVID-19 outbreak development of JD in the United States advantage will come from operating but, despite this, JD has achieved further and JD’s presence was cemented by the stores in tandem with a strong online expansion this year with the key changes opening of our 16,000 sq. ft. flagship offer. Stores give a platform to to note as follows: store in Times Square, New York in the showcase product, provide consumers Germany has seen the largest increase in second half of the year. Furthermore, we with the opportunity to physically see JD stores in mainland Europe, with 11 new continued to increase our critical mass and try the product, and give us the stores, including larger stores in Hanover by converting 37 Finish Line stores to JD. operational flexibility and agility to and Stuttgart to allow JD to offer its full 34 of these conversions were in the lower offer an enhanced speed of service proposition. There was one closure in cost ‘badge flip’ style with the installation for online orders. We will continue Berlin to make way for a flagship style of fixtures for apparel and changes to the to invest in property with a focus store that is expected to open in the first signage. These conversions require less on the international expansion of half of 2021. non-trading time and can be delivered the JD fascia. We are confident that Spain: We have increased the JD store with substantially less capital investment. our increasing international reach base further with 70 stores in total at the and the consistency of our premium At the beginning of the period, we year end after opening nine stores during proposition across our territories will acquired Onepointfive Ventures Limited the period. The JD Spain stores perform be even more attractive at this time to based in Vancouver, Canada. This well in similar locations to our Sprinter the major international landlords and acquisition will provide the platform to stores and we have continued to target property agents. develop JD in Canada and we anticipate these areas. opening our first store in the second half France: JD now has 78 stores in France of 2021. after a net increase of seven stores, including the conversion of one former Chausport store. In the second half of the year, JD opened a flagship style store on the key street of Rue de Rivoli in the centre of Paris.

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SIZE? Size? specialises in supplying the finest INTERNATIONAL SPORTS FASHION FASCIAS products from the best brands in footwear, apparel and accessories with stores and We continue to invest in the physical dedicated local websites in nine countries. EUROPE and online channels to ensure a robust During the year we added a store in The Group’s other international fascias platform for future growth across Iberia. Newcastle, relocated the Glasgow store across Europe focus on active sport and closed four stores in the UK and one participation and fitness with the key • Perry Sport and Aktiesport (the store in France. The Size? websites typically fascia’s being: Netherlands): We continue to take action contribute more than 50% of overall sales for • Chausport (France): Consistent with where it is necessary, opening one new Size? and the consequence from a property previous messaging, there has been Aktiesport store and closing two in the perspective is that we would not expect to minimal change to the Chausport store year. The Group remains committed to the materially increase the number of stores portfolio in this financial year with one business and we continue to make limited in our existing territories with the focus on store converted to JD. investments where they enhance our ensuring that our stores in the major cities • Sprinter & Sport Zone (Iberia): A further proposition with one new store opened in have sufficient space to present the full offer seven stores opened during the year the year. and provide the full digital experience to under the Sprinter fascia. These stores both consumers and our third party brand had an average size of 5,800 sq. ft. which partners. is considered to be the most effective We are currently on site fitting out our first trading space for the core offer focusing Size? store in North America with the store on active sport participation and fitness. on Queen Street, Toronto, scheduled to open later in the Spring.

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UNITED STATES FASHION FASCIAS

Our Premium Fashion businesses further • The Hip Store – The Hip Store continues SHOE PALACE FINISH LINE elevate our overall offer. Our principal to bring together an eclectic mix of The acquisition of Shoe Palace in December During the financial year we have seen a Fashion businesses comprise: domestic and international labels including 2020 complements the Group’s ongoing significant improvement in performance and • Scotts & Tessuti – There are 59 stores in emerging talent and globally-established positive developments from the existing whilst the temporary federal stimulus has total at the end of the year following two brands. The Hip Store has been an Finish Line and JD fascias in the US. In inevitably had a significant positive impact, closures during the period. We continue institution in Leeds for over 20 years with particular, this acquisition will significantly we firmly believe that the performance has to look to exit smaller stores in secondary a second store, in Nottingham, opened in increase the Group’s presence on the West also benefitted from the constant review markets and focus our activity on larger the previous year. Coast of the United States and strengthen of the store portfolio and the continued space stores in premium centres where We have made further selective its connection with the Hispanic and Latino remediation of the issues caused by a lack we can showcase the full range of the complementary acquisitions in this area consumers, who represent a significant of investment in the real estate portfolio premium fashion offer. during the financial year with four new proportion of Shoe Palace’s customer base. over a number of years prior to acquisition. • Choice has six stores and is a retailer of stores added to the Fashion portfolio The intention is that, from next year, the JD We have continued to address the size of premium men’s, women’s and children’s under various fascias including Cricket in Finish Line and Shoe Palace teams will begin the portfolio by reviewing each store on a apparel and footwear. There are many Liverpool, Wellgosh in Leicester, and Oi to share ideas and best practices as we look case by case basis and as a result 37 Finish similarities with Scotts and Tessuti with Polloi based in the Northern Quarter in to create an unrivalled proposition which Line stores were converted to JD during the the management of the businesses Manchester. connects with all relevant consumers. We period and a further seven underperforming working increasingly close together to are confident that our combined fascias will stores were closed. At the end of the deliver a consistent proposition in this provide us with the flexibility and expertise financial year there were 464 Finish Line sector. to fulfil our mutual ambition of becoming a stores across 42 US states. prime customer destination for footwear and There has also been a further reduction • Base Childrenswear and Kids Cavern, two lifestyle apparel in the United States. in the number of Macy’s concessions this specialist retailers of children’s premium apparel and footwear with 11 stores in total. Based in San Jose, California, Shoe Palace year with a net decrease of five branded currently has 167 stores, the vast majority concessions in the year, all of which were as of which trade under the Shoe Palace a consequence of the closure of the Macy’s banner. More than half of the stores are host store. At the year end there were located in California, although there branded concessions in 290 Macy’s stores is also an established retail presence across 38 US states. in Texas, Nevada, Arizona, Florida, Colorado, New Mexico and Hawaii.

92 93 PROPERTY AND STORES REVIEW

GYMS OUTDOOR

During the year we significantly increased It is inevitable that the COVID-19 pandemic our critical mass and national presence with resulted in a temporary slowing of the BLACKS, MILLETS AND ULTIMATE fundamentally restructured, Go Outdoors the acquisition, out of administration, of an organic club opening programme with OUTDOORS had a future in the Group. Consequently, the initial 50 gyms which had previously traded only one new JD site, being a second Our approach continues to be to keep Group, via its newly incorporated subsidiary as Xercise4Less for a total consideration club in Glasgow, opened during the year. leases flexible with break clauses wherever Go Outdoors Retail Limited, subsequently of £24.2 million. We have subsequently As at the 30 January 2021 there were 70 possible so we can react quickly if market re-acquired the business and substantially returned 11 of the acquired sites back to gyms in total and we are optimistic that conditions change. Whilst there has been all of the assets of Go Outdoors from its the relevant landlords and would currently we will return to previous levels of activity no change to the Blacks store portfolio in Administrators with this proposal being anticipate retaining at least 36 of the in the new financial year with at least five the year, our policy of flexibility means that reviewed and cleared in advance by the remaining gyms longer term although further organic clubs opening this year the Millets store portfolio has continued independent Pre Pack Pool. negotiations on new leases are still ongoing complementing further conversions of the to change with the closure of four stores The Group has subsequently completed or on a small number of sites. The programme acquired X4L clubs. during the year along with the relocation of substantially agreed new leases with terms of works to convert these gyms to the JD one store. Five stores continue to trade as that were more appropriately structured for fascia was accelerated through the most Ultimate Outdoors following the closure of 53 stores. Advanced negotiations continue recent temporary closure period with a total one store in the year at Merryhill. for the remaining stores that the Group of 19 clubs now converted to the JD format. would like to trade from longer term with The lockdowns in the year have brought GO OUTDOORS two significant loss-making stores closed to into sharper focus the physical and mental Following the onset of COVID-19, the future date. viability of Go Outdoors became materially health benefits of regular exercise. We Prior to Go Outdoors entering into uncertain with the enforced closure of the are confident that our JD and X4L clubs administration, we had started to integrate stores on 23 March 2020 bringing into offer a safe environment for our members, the Fishing Republic business into the Go sharper focus the underlying structural with significant investments made in Outdoors stores by creating dedicated weaknesses of the business. In particular, reconfiguring the space in our clubs to areas for fishing products where space the performance of Go Outdoors is very facilitate social distancing and providing allows. As a consequence, we did not need dependent on levels of footfall into stores sanitisation stations. a large number of stand-alone Fishing which, historically, have represented more Republic stores with a further two stores than 90% of annual revenues. Further, closed in the year leaving a portfolio of the terms of the property leases were three stores at the end of the year. very inflexible with the stores having an average remaining period to lease expiry In December 2020, the Group also acquired of approximately ten years with upwards the highly regarded Naylors equestrian only rent reviews, many of which are fixed business which had three stores on at rates above inflation regardless of the acquisition. As with Fishing Republic, it is market rent in the location. our intention to include Naylors branded equestrian areas in to Go Outdoors stores Reduced consumer confidence and the where space allows. requirement to maintain social distancing in stores as a result of COVID-19 impacted footfall. This, combined with the inflexible TISO, ALPINE BIKES AND GEORGE FISHER lease terms, resulted in the Board deciding There were no changes to the Tiso store that it was not in the best interests of portfolio during the financial year. Tiso the wider Group, and its shareholders, to continued with 13 stores; 12 of which are in provide continued financial support to Go Scotland, consisting of nine Tiso Outdoor Outdoors in its current form. Accordingly Experience stores and three stand alone Go Outdoors entered into administration on Alpine Bikes stores, plus the highly regarded 23 June 2020. George Fisher store in Keswick. The Board considered a number of strategic For a complete table of store numbers see options which included the appointment of page 32. advisers in May 2020 to market the business for a potential sale. The Board examined the offers made through the marketing process together with the other options available Peter Cowgill to it and ultimately determined that, if Executive Chairman 94 13 April 2021 95 CORPORATE AND SOCIAL RESPONSIBILITY

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ENVIRONMENT, SOCIAL AND ESG SECTION CONTENTS

GOVERNANCE (ESG) 100 OUR PEOPLE 100 Response to COVID-19 101 Inclusivity OVERVIEW AND GOVERNANCE fascias and territories. The ESG Committee Prior to the Group’s entry into the FTSE is responsible for the assessment and 102 Employee Welfare, Communication and Engagement 100, the Board instigated a formal ESG publication of our ESG-related principal 103 Learning & Development engagement process, leading to a step- risks, our environment related investment change in our commitment to provide plans, and the communication of our 105 Talent Acquisition, Kickstart Scheme & Opportunities within the Group greater transparency and performance strategy to colleagues, customers and comparison on our environmental investors. 107 HEALTH & SAFETY performance. Our ESG Committee has shared our 2020 109 ENVIRONMENT AND CLIMATE CHANGE Cognisant of our enhanced reporting achievements and 2021 objectives with 109 Disclosures and standards responsibilities as part of the FTSE 100, our leading brands, outlining our progress the Group founded its ESG committee to within the period, and encouraging our 111 Key environmental achievements determine ESG-related strategy, corporate largest suppliers to increase the disclosure 111 Climate change - reporting and compliance risk-assessment and monitoring of ESG of information relating to their own 114 Science based target initiatives (SBTi’s) performance across the Group’s respective environmental stewardship and progress. 114 Environmental objectives (including climate change) – 2020/21 progress 118 Greenhouse Gas (GHG) emission data 121 Water stewardship and biodiversity 122 Environmental resource management

125 ETHICAL SOURCING 125 JD Ethical Code of Practice / Code of Conduct 127 Sustainability 134 Modern Slavery 137 Supply Chain Audit & Compliance

140 THE JD FOUNDATION

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INCLUSIVITY The campaign is ongoing and the first phase OUR PEOPLE The Group is absolutely committed to of virtual training sessions on the topic promoting policies which ensure that were attended by 540 employees across The talented individuals working with Throughout 2020 our people continued colleagues and customers are treated 151 sessions. The feedback received has the Group are integral to our continued to deliver in challenging circumstances. equally regardless of ethnicity, social origin, been exceptional with 91% of participants success, delivering exceptional results year This is testament to the outstanding work gender, sexual orientation, disability or stating that 50% or more of the information after year. We want to attract, retain and ethic which exists throughout the Group. age. Following the tragic death of George received during training was new to them. develop the very best talent at all levels Our colleagues’ response to the challenges Floyd in the United States, we worked with As a result, over 80% of participants stated throughout the Group and believe that an resulting from the COVID-19 pandemic has our teams around the world and with both that they will be more aware of the way in engaged workforce is an essential ingredient been a source of great pride. We truly have the JD Foundation and the Finish Line which they behave and communicate. towards continued success. We strive to an extraordinary team across all fascias, Youth Foundation to ensure that, across To promote widespread engagement in create a workplace in which everyone is divisions and sectors of the business the Group, we play an integral part in what safe; supported and respected; treated globally. the campaign, colleagues were also asked is hopefully a united global approach to to help the JD Foundation to nominate its fairly and taken care of, listened to, and The patience of furloughed colleagues eradicate not just racism but all forms of motivated to achieve their full potential. latest charity partner from a shortlist of waiting to return to their workplace, the discrimination from society. organisations. At the end of this process, We are committed to achieving excellence adaptability of those who have had to in the areas of health and safety and the We have launched our Inclusivity Campaign Blueprint For All (formerly known as The transform their way of working to perform which will support our promise to educate Stephen Lawrence Charitable Trust) was protection of our colleagues in their working their roles remotely and the tenacity of environment. and train our colleagues, with a focus selected as the charity partner (please refer individuals who have continued to work on key topics such as equality, diversity, to page 142 for further details). Our goal is to provide opportunities, support throughout, whilst adhering to guidance as biases and cultural intelligence. Alongside All colleagues have a part to play in the and guidance to our colleagues all over it has been issued, have all been admirable. the introduction of our Diversity & the world, whilst promoting inclusivity, Our colleagues have overwhelmingly risen future of the Group and we will continue Inclusion forums for our colleagues, we are to remain committed to breaking down the social mobility and mutual respect across to the challenge and continued to deliver committed to engage, learn and promote the Group. This is achieved by educating, and exceed expectations. This is reflective barriers to our collective progress and sense dialogue around potentially sensitive of belonging. informing and responding to our colleagues, of the “can-do” culture fostered within the subjects in order to improve understanding delivering a consistent employee experience. business and our unwavering commitment and awareness throughout the business. to getting the job done to the highest GENDER ANALYSIS In addition, a series of videos have been RESPONSE TO COVID-19 possible standard. The breakdown of the Plc Board and the created highlighting individual experiences Throughout the COVID-19 pandemic, our Group as a whole by gender as at the end During a time when people have felt more of diversity and inclusivity. These have priority has been to protect our colleagues of the financial period ended 30 January geographically disconnected than ever, been distributed via our people platform, when they have been at their most 2021 is as follows: the Group has invested in the tools and JD4U, to emphasise the importance of vulnerable. As a business, we recognise that technology to ensure that our colleagues the campaign to all colleagues and drive we have a responsibility not only to our could continue to work closely together. engagement at all levels. The videos have colleagues’ physical health but also their generated over 40,000 views by our mental wellbeing and we have strived to colleagues. ensure that nobody felt as though they had to face this unique situation alone. In the face of the challenges this year, we have sought to Male Female Total % Male % Female provide our colleagues with job security and Plc Board 5 2 7 71% 29% to support them as individuals, giving them Senior Managers* 409 150 559 73% 27% the platform to continue to thrive. Other employees 30,003 30,484 60,487 50% 50%

The breakdown for the comparative period as at 1 February 2020, is set out below: Male Female Total % Male % Female Plc Board 5 2 7 71% 29% Senior Managers* 322 106 428 75% 25% Other employees 28,924 27,326 56,250 51% 49%

*Senior Managers are defined as persons responsible for planning, directing or controlling the activities of a Group company or companies, a strategically significant part of a Group company or Directors of subsidiary undertakings.

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EMPLOYEE WELFARE • Comprehensive “Return to Work” training Over 550,000 tasks have been completed This process is assisted by the items put The changes that society in general has for our colleagues as they returned from by colleagues since the launch of the forward by colleagues across the business faced as a result of the pandemic has lockdown to a workplace different to new homepage, which is accessible by via our anonymous ‘Your Voice’ digital provided the business with the opportunity anything they had previously encountered. colleagues from any web enabled device suggestion box. Your Voice allows all to focus on the safety and wellbeing of our The welfare of our colleagues is of the and assisted by push notifications from the colleagues to submit their suggestions most important resource; our colleagues. utmost importance to the business. To JD4U mobile app. regarding how to improve the business from The promotion of social distancing and ensure our approach to this subject is at the These tasks relate to all aspects of Group any web-enabled device. COVID-19 control measures throughout the required standard, we have trialled ‘Welfare communications, from upcoming events, Representatives from each forum are business have seen a huge cross-functional Champion’ roles in our Head Office and to providing support through lockdown selected to attend a forum with the Group effort to provide environments that are Kingsway Distribution Centre. and providing general updates, ensuring all Executive Chairman, as the Group continues as safe as possible for our colleagues and Our Welfare Champions are a designated our colleagues continue to remain well- to cultivate meaningful, two-way dialogue customers. point of contact for colleagues who need informed in an ever-changing environment. between the business and its colleagues. However, the Group has not purely to reach out for help regarding any aspects The homepage also provides a hub for This generates a wide range of topics concentrated on physical safety with of their mental or physical wellbeing. These important documents, user guides and which furthers discussions such as how significant investment in providing support colleagues receive the appropriate training resources on wellbeing topics such to create a better place to work. Details for colleagues’ general wellbeing. from the Group to ensure that responses are as Mental Health Awareness and JD of the engagement that has taken place with our colleagues in relation to Executive The groundwork for some aspects of this treated with the required levels of sincerity, Foundation initiatives. respect and professionalism. The trial has remuneration can be found in the Directors were in place from last year, such as the The year also saw the introduction of Remuneration Report on page 179. training of colleagues on First Aid, Mental been a success and the first retail Welfare Company Office 365 accounts for all retail Health First Aid, behavioural training Champions will be nominated in 2021. colleagues at Supervisor level and above LEARNING AND DEVELOPMENT sessions and Modern Slavery Awareness The Group will also launch our wellbeing within the UK. Allowing daily access to In 2020, the Learning and Development Campaigns. During 2020, the Group has network where nominated sponsors will Microsoft Teams and Outlook provided department restructured to allow strategic taken this to another level: come together to drive the mental health colleagues with additional communication focus on four key areas (Leadership, Brands, • Regular checks regarding the vulnerability agenda and champion open communication tools to perform their roles effectively. to raise awareness. Operations and Technology) and to better status of our colleagues were conducted facilitate their reach across the Group on JD4U, allowing us to provide the ENGAGEMENT in response to the restrictions imposed appropriate instruction and support where COMMUNICATION The Group continually strives to improve, due to COVID-19. These restrictions have required. The requirement to bring our colleagues and we are always looking for ways to necessitated an increased focus on online together has meant that our people • Resources for campaigns regarding Mental empower colleagues with the opportunity workshops and webinars whilst improving management system, JD4U, has become Health Awareness and Domestic Abuse to provide us with their unique insights into the use of existing technology. an even more invaluable asset throughout have been made available via JD4U. how we can make the business an even 2020. better place to work. Our team are experienced in delivering • Messages of support from key business training solutions to support a broad range Previously JD4U allowed colleagues to heads issued to large sectors of the Our Employee engagement forums are of initiatives and their greatest achievement ensure they have access to the latest business to whom it would previously designed to understand the motivations in 2020 was the number of sessions information regarding their pay, holiday and have been impossible to reach during the of our diverse employee base and the delivered despite the constant changes to contract information but the deployment of lockdown. representatives meet monthly to discuss the COVID-19 restrictions. the system’s new homepage in March 2020 topics that matter to our colleagues. • Working from home guidance and tools saw a development which has been crucial This provides representatives from all levels, provided to all colleagues expected to to keeping colleagues aware of materials work remotely. fascias and sectors of the business with that are both necessary and beneficial. the opportunity to convene and provide the Group with honest feedback, ideas and concerns from employees and present ideas to the members for consideration. The forum then collects relevant data to analyse, and provide productive feedback, enabling two-way communication between our colleagues and the Group.

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The team have conducted 364 virtual The platform opened up an opportunity to COURSES DELIVERED IN 2020 courses, attended by 1,202 delegates promote existing digitally enabled portfolios 2020 Courses UK and Ireland Courses Held Delegates Trained across the Group (including 216 courses of learning offerings as a way to help internationally reaching 894 attendees) colleagues during challenging times and to Welfare Champions 23 45 within 2020. The overwhelming majority of help them to develop new skills. Globally, Retail Academy 60 90 attendees (94%) agreed that virtual courses our employees have access to almost 800 Inclusivity 151 540 allowed for effective learning and the courses, tailored to support their specific quality of training was maintained. job role, with 8.4 million hours of learning Head Office Management Development Programme 25 18 Retail Supervisor Accreditation 38 308 Our online e-learning platform played a completed throughout 2020. crucial part in the accelerated adoption of Also, across our Kingsway Distribution Retail Management Development Programme 47 93 digital learning. An example of this was the Centre we have designed a two-step online Head Office Induction 20 108 rollout of the COVID-19 module to 39,554 induction which digitises the previously colleagues across UK & Europe; achieving physical induction process, vastly improving Total UK 364 1,202 a company record for the highest number the colleague experience. Since October of participants to a single course. The 2020 over 4,000 staff have been inducted 2020 Courses Europe Courses Held Delegates Trained module ensured a consistent message was in this way. Retail Academy 63 53 communicated across the Group, enhancing awareness and helping to keep our Retail Supervisor Accreditation 42 376 colleagues and customers safe. Retail Management Development Programme 64 167 Territory Specific Courses 23 270 E-LEARNING STATISTICS

Europe Courses on Platform Courses Completed Minutes of Learning Total Europe 192 866 UK and Ireland 205 247,365 3,684,587 UK & Europe Total 556 2,068 Belgium 24 2,191 27,068 Germany 13 7,734 91,709 APPRENTICESHIPS TALENT ACQUISITION Spain 68 63,300 785,140 Over the last few years, we have worked As the focus over the last year has been to France 42 15,838 221,244 alongside internal and external stakeholders protect and support our existing colleagues, to build up an infrastructure to support the Group implemented a temporary Italy 38 18,633 231,945 the promotion of apprenticeships as a recruitment freeze during 2020. However, Netherlands 28 3,107 24,102 learning and development opportunity and the Group continues to attract talent Scandinavia 26 1,250 22,436 to support employee development and globally with thousands of users registered progression across the Group. internationally on our careers website. Asia To date we have had 45 apprentices Our engagement with digital platforms Asia 15 3,805 75,500 complete their apprenticeships successfully such as LinkedIn has seen this number grow and have 66 current apprentices studying throughout the past year and will continue South Korea 13 2,270 51,741 programmes such as Management, HR, to do so going forward. More people than Data Analytics, Retail, Accountancy, Digital ever want to work for the Group, and we are United States Marketing, Software Development, Quantity determined to ensure we become an even US 796 710,978 498,197,655 Surveying and many more. more attractive employer who can offer Our key strategy for 2021 is to offer stability, support and growth opportunities Total Global 1,268 1,076,471 503,413,127 apprenticeship pathways for all employees to our colleagues across the globe. across Group Retail stores, Distribution Centres and Head Office alongside externally advertised apprenticeship role opportunities. Key successes so far this year have been the launch of retail and Distribution Centre apprenticeship programmes working with our apprenticeship partner.

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KICKSTART SCHEME OPPORTUNITIES WITHIN THE GROUP Today’s young people are the stars of The Group’s expansion has meant that HEALTH AND SAFETY tomorrow. The Group recognises this there have always been opportunities for and has now been approved to take colleagues to grow with the business. Now, We are fully committed to continuous to this important area to ensure that our on over 1,200 colleagues as part of the colleagues can grow both professionally and health and safety improvement across all Health and Safety team has the necessary government’s Kickstart scheme. personally with JD. areas of the Group and understand that it is personnel and other resources to manage the way we work and behave that protects the risk effectively. Breaches of Health and Available to people on Universal Credit The amount of learning and development our colleagues, customers and other Safety regulations can happen though, between the ages of 16 and 24, the Kickstart options for colleagues at all levels of stakeholders. and where they do, we take appropriate scheme enables the most vulnerable the business is unprecedented and this Our Occupational Health provision provides action and use the experience to ensure individuals to enter the world of work portfolio of learning materials and pathways an even greater focus on health and safety to gather vital skills and training (from continues to expand. health checks and support for employees and also enables the business to promote improvement for the benefit of the public, both the Group and the Prince’s Trust) as With the support and development our customers and our employees. well as professional experience that will healthier lifestyles. The Retail Trust is also a resources available, the Group is in the key component of our wellbeing strategy, We can report the following for the year: benefit them for the rest of their careers. unique position of being a great business Our Kickstart selection process will have a providing a free, confidential support • The Royal Society for the Prevention of to work for providing exciting opportunities service that aids the emotional and financial particular focus on attracting individuals both in the UK and internationally. Accidents awarded the Group a Gold from disadvantaged backgrounds who wellbeing of our people, their families and Award for its retail health and safety would have otherwise been displaced direct dependants in times of need. management in March 2020. further from the employment market due to Our organisational structure defines • There have been no Local Authority or COVID-19. individual safety responsibilities and duties Fire Authority enforcement notices served to ensure that we provide and maintain safe in UK and the Republic of Ireland during and healthy working conditions, equipment the year. and systems of work for all our colleagues. The table below shows the number of We demonstrate this commitment through enforcement notices served in the UK and active leadership, promoting best practice the Republic of Ireland over the 10-year and by setting specific and measurable period since 2011. targets each year. Our performance against these targets is reviewed at Board level and reported upon regularly. We will ensure that ENFORCEMENT NOTICES SERVED adequate resource is provided to enable 2011–2020 these targets to be achieved and to ensure

the effective management of risk within the 4

Group. 3 As the Group’s physical store base becomes 2 1 1 more geographically dispersed, the risk of 2020 2014 2016 2019 2015 2018 2012 2013 2017 breaches in health and safety standards 2011 and regulations will naturally increase. To mitigate against this risk, we constantly review the level of resource dedicated

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In 2019 there were three Local Authority or Our focus in the coming year will be: ENVIRONMENT AND CLIMATE CHANGE Fire Authority enforcement notices served. • To retain the British Safety Council ‘five In each case immediate action was taken to star’ accreditation for our Kingsway comply with all requirements and as a result distribution centre. This period represents the first year that we the notices were withdrawn. DISCLOSURES AND STANDARDS – • To retain the Royal Society for the ENVIRONMENTAL have referenced our performance relative Our commitment to continuous health and Prevention of Accidents Gold Award for Over the past two years we have re- to both the TCFD framework and UN SDGs. safety improvement is demonstrated by: our retail health and safety management. purposed and relaunched our corporate Research by our ESG Committee indicates website, providing detailed explanations that comparable organisations have taken • The further development across • Continued safety management in all our and case studies highlighting our differing approaches to referencing TCFD, our European stores of our web stores and ensuring no Local Authority environmental progress. The Group and it is our belief that the Financial based, online induction and training or Fire Authority enforcement notices are welcomed the positive investor and Stability board and / or the UK government programme ensuring every colleague served on the Group. has the competence, understanding and stakeholder feedback on our prior increase and Financial Conduct Authority (FCA) may awareness to work safely and at minimum • To further improve the level of compliance in disclosures relating to our environmental issue more standardised guidance to TCFD risk. with Group standards in every territory. performance. We aim to continue this disclosures within the next two years. progress both during the period, and via • Continued health and safety input in • The further implementation of our health In the interim, we acknowledge that additional disclosures within this report all our new and refitted stores from the and safety information, training and record our interpretation of TCFD and the UN including: initial design through to opening. Our keeping software across all the European SDG disclosures may not be a complete health and safety team conducts its own countries in which we operate. • Our inaugural adoption of the principles exposition for all criteria. Nonetheless, we audit programmes to ensure the highest and framework outlined within the believe that by adopting such reporting safety standards are maintained during COVID-19 Task Force on Climate-related Financial frameworks, the Group is once again the construction phase of all our shop-fit The COVID-19 pandemic has presented Disclosures (TCFD). evidencing its commitment to continual projects. significant health and safety challenges. • Disclosing the Group’s progress improvement with regards to environmental performance and reporting. We shall • Continuous review of our policies and However, we continue to develop and towards the United Nations Sustainable continue to use the TCFD recommendations processes to ensure best practice in all establish revised working practises to Development Goals (SDGs) relevant to our to inform and develop our strategy on areas of our business. During the year ensure the safety of our colleagues, business operations. customers and visitors. Details of our climate action and related disclosures. we have reviewed and revised various • Providing our scores (including risk assessments, operating procedures risk assessments across all areas of the comparison to our industry peers) for On the next page is a compliance summary and control measures taken to address business. additional benchmark assessments within of the TCFD disclosure requirements and the increased risk are presented in our the Carbon Disclosure Project (CDP) the page reference for the Group’s relevant • Our quarterly Group and monthly Principal Risks and Uncertainties section global disclosure system. disclosures in this Annual Report: Distribution Centre health and safety on page 51. Local authorities have visited committee meetings allow colleague our distribution centres, stores and gyms engagement in health and safety, with all on multiple occasions to review the control colleagues having the opportunity to raise measures that we have implemented. safety concerns through their committee representatives. • Bi-annual health and safety meetings held in all other European countries in which we operate. • All UK Group companies with warehousing and distribution activities receive bi- annual internal health and safety audits to ensure compliance with Group health and safety standards. • The appointment of a Health and Safety Officer in Germany to provide specific in country support to the JD Germany team.

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Page ESG KEY ACHIEVEMENTS – ENVIRONMENTAL – CLIMATE CHANGE ENVIRONMENTAL The Group embraces its responsibility to GOVERNANCE Disclose the organisations governance around climate- 49, 109 • The Group achieved a ‘Leadership’ contribute towards reducing the impact of related risks and opportunities: grade of A- within the CDP ‘Climate climate change and remains fully supportive – Board oversight 49, 56, 98, 162 Change’ assessment, for which scores of the United Nations ‘Paris Agreement’ – Management role in assessment and management 49, 56–57 were published in December 2020. adopted in 2016. The Group will be closely CDP disclosures are closely aligned and monitoring preparation for, and actions STRATEGY Disclose the actual and potential impacts of climate- 58–67 recognised by the TCFD. The Group out- agreed at the 26th UN Climate Change related risks and opportunities on the organisations performed our sector benchmark score by Conference (COP26) in November 2021. businesses, strategy, and financial planning, where such three grades. information is available: Responsible energy procurement and usage • The Group’s inaugural submission within remains integral to the Group’s efforts – Risks and opportunities over short, medium, long-term 58–67 the CDPs ‘Water Stewardship’ category to help limit global warming, and to play – Impact of climate-related risks and opportunities 58–67 achieved a ‘B’ grade score, demonstrating our part towards helping to limit global – Resilience of the organisations strategy using climate- 58–67 the strong progress made across the warming to the mid-century 1.5 degree related scenarios entirety of the Group, from our Private Celsius scenario. The Group requires all of Label team through to the site-level our subsidiaries and suppliers (regardless of RISK Disclose how the organisation identifies, assess, and 56 endeavours of all of our colleagues. The territory) to mirror its commitment towards MANAGEMENT manages climate-related scenarios: Group outperformed our sector average minimising the impact of climate change, – Processes for identifying and assessing risk 56–57 score for ‘Water Stewardship’ by two via progressive behaviours, investment, and – Processes for managing climate-related risk 56–61 grades and has also received recognition increased disclosures relating to carbon as a ‘CDP Supplier Engagement Leader’, usage and environmental performance. – How are climate-related risks integrated into the 58–64 based on our 2020 CDP climate response. organisation’s overall risk management The core business of the Group is retail. • In accordance with our support and Across our multiple store fascias and METRICS AND Disclose the metrics and targets used to assess and 109 membership of the RE100 (the world’s territories we aim to provide customers with TARGETS manage relevant climate-related risks and opportunities most influential companies, committed an engaging retail experience, showcasing where such information is material: to 100% renewable power), the Group the latest products from leading brands. – Metrics used to assess climate-related risks identified 56, 114–117 continued to transfer new territories to Accordingly, this requires our stores and – Disclosure of Scope 1–3 GHG and associated risks 111, 118–120 renewable energy, with Spain and Portugal sites to utilise the latest lighting and migrating to new, environmentally technology, whilst providing customers and – Describe targets used to manage climate-related risks 115–119 beneficial green renewable solutions colleagues a regulated ambient temperature and performance vs targets during the period. throughout their visits. • The Group achieved recognition as a ‘Committed’ supporter by the Science ENVIRONMENTAL – CLIMATE CHANGE Based Targets initiative (SBTi) board in REPORTING AND COMPLIANCE December 2020. During the period ahead, The Group’s management of carbon the Group will target formal sign-off our emissions is delineated into two categories: Scope One-Three emission reduction plans 1) Scope One and Scope Two – the Group’s by the SBTi committee. This verification ‘directly controlled’ operations within process is a prerequisite for the Group Group-owned infrastructure (e.g. our to publicly state that our targets are warehouse and in-store energy usage) and; ‘Science-based’. This year we also reported for the first time our Scope Two 2) Scope Three – the operations and market-based emissions in addition to our activities of both our merchandise suppliers location-based emissions. (including manufacture of products), and our non-merchandise suppliers, including • The Group achieved independently- but not limited to product transport and audited ‘zero to landfill’ accreditation delivery. for our largest directly operated site (Kingsway Distribution Centre) in February Within the first category (Scope One, 2020 and plans to follow suit for our other or ‘directly controlled’ operations), major occupancy locations. the Group remains compliant with the UK Government’s Carbon Reduction Commitment, the new Streamlined Energy

110 111 CORPORATE AND SOCIAL RESPONSIBILITY ENVIRONMENTAL – CLIMATE CHANGE REPORTING AND and Carbon Reporting (SECR) system and The secondary category of carbon has fulfilled our Energy Savings Opportunity emissions (Scope Three – those arising from COMPLIANCE Scheme (ESOS) and Energy Efficiency the activities of our supply chain) has been Directive (EED) obligations. At present, over fully mapped during the period as part of THE SECONDARY CATEGORY OF CARBON EMISSIONS (SCOPE THREE – 99% of Group carbon emissions fall within our SBTi preparations. Purchased goods THOSE ARISING FROM THE ACTIVITIES OF OUR SUPPLY CHAIN) HAS BEEN the Scope Three category. and services (71.42%) are the largest Scope FULLY MAPPED DURING THE PERIOD AS PART OF OUR SBTI PREPARATIONS: The Group continues to use CDP as Three contributor. The Group continues to our primary method of monitoring our monitor the progress of our largest suppliers comparative industry performance relating as they seek to achieve their respective to our management and strategy relating carbon reduction targets. Emissions data is to climate change and carbon reduction. constantly adjusted due to both changes in Group activity and changes to calculation We recognise that our new position within USE OF SOLD EMPLOYEE WASTE GENERATED CAPITAL the ‘leadership’ category of organisations methodologies. OTHER PRODUCTS COMMUTING IN OPERATIONS GOODS can only be maintained by continued 1.12% 21.37% 0.47% 0.18% 1.73% improvements with regards to both reducing carbon, and further increasing the transparency of our efforts.

DOWNSTREAM UPSTREAM PURCHASED TRANSPORTATION AND BUSINESS TRANSPORTATION GOODS AND END OF LIFE DISTRIBUTION TRAVEL AND DISTRIBUTION SERVICES 1.18% 0.39% 0.65% 1.49% 71.42%

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ENVIRONMENTAL – SCIENCE BASED ENVIRONMENTAL – REDUCING CARBON TARGET INITIATIVES (SBTI’S) EMISSIONS – 2020/21 PROGRESS 2020/21 2020/21 – PROGRESS 2021/22 OBJECTIVES ENVIRONMENTAL During the period, the Group’s Energy During previous reporting years, the OBJECTIVE and Environment team worked with Group maintained a Carbon Management independent, specialist consultants to Programme (‘CMP’) sponsored by our Chief CARBON The Group has installed BMS in a BMS shall continue to be installed identify the sources and values of all the Financial Officer and reviewed at regular REDUCTION – further 36 stores this year (2020: within new JD stores as standard with Group’s Scope One, Scope Two, and Scope intervals. Following the establishment of the ON SITE 372 stores) providing a saving of trials underway for a number of our Three emissions. Group’s ESG Committee, the management Reduce carbon 10.4% compared to usage prior other fascias and international stores. Based on the data gathered, and the of carbon, water, waste, and other key usage in trading and to BMS install. Total BMS-related Investment in LED continues to analysis of both Group operations and the environmental measures are now measured non-trading sites energy saving equals a carbon be rolled out into new stores with carbon reductions of our key suppliers, the against an updated set of objectives. via investment in reduction of 917t CO2. improved lower energy specifications Group has identified the following (draft) technology We reduced our Summer and being tested. LED retrofit programs SBTi’s. The SBTi board allows up to two • Building Winter heating and cooling set are planned for the Kingsway years to submit Scope Three targets (owing Management points and these temperature Distribution Centre and JD Gyms to the complexity of completing a footprint System (BMS) adjustments delivered carbon sites. calculating our supply chain emissions). installations savings of 309t CO2. The Group plans to review the JD Group has chosen to provide our • Adjusting Group investment in LED’s has benefits of solar usage within provisional targets in the interests of temperature ‘set- continued during the period selected locations. transparency, and to reassure investors and points’ with the installation of LED’s in customers as to our continued commitment 20 locations, including seven to reduce carbon emissions and help to limit • Use of LED gym sites, achieving 30% energy the impact of global warming. Please note technology reduction vs. the previous that the targets below may be adjusted lighting system (200t CO2). due to any or either of i) adjustments made within our final data validation check ii) CARBON The Group has commenced the The Group aims to launch the feedback received as part of the official REDUCTION - development of a new ‘I am ‘IAMSustainable’ online training SBTi board verification process, or iii) EDUCATION sustainable’ online training course programme in the UK and Republic the occurrence of significant, unforeseen Reduce energy with an external ESG e-learning of Ireland, supporting ESG awareness events (e.g. major changes in international usage via colleague specialist. and education, with a target of legislation) that impact the global awareness and Furthermore, the Group’s 1,000+ staff to complete the Carbon operations of business operations: training environmental messaging has Reduction training. JD Group Scope One and Two emissions been expanded into more reduction targets: By 2035, JD will achieve e-commerce products including an absolute reduction of 67.2%* vs our auto-bagger film, along with 2019/20 base year. Forest Stewardship Council (FSC) JD Group Scope Three emission reduction labelling on till receipts. target: By 2035, JD Group will achieve an A review of the United Nations absolute reduction of 67.2%* vs our 2019/20 Sustainable Development Goals base year. (SDGs) has been completed, with *subject to final data validation checks and references to be included in this, external specialist review. and future Annual Reports.

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2020/21 2020/21 – PROGRESS 2021/22 OBJECTIVES 2020/21 2020/21 – PROGRESS 2021/22 OBJECTIVES ENVIRONMENTAL ENVIRONMENTAL OBJECTIVE OBJECTIVE

CARBON A Scope Three emission The Group will submit our Scope One RESOURCE Zero to landfill accreditation The Group plans to further develop REDUCTION – screening exercise has been and Two emission targets to the SBTi MANAGEMENT was achieved following an ‘circular’ waste solutions with REPORTING completed and submitted within committee and complete our Scope Reducing waste and independent audit of our items ranging from store radios to Ensure that carbon our 2020 CDP submission. This Three emissions footprint with key improving re-use via Kingsway Distribution Centre. mannequins, reusing items where reduction measures identified that ‘Purchased goods’ strategic suppliers (to enable SBTi store product ‘take- The Group recycled 5,173 tonnes possible, or working with specialist are applied to all (i.e. our branded products sold submission for Scope Three targets). back’ of card during the period (2020: material recycling operators. businesses and by the Group) are our largest The Group plans to implement 5,491 tonnes). The Group also aims to complete the territories, and also carbon contributor. an inventory management plan The delivered ‘circular economy’ second UK and European packaging by key suppliers The Group achieved recognition to improve governance for GHG projects including the return, fix, review in two years, identifying new as a ‘Committed’ supporter emissions data submissions. The and reissue of large numbers of recycling innovations and ensuring by the Science Based Target Group is also using a new carbon- hangers and tote boxes, reducing that more of our packaging can be initiative (SBTi) Board in intensity metric to comply with the business costs and delivering a recycled as a single-waste stream. December 2020. Streamlined Energy and Carbon carbon saving of 72t CO2. The Group will work to improve both A new store reporting dashboard Reporting (SECR) requirements. The Group has developed a colleague and customer education was launched, allowing ‘rapid customer education ‘wheel’ on local-re-use, sale and recycling in action’ to be taken during outlining the key principles of accordance with circular economy COVID-19 closure periods, re-use, repair and recycling principles. reducing Group energy usage by of footwear and apparel. This 77%. is available on our corporate website and supports our opinion CARBON Within the period we renewed The Group continues to purchase that blanket ‘retailer take-back’ REDUCTION – existing agreements onto renewable energy wherever schemes do not provide the PROCUREMENT renewable energy tariffs and operationally feasible and transition most environmentally-friendly Purchase of also moved our Spanish and the remaining European regions so solutions to end of life product. renewable Portuguese stores to renewable as to achieve our 100% renewable UK energy wherever energy contracts. and Europe status by 2022. WATER REDUCTION Over 3.9m litres of water has The Group aims to deliver an operationally feasible All UK based subsidiaries that The Group plans to identify Site level measures been saved within the period additional 10m litres of water use were acquired during 2020 opportunities for U.S stores (including across various initiatives - from reduction during FY2022 (on a like (including Xercise4Less) have acquisitions) to migrate to renewable changing specifications to for like basis). been transitioned to renewable energy. earlier fault identification, with We plan to migrate our UK and energy contracts. a potential further 15m litre European standard of energy reduction identified. reporting management into additional BENCHMARKING The Group completed CDP The Group aims to continue and The Group delivered Automatic JD Group territories. This will enable AND ENGAGEMENT: submissions, with results of A- for increase engagement with: Meter Reading (AMR) across easier identification of efficiencies Increase Group climate (three levels above the a) independent carbon-reduction our largest major occupancy and remedial actions across the engagement with: retail average and ‘Leadership’ surveys and expanding our distribution centre and gym sites. Group. a) independent recognition), and B for Water engagement with organisations such carbon-reduction (two levels above the retail as SBTi. average). surveys b) accredited industry bodies b) accredited industry The Group has also recently - continue and expand ‘zero to bodies joined the Energy Institute and landfill’ accreditation for our office, continues to engage with the c) strategic suppliers major occupancy sites and targeted Retail Energy Forum. geographical locations. c) strategic suppliers - to develop our Scope Three footprint and implement SBTi Scope Three targets, allowing progress and performance comparison with our industry peers.

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CORPORATE AND SOCIAL RESPONSIBILITY PERCENTAGE OF EUROPEAN OPERATIONS ENVIRONMENTAL – GREENHOUSE GAS (GHG) EMISSION DATA The Group uses and reports on Key Performance Indicators for energy usage. During the last SUPPLIED BY RENEWABLE SOURCED ENERGY year, the Group has engaged the services of a leading third party audit and certification body to audit and verify our Greenhouse Gas (GHG) submissions (in accordance with ISO 14064-3 RENEWABLE standards). NON RENEWABLE 73% Accordingly, the Group can report the figures below, calculated based on GHG Protocol 27% Corporate Standard using emissions factors from UK government conversion factor guidance. The emissions reported correspond with our financial year and reflect emissions from the leased and controlled assets for which the Group is responsible. Emissions are predominantly from electricity use for our UK operations, a significant element of which act as supporting infrastructure for our international businesses.

2020/21 2019/20 Emissions Source: Tonnes CO2e Equivalent Tonnes CO2e Equivalent Scope One (Purchased fuels) 5,974 6,529 Scope Two (Electricity) Location based 44,935 48,589 Scope Two (Electricity) Market based 26,376 31,039 Scope Three (All emissions) 4,145,393 4,279,621

(i) The 2019/20 data has been retrospectively adjusted to reflect new methodology applied to the calculation of the GHG emissions as part of the Group’s commitment to setting an SBT. (ii) Reporting boundaries for 2020/21 (aggregated facilities under operational control) include UK, Australia, Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Malaysia, Portugal, Singapore, South Korea, Spain, Sweden, Thailand & the US. (iii) In line with the GHG protocol on dual reporting, we are now able disclose both our market and location-based emissions for purchased electricity in 2019/20 and 2020/21. (iV) Scope Three emissions data is from our screening and financial data completed for our baselining for our SBT commitments. We are planning to complete a detailed footprint exercise this year.

Whilst not a mandatory disclosure, the Group remains committed to presenting data appertaining to energy usage and carbon footprint. After improving our reporting mechanisms, the Group is now able to provide its full actual UK and International energy usage (kWh measurement) and carbon footprint.

2021 2021 2021 UK and ROI Int Total Energy Usage – Electricity (kWh) 71,254,598 88,928,909 160,183,507 Energy Usage – Natural Gas (kWh) 14,184,165 12,810,388 26,994,553 Total Energy Use (kWh) 85,438,763 101,739,297 187,178,060 Carbon Emissions (Tonnes CO2e) 20,152 30,757 50,909 Intensity metric: Location based emissions (kgCO2e/m2) 32.7 57.4 44.2

As required under UK SECR legislation, we have now applied an intensity factor to our GHG emissions expressed in kilograms CO2e per meter squared. Following our participation in CDP and RE100, we adhere to international recognised standards on disclosure for renewable energy consumption. This year we have amended the presentation of our renewable energy usage. Our previous method was to use the revenue of our respective businesses supplied by renewable sourced energy as a % of the total revenue of the Group. As per the new recognised standard, we have changed this to NON RENEWABLE RENEWABLE now apply a calculation of the renewable energy share of our total electricity consumption as a percentage for Europe and worldwide, as detailed in the graphs. The percentage is 42% 58% calculated based on the total usage of renewable energy supply as a % of the total energy supply for the region. PERCENTAGE OF WORLDWIDE OPERATIONS SUPPLIED BY RENEWABLE SOURCED ENERGY

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Industry data highlighted the need to annual emissions by 1.1 billion tonnes (50%) Accordingly, we have reviewed our own • The Group submitted its application to accelerate decarbonisation in line with the within the next decade to remain on course supply chain to identify how we can join the Better Cotton Initiative (BCI). 2016 Paris Climate Agreement and 2018 to achieve the 1.5°C global temperature encourage sustainable behaviour across We recognise the importance of working Intergovernmental Panel on Climate Change increase limit required to restrict global our supply tiers to further reduce carbon with a global not-for-profit organisation, (IPCC) report. McKinsey & Company and warming. The largest carbon emission emissions, encourage increased stewardship and the largest cotton sustainability the Global Fashion Agenda described impact (identified in the chart below6) is of water, whilst ensuring safe chemical programme in the world. The BCI mission, further targets within the ‘Fashion on the production, processing and garment practices. purpose and objectives also align to the Climate’ report. The report identified that manufacturing stages of the supply chain United Nations Sustainable Development the wider fashion industry needed to reduce cycle. ENVIRONMENTAL – WATER STEWARDSHIP Goals (UN sustainable development AND BIODIVERSITY goals). The Group recognises that key raw • Continuing our ‘Sustainability flag’ materials including cotton rely heavily ANNUAL GREENHOUSE GAS EMISSIONS OF APPAREL AND FOOTWEAR assessment process for the Group’s on water availability. Making sustainable own-brand manufactured garments. This products can directly impact farmers, the ensures that our private label products use of pesticides and water. Using recycled (and suppliers) have been subject to polyester can offer many sustainable reviews and compliance criteria designed

30% benefits vs virgin polyester. The majority of to reduce our impact on the environment. goods sold by the Group are manufactured Further details can be found on our by leading global brands. corporate website www.jdplc.com. Our largest water footprint is via our supply • We have engaged with the WWF Water 20% chain (third-party and private label) and our Risk Filter, allowing the Group to assess own operational use. For our own footwear water risk factors within the source and accessories brands we provide and countries for our private label product 10% monitor a ‘supplier manual’ including manufacture. % of total Industry emissions Industry % of total policies on modern slavery, procurement In addition to our work on reducing water and global environmental footprint consumption through our private labels reduction. This includes standards we via sustainable design and materials, the require to be met with regards to REACH Material Yarn Fabric Wet Cut, make, Transport Retail Product End of Group also identifies our responsibility production preparation preparation processes trim use life (Registration, Evaluation & Authorisation to conserve water within our directly of Chemicals). For leather manufactured * This is an annualised rather than a life-cycle analysis. Results from 19 June 2020. controlled estate. 6 Data Source: McKinsey & Co goods, the Group requires our suppliers to be signed up to the Leather Working Group • The overwhelming majority of our store (LWG) standards. locations are leased from landlords. However, where we can contribute to In the most recent period, the Group has water reduction, the Group continues to demonstrated progress via: invest in assets to reduce consumption • Submitting our first ever response to the and risk to supply, both of which generate CDP ‘Water Security’ survey, achieving a positive financial returns. ‘B’ grade score. • Investments in usage-reducing assets have • During the last period the Group has saved 3.9 million litres of water to date, reduced its use of virgin polyester and with over 15 million litres of additional increased use of Responsibly Sourced conservation measures identified and Cotton (‘sustainable cotton’). Sustainable implemented. cotton ensures; i) that farmers are trained • We also commenced the usage of on methods of water reduction ii) that automatic meter reading (AMR) into farms are economically irrigated and iii) our largest major occupancy sites, the receipt and payment of fair wages the Distribution Centre and JD Gyms, to workers. permitting improved monitoring and subsequent reduction of our water consumption.

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ENVIRONMENTAL – RESOURCE ONLINE SALES PACKAGING MICROPLASTICS REGULATORY COMPLIANCE MANAGEMENT By using recycled plastic material for our In accordance with the prevailing market In 2013 the European Commission adopted During the period, the Group noted a slight online item dispatch packaging (avoiding research at the time, the Group previously a proposal targeting member states to reduction in public and media focus on virgin material) we achieved an equivalent used additives within plastic bags in reduce their consumption of plastic bags the use of plastic, mostly likely due to the embodied carbon saving of 1,005t accordance with the widely-held belief that with a thickness below 50 microns. In the impact of COVID-19 across the globe. The CO2e within the period. New customer this would catalyse the degradation process period, the Group’s core, directly-controlled Group expects further public and media messaging (highlighting our recycled of higher-volume low-density polyethylene retail businesses did not use plastic scrutiny and debate on plastic (and other content percentage, and further recycling of (LDPE) customer bags. bags below 50 microns. The plastic bags packaging materials) to resume within packaging after use) has been introduced Following an internal review, the Group took produced by the Group are at least within the next period. Accordingly, the Group across additional packaging for online sales, the decision to remove degradable additives the DEFRA 50–70 micron ‘bag for life’ has continued to improve its ‘resource including film for ‘auto-bagged’ products, from our bags in late 2018. We felt that little criterion. management’ performance across several and the packaging used for our ‘ship from direct evidence existed to demonstrate even We continue to remain fully compliant with areas of our directly-controlled operations. store’ project. medium-term degradation within samples the carrier bag charge schemes across all RECYCLING RETAIL PACKAGING of customer bags containing degradable operating territories. In line with territory • Our largest directly-controlled facility The Group continues to support its long- additives. This viewpoint was echoed by legislation, the Group uses paper-based (Kingsway Distribution Centre) achieved held view that encouraging customer re-use both the Department for Environment, Food bags rather than plastic bags in its stores in certified ‘zero to landfill’ accreditation in of retail-issued bags is the most effective and Rural Affairs (DEFRA) in its ‘Review of the Republic of Ireland, Belgium, Germany, February 2020. way to reduce overall plastic usage. Our standards for biodegradable plastic carrier selected Spanish regions and Malaysia. The • The Group continues its ‘circular economy’ JD fascia is renowned for its high quality, bags’ and the United Nations Environment Group is mindful of paper’s higher level of development by increasing the number durable drawstring duffle bags, the re-use Programme (UNEP) in its ‘Review of pre-manufacture carbon emissions versus of recyclable waste streams within our of which remains visually evident, from the standards for biodegradable plastic plastic and works to ensure that whole-life directly controlled operations. Examples high street through to the high school. carrier bags’, both of which concluded carbon emission and environmental impact include reprocessing and reusing assets REDUCING THE IMPACT OF RETAIL that there was a lack of evidence for the is assessed when reviewing bags and including 1,683 boxes of store hangers and PACKAGING biodegradability of carrier bags in an packaging for any new territories. By using over 103 tonnes of broken tote (container) Whilst our documented approach to re-use unmanaged environment. attractive designs, the Group also promotes units. is effective, the Group further minimises Furthermore, describing a bag as re-use of paper bags in the same way that it promotes re-use of its plastic bags. • The Group expanded its use of the Dry the environmental impact of customer ‘degradable’ or ‘compostable’ can lead Mixed Recycling (‘DMR’) schemes to all bags by ensuring that duffle bags are made to (unintentional) regressive outcomes Our JD New York (Times Square) store its stores and businesses in the UK and from 50% recycled material, across our UK, owing to 1) ‘degradable’ or ‘biodegradable’ opened in October 2020. New York State Republic of Ireland, to maximise waste European, Asia Pacific and US operations. bags containing insufficient instructions enacted stringent new waste reduction diversion from landfill. In 2021 we diverted In November 2020, our JD fascia used 70% on the exact environment required to laws in March 2020, preventing the use of 98.8% (2020: 98.6%) of our waste from recycled material for our larger ‘flexi-loop’ achieve material degradation; 2) the plastic, even for re-usable, draw-string bags landfill. bag, a product previously made from 50% risk of successful material degradation certified as ‘bag for life’ in other territories. recycled material. Our ability to assess the creating microplastics; and 3) the lack of The JD U.S team developed a new, non- • The Group continues to remove card and impact of the trial (e.g. ‘did the bag continue local infrastructure to support the correct woven fabric bag that successfully mirrored plastic at the earliest possible source to remain as reusable as the previous disposal and collection of degradable or the look and purpose of the iconic JD bag. (via Kingsway). During the year, the iteration?’) was limited due to COVID-19 compostable materials. amount of cardboard recycled reduced restrictions. to 5,173 tonnes (2020: 5,491 tonnes). This Accordingly, despite the development of reduction is consistent with the reduced During the period, Go Outdoors joined our newer ‘degradable’ and ‘compostable’ bags UK and European output as a direct Blacks and Millets fascias by successfully in recent years, the position of the Group is consequence of COVID-19. ceasing production of plastic customer that we have yet to see sufficient evidence bags, adopting an attractive paper design. of large-scale environmental benefits, or do This measure further reduces the volume not believe that a high enough percentage of plastic used within the Group, and of customers have sufficient access to we believe that (in accordance with our composting facilities. Accordingly, our emphasis on re-use, regardless of material) customer messaging continues to focus the design of the bag encourages re-use of on encouraging the re-use of packaging the paper-based product. (regardless of material type) to support the reduction of demand for raw materials and associated resources.

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CHARITABLE DONATION OF PLASTIC BAG • Scotland: £0.04 million received in the LEVY INCOME period to 30 January 2021. During the ETHICAL SOURCING To encourage customer consideration of the period, 12.5% of the funds were passed necessity of bag use, the Group voluntarily to Scottish Mountain Rescue with the Approximately 90% of the products JD CODE OF CONDUCT: MINIMUM charges for the use/sale of drawstring-bags. remaining 87.5% donated to other sold by the Group are sourced from our STANDARDS FOR OUR SUPPLIERS international brand partners. Whilst the Where local authorities permit the donation charitable causes in accordance with the • Employment is freely chosen – there Group does not have any direct control over of bag-levy income, the Group donates all objects of the JD Foundation. must be no forced labour, bonded or the operations of these businesses, from proceeds from carrier bag charges to the JD involuntary Further information about the JD frequent dialogue with them, we believe Foundation. The Group does not offset any The organisation shall not engage in or Foundation and its activities can be found that their view on the need for an ethical production or ‘administrative’ costs from its support the use of forced or compulsory on pages 140–153 . supply chain is aligned with that of the bag-levy income, and accordingly 100% of labour, including prison labour, and Group. (net of VAT) proceeds are received by the shall not retain original identification JD Foundation for annual distribution as The remaining 10% of sales are derived papers. No personnel shall be required follows: from the Group’s own sourcing of ‘Goods to pay deposits to the organisation at • England: £0.37 million received in the for Resale’ where the Group is in control any time during or prior to commencing period to 30 January 2021. During the of the supply chain. We introduced our employment. own Ethical Code of Practice in 2019, period, 12.5% of the funds were passed to • Freedom of Association and the right to encompassing our policies into a concise Mountain Rescue in England and Wales collective bargaining must be respected document for our manufacturing suppliers with the remaining 87.5% donated to other All personnel should have the right to and brands. We have made further updates charitable causes in accordance with the form, join and organise trade unions and and improvements in 2020/21 to ensure that objects of the JD Foundation. to bargain collectively on their behalf our policies reflect the latest best practice with the organisation. Where these • Wales: £0.02 million received in the on human rights, worker welfare, and health rights are restricted under local laws the period to 30 January 2021. During the and safety issues. period, 12.5% of the funds were passed to organisation shall allow workers to freely Mountain Rescue in England and Wales The JD Sports Fashion Plc Ethical Code elect their own representatives. of Practice establishes the procedure with the remaining 87.5% donated to other • Workers conditions are safe and hygienic for protecting workers and providing charitable causes in accordance with the The organisation shall establish assurance that our private label products objects of the JD Foundation. documented procedures to detect, are manufactured within safe and fair prevent, minimise and eliminate potential conditions. The Ethical Code of Practice risks to the health and safety of personnel. applies to everything we do and forms The organisation shall maintain written part of the contract with us. The people records of all health and safety incidents working for our suppliers are to be treated that occur in the workplace and in with respect, and their health and safety dormitories provided by the organisation, and basic human rights must be protected whether it owns, leases or contracts and promoted. The JD Code of Conduct dormitories from a service provider. is included in this document which follows the International Labour Organisation (ILO) The organisation shall provide, for use by minimum standards. all personnel, free access to; clean toilet facilities, potable water, suitable spaces To find out more about our Ethical Code of for meal breaks, and, where applicable, Practice, please visit our corporate website sanitary facilities for food storage. at https://www.jdplc.com/code-of-practice.

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• Child labour shall not be used • No discrimination SUPPORTING OUR PRIVATE LABEL and trims had to be put ‘on hold’ across The organisation shall establish, document, The organisation shall not engage in MANUFACTURERS DURING COVID-19 the world. By September 2020, we had maintain and effectively communicate to or support discrimination in hiring, The challenges of the global pandemic re-designed, re-phased and reduced the personnel and approved subcontractors, remuneration, access to training, required the Group to re-phase fabrics outstanding commitment to zero within written policies and procedures for promotion, termination or retirement and orders within the supply chain to our supply base. The Group is proud of the remediation of child labourers, and shall based on race, national or territorial later seasons, moving stock to different fact that during this challenging year, no provide adequate financial and other or social origin, caste, birth, religion, locations in order to accommodate closures supplier was left with excess fabric or trims, support to enable such children to attend disability, gender, sexual orientation, across Europe. These changes reduced our or suffered any negative impacts arising and remain in school until no longer a child family responsibilities, marital status, union ‘seasonal buy’ plans. from cancelled orders. Further, suppliers as defined above. membership, political opinions, age or During the first lockdown period (April – continued to be paid according to pre- The organisation may employ young any other condition that could give rise to June 2020) over $170 million of fabrics agreed terms. workers, but where such young workers discrimination. The organisation shall not are subject to compulsory education laws, allow any behaviour that is threatening, they shall work only outside of school abusive or exploitative, including gestures, hours. Under no circumstances shall language and physical contact, in the any young worker’s school, work and workplace and in all property provided by transportation time exceed a combined the organisation, whether it owns, leases total of 10 hours per day, and in no case or contracts the residences or property SUSTAINABILITY IN PRIVATE LABEL shall young workers work more than 8 from a service provider. hours a day. Young workers may not work • Regular employment is provided MANUFACTURING during night hours. Obligations to employees under labour or The Group began the journey to integrate During the first period of the Group’s • Living wages are paid in line with local social security laws and regulations arising sustainability into our private label business BCI membership (2020), the Group laws and for a standard working week, from the regular employment relationship in 2019, thus embedding sustainability as an produced 22% of its cotton through the overtime must be paid at premium rate shall not be avoided through the use of integral part of our private label production BCI programme. This equates to 3.7 The organisation shall respect the right labour-only contracting, sub-contracting, – from conception to end product and million garments, representing 492 metric of personnel to a living wage and ensure or home-working arrangements, or beyond. tonnes of ‘Better Cotton’, (cotton grown that wages for a normal work week, through apprenticeship schemes where via methods that protect and restore the not including overtime, shall always there is no real intent to impart skills or During the last quarter of 2020, the Group environment, whilst improving farmers’ meet at least legal or industry minimum provide regular employment, nor shall any became members of The Better Cotton livelihoods). Our sourcing of Better Cotton standards, or collective bargaining such obligations be avoided through the Initiative (BCI). The BCI is a global, not-for- in 2020 saved an estimated 279 million litres agreements (where applicable). Wages excessive use of fixed-term contracts of profit organisation and the largest cotton of water whilst generating over 80,000 of shall be sufficient to meet the basic employment. sustainability programme in the world. BCI € additional profit for BCI-licensed farmers. needs of personnel and to provide some • No harsh or inhumane treatment is exists to make global cotton production discretionary income. The organisation tolerated better for the people that produce it, the shall not make deductions from wages for Physical abuse or discipline, the threat of environment in which it grows, and to invest disciplinary purposes. physical abuse, sexual or other harassment within the future of the cotton industry. • Working hours must not be excessive and and verbal abuse or other forms of must be voluntary intimidation shall be prohibited. The organisation shall comply with The health and safety of workers is applicable laws, collective bargaining paramount in all areas of our business, agreements (where applicable) and direct or otherwise. The Group continues industry standards on working hours, to review its policies on ethical sourcing breaks and public holidays. The normal on a regular basis. We continuously assess work week, not including overtime, shall factory ethical and quality management be defined by law but shall not exceed 48 and work with our suppliers to improve hours. Personnel shall be provided with conditions in our factories. at least one day off following every six consecutive days of working.

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The high level of investment within the BCI programme helps to support women within CARE LABELS the cotton supply chain, enabling them to 100% strengthen their standing within both their 22% 492families and communities. In the 2018–2019 of products tonnes 279 cotton season, BCI training reached 98,789million BARCODES female farmers across the world. litres 100% Female farmers supported by the BCI learn every aspect of cotton growing – from seed SWING TAGS made in BCI to harvest, with the programme including:of water of BCI cotton 100% since joining used• Safe use of chemicals. saved • Advantages of replacing conventional pesticides with natural substances. LABELS • Improving soil fertility. 100% 22% 492 • Optimising irrigation and water harvesting of products tonnes 279techniques. million THREAD Thelitres Group has committed to sourcing 80% of its cotton through the BCI by 2022. This is an ambitious target, but one that we are confident can be achieved by converting 13 4% POLYESTER made in BCI of BCI cotton ofmillion water garments to sustainable cotton. since joining used saved Man-made fibres, namely recycled polyester, remain a challenge. Recycled polyester varies considerably in both cost and quality. 22% COTTON However, by using a mix of virgin and recycled polyester to offset cost and quality, a further 440,000 garments were produced LINING AND 22% 492 bringing our 2020 total to just over four of products tonnes 279 WADDINGS million million pieces. This represented 25.6% of 83.5% litres our total inventory for 2020, achieving our target during an unprecedented year. Working from design through development, FASTENINGS made in BCI of BCI cotton of water we have achieved a minimum of 30% of since joining used saved sustainable materials within a garment. Our design and development team has SUSTAINABLE undertaken the conversion of components Components in the production process which are manufactured to a pre-determined used in the manufacture to sustainable level of sustainability, including sustainable materials and / or processes. materials. The production pyramid demonstrates the percentages achieved NON SUSTAINABLE by substituting materials, from throwaway Components in the production process which are currently not from a sustainable packaging to linings and waddings. source. These areas are high priority to become sustainable going forward.

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SUSTAINABILITY IN PRIVATE LABEL The Group presently contracts fully- DESIGNING OUT WASTE AND POLLUTION achieved this aim, whilst reducing waste, MANUFACTURING – SUPPORTING factored garments and does not have Our products are designed with and supporting four of the key UN SDGs. INDUSTRY INITIATIVES direct relationships with the lower sustainability in mind from the outset, The Group has committed to join WRAP tiers of our supply chain. However, our using high quality material and dyes, 1. AFRICA SHOES Textile 2030, an initiative that takes effect ambition is to utilise our existing supply laser-cutting and brushing of the fabric Africa Shoes has been exporting branded in 2021. This is a government backed chain knowledge and understanding to during manufacture. These best practice second-hand and safe basic-fault products project, replacing the previously successful incorporate sustainable processes (including measures extend the life of products, to Africa and other outlets around the Sustainable Clothing Action Plan (SCAP). finishes at dye house level) into our product whilst minimising the release of dyes world since 1990. This type of stock has Membership enables the Group to utilise development and end garments. These and microfibres once in the home of the historically been ‘discarded’ by other additional systems and training to further include critical environmental protection consumer. Microfibres are too small to be retailers. Whilst Africa Shoes sells product measure our overall GHG emissions and categories such as energy, water and the filtered out by waste treatment plants, so globally, the preferred destination for the water usage. This, in turn, enables us to carbon usage arising from manufacture. travel through and pollute water pipes to majority of our stock is markets within reduce emissions and resource usage in enter oceans and rivers. Effective design selected regions of Africa. Small, local accordance with both our own and national CIRCULAR ECONOMY can mitigate and reduce the impact of vendors are able to access re-saleable stock / international targets. The Ellen MacArthur Foundation defines microfibres. at heavily discounted prices enabling them WRAP Textile 2030 builds on the original a circular economy as being; ‘based on Our Development Team analyses the data to make profit and contribute towards their WRAP action plan to move towards the principles of designing out waste and and comments associated with products local economy. circularity, system change, climate action, pollution, keeping products and materials in returned by our customers to identify any contributing towards national policy use, and regenerating natural systems.’ common issues which can be corrected 2. SOLE RESPONSIBILITY and regulatory developments, including The Group is committed to an internal for future production cycles. These design Sole Responsibility specialises in the Extended Producer Responsibility (EPR). circular economy model to ensure the changes and corrections help to reduce resale of clothing and footwear diverted To further support our work on WRAP minimisation and eradication of landfill the volume of customer returns; which in from landfill to consumers, thus giving the Textile 2030, our collation of information waste across our business. We have already turn eliminates carbon emissions arising ‘seconds’ a ‘second chance’ and keeping has extended to the lower tiers in our achieved ‘zero waste to landfill’ certification as a result of product returns. In circular products and materials in use. supply chain, mills and dye houses. This for our UK distribution centre, and continue economy terminology, this is ‘designing out waste and pollution’ in practice. enables assessment of the environmental to re-use, repurpose and recycle across all 3. CARBON RESOURCES (CAMPING impacts within our supply chain, including of our operations – from sourcing through RESOURCES) LTD aggregation of supplier certifications and to packaging. KEEPING PRODUCTS AND MATERIALS Supporting our Outdoor businesses, Carbon accreditations. IN USE Resources specialises in the refurbishment Despite our design improvement and repair of tents and equipment, giving progression, changing customer tastes and products an extended life. The quality of requirements mean that it is not possible to repairs offered ensures ongoing durability completely eliminate returned stock. for years beyond the original repair, keeping The Group has developed a supply chain products and materials in use, and reducing to support the environment by keeping the carbon footprint associated with new products and materials in use for as long manufacture. as possible. To enable this, it was vital WE ARE to identify supply chain partners able to SHIFTING TO align to our waste-elimination principles A SYSTEM within their own businesses. This ensures Regenerate WHERE WE Design out compliance throughout the supply chain, natural waste and benefits end customers, and enables systems pollution the suppliers to make their own, direct contribution towards the United Nations ‘Sustainable Development Goals’ ( UN SDGs). A summary of three of our suppliers supporting the Group to ‘keep products and materials in use’ is provided as follows. Through ongoing collaboration, we have

Keep products and materials in use 130 131 CORPORATE AND SOCIAL RESPONSIBILITY

The graph below demonstrates the recent volumes of products given an ‘extended life’ BEHIND THE LABEL We did not allow COVID-19 to stop us from via our supply chain partners. Please note that 2021 volumes were impacted by the Our JD fascia (and the larger Group commencing our journey to look behind the COVID-19 pandemic. subsidiaries) has committed to a target of label at the end to end production process: 80% BCI cotton use by 2022. We continue The Group Private Label team to work on increasing our usage of recycled April commenced researching Number of units polyester, thus aiming to reduce the impact 2020 sustainable processes (including 0 of the manufacture of Group private label machinery alternatives) to replace products. We recognise that to achieve this 1,792 existing conventional practices. This aided 2018 target we must continue our progress, from identification of the requirements for a 1,138 farm level to finished garments, and each more sustainable supply chain. stage in between. 0 A fact sheet was created to collate In order to achieve long-term, sustainable 3,312 data from tier 2, 3 & 4 (mills, improvements across the supply chain, it is July 2020 dye houses and print houses) imperative that the Group, our brands and identifying the processes / 46,509 non-governmental organisations continue practices / machinery used, certifications to work with host countries to improve 3,998 and environmental audits in place, and 2019 conditions for workers. Our experience initiatives being undertaken by suppliers. 38,537 is that short-term bans or reactionary measures do not always facilitate progress, The fact sheet was issued to our 7,012 and on occasions may result in slowing or Oct top ten suppliers to assess the 54,865 reversing progress made over the preceding 2020 feedback we received from the years. different supply chain tiers. We adjusted our process and progressed to Accordingly, the Group shall continue to 44,539 contacting the second group of suppliers. take a balanced view on sourcing locations Our updated process was introduced 2020 11,230 and decisions. Many finished goods Nov to our entire supplier base, resulting 19,509 suppliers source cotton from multiple origin regions beyond their own borders and the 2020 in data being supplied to our Private 0 Group sources many non-cotton products Label team from 87 mills, 81 dye houses and 61 print houses. 37,708 from factory locations in China and other territories. Regardless of material or origin As anticipated by the Private Label location, the protection of worker rights Dec team, we received mixed data 3,434 within our supply chain remains a primary 2020 and responses. Not all suppliers focus of the Group. could provide verifiable data to 580 2021 To ensure that we meet the 2030 target, substantiate the positive environmental 2,755 reducing our overall environmental impact initiatives being undertaken. 0 has become a strategic priority for Group. The majority of suppliers were able to To achieve our targets, we shall further 6,244 demonstrate that they were working develop our internal knowledge, whilst towards common environmental goals facilitating closer working strategies (to those of the Group) within their own

GRAND TOTAL 94,482 between factories at all levels in the supply operations, showing knowledge of the chain not just those that we contract positive environmental and monetary 17,600 with for the actual production of the benefits of such changes. As more 61,939 finished garment for resale. It is the mills international brands and retailers undertake and dye houses that have the greatest similar engagement initiatives, the likelihood 7,012 environmental impact within the tiers of the of consolidated, verified certification 102,129 supply chain. Exploring different fabrics and becomes more likely. processes within these operations builds awareness and knowledge, enabling action Shoes and Clothing Africa Shoe on environmental issues. Collectively, these measures help to reduce the year-on-year Sole Responsibility Camping Resources environmental impact across our supply chain. Named and Branded Gear

132 133 CORPORATE AND SOCIAL RESPONSIBILITY

The Group Private Label team 2021–2022 partners, Young Minds. Further support was • Introduce our staff to a clearer procedure Jan decided to focus on three The Group will continue to work with supplied by Papyrus, a charity supporting for reporting any concerns. 2021 strategic assessment areas: suppliers and key stakeholders to the prevention of suicide. Our welfare • Engage with bodies such as the Chemical, Energy, and Water. promote best practice. We realise that champions have not only been able to Gangmasters and Labour Abuse Supplier data has been analysed and a our existing knowledge of assessing data help others suffering during this year of Authority (GLAA) to enlist support for grading system is now being implemented. relating to sustainable processes within the pandemic but have also personally the investigation of and prevention of This will provide further transparency the manufacturing supply chain can be benefitted from the extra support available. improper or criminal activity. relating to sustainability certifications and improved. Our team will be focusing During the period, our Welfare Champions accreditations across the supply chain. Our on expanding our understanding of • Identify areas for continued improvement. have been further supported by improved The Group shall be collaborating with three assessment areas incorporate industry environmental practices across all tiers access to ‘Strategic Response’ and standard audits, reviews, management of the supply chain and encouraging our external agencies to protect and promote ‘Critical Response’ teams. Initially set up worker safety at our core facilities. We systems, certifications and accreditations to factories to do the same within their own in our Kingsway Distribution Centre, these provide an overall grade. organisations. aim to extend additional training into changes have enabled us to: our individual stores and wider retail We will continue to learn from our partners, • Provide additional support and training to environment by the end of 2022. and their operations, to reduce our help staff to identify the signs of modern collective environmental impact across slavery and labour exploitation. both our immediate operations and within the local environments in which our supply chain operations are undertaken. ESCALATION PROCESS FLOW

MODERN SLAVERY NO OF NO OF KEY PEOPLE: 3 KEY PEOPLE: EMPLOYEES: 108 EMPLOYEES: 111 – Head of Sourcing The Group has partnered with UNSEEN UK MODERN SLAVERY – SUPPORT AND TRAINING: TRAINING: TRAINING: QA & Ethics to support their UK Modern Slavery Helpline MONITORING – Modern Slavery – Modern Slavery – HR Manager – Head of HR and Resource Centre. This vital resource Our compliance team has been able to – Spot the signs – Spot the signs – Supply Chain Operations provides 24/7 access and assistance for progress our implementation of a robust – Mental Health – Mental Health Manager – Senior Group victims, the public, statutory agencies and modern slavery and labour exploitation – First Aid – First Aid – Site Security Security Manager businesses to report concerns and get help prevention team in our main distribution – GDPR Manager – Distribution and advice. The UNSEEN Modern Slavery centre by enabling a joint task force with Logistics Helpline is included in our latest Ethical our onsite recruitment companies. Code of Practice and within materials This collaboration has formalised and distributed to our core UK sites and aligned joint internal procedures, relating businesses. to the recruitment of all distribution The private label overseas manufacturing centre staff, including security personnel. WELFARE STRATEGIC CRITICAL sites are audited by third party auditors and This enabled us to develop a wider WELFARE CHAMPION RESPONSE RESPONSE to avoid audit fatigue, the Group accept understanding of factors that may CHAMPIONS audits already in place by all accredited indicate evidence of exploitation and take SPONSOR TEAM TEAM audit companies. The Group will continue preventative (pre-employment) action to nominate QIMA for its own contracted wherever possible. Whilst the process is audits should an existing audit not be in fully implemented and exists for personnel place. employed in the distribution centre, During 2020, adherence to international (permanent and temporary), facilitating this ROLE ROLE ROLE ROLE travel restrictions has meant that overseas earlier in the recruitment process enables To provide first To provide Key management To alert Directors auditing has not been permitted, either by us to assist and support those people who line support to support to Welfare stakeholders of the wider the Group or external third parties. We have may not be offered employment, but who colleagues. Champions and to ensure the business and to mitigated this risk by continuing to work (from interviews, or recruitment-related provide first line documented notify / liaise with with our suppliers on factory standards engagement) may have displayed indicators advice. escalation process authorities as including rectification of non-compliance of potential exposure to exploitation. is followed in appropriate. issues via remote management. During 2020 our Welfare Champions consultation with continued to support staff in the the critical response Distribution Centre and head office, proving team. to be an invaluable resource to the business. Mental health support training was provided by one of the JD Foundation charity 134 135 CORPORATE AND SOCIAL RESPONSIBILITY

• Expand the scope and breadth of supply important to keep abreast of new trends SUPPLY CHAIN OWN LABEL SOURCING chain worker protection. Through our emerging from those involved in labour The Group continued to map our supply Within the audit status graph, the ‘third membership of UNSEEN UK, we shall exploitation and modern slavery. Through chain, with this now completed to the print party audit in date’ line of 77% represents all continue our progress on supply chain our collaboration with the GLAA, UNSEEN houses in the fourth tier. This strategy of the factories where an audit is required transparency mapping. This will include, UK and our supply chain partners, the requires continual engagement with our in accordance with Group processes. Of but not be limited to UK third party Group is confident that it has the ability to partners – our manufacturing chains beyond the remaining 23% of factories, 16.8% warehousing operations. continue to adapt and improve our work to first tier will often change due to demand were delayed due to travel restrictions Modern Slavery is a constantly changing, increase the awareness of and reduce the and capacity. As a supplier of fully factored arising from the COVID-19 pandemic. The multi-faceted topic that can impact any prevalence of Modern Slavery. garments, our partnership does not remaining 6.2% did not require an audit sector or community. Accordingly, it is historically extend to mills and dye houses, owing to either minimal volumes, or where though we recognise the need to develop 2019/20 was the first year the Group has these relationships further. worked with these factories. The percentage of suppliers audited has AUDIT STATUS 2020 VS 2019 reduced from 86% to 77% but this reporting Protection of workers within our supply period of 2020 includes new acquisitions chain is paramount. We will continue to which were not previously included in have zero tolerance approach to critical our audit programme. Additionally, the issues identified by Group personnel or 2020 audit percentage decreased due third-party auditors, from physical working to the inclusion of our Sprinter / Sport environment concerns through to anything Zone European subsidiary, which added that impacts workers and causes hardship complexity to the analysis of an already or harm. The factories used by the Group diverse global supply chain. are audited by accredited third party, Our core sourcing regions are in Asia, India, specialist assessment and audit suppliers, as Turkey and Pakistan. The chart on page shown in the graph below. 139 illustrates the value split (in GBP) by country for private label product sourcing across all Group entities.

AUDIT STATUS LAST YEAR VS THIS YEAR • 1st Tier = CMT Site (Factory) SUMMARY OF PARTNERS IN • 2nd Tier = Mill 2019–2020 AUDIT REQUIRED • 3rd Tier = Dye House • 176 Agents in 2020 V 243 Agents • 4th Tier = Print House in 2019 16.8% • 496 factories in 2020 V 355 6.2% factories • 21 Sourcing Countries 2020 V 25 3RD PARTY AUDIT IN DATE Sourcing Countries in 2019 77.0% 86.0%

NO AUDIT REQUIRED 6.2% 7.8%

2021

2020

136 137 CORPORATE AND SOCIAL RESPONSIBILITY

Subcontracting is expressly forbidden CHINA BANGLADESH OTHER VIETNAM UK without Group authorisation and 185.0M 14.3M 2.4M 2.8M 1.0M verification, provided by our Private Label team. The Group regularly visits the factories that we work with to check production and standards. This is critical to promoting the importance of longer- term relationships, key to the protection of workers’ rights and working with factories to achieve better standards for workers. It is the aim of the Group to ensure that all entities within the Group work to adopt our policies. It is important to recognise that the the Group is highly acquisitive, and accordingly our supply chain contacts, and global reach expands each year. The Group shall continue to work with and advise subsidiaries and acquisitions in order to PRIVATE LABEL embed our policies into their businesses. PRODUCT SOURCING FY2021 (£GBP)

Neil Greenhalgh Chief Financial Officer 13 April 2021

INDIA INDONESIA MYANMAR PAKISTAN PORTUGAL TURKEY 16.2M 5.9M 4.3M 13.8M 3.4M 7.4M

138 139 THE JD FOUNDATION CHANGING LIVES, SAVING LIVES The mission of the JD Foundation is to support charities working with disadvantaged young people in the UK.

The JD Foundation (The Foundation) donated to our charity partners. All monies supported 18 charities in 2020 with a focus raised (excluding fees) are distributed on mental health and homelessness. amongst the chosen charity partners, with a The JD Foundation is a registered charity, small reserve left for emergency funding. founded by JD Group in October 2015. The Foundation is committed to distributing 100% of the net proceeds from the sale of 100% of all monies raised, less direct the iconic JD Duffle Bag and other carrier expenses with any residual amounts over bags in England, Wales and Scotland are committed to the principal partners retained transferred to the JD Foundation. In the for emergency funding. period from October 2015 to January 2021, the JD Foundation has raised over £3.5 million, with 89% of funds received to date y it r a h C

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e D £3.1m OVER TOTAL AMOUNT £3.5m DONATED TOTAL AMOUNT CHOSEN CHARITIES FOR 2020 The Foundation supported The Daily The Foundation’s chosen charity partners Mirror’s Save a Kid’s Christmas appeal RAISED support a number of community based by match-funding donations to Save the charity initiatives in addition to nationwide Children up to a value of £15,000. The charities tackling mental health, youth appeal raised a staggering £161,000, which homelessness and unemployment. Further, we believe may be The Daily Mirror’s most we support charities which provide support successful Christmas appeal to date! to families dealing with undiagnosed Our donation of £15,000 could provide heart conditions, terminal illness and grants to 38 families, reaching approx. 79 bereavement. children. These families would each receive ENVIRONMENTAL CHARITIES OVER In early 2020, we agreed a new charity an early learning pack, including toys and In addition to supporting youth charities, partnership with City Hearts, who believe books, which supports age appropriate play the Foundation also supports Mountain that together we can help victims of and encourages parent-child interaction to Rescue England and Wales and Scottish Modern Slavery not just become survivors stimulate early communication & language Mountain Rescue. During the five £1.1m but see them thriving in their communities. skills. Families would also then be able to year partnerships the Foundation has The Foundation supports the Bright Futures select a combination of items and resources donated over £1.1 million to support TOTAL AMOUNT Employment programme in partnership up to the value of £340 in the form of the services they provide in Scotland, with JD Sports. essential household items (e.g. table and England and Wales. DONATED chairs, cots, beds, oil-filled radiators) or vouchers for supermarkets and Argos.

140 141 WHAT WE DO... PLANS FOR THE FUTURE… EMPLOYEE CHOICE We believe in a future where talent is 2021 promises to be an exciting year for us. respected and nurtured irrespective of With the support of the JD Foundation, we PARTNERSHIP where it comes from, where organisations will launch our new online Opportunities recognise and realise the benefits of Hub. It will connect ambitious young people #BlackLivesMatter a diverse workforce and where our with jobs, work experience, internships and communities can come together and thrive. mentoring opportunities with employers This is our blueprint to set the foundations that would normally be out of their for a more inclusive society to grow. reach. Through the Opportunities Hub, Our high impact programmes work organisations will have access to a rich mix with disadvantaged young people of talent that they often struggle to reach and communities, providing tangible and young people will get the support they opportunities and support that enables need to begin their career. them to thrive, whilst driving systemic We were delighted to be awarded the JD In September 2020 the Foundation change in organisations and society. Foundation Employee Choice Partner in announced a new two year Employee 2020. Ours is a blueprint for a future, where Choice Partnership with Blueprint for All talent is respected and nurtured irrespective (formerly the Stephen Lawrence Charitable of its origins. Trust). In support of the #BlackLivesMatter movement £62,500 was pledged towards the eradication of racism. A number of charities in line with our mission were On 1 January 2021, our name changed short listed with colleagues voting in our to Blueprint for All (formerly the first Employee Choice Partnership for their Stephen Lawrence Charitable Trust). preferred partnership. Three other charities This change respects Stephen’s family’s were awarded grants in this process – Show wishes that the Stephen Lawrence Racism the Red Card, BLAM UK CIC and Day Foundation, set up by his mother Anthony Walker Foundation. Baroness Lawrence last year, is the only charity to bear his name. As See a statement (right) from Blueprint: we change our name, we are proud to confirm our charitable purpose and indeed all our work to ensure opportunities denied to Stephen due to race, ethnicity or background are rooted in our objectives forever and we will continue to honour his memory through our work. The Blueprint in our new name signifies that we have a clear plan to create the changes our society needs, and gives a subtle nod to Stephen’s own desire to become an architect, ensuring that he is always recognised in our story. The ‘for All’ highlights our belief that the same opportunities and support should be open to everyone, not limited because of someone’s race, ethnicity or background. It also speaks of our collaborative approach and the role we all need to play in creating a fairer and more inclusive society.

142 143 COVID-19 PANDEMIC

“2020 was a tough year for charities but an We opened our first base in Northern Ireland ever more challenging time for those they during the first national lockdown across the support. PAPYRUS worked hard to build up UK and ROI. Quite an achievement. Our staff it’s reserves to enable more young people in the North West, London, West Midlands to be able to access our services. We had and Cardiff, have continued to engage their great plans to extend services and to grow local and regional communities in suicide our footprint. The pandemic hit us suddenly awareness, prevention and learning about and we were quick to act, shelving many of our model of intervention. our plans for growth in order to maintain our PAPYRUS would be nothing without those essential offer. who turn tragedy into hope, rooted in personal experiences of suicide loss, mental illness or emotional distress. Most of our income comes from people who want no child or young person to suffer what they or their loved ones have been through in terms of anguish We set our course to PAPYRUS would be and suffering, often hidden from protect our much-valued nothing without those sight because of the social stigma HOPELINEUK service, who turn tragedy into that still surrounds suicide. With our unique response hope, rooted in personal them, our charity partners enable to those with thoughts experiences of suicide our life-promoting services. of suicide and those loss, mental illness or Many of our partners, like the concerned about them. emotional distress. JD Foundation not only give us financial support; they work with us to link more people to what we can bring to them and they to us. Suicide prevention is best delivered by communities themselves, when Mental health crisis resources are shared and people are made aware of what help can be given. PAPYRUS could not do its life-saving work without 2020 saw several months of national Despite most of the world shutting down, We set our course to protect our much- such vital support. lockdown in the UK, thousands of young our charity partners were needed now more valued HOPELINEUK service, our unique people lost contact with the things so than ever before and continued to operate response to those with thoughts of suicide Our teams have worked so very hard crucial in helping them stay well; from and provide services to the disadvantaged and those concerned about them. throughout 2020 to meet the needs of young people and to keep them suicide- trusted adults within the community whose communities throughout this period. Here’s Throughout various lockdowns and safe. They have worked hard, too, to keep doors had to close, to professional mental what a few of our partners have to say: tightening social restrictions we were able to themselves going. Self-care and mutual health services desperately struggling to answer thousands of calls, texts and emails support have been our watchwords meet rising demand. The latest mental about suicide and work towards safety throughout one of our toughest ever years. health prevalence data shows that children with so many of our children and young with a probable mental health disorder people and their caregivers to enable life As we enter 2021, we have great hope were more than twice as likely to live in and provide hope again where it was often for new development of PAPYRUS and a household that had fallen behind with so very fragile. We even extended our offer our services. We are looking forward to payments – circumstances already felt by by launching webchat to give young people extending our footprint across the UK, so many families as a result of the immense direct access to one of our advisers online. and to engaging with more and more financial pressure resulting from the communities to keep them suicide-safe.” pandemic. Our suicide prevention training offer had to be re-fashioned into online education. Ged Flynn, Our work with local authorities and national PAPYRUS Chief Executive governments found a renewed focus, often For more information, please visit highlighting the needs of the charity sector www.papyrus-uk.org as it found itself in totally uncharted waters.

144 145 The JD Foundation has provided us with invaluable support, which has enabled us to inspire over 500 young people this 2020 was an incredibly busy year for all of us close family contact on an ongoing basis, to year and prepare them for their future working lives. The at YoungMinds, providing thousands of young dealing with health anxiety and pulling together additional value that has been provided through all the JD people across the UK with the support and ideas for virtual shared activities that we can staff volunteering time, directly supporting young people, is guidance they have so desperately needed. At push out to young people to help those who are of huge significance. They have been inspired by people who a time when help is out of reach for so many worried about isolation. love their jobs and speak about them passionately! I’m really young people, our work has never been more The support of our funders has meant that grateful for the ongoing support of the JD Foundation and the important. we have been able to respond quickly and massive impact it is having on the lives of local young people. During the pandemic there has been a dramatic effectively, meeting the scale of demand during Phil East, CEO Salford Foundation increase in the number of young people a time of great uncertainty. accessing the YoungMinds website for support. We know that we aren’t out of the woods yet. They are seeing more emerging mental health COVID-19 is still well and truly with us and we challenges as well as increasingly serious issues, are now facing a major recession, and continued as access to traditional means of support uncertainty of living with an invisible disease. such as school, family and friends have been This means we are expecting the biggest reduced. crisis for young people’s mental health for From seeking practical tips to help them get generations. through a tough day, to reaching out for urgent Looking ahead, we have a calendar packed full help; YoungMinds ensure that no matter the of activities and content in order to help young The support Once Upon a Smile has received from the JD challenges a young person might be facing, people get through the following months of Foundation has been a lifeline. Over the last few years we as a they can turn to them and find the trusted help restrictions in place. We will continue being charity have grown and that growth has ensured we are able and support that they need. there for young people no matter how this to support more bereaved families. This growth is thanks to the Our number one priority is to ensure as many unfolds – we’re determined to show them they support of the Foundation and without it, I have no doubt, our young people and families as possible feel aren’t alone. charity wouldn’t be as much of a success as it is. supported and able to look out for themselves Daniel Jillings, Once Upon A Smile. and others during this difficult and uncertain time. We have done this through our Parents Helpline, which has seamlessly converted to remote working and by ensuring our YoungMinds Crisis Our number one priority is to

Messenger service can respond to a predicted ensure as many young people growth in demand over the period. We also and families as possible feel adapted our 360 Schools digital community “supported“ and able to look content by creating a downloadable resource out for themselves and others for schools to share with students and their during this difficult and The support we have received from the foundation has truly parents, and are continuously developing our uncertain time transformed Smiling Families. We have been able to reach so digital content on everything from surviving many families in so many ways, NONE of which would have been possible without the support of the JD Foundation. Our services have been able to expand and we have seen the families that have contacted us or been nominated have quadrupled each year. The support was so important to us during 2020 as we were thrown into unprecedented waters and suddenly needed to shop and deliver medication and medical supplies for our 47 families during lockdown. We also recognised a need for mental health support on a wide scale as our families battled isolation. With the Foundation’s help we were able to supply Smile boxes on a weekly basis which were safely delivered and coincided with online fun sessions for over 260 people. Our charity would truly have had to let all those people down were it not for the love and support of the Foundation. Kerry Martin Beades, Founder Smiling Families

146 147 “Imagine the Change’ or ‘Be the Change’, that’s With an updated purpose of providing what the team at Manchester Youth Zone tell ‘somewhere to turn, something to do, someone their members when they walk through the to talk to’, along came #VirtualMYZ – an doors of their big yellow building… and that’s online Youth Zone with Zoom Sessions, Daily exactly what they themselves had to do as Challenges, Fitness Sessions, Food Deliveries, COVID-19 struck! Well-being Calls / Visits and much, much more.” As a charity that would normally welcome over 1,000 visits from some of the most vulnerable children in Manchester every week, being forced to close their doors was never going to stop them being there for young people. They adapted, they changed, and they broke through boundaries they didn’t even know existed.

The JD Foundation is a founder patron of the Employability workshops are also available HEADLINE STATS: APRIL – DECEMBER 2020 HideOut Youth Zone who officially opened for those who need help getting into on Saturday 26 September by Capital Donor employment, education or training and our Fred Done, representatives from Manchester enterprise suite and business links inspire City Council and young people. The them to dream big and develop their Foundation have donated £50,000 so far and entrepreneurial skills. will provide a further £50,000 in partnership Following months of isolation, which has funding across 2021 and 2022. taken its toll on young people’s physical and Through food deliveries Though core sessions were With a mix of fitness Located in Gorton, HideOut Youth Zone is mental wellbeing, the Youth Zone is playing a and ‘grab bags’ available closed, MYZ could still sessions, music lessons, a brand-new youth charity which provides key role in supporting young people. to collect at MYZ they hold 1–1 sessions and in game nights, cooking clubs thousands of young Mancunians with During the national lockdown periods we provided 9,236 free meals some cases support group and more, MYZ hosted 824 somewhere to go, something to do and for the families they activities meaning they still Zoom Sessions! have been delivering small group & 1to1 someone to talk to. The youth zone is open support, digital & online sessions, welfare work with. had 2,767 visits to Youth to young people aged 8–19 and up to 25 for Zone. calls, home door visits & detached street those with additional needs. work across the community seven days a HideOut is open whenever school is closed week. We are always here for young people for young people, ensuring they have the across Manchester and feedback from our opportunity to take part in around 20 members, parents and carers has been practical activities per night including sports, extremely positive during challenging times. arts, media, music, dance, cooking, health & wellbeing, and digital technology. Daily challenges and activities across Still providing young people with socials meant that there’s been over ‘someone to talk to’ there was 622 9,500 engagements. hours of 1–1 mentoring and over 1,000 phone calls!

148 149 CHARLOTTE’S STORY

In 2016 I was suffering with shortness of trip to the supermarket would have me breath and tiredness whilst at university. in bed for several days afterwards. Most Following several GP appointments it was people discover they have restrictive concluded that I was just suffering with cardiomyopathy by fainting or ending up in stress and anxiety due to my university A&E with a stroke or with arrhythmias. work and being away from home. Despite I feel incredibly grateful to Debbie and this, my symptoms continued to get worse CRY that my fate was quite different and I and when I went home for the summer my am now back to living the life I love. I urge mum was concerned about how much everyone to have a CRY screening even if I was struggling. they are perfectly healthy because many She’d heard of a heart screening in our local people have no symptoms but are at risk of area and suggested I went and get checked sudden cardiac death.”

over. I went along with my boyfriend to both be screened and it was completely

free which was a plus with both of us being students! “ They asked for any family history and I had I RECEIVED an ECG and then an echocardiogram also. Following my screening I was referred to THE GIFT OF A a cardiologist for further tests because my “NEW HEART results were abnormal. I met my cardiologist and he said he wasn’t sure until he did more tests but he knew whatever it was my heart CARDIAC RISK IN THE YOUNG was ‘far from normal’. I was so glad that I was finally being taken seriously but also very worried about how long I’d been living Charlotte Carney with this and not realised! Charlotte Carney attended a CRY screening I was finally diagnosed with restrictive day funded by the JD Foundation. cardiomyopathy and started on several medications including beta blockers and blood thinners. I was at huge risk of a stroke and also sudden death which was terrifying. Around 6 months after diagnosis I was told that I was still getting worse and I wasn’t responding to medication. There is no cure for restrictive cardiomyopathy and I was transferred to a heart transplant team to assess my suitability. Thankfully I was the perfect candidate for a heart transplant and I was placed on the waiting list 3 February 2018. On 27 February 2018 I received the gift of a new heart. Before this it was at the point where I was bedbound and couldn’t do anything I loved anymore, a

150 151 INTO 2021... FIND OUT MORE...

In 2021 we’re committed to developing our the students for the session, guiding them charity partnerships even further, outside of through the activities. The sessions and CHANGING LIVES, SAVING LIVES the funding we offer. The JD employees play activities are the same as those in schools an integral part in raising aspirations and and will end with a YouTube Live / Zoom supporting our youth of today. Below are site visit, where the business mentor will be just some of the exciting projects gathering able to give students a tour of the office, set momentum. an activity and answer questions.

INCLUSION AND DIVERSITY IN SPORT REBRAND AND RELOCATE PROJECT One of our charity partners Sacriston Youth Follow our journey on social media... At the start of 2020 two designers based Project are relocating premises. Through at the Sharp Project were working with our partnership development, the property youth workers and a group of young team at JD have provided invaluable support people at Manchester Youth Zone, on a and guidance – redesigning the layout of project around inclusion and diversity in their new premises, provided a tender for sport – with the idea that ultimately they’d contractors, managed the processes and create a campaign – digital or physical to supported with their rebrand by designing a showcase the JD brand and partnership with new charity logo. This partnership work has Manchester Youth Zone. Due to COVID-19 saved the charity over £2,000 in costs. this has been put on hold until 2021. MOUNTAIN BIKE INSTRUCTOR AWARD ENTERPRISE PROJECTS Through our partnership development, a Luci (Apparel & Graphic Designer) is donation of Outdoor clothing was made donating her time and experience to from the Outdoor Group to Manchester contribute to the Reds v Blues football Youth Zone which meant they could gift shirt initiative at Manchester Youth Zone, and enable a selection of young people to collaborating with young people on designs take part in the Mountain Bike Instructor of a football shirt, with the aim that this will Award “gears level 1.” The team of six were be created and sold to supporters in lieu of taken hard core mountain biking around @JDFoundationUK @TheJDFoundation @TheJDFoundation the next live event. Many more enterprise Dovestones reservoir in the Peak District, projects to follow… Delemere Forest, Chorlton and Sale water parks and Drinkwater Park mountain bike MENTORING trails. This support will continue in 2021. Another year, another cohort of mentors as we continue to support Salford Foundations Inspired to Aspire Mentoring Programme. Aimed at students in Year 8 and Year 9, The young people have learnt how to map the programme consists of seven ‘soft skill’ read and navigate, have learnt about safety sessions that focus on the skills needed in “in the outdoors and emergency first aid. the world of work (Introduction, Teamwork, They have learnt how to repair punctures, fix

Time management, Self-awareness, broken chains and maintain the bikes after Communication, Problem solving). a ride. They have ridden up, down, through water, over rocks and even done some jumps This is extremely beneficial for students in and they“ have done all this in some really helping them understand how education poor weather, all thanks to Outdoor Group links to the world of work. We will continue and the kind donations the kids were able to to offer our usual programme in schools do this in all kinds of weather. (following COVID-19 procedures) delivered by JD mentors, this will be delivered to two groups of eight students, over two school periods. As well as this we are also launching Zoom / Teams mentoring, the sessions will require a teacher who will have access to a laptop / computer with a webcam and a business mentor will then be on Zoom with

152 153 SECTION 172 STATEMENT

COMPANY STAKEHOLDER ENGAGEMENT This statement sets out how the Directors have approached and met their responsibilities under section 172 Companies Act 2006 and in particular how the Directors have satisfied themselves that they have acted in a way which is most likely to promote the success of the company for the benefit of its members as a whole and in doing so, having regard for stakeholders interests.

STAKEHOLDER KEY ISSUE HOW WE HAVE IMPACT OF HOW THE BOARD STAKEHOLDER KEY ISSUE HOW WE HAVE IMPACT OF HOW THE BOARD ENGAGED ENGAGEMENT TOOK ACCOUNT OF ENGAGED ENGAGEMENT TOOK ACCOUNT OF THE ENGAGEMENT THE ENGAGEMENT

Customers Ensuring we We increased our We have issued Our online and Colleagues Maintaining The Group’s Revised work from The Executive deliver a positive customer care direct and clear warehouse dialogue with Human Capital home policies Chairman consumer service to meet communication operations and our employees Management have been shaped attends selected experience in light the needs of our with our their ability despite extensive system and by employee employee forum of unprecedented consumers in light customers with to operate store closures and communication feedback. meetings in levels of online of increased online a central theme effectively, remote working. forum “JD4U” is The feedback order that he can demand. sales – to ensure of the safety efficiently and Ensuring our now cemented as from our store receive direct Maintaining our our customers can and wellbeing of safely was one employees a crucial tool in employees feedback from connections tell us about their our customers of the primary feel connected the way the Group and employee employees. This with consumers, experiences. and employees topics of and supported engages with its wellbeing has feedback is despite significant We carried out regarding our discussion by during a very employees. been at the discussed with periods of store more social store opening the Board during challenging time Diversity and heart of store the Board and closures. engagement and plans. the period of the from a personal Inclusion training re-opening any appropriate pandemic. actions coming Identifying the established an We produced and professional has been delivered programmes. increased presence instruction videos The Board perspective. to all employees out of the needs of our sessions are consumers and on social channels on how we have requested regular and relevant such as You Tube adapted our updates and were engaging content agreed with the their changing HR Director. environments. and Tik Tok. stores ready for provided with all has been created We developed re-opening in the of the customer to highlight the The Executive an at home same style and material which key issues, which Chairman engagement series with the same focused on the have received appeared in the to communicate branding as we safe re-opening over 40,000 views diversity and with our consumer create all of our of our store across the Group. inclusion video which was focused product content network. Employee Forums content to deliver on entertaining our so that it was are run with his own personal consumer at home engaging and representatives commitment to through music, meaningful to our attending from all achieving better guest appearances consumer. areas of the Group. diversity across and at home the Group. workouts.

154 155 SECTION 172 STATEMENT

STAKEHOLDER KEY ISSUE HOW WE HAVE IMPACT OF HOW THE BOARD STAKEHOLDER KEY ISSUE HOW WE HAVE IMPACT OF HOW THE BOARD ENGAGED ENGAGEMENT TOOK ACCOUNT OF ENGAGED ENGAGEMENT TOOK ACCOUNT OF THE ENGAGEMENT THE ENGAGEMENT

Shareholders Ensuring our Attending regular The interest Board members Suppliers Establishing a We carry out We have The Board has shareholders virtual meetings in the recent attend regular robust framework regular audits successfully established a JD have a clear and roadshows share placing shareholder for the protection of our factories mapped the code of conduct understanding with shareholders. exercise shows meetings and the of people and engage in second and which is shared of our global Delivering an shareholders Remuneration working for our extensive due third tiers of with all suppliers expansion improved investor and prospective Committee suppliers – in diligence to ensure the Group’s and follows the strategy. website with better shareholders Chair has led particular ensuring we understand manufacturing International Ensure our disclosure on key understand the the initiative fundamental where the supply chain Labour shareholders topics including Group’s future to change health & safety components of the to include mills Organisation understand the supply chain. global plans. the Executive measures are products that we and dye houses minimum measures taken A new Director pay in place and manufacture are and this will be standards. As to secure a robust remuneration structure. safeguarding made and what the included in the set out in more financial position policy with a share The Board and promoting working conditions 2021 transparency detail in the through the based LTIP is to regularly engages their basic human are like in those map at Corporate Social pandemic and in be proposed at in the assessment rights. environments. www.jdplc.com Responsibility the medium to this year’s AGM. of board papers ESG risks and We engage with Nike and adidas section, the long term. regarding improvement our key branded are committed to continued the strategic targets and the suppliers Nike carbon reduction international Responding expansion of the to shareholder decisions which involvement of our and adidas on targets which are crucial to branded suppliers. the progress align with those of Group ensures feedback and a wider network implementing the long-term being made on a the Group. benefits to the number of ESG of people who an improved operate in remuneration Group. The related issues Board tests – for example accordance with structure to ensure our company better alignment each decision carbon reduction alongside its initiatives. values and between executive standards. pay and long-term overall objective shareholder value. to deliver long term sustainable earnings growth and to enhance total shareholder returns.

156 157 SECTION 172 STATEMENT

STAKEHOLDER KEY ISSUE HOW WE HAVE IMPACT OF HOW THE BOARD ENGAGED ENGAGEMENT TOOK ACCOUNT OF THE ENGAGEMENT

Regulators Environmental We have had We have been The CFO closely and employment extensive able to provide monitors the issues in light of engagement with our employees engagement with the pandemic. local authorities and customers local authorities The impact of particularly with the positive regarding the Brexit on the regarding our message that all measures we Group’s supply warehousing of our operations have in place chain and its facility at Kingsway are COVID-19 to ensure the people. – with the primary compliant safety of our focus being the following employees in safety of our extensive our warehousing employees. engagement with facilities and We have local authorities. provides regular formalised our We have ensured feedback on this membership of the financial to the Board. the British Retail robustness of our The Board Consortium (‘BRC’) business given request regular to assist with that we have kept updates on the our engagement our warehousing standards that are with government facilities open being achieved via a coalition and operational and maintained of retailers and in a COVID-19 during the specifically non- compliant manner prolonged period essential retailers throughout the of the pandemic to navigate the pandemic. including robust challenges posed social distancing by the pandemic and additional and Brexit. hygiene measures. The Executive Chairman GOVERNANCE personally attends many of the BRC virtual meetings and regularly updates the Board on the initiatives being led by the BRC.

By order of the Board STRATEGIC REPORT

The strategic report on pages 42 to 158 is approved by the board of directors. Neil Greenhalgh Chief Financial Officer 13 April 2021

Neil Greenhalgh Chief Financial Officer 158 13 April 2021 159 THE BOARD

PETER COWGILL ANDREW LESLIE Executive Chairman and Chairman of the Non-Executive Director, Chairman of the Nomination Committee Aged 68 Remuneration Committee and Member of the Audit Peter was appointed Executive Chairman in March and Nomination Committees Aged 74 2004. He was previously Finance Director of the Group Andrew was appointed to the Board in May 2010. He until his resignation in June 2001. Peter Cowgill is has over 40 years of experience in the retail, footwear the Non-Executive Chairman of Quiz Plc and Roxor and apparel sectors. He was an Executive Board Group Limited. Peter is a chartered accountant and Director of Pentland Brands Plc, from which he retired founder of North West based chartered accountancy in 2008. Andrew also held a number of senior positions firm, Cowgill Holloway. In 2019, Peter was awarded with British Shoe Corporation, The Burton Group Plc an honouree doctorate (Doctor of Business and Timpson Shoes Limited. Administration) from the University of Bolton for his outstanding contribution to business. HEATHER JACKSON Non-Executive Director, Member of the Audit, Nomination and Remuneration Committees Aged 55 NEIL GREENHALGH Heather was appointed to the Board in May 2015. Chief Financial Officer Aged 49 Heather has extensive experience in strategy, change Neil joined the Group in June 2004 and was appointed and technology in different sizes of company from FTSE Chief Financial Officer in November 2018 having been 100 to start up and in different consumer facing sectors. promoted from his previous role as Group Finance She is currently a Non-Executive Director of Lookers Director. Neil previously held a number of senior Motor Group plc, Rothesay Life, Skipton Building positions within the Woolworths Group and qualified Society and Ikano Bank AB. Her former roles have as a chartered accountant with KPMG in 1996. included CIO and COO of HBOS / Lloyds Plc and other Director level roles with Capital One, Boots the Chemist and George at Asda.

ANDY RUBIN MARTIN DAVIES Non-Executive Director Aged 56 Non-Executive Director, Senior Independent Director, Andy was appointed to the Board in February 2016. Chairman of the Audit Committee and Member of the Andy is Chairman of Pentland Brands, a Director of Nomination and Remuneration Committees Aged 61 Pentland Group Plc and the European Vice-President Martin was appointed to the Board in October of the World Federation of the Sporting Goods 2012. Martin also holds the position of Chairman of Industry. Sentric Music Limited. He was previously Group Chief Executive of Holidaybreak Plc from 2010 until its sale to Cox and Kings Limited in 2011. He joined the Board of Holidaybreak Plc in 2007 when it acquired PGL where he had been Chief Executive. He left KATH SMITH Holidaybreak Plc in 2012. Previously, he has had roles Non-Executive Director, Member of the Audit, at Allied Breweries, Kingfisher and Tommy Boy Music Nomination and Remuneration Committees Aged 64 in New York. Kath was appointed to the Board in May 2019. Kath also holds the position of Non-Executive Director of Sorted Holdings limited. She was previously the GM / Vice President of The North Face EMEA, a VF Corporation company. She has over 30 years’ experience in building world leading brands including Mars and Diageo and 20 years of experience within the sporting goods industry where she was Managing Director of both the adidas and Reebok brands. From 2012 to 2014 she served as a co-opted member of the University of Salford’s Audit Committee. 160 161 DIRECTORS’ REPORT

Pages 162 to 167 (inclusive) of the Annual year, including an assessment of SHARE CAPITAL SHAREHOLDER AND VOTING RIGHTS Report, together with the relevant relevant environmental, employee, As at 30 January 2021, the Company’s All members who hold ordinary shares sections of the Annual Report, which are social, community and human rights issued share capital was £2,433,083 are entitled to attend and vote at the incorporated into these pages by reference, issues, together with the Group’s key comprising 973,233,160 ordinary shares of Company’s Annual General Meeting, save constitute a Directors’ Report, which is performance metrics; in a manner which is 0.25p each. as set out in the Company’s Articles of required to be produced by law and is consistent with the size and complexity of On 3 February 2021, the Company placed Association and subject to any applicable prepared in accordance with applicable law. the business. a total of 58,393,989 new ordinary shares legislation implemented in response to the The Directors’ Report also includes certain • An assessment of the Group and parent in the capital of the Company at an issue COVID-19 pandemic. On a show of hands at disclosures that the Company is required to Company’s ability to continue as a going price of 795 pence per share. The placing a general meeting, every member present in make by the Financial Conduct Authority’s concern, disclosing, as applicable, matters shares represent approximately 6.0 per person or by proxy shall have one vote and, Listing Rules and Disclosure Guidance and related to going concern. cent. of the existing issued share capital on a poll, every member present in person Transparency Rules. or by proxy shall have one vote for every The Group is committed to establishing and of the Company. As such, from this date, the Company’s issued share capital is ordinary share they hold. Subject to relevant maintaining good corporate governance statutory provisions and the Company’s FAIR, BALANCED AND UNDERSTANDABLE practices (as set out in the Corporate £2,579,068. comprising 1,031,627,149 The Board considers that the Annual Report Articles of Association, holders of ordinary Governance Report), which the Board ordinary shares of 0.25p each. and Accounts, taken as a whole, is fair, shares are entitled to a dividend where believes is appropriate for the business of balanced and understandable and provides declared or paid out of profits available for the Group and is fundamental for retaining SHARE ALLOTMENT AUTHORITY the information necessary for shareholders such purposes. Details of the final dividend effective and long-term, sustainable The Directors were granted authority at the to assess the Group’s position and proposed is provided in the Dividends and relationships with its key stakeholders. 2020 AGM to allot shares in the Company Earnings per Share section of the Financial performance, business model and strategy. and to grant rights to subscribe for or A summary of the Directors’ responsibilities The Corporate Governance Report (pages Review on page 86. 168 to 175) is incorporated by reference into, convert any securities into shares in the in respect of the Annual Report and Company up to a maximum aggregate Financial Statements is set out on pages and is deemed to form part of, this report. For the purposes of DTR 4.1.5R (2) and DTR nominal amount of £190,830 (which RESTRICTIONS ON TRANSFER OF SHARES 210 to 211. represented approximately 7.84% of the 4.1.8, this Directors’ Report and the Strategic The restrictions on the transfer of shares in Company’s issued ordinary share capital Report, which has been approved by the the Company are as follows: PRINCIPAL ACTIVITY Board and is set out on pages 42 to 158, as at 25 June 2020). This authority is The principal activity of the Group is the • The Board may, in its absolute discretion, comprise the Group’s management report. scheduled to lapse at the 2021 AGM. At the retail of multi-brand, sports fashion and 2021 AGM, shareholders will be asked to refuse to register any transfer of shares outdoor clothing, footwear, accessories and Details of the Group’s use of financial grant a new allotment authority. which are not fully paid up (but not in a equipment. instruments, together with information manner which prevents dealings in listed At the 2020 AGM, a resolution was also on policies and exposure to interest rates, shares from taking place), or which is in In accordance with the Companies Act passed to permit the board to allot ordinary foreign currency, credit and liquidity risks favour of more than four persons jointly or 2006, the Strategic Report on pages 42 shares for cash on a non-pre-emptive basis can be found in Note 20 to the financial which is in relation to more than one class to 158 contains a: both in connection with a rights issue or statements. The information included in of share. • Fair review of the business. Note 20 is incorporated into the Directors’ similar pre-emptive issue and, otherwise than in connection with any such issue, up • Certain restrictions may, from time to time, • Description of the principal risks and Report and is deemed to form part of this be imposed by laws and regulations for Directors’ Report. to a maximum nominal amount of £190,830 uncertainties facing the Group. (which represented approximately 7.84% example, insider trading laws. • Balanced, comprehensive and of the Company’s issued ordinary share • Restrictions apply pursuant to the understandable analysis of the capital). A new special resolution will be Listing Rules (LR) and the Market Abuse development and performance of the proposed at the 2021 AGM to renew the Regulation (MAR) of the Financial Group’s business during the financial Directors’ power in this regard. Conduct Authority. The Company has in place a share dealing policy which includes processes which must be followed to ensure that any transfer of shares activity is conducted in compliance with MAR and the LR and that all Directors and certain Company employees obtain prior approval before dealing in the Company’s shares.

162 163 DIRECTORS’ REPORT

The Company is not aware of any DIRECTORS APPOINTMENT AND REPLACEMENT OF AMENDMENT OF THE COMPANY’S arrangement between its shareholders that Details of all persons who were Directors DIRECTORS ARTICLES OF ASSOCIATION may result in restrictions on the transfer of at the financial period end including their The Company’s Articles of Association The Company’s Articles of Association may shares and / or voting rights. roles and brief biographical details are set provide that the Company may by ordinary only be amended by a special resolution at out on pages 160 to 161. The Directors are resolution at general meeting appoint a general meeting of shareholders. SUBSTANTIAL INTERESTS IN SHARE responsible for the management of the any person to act as a Director, provided CAPITAL business of the Company and, subject to that (where such person has not been CHANGE OF CONTROL – SIGNIFICANT As at 30 January 2021, the Company has relevant legislation, regulatory requirements recommended by the Board) notice is given AGREEMENTS been advised of the following significant and the Company’s Articles of Association by a member entitled to attend and vote at In the event of a change of control of the holdings of voting rights in its ordinary (‘Articles’), the Directors may exercise all the meeting of the intention to appoint such Company, the Company and the lenders of share capital pursuant to the Disclosure of the powers of the Company and may a person and that the Company receives, the £700 million bank syndicated facility Guidance and Transparency Rules of the delegate their power and discretion to among other information, confirmation of shall enter into an agreement to determine Financial Conduct Authority (‘DTRs’): committees, as they see fit. that person’s willingness to act as Director. how to continue the facility. If no agreement There are no agreements between the The Articles also empower the Board to is reached within 20 business days of the Number of ordinary % of appoint as a Director any person who shares/voting rights ordinary share Company and its Directors or employees date of change of control, the lenders may, held capital providing for compensation for loss of is willing to act as such. The maximum by giving not less than 10 business days’ office or employment (whether through possible number of Directors under the notice to the Company, cancel the facility Pentland Group resignation, purported redundancy or Articles is 20. and declare all outstanding loans, together Limited 535,278,239 55.0* otherwise) that occurs because of a In addition to the powers of removal with accrued interest and all other amounts Fidelity takeover bid. conferred by statute, the Company may by accrued immediately due and payable. Management ordinary resolution remove any Director and Research Co 46,665,304 4.8 DIRECTORS’ INTERESTS before the expiration of his or her period EMPLOYEES *Since 30 January 2021, the Company carried out a share placing and, of office. The Articles also set out the as such, Pentland’s shareholding now represents 51.9% of the share Details of Directors’ interests and those The Strategic Report on pages 42 to capital of the Company. of their connected persons in the share circumstances in which a Director shall 158 provides information on the Group’s capital of the Company are set out on page vacate office. approach to people and how the Group Save for the above, the Company has not 201. This information is incorporated into The Articles broadly require that at each attracts, retains and develops its employees. been notified of any significant changes in this Directors’ Report by reference and is AGM one-third of eligible Directors shall The Strategic Report also sets out a interests pursuant to the DTRs between 30 deemed to form a part of it. retire from office by rotation and may summary of the measures recently adopted January 2021 and the latest practicable date stand for re-election and that any Director by the Group to improve the way it engages prior to the publication of this report. The number of Directors at any one point in time shall not be less than two. who was appointed by the Board after the with its employees. previous AGM must retire from office and As required under the UK Corporate RELATIONSHIP AGREEMENT may stand for election by the shareholders. Governance Code 2018, the Group has In accordance with LR 9.2.2 AD R (1), the Additionally, any other Director who has made further progress regarding its Company has in place a legally binding not been elected or re-elected at one of the stakeholder engagement programme. relationship agreement with its controlling previous two AGMs must also retire from The focus of this remains ensuring that the shareholder, Pentland Group Limited. office and may stand for re-election. The Company has complied with the Group’s employees are well informed about Notwithstanding the provisions of the undertakings included in the relationship any material organisational changes in the Articles, the Board has determined that agreement during the period under review. Group and all significant matters which may all the Directors will stand for re-election So far as the Company is aware, the affect the Group’s financial performance. at the 2021 AGM in accordance with the undertakings in the agreement have also During the course of the financial year, best practice recommendations of the UK been complied with by both Pentland Group the Group’s HR department has worked Corporate Governance Code. Limited and its associates during the period very hard to increase engagement with under review. people across the Group at all levels. It has been more important to do this well this year than in any other. Given the large numbers of our colleagues who are working remotely and who are facing unique and, in some cases, very challenging personal circumstances, we have sought to ensure our employees feel connected, supported and able to raise any concerns they may have in a confidential manner, with ease.

164 165 DIRECTORS’ REPORT

The Group’s employee forums are now and merit of any applicant for the job and GREENHOUSE GAS EMISSIONS ANNUAL GENERAL MEETING well established and engage with and full and fair consideration is always given to Details of the Group’s Greenhouse Gas Due to the ongoing uncertainty regarding comprise of representatives of every area disabled persons in such circumstances. emissions are shown in the Corporate restrictions on indoor gatherings as at the of the Group’s business. On a regular Should an employee become disabled and Social Responsibility report on page date of publication of this Report due to basis, the employee forum meets with during his or her employment by the 118. This information is incorporated into the COVID-19 pandemic, it is the Company’s the Group’s Executive Chairman. It is the Group, every effort is made to continue the this Directors’ Report by reference and is current intention to hold its AGM as a Directors’ view that this regular meeting employment, development and training deemed to form part of it. closed meeting once again this year. It provides an opportunity for a transparent of the employee in question within their will take place on 1 July 2021 at Edinburgh and meaningful conversation between a existing capacity wherever practicable, AUDITOR House, Hollinsbrook Way, Pilsworth, Bury, sample of employees at varying levels of or failing that, in an alternative suitable As set out on page 178, the Audit Lancashire, BL9 8RR. Once COVID-19 the Group and the Executive Chairman and capacity. Committee has recommended that KPMG restrictions have been lifted, we will of is, therefore, the most effective method course look to resume AGMs as normal Further information regarding the Group’s LLP be re-appointed as auditors for the of workforce engagement. The Executive financial year 2021/22. KPMG LLP have where shareholders will be invited to attend Chairman then provides feedback on these approach to equality and diversity is set out in person once it is safe to do so. in the Strategic Report on pages 42 to 158. indicated their willingness to continue sessions to the rest of the Group’s Board in office as auditor of the Company. A The meeting will consider formal business of Directors. Any appropriate follow up resolution proposing their re-appointment only. Shareholders are invited to submit actions or items to address are progressed, SUPPLIERS, CUSTOMERS AND OTHERS will be proposed to shareholders at the any questions in advance via email as appropriate, by the HR Director and the Details of how the Directors have had forthcoming AGM. ([email protected]). Alternatively, HR Department. The Directors considered regard to the need to foster the Group’s the Company’s Directors will make a number of other forms of engagement, relationships with suppliers, customers arrangements to attend virtual meetings including those suggested by the UK and others with whom it has a business DISCLOSURE OF INFORMATION TO THE AUDITOR with its individual shareholders, as Corporate Governance Code, however, relationship can be found in the s172 appropriate, should shareholders require it holds the view that its current chosen Statement on page 154. Each person who is a Director at the date of approval of this report confirms that: a meeting to discuss any particular issues method has prompted positive interaction that otherwise may have been raised at between the workforce and the Directors POST BALANCE SHEET EVENTS • So far as they are aware, there is no the AGM. Shortly after the meeting, the and has allowed the Directors to incorporate Details of post balance sheet events relevant audit information of which the Company will publish on its website the the feedback provided into its decision are provided in Note 31 of the financial Company’s auditor is unaware; and results of the AGM. making processes. statements. • Each Director has taken all the steps that Further details on how the employee they ought to have taken as a Director to By order of the Board engagement is taken into account in the FUTURE DEVELOPMENTS make themselves aware of any relevant principal decision making process is set out Future developments are discussed audit information and to establish that in the s172 Statement on page 154. throughout the Strategic Report on pages the Company’s auditor is aware of that In addition, a key factor in the Group’s 42 to 158. information. Neil Greenhalgh employee remuneration strategy is Chief Financial Officer encouraging the involvement of all POLITICAL DONATIONS AND 13 April 2021 employees in the Group’s performance EXPENDITURE so that every employee feels they have Neither the Company nor any of its an important contribution to make in subsidiaries has made any political donation this regard. Full details of the Group’s or incurred any political expenditure during remuneration strategy are set out in the the period under review. Remuneration Report on pages 179 to 208. The Group is committed to promoting equal RESEARCH & DEVELOPMENT opportunities in employment regardless During the financial period ended 30 of employees’ or potential employees’ January 2021, the Group engaged in ethnicity, social origin, gender identity, Research & Development activity in relation sexual orientation, disability or age. to technological advances in the Group’s Recruitment, promotion and the availability multichannel solution. of training and development at all areas within the Group are based on the suitability

166 167 CORPORATE GOVERNANCE REPORT

The Board’s role is to ensure that the Group members to use their substantial knowledge that the Board’s mix of Executive and Non- of the Company’s Articles regarding is led in a manner which protects the long about the Group’s increasingly complex Executive Directors provides an appropriate the retirement of Directors, the Board term interests of its shareholders, whilst and diverse business to provide meaningful combination of judgement, skill and determined that all Directors will retire balancing and promoting the interests of challenge and debate to the Executive experience to satisfy the Group’s need for at the 2021 AGM and offer themselves its other key stakeholders – including its Directors in the key decision making overall effective and agile leadership. for re-election in accordance with the employees and suppliers. processes. The independence of the Non-Executive best practice recommendation of the UK The Board promotes the principles set out In particular, it is acknowledged that Andrew Directors is considered by the Board on an Corporate Governance Code. in the UK Corporate Governance Code Leslie has been a Non-Executive Director for annual basis. All Non-Executive Directors, 2018 as issued by the Financial Reporting more than nine years and that Martin Davies save for Andy Rubin, are considered to be BOARD COMPOSITION AND DIVERSITY Council (FRC) (the ‘Code’). This report will have been a Non-Executive Director for independent by the Board. Andy Rubin is This year, like no other, has highlighted the sets out how the Company has applied the nine years during the financial year 2021/22. the Chairman of Pentland Brands and a importance of achieving meaningful change main principles set out in the Code. The Both Andrew and Martin perform pivotal Director of Pentland Group and is, therefore, in the levels of diversity within the Board, statement of the Company’s compliance roles on the Board – including Andrew’s not considered by the Board to be an the senior leadership team and across all with the relevant provisions of the Code is role as Chair of the Remuneration independent Non-Executive Director. levels of the Group. set out on page 175. This report includes Committee and Martin’s role as Chair of From time to time, the Executive Chairman The Board welcomes the initiative and focus relevant provisions of the Code, where the Audit Committee. Both committees meets with the Non-Executive Directors of the Parker Review and will engage with appropriate. The full Code can be found on have implemented and overseen significant without the other Directors present to the Parker Review, as appropriate, just as it the FRC website (www.frc.org.uk). change during the course of the financial discuss Board performance and other did with the Alexander-Hampton review in year, which will continue into the financial matters considered appropriate. recent years.

year 2021/22. Further details of the activities The Board considers that all the Directors The Board strives to build a diverse and THE BOARD carried out by the committees are set out are able to devote sufficient time to their inclusive team and to promote a diverse on pages 172 to 173. duties as Directors of the Company. The and inclusive culture throughout the BOARD COMPOSITION AND SUCCESSION As such, the Board and Nominations brief biographical detail on page 160 business. It is the Board’s strong belief that The Board comprises seven Directors: the Committee are satisfied that Andrew includes details of the Chairman’s other if all employees at all levels of the Group Executive Chairman, the Chief Financial remains sufficiently independent and directorships of listed companies. The feel supported, respected, empowered and Officer and five Non-Executive Directors. effective in his respective roles on the Board Board notes that the Chairman now has inspired to achieve, grow and develop, this Martin Davies performs the role of Senior and Board Committees and therefore wish one less directorship, which has provided will ultimately serve our business better Independent Non-Executive Director. The to support Andrew Leslie continuing in his him with more time to devote to his role and promote the long term success of the name, position and a brief profile of each roles for the forthcoming financial year. as Executive Chairman of the Company. Group. Director is set out on page 160 to 161. The Board and Nominations Committee are Notwithstanding this, the Board is in any The success of the Group is in its ability to A main focus of the Board’s objectives also confident that Martin Davies remains event satisfied that, given the limited time speak to and identify with its consumers this year has been succession planning in sufficiently independent and will therefore commitment required for the Executive and, as such, it is crucial that the employees three key areas: the role of the Chairman also support Martin Davies continuing in Chairman to perform his other directorships, of the Group, at all levels, reflect the / CEO, the composition of the Board and his roles for the forthcoming financial year. these appointments do not conflict with the diverse nature of our consumers and of our the strength and development of the In accordance with the Code, Andrew Executive Chairman’s ability to carry out his communities. senior management team. Each succession Leslie and Martin Davies will be subject to role effectively for the Group. programme has unique methods and A key part of this success is to ensure re-election at the AGM this year, as will all The knowledge and experience the objectives but ultimately is centered around employees can identify with others across other Directors (as explained further on Chairman (and the Non-Executive Directors) securing the future long-term success of the the Group and can share their unique page 165). gain from their roles on the Boards of other Group’s business. experiences, backgrounds and perspectives. Whilst assessing its own performance and at Companies provides the Directors with We want all employees to feel they can The Board and the Nominations Committee the same time implementing the next stage useful insights into market trends and how develop and achieve their potential within recognise that there are some Board of Board succession, the Board’s focus is other companies have navigated their way the Group and we ensure that they all have members who have been long term ensuring and promoting the entrepreneurial through the extremely difficult challenges access to clear pathways of progression members of the Board. The Board has leadership which has undoubtedly been faced by us all during the Global pandemic from a “grassroots” level and beyond. assessed in great depth the ability of pivotal in the Company’s outstanding during the course of the financial year. Fundamental to this is a reassurance its members to perform the role they financial performance in recent years. The A summary of the rules that the Company that all of our employees and future are required to by the Company. This Board is committed to ensuring that this has in place about the appointment and employees (including Board members) assessment has included the requirement entrepreneurial leadership takes place replacement of Directors is set out on will be appointed to roles based on purely for certain Non-Executive Board members within an effective framework of control page 165. Notwithstanding the provisions objective criteria and because they have to retain independence and for all Board and risk management. It is also considered

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shown that they have the expertise, talent candidates at all levels within the business. BOARD EVALUATION committees to ensure they meet more and drive to succeed in that role. The Board is committed to ensuring that all The Board has completed an externally regularly in a formal setting, particularly the The Board is encouraged that the female recruitment is conducted on this basis and facilitated Board Evaluation exercise with nominations committee. composition of the Board has reached to continually monitoring our diversity mix. the support of Global Future Partners. The Directors considered that the evaluation c.30%, however, the Board recognises Further details on the steps taken to move There are no connections between Global exercise was extremely worthwhile and that there is more to do to ensure there is the Group closer to its clearly defined Future Partners and the Group or any of its will help to shape the ongoing succession greater gender and ethnic diversity within objectives in relation to diversity and Directors. planning efforts across the group. its Board composition. This is a key factor in inclusion are set out in the Corporate Social The focus areas of the review are set out the Board’s succession planning. Responsibility section on page 96. below: MATTERS RESERVED FOR THE BOARD The Board’s primary focus will always be • The opportunities and challenges for the The Board has a formal schedule of matters to ensure that its membership has the BOARD OPERATION AND Group in the short, medium and long term; reserved specifically to it for decisions RESPONSIBILITIES which include: relevant skills, experience and judgement, • The governance and oversight of the The Board is responsible for the direction, which is fundamental to maintaining an business and risk management; • Strategic decision making and shaping of entrepreneurial and effective management management and performance of the future strategy. and leadership team. The Board is Company. The Directors act together in the • Cultural and values oversight; • Approval of the Group’s financial encouraged by the greater level of gender best interests of the Group via the Board • Board experience and skills; and ethnic diversity within the Company’s and its Committees. The Board held eight statements. • Effectiveness of the Committees. senior management. scheduled Board meetings during the year • Corporate acquisitions and disposals. under review and ad hoc meetings were An overriding theme of the Board A key part of the Board’s succession • Significant capital projects. held in between scheduled meetings, where Evaluation was succession in light of the planning is to ensure that there is a required. Director attendance at scheduled ongoing initiatives regarding the following The matters reserved for the Board are commitment to change and grow the Board and Committee meetings is set out three main areas: (i) Chairman / CEO kept under continual review to ensure they talent pool of gender and ethnically diverse below. Succession; (ii) Board Composition; (iii) remain appropriate in light of the size of the candidates in order to influence recruitment Development of the Senior Management Group and the nature of its activities. patterns for the future. The Board and team. the Group’s HR department target a broad range of candidates from various The evaluation exercise identified the key MAIN ACTIVITIES OF THE BOARD DURING backgrounds, sectors and cultures when strengths of the Group and recognised THE YEAR hiring both new Board members and new the vital role the Board has played and • Approved a number of key strategic continues to play in the succession of the corporate acquisitions to further develop Group. The exercise also identified key areas the international growth of the Group (see ATTENDANCE AT BOARD AND COMMITTEE MEETINGS of opportunity and improvement where Note 11 of the financial statements).

Year to 30 January Board Meetings Remuneration Audit Committee Nomination the Board should consider concentrating • Reacted quickly to the impact of Brexit 2021 Committee Committee its focus and efforts for the forthcoming and implemented plans to address the Total number of 8 2 2 – financial year to promote and develop the specific effects on the Group in various meetings success of the Group still further. areas including in relation to people, The result of the evaluation process has supplier relationships and logistics. P Cowgill 8 – 2* – been that a core list of issues needing • Assessed the key regulatory risks posed N Greenhalgh 8 – 2* – attention going forward have been to the Group and the various measures identified which will form part of the being implemented to counter this A Leslie 8 2 2 – Board’s action plan for the forthcoming risk on an ongoing basis including in M Davies 7 2 2 – financial year. relation to COVID-19, cyber security and The key topics which will comprise the other regulatory frameworks such as H Jackson 8 2 2 – Board’s action plan are: competition law. A Rubin 8 – – – (i) succession at the executive level; In order to assist the Board in its effective review and decision making regarding K Smith 8 2 – – (ii) the evolution of the composition of the the Group’s activities, Board papers are Board – to achieve greater diversity on the circulated to Directors prior to Board Notes: Board and an increased range of expertise *P Cowgill and N Greenhalgh attended the meetings as annotated in the table above at the invitation of the members of those Committees in order meetings which include up-to-date financial and skills including international experience; to provide additional detail on day to day matters arising at such meetings and to assist the Committee members with the matters delegated to information, reports from the Executive the Committee as deemed appropriate by such Committee members. (iii) improving the operation of the Directors, a summary of key risk and Certain members of the Board and Committees have attended the meetings virtually. compliance issues and papers on major

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issues for consideration by the Board. The BOARD COMMITTEES REMUNERATION COMMITTEE NOMINATION COMMITTEE Board has a formal procedure for Directors The Board delegates certain powers to The Remuneration Committee currently The Nomination Committee currently to obtain independent professional advice. Board Committees. There are three principal comprises four independent Non-Executive comprises Peter Cowgill, the Executive All Board members have full access to Board Committees to which the Board has Directors: Andrew Leslie, Martin Davies, Chairman, and four independent Non- the Company Secretary who is a fully delegated certain of its responsibilities. The Heather Jackson and Kath Smith. Andrew Executive Directors, Andrew Leslie, Martin admitted Solicitor and attends all Board terms of reference for all three Committees Leslie is the chair of the Remuneration Davies, Heather Jackson and Kath Smith. and Committee meetings. The Company are reviewed by each Committee regularly Committee. The Committee’s principal duties are to Secretary is responsible for advising the and are available for inspection on request The Committee’s principal duties are to consider the size, structure and composition Board on all Corporate Governance and and are available on the Company’s determine: of the Board, ensure appropriate succession corporate website www.jdplc.com. legal matters. • Overall Group remuneration policy. plans are in place for the Board and All newly appointed Directors receive Senior Management and, where necessary, AUDIT COMMITTEE • Remuneration packages for Executive an appropriate induction when they join consider new appointments to the Board The Audit Committee currently comprises Directors and Senior Management. the Board. Relevant training is arranged and Senior Management. The matters three independent Non-Executive throughout the year as deemed appropriate • The terms of Executive Director service delegated to the remit of the Nominations Directors; Martin Davies, Andrew Leslie including the attendance at Board meetings contracts, as may be required from time to Committee include Board structure, and Heather Jackson. Martin Davies by external legal specialists and / or the time. succession planning and the performance of chairs the Audit Committee. The Board the Board and the Senior Management. circulation of advice notes. • The terms of any performance-related and notes that it is a requirement of the DTRs / or long term incentive schemes operated The Nominations Committee did not and a recommendation of the Code that by the Group and awards thereunder. formally meet during the course of the INSURANCE ARRANGEMENTS the Audit Committee as a whole shall financial year as the key topics of discussion The Company, through its majority have competence relevant to the sector In particular this year, the Committee has were addressed in discussions which took shareholder Pentland Group, maintains in which the Company operates. This is produced a revised remuneration policy place during the main Board meetings and Directors’ and Officers’ liability insurance, something which was explored during in order to address some of the key areas during ad hoc meetings between relevant which is reviewed at appropriate intervals to the Board Evaluation process, referred to of concern raised by shareholders in the Board members. As identified during the ensure it remains fit for purpose. on page 171. The Board confirms that it lead up to the Company’s AGM in 2020. Board evaluation process, it is the intention considers the composition of the Audit The Committee is proposing a new LTIP of the relevant Board members to ensure Committee provides the requisite skills and scheme which will involve issuing shares in CONFLICTS OF INTEREST that the Nominations Committee meets The Company’s Articles of Association experience, however, the Board and the the Company to executive Directors for the more formally during the forthcoming permit the Board to consider and, if it sees Audit Committee considers it is prudent first time. The Committee are pleased to financial year to ensure that it is providing fit, to authorise situations where a Director to keep this under continual review in be able to present this to shareholders this rigorous challenge and driving change, has an interest that conflicts, or possibly order to ensure that it remains satisfied year and are hopeful that this will provide particularly with regard to diversity and could conflict, with the interests of the that the expertise of the membership of a remuneration framework which better inclusion. The Nominations Committee Company. The Board considers that the the Audit Committee remains appropriate. achieves the alignment of executive pay will also keep under particular review procedures it has in place for reporting The brief biographical detail on page 160 with shareholder interests and the long term during the forthcoming financial year the and considering conflicts of interest are to 161 includes details of the experience success of the Company. independence of both Andrew Leslie and effective. and expertise of the members of the Audit The Committee met twice during the year. Martin Davies given the length of time they Committee. Details of attendance at Remuneration have served on the Board. The Audit Committee met twice during the Committee meetings are set out in the table The gender balance of the Board, senior year with the external auditor attending part on page 170. management team and the wider employee of each meeting. Details of attendance at Further details about Directors’ group is set out in the Our People section of Audit Committee meetings are set out in the remuneration are set out in the Directors’ the Corporate Social Responsibility Report table on page 170. Remuneration Report on pages 179 to 208. on page 101.

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INTERNAL CONTROL • Monitoring of store procedures and the and costs of control. It follows, therefore, obligations under various legal frameworks, There is an ongoing process for identifying, reporting and investigation of suspected that the system of internal control can including the EU Market Abuse Regulation, evaluating and managing the significant fraudulent activities. only provide reasonable, and not absolute, to ensure that no shareholder or group risks faced by the Group. This process was • Reconciliation and checking of all cash and assurance against the risk of material of shareholders are prejudiced or given utilised during the year under review and stock balances and investigation of any misstatement or loss. an unfair advantage compared to the the Board confirms that it has completed material differences. The integration of recently acquired shareholders as a whole. a robust assessment of the Company’s businesses into the Group’s system of emerging and principal risks. In addition, the Audit Committee receives detailed reports from the external auditor in internal controls is achieved as quickly as COMPLIANCE WITH THE CODE The Board, in conjunction with the Audit relation to the financial statements and the possible and is done on a proportion basis The Directors consider that during the year Committee, has full responsibility for the Group’s system of internal controls. taking into account the size and type of under review and to the date of this report, Group’s system of internal controls and business acquired. the Company complied with the Code monitoring their effectiveness. However, The Senior Independent Director, as Chair except as follows: such a system is designed to monitor of the Audit Committee, has regular interaction with the external auditor and SHAREHOLDER RELATIONS Code Provision 9 – The role of Chief and manage the risk of failure to achieve During the course of the 2020/21 financial Executive and Chairman is undertaken by business objectives and cannot eliminate senior members of the Group finance department in order to monitor and assess year, the Executive Chairman, the Senior one person – Peter Cowgill, the Company’s such risk entirely. The Board seeks to Independent Director, Chief Financial Executive Chairman, which has been the manage this risk by having established the effectiveness of the Group’s system of internal controls. Officer, the Investor Relations Manager case for almost the last seven years. The a well-defined organisational structure, and the Company Secretary proactively Board believes that there is sufficient clear operating procedures, embedded The Group has a formal whistleblowing contacted many of the Company’s separation of responsibilities of the roles lines of responsibility, delegated authority policy in place which provides details shareholders and conducted a series of usually undertaken by the Chairman and to executive management and a of how employees can raise concerns in virtual meetings particularly to discuss the Chief Executive amongst the Executive comprehensive financial reporting process. relation to the Group’s activities or the corporate governance issues. Chairman, the Chief Financial Officer, the Key features of the Group’s system of actions of any employee of the Group on a Non-Executive Directors and the Company’s confidential basis. This policy is reviewed During the meetings, the relevant internal control and risk management are: shareholders were provided with updates Senior Management team. The Board, with annually by the Audit Committee. The assistance from the Nomination Committee, • Identification and monitoring of the regarding changes to the remuneration mechanism for employees to access keeps this arrangement constantly under business risks facing the Group, with major structure to address some of the key whistleblowing channels has been recently review. risks identified and reported to the Audit reviewed to ensure that they are effective. concerns raised by shareholders at the Committee and the Board including via Company’s recent AGMs. This report was approved by the Board and brief monthly updates, more in depth The Group strives to conduct itself in all signed on its behalf by: areas and at all levels in an ethical manner. The Executive Directors maintain an quarterly updates and an annual risk active dialogue with the Company’s major report preparation and review process. The Group takes a zero tolerance approach to bribery and corruption, amongst its shareholders to enhance the understanding • Detailed appraisal and authorisation employees, suppliers and any associated of their respective objectives, holding procedures for capital investment, which parties acting on the Group’s behalf and conference calls and attending meetings is documented in the Matters Reserved this is very clearly documented in the way and investor roadshows on a regular basis. Neil Greenhalgh for the Board and the Group’s Contract that it contracts with any such third parties. The Investor Relations Manager supports Chief Financial Officer Authorisation Policy. The Group has a detailed Anti-Bribery the Directors and the Company Secretary 13 April 2021 to ensure there is efficient and effective • Prompt preparation of comprehensive and Corruption Policy and is committed monthly management accounts providing to acting professionally, fairly and with communication with shareholders on any relevant, reliable and up-to-date integrity in all its business dealings. The matters which they may wish to raise information. These allow for comparison Group has appropriate processes in place during the course of the year. The Company with budget and previous year’s results. to audit compliance with its Anti-Bribery welcomes a transparent relationship with its Significant variances from approved and Corruption Policy and its Gifts and shareholders and encourages shareholders budgets are investigated as appropriate. Hospitality Policy, periodically. to contact them should they have any concerns they wish to discuss. • Preparation of comprehensive annual The Board has reviewed the effectiveness of profit and cash flow budgets allowing the Group’s system of internal controls and The Company has one class of issued share management to monitor business activities believes this to be effective. In establishing and, as such, all shareholders have the and major risks and the progress towards the system of internal control, the Directors same rights, as set out in the Company’s financial objectives in the short and have regard to the materiality of relevant articles of association which were disclosed medium term. risks, the likelihood of a loss being incurred on 28 April 2020. In addition, the Board receives regular training and updates on its

174 175 AUDIT COMMITTEE REPORT

PRINCIPAL DUTIES FINANCIAL STATEMENTS AND VALUATION OF GOODWILL AND FASCIA VALUATION OF INTANGIBLE ASSETS The principal duties of the Audit Committee SIGNIFICANT ACCOUNTING MATTERS NAMES INCLUDING THE IMPAIRMENT OF RECOGNISED AS PART OF THE (‘the Committee’) are to review draft annual The Committee is responsible for reviewing THE GOODWILL AND FASCIA NAME IN GO ACQUISITION OF SHOE PALACE and interim financial statements prior to the Group’s draft financial statements and OUTDOORS CORPORATION (‘SHOE PALACE’) being submitted to the Board, reviewing interim results statement prior to Board The Committee considered the assumptions The Committee approved the appointment the effectiveness of the Group’s system of approval. As part of such review, the underlying the calculation of the value of Duff & Phelps Ltd as the Group’s formal internal control, risk management and the Committee considers whether suitable in use of the cash generating units being advisor in respect of the estimation of the performance and cost effectiveness of the accounting policies have been adopted and tested for impairment, primarily the short- fair value and remaining useful life of certain external auditor. whether appropriate judgements have been term plan, the assumptions on discount tangible and intangible assets of Shoe made by management. The Committee also rates and long term growth rates. The Palace. MAIN ACTIVITIES OF THE AUDIT considers whether appropriate disclosure Committee reviewed the budgets and The Committee has reviewed the acquisition COMMITTEE DURING THE YEAR of significant estimates and judgements has business plans that support the impairment accounting in relation to the purchase The Committee’s activities included: been made. The Committee also reviews reviews and challenged the assumptions of Shoe Palace and has considered reports by the external auditor on the full used and are comfortable that they • Reviewing the Group’s draft financial the assumptions used in the intangible year and half year results. represent management’s best estimate at valuation model; primarily the budgets statements and interim results statement the time. The external auditor provides to prior to Board approval and reviewing the The following are material areas in and forecasts, discount rates and royalty which significant judgements have been the Committee detailed explanations of the rates used. The external auditor provides external auditor’s detailed reports thereon results of their review of the estimate of including internal controls. applied and have been considered by the to the Committee detailed explanations of Committee during the year: the value in use, including their challenge their review of the acquisition accounting, • Reviewing regularly the potential impact of management’s underlying cash flow including their challenge of management’s on the Group’s financial statements projections, the key growth assumptions key assumptions and discount rates. of certain matters such as impairment VALUATION OF INVENTORIES and discount rates. The Committee has also The Audit Committee considered the risk The Committee has also reviewed the of fixed asset values and proposed reviewed the disclosures in the financial disclosures in the financial statements. International Accounting Standards. that inventory may need to be impaired statements. and tested the principles and integrity of • Reviewing the external auditor’s plan the obsolescence provision calculation VALUATION OF THE IBERIAN SPORTS for the audit of the Group’s financial used across the Group. This risk review is IMPAIRMENT OF THE GOODWILL AND RETAIL GROUP PUT OPTION statements, key risks of misstatement in particularly important to the Group given FASCIA NAME IN FOOTASYLUM The Committee has reviewed the valuation the financial statements, confirmations of the extremely seasonal nature of its retail In order to comply with the CMA’s hold of the Iberian Sports Retail Group Put auditor independence, audit fee and terms businesses and the changing desirability separate order, only members of a Option and has considered the assumptions of engagement of the auditor. of branded products over time. The Audit designated team are permitted access to used in the valuation model; primarily the Footasylum financial data. This designated • Reviewing the independence and Committee also reviewed the assessment EBITDA multiple, the approved forecasts team have prepared, reviewed and effectiveness of the Group’s external carried out by the auditors of the overall and the discount rate used. The external challenged the underlying calculation of auditor. consistency of the assumptions used by auditor provides to the Committee detailed comparing with those used in prior periods. the value in use of the cash generating explanations of their review of the valuation, • Preparations for a tender process to take The Committee reviews the provision units being tested for impairment, primarily including their challenge of management’s place in respect of the Group’s external models and challenges management on the the short-term plan, the assumptions on key assumptions and discount rates. auditor to take place during the financial key judgements made over aged stock and discount rates and long term growth rates. The Committee has also reviewed the year 2021/22. the level of proceeds for aged stock. The The external auditor has provided to the disclosures in the financial statements • Reviewing the whistleblowing external auditor reports to the Committee Committee high level explanations of the including the sensitivity analysis performed. arrangements in place for employees to on the work they have completed and how results of their review. The Committee has be able to raise concerns in confidence their audit work is concentrated on this area. also reviewed the disclosures in the financial to ensure they remain effective and statements. appropriate. • Reviewing the Company’s risk register and internal controls. • Assessment of the need for an internal audit function and the effectiveness of the Group’s existing system of internal controls.

176 177 AUDIT COMMITTEE REPORT DIRECTORS’ REMUNERATION REPORT

EXTERNAL AUDITOR Whilst the Audit Committee’s current A breakdown of the audit and non-audit recommendation is to re-appoint KPMG ANNUAL STATEMENT OF THE CHAIRMAN related fees are set out in Note 3 to the as auditors for the forthcoming financial Consolidated Financial Statements on page year, the Audit Committee notes that a new OF THE REMUNERATION COMMITTEE 240. auditor will have to be appointed no later than the beginning of the financial year The Committee has regard to the FRC rules DEAR SHAREHOLDER KEY POINTS TO NOTE: commencing February 2024. The Audit on auditor independence and the provision As Chairman of the Remuneration • Significant retention of sales and Committee has commenced its tender of non-audit services by the auditor and Committee (the Committee), I am pleased profitability through an unprecedented programme which will continue throughout in particular the recently revised policy on to present the Company’s Remuneration period of global uncertainty and multiple the 2021/22 financial year and it is expected the provision of non-audit services by the Report for the financial year 2020/21. periods of temporary store closures external auditor. The Committee recognises that a decision regarding a new auditor will This Directors’ Remuneration Report reflects: that the policy’s objective is to ensure be made before 29 January 2022. (‘Report’) summarises the activities of • The strength and premium position of auditor independence and appropriate The Audit Committee confirms that the the Committee during the period to 30 the JD brand and consumers’ affinity to levels of approval for non-audit work being Company otherwise complied throughout January 2021. It sets out the Directors’ it. undertaken by the external auditor. Under the financial year under review with Remuneration Policy (‘the Policy’) and the policy, any non-audit services to be The Statutory Audit Services for Large • Relevance of product offer to style remuneration details for the Executive undertaken by the auditor which are not Companies Market Investigation (Mandatory conscious consumers. and Non-Executive Directors of the prohibited under the audit reforms require Use of Competitive Tender Processes and Company. This report has been prepared • Agile multichannel ecosystem built up advance authorisation in accordance with Audit Committee Responsibilities) Order in accordance with Schedule 8 of The over a number of years. the following: 2014. Large and Medium-sized Companies and • Infrastructure flexibility. • For individual pieces of work below Groups (Accounts and Reports) Regulations • Profit before tax and exceptional items £20,000 – Chief Financial Officer approval INTERNAL AUDIT 2008 (as amended) (‘Regulations’) and decreased slightly to £421.3 million (2020: required Whilst the Company does not have an the requirements of the Listing Rules. The £438.8 million). On a proforma basis under internal audit function, the Audit Committee Companies Act 2006 requires the auditor to • Work in excess of £20,000 – Committee IAS 17 ‘Leases’, with rents recognised regularly reviews the need for such a report to the shareholders on certain parts approval required according to contractual terms, the function. During the financial year, the of the Report and to state whether, in their headline profit before tax and exceptional KPMG have acted as auditor to the Audit Committee determined that such an opinion; those parts of the report have been items for the Group would have been Company since its flotation in 1996. appointment is not currently necessary as properly prepared in accordance with the £38.8 million higher at £460.1 million The Committee is satisfied that this is the aspects of internal control which an Regulations. The parts of the Annual Report (2020: £26.8 million higher at £465.6 in compliance with the FRC’s rules on internal audit function would be responsible on Remuneration that are subject to audit million). mandatory firm rotation. The Committee for are currently adequately addressed by are indicated in that report. acknowledges that the lead audit partner various existing business functions within • EBITDA before exceptional items is subject to rotation every five years to the Group, namely the Group’s finance and increased to £990.2 million (2020: £979.8 KEY HIGHLIGHTS safeguard independence, with a new lead profit protection functions. Such functions million). audit partner having been appointed during There are three sections: appropriately focus on aspects such as • Transformational developments in the the 2020/21 financial year. The Committee is • This Annual Statement. financial control, stock shrinkage, theft, United States: confident that this has brought an additional fraud and stock and cash audits. The finance • The Policy Report which sets out the • Exceptional trading performance in the level of independence to the audit process. and profit protection departments report to Company’s remuneration policy for Finish Line and JD fascias in part driven The Audit Committee recommends that the Board on a regular basis and the Audit Directors, and details the changes from by the enhanced consumer demand KPMG be reappointed as the Company’s Committee considers that this function the current policy. These changes will be consequent to the US Government statutory auditor for the 2021/22 financial plays an effective and efficient role. put to a binding shareholder vote at the stimulus. year. The Audit Committee, after careful 2021 AGM and will apply for three years consideration including of the auditor’s from the date of approval. • First flagship store for JD opened performance during their period in office, in Times Square, New York with a • The Annual Report on Remuneration positive reaction from customers and is satisfied with the level of independence providing details on the remuneration international brand partners. and impartiality of the external auditor and Martin Davies earned in the year to 30 January 2021 and is happy with the audit process and that the Chairman of the Audit Committee how the Policy will be operated during the • A further 37 former Finish Line stores way it operates remains effective. 13 April 2021 2021/22 financial year. This Annual Report converted to JD with 49 stores trading on Remuneration together with the Annual as JD at the end of the year. Statement will be subject to an advisory shareholder vote at the 2021 AGM.

178 179 DIRECTORS’ REMUNERATION REPORT

• Acquisitions of Shoe Palace (based These areas are covered in greater detail As a result of these activities, proposed exceptional results during the course in California) and, subsequent to the within the report but are summarised as changes are being made as detailed below of an extraordinarily challenging and year end, DTLR (based in Maryland), follows. and throughout this report, however at this unprecedented year, demonstrates that this complement the strengths of the time, this does not include any proposed has been successful. existing Finish Line and JD fascias EXECUTIVE AND SENIOR MANAGEMENT increase to the Executive Chairman’s salary. For this year I believe that bonus and LTIP and significantly enhance the Group’s REMUNERATION Whilst the outcome of the benchmarking outcomes continue to be reflective of exposure to key consumer demographics We continue to operate in a climate where of the Executive Chairman’s basic salary the sustained outstanding performance on the West Coast and East Coast of the the COVID-19 pandemic creates uncertainty. found that the remuneration is in the lower of the Group. The posting of exceptional United States. Subsequent Government lockdowns from quartiles, given the COVID-19 pandemic, an results during such a challenging climate • International development of JD in other November 2020 have meant we must increase in salary is currently not deemed demonstrates that the remuneration markets continues to progress positively remain agile in response to developments in appropriate. This may be subject to review approach and steps taken throughout the although the number of new stores slowed this area. in the 2021/22 financial year. pandemic continue to support and drive temporarily as a consequence of the In light of shareholder feedback over the The review of market practice in relation this performance. restrictions on construction works with: last 12 months, the Committee have been to remuneration methods has resulted in a) Net increase of 31 JD stores across working with the Group to review the discussions with the majority shareholder, INVESTOR CONCERNS Mainland Europe existing Policy and seeking external advice several other major shareholders and a Although the Policy was approved by b) Net increase of five JD stores in the on best market practice for Executive and proposed amendment to the Policy. The aim shareholders at the 2020 AGM, the Asia Pacific region Senior Management remuneration. As of this change is to secure the long-term Committee is cognisant that a number of • Outdoor business returned to profitability a result of this exercise the Group have investment of the Executive Directors into shareholders had concerns with certain in the second half of the year with a strong undertaken a number of activities focused the business, and to align the interests of aspects of the policy. This included the performance on key categories. on maintaining effective, straightforward the shareholders with the Executives. This lack of share-based remuneration, the and market competitive remuneration will be achieved by altering the Long Term Chairman’s remuneration approach and • Ongoing significant investments in including: Incentive Plan (‘LTIP’) to include share- succession planning. logistics to mitigate against the ongoing based remuneration from the 2021/22 risks associated with: • Undertaking a market review of the basic financial year onwards. This will be put to The Committee has taken on board these salary and total earnings of the Executive and other concerns raised and has engaged • Requirement to operate with social shareholders at the AGM in 2021. Chairman to ensure that this remains with a number of its major shareholders distancing. appropriate for the market in which In addition, a review of the Group’s throughout the 2020/21 financial year. As a • Duties payable consequent to the form the Group operates. This was based on succession planning strategy has now result, changes are being proposed to some of the UK’s trade agreement with the publicly available information from FTSE commenced, to ensure that a robust aspects of the Directors’ remuneration European Union. 100 companies that had made annual process is in place to identify and develop arrangements. These changes are contained potential future leaders, securing the This financial year has been unique given report disclosures. within the Policy and the Committee continued success of the Group. The the unprecedented nature of responding has shared its proposals with its major • Undertaking a review of potential incorporation of the new share scheme into to the COVID-19 pandemic. During this shareholders in advance. The key alteration alternative arrangements for remuneration the LTIP (over the course of the Policy) challenging time the Committee has focused covers a proposed change to the LTIP to including the introduction of share-based will be utilised to support this programme, on ensuring that it’s Executive Director and include share-based remuneration. remuneration. aimed at incentivising long term investment Senior Management remuneration continues • Ongoing consideration in respect into the business for any future Executives. to drive its strategic aims in both the short, of appropriate succession plans, RESPONSE TO COVID-19 medium and long term. Alongside the The Committee is dedicated to ensuring in conjunction with the Board and As a responsible employer we have ensured Committee, the Group have been focusing that the Group’s remuneration packages are Nomination Committee members, to that we have met our obligations in on a number of key areas including but not appropriate in an increasingly competitive put in place an efficient and evolving protecting our people and our customers limited to: retail and digital sector throughout the UK during the COVID-19 pandemic. As a future structure for the Board and Senior and internationally, with the global recovery • Executive and Senior Manager result of this many of our colleagues Management team. from the pandemic at the forefront. The remuneration; have been unable to work due to multiple remuneration packages also seek to retain and extended periods of closures. • Addressing investor concerns; and motivate the vital Senior Management The Group has taken every measure • COVID-19 pandemic response; and team members who are a fundamental possible to preserve jobs, one of which part of the Board’s succession and growth • Colleague welfare, diversity, inclusion and includes participation in the Government plans for the Group. The fact that the social mobility. Coronavirus Job Retention Scheme (CJRS) Senior Management team has once again and the Temporary Wage Subsidy Scheme been successfully motivated to deliver in the Republic of Ireland.

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This was in addition to many other measures COLLEAGUE WELFARE, DIVERSITY, which included: INCLUSION AND SOCIAL MOBILITY DIRECTORS’ REMUNERATION POLICY • Voluntary reductions in salary for several The areas of welfare, diversity, inclusion and (UNAUDITED) members of the Board and Senior social mobility continue to be key priorities Management Team ranging from 20–30% for the Committee and the Group. Many colleagues have faced additional welfare of salary. INTRODUCTION • Remuneration should be aligned with the concerns during the pandemic and the The Directors’ remuneration policy (the key corporate metrics that drive earnings • Voluntary reduction of 75% of salary for Group’s response to the Black Lives Matter ‘Policy’) was put to a binding shareholder growth and increased shareholder value the Executive Chairman. movement has resulted in a greater focus vote at the AGM on 31 July 2020. Following with significant emphasis on performance being placed on these areas during this • Planned pay rises were frozen for all feedback from shareholders a change to related pay measured over the longer financial year, this included: staff (outside of those linked to statutory the Policy is proposed, which involves the term. changes in pay such as National Minimum • The introduction of Welfare and Wellbeing introduction of a share based element • Incentive arrangements for the Executive Wage, and those linked to business-critical Champions. to the Long Term Incentive Plan (‘LTIP’). needs). Directors should provide an appropriate • An increase in the number of trained Further details on that change and the full balance between fixed and performance • All incentive payments (including LTIP mental health first aiders across the Group. revised Policy are set out below. related elements and be capable of and bonuses) were deferred including • Launching Welfare and Diversity forums. The revised LTIP and Policy will be put to a providing exceptional levels of total instalments of the previously stated separate shareholder vote at the AGM which payment if outstanding performance is Executive Chairman’s special bonus. • A campaign for the celebration of diversity is scheduled to take place on 1 July 2021. achieved. • A temporary recruitment freeze outside of across the Group. Subject to approval by the shareholders, the business-critical roles. • An increase in the visibility and ease of policy will take effect from the date of the UK CORPORATE GOVERNANCE CODE These measures combined with CJRS has access to information on support channels 2021 AGM for up to three years. There are The Committee has considered in detail meant that the Group has been able to for a wide range of welfare, diversity and currently no further planned changes to the the requirements of the UK Corporate secure employment for as many of our inclusion related topics. policy over the three-year period to which it Governance Code and is comfortable that colleagues as possible. I believe this has • Supporting social mobility by developing relates. the proposed Policy is in line with this. directly contributed to the Group’s ability our approach through talent acquisition Remuneration payments and payments for The change we are making to remuneration to provide a strong financial performance and work support education. loss of office can only be made to Directors for 2021/22 includes the introduction throughout the pandemic. The Group has continued to engage if they are consistent with the Policy. of a share-based element to the LTIP As a result of the strong performance of the with the workforce through employee The role of the Committee and the programme for Executive Directors. Group, the decision has also been taken that engagement forums across the Group and formulation of the Policy is undertaken in In addition to the Executive Directors, the the Group will take part in the Government a dedicated workforce committee has been a way that ensures remuneration decisions Committee continues to have responsibility Kickstart and apprenticeship schemes established to represent all areas of the are undertaken in a manner that prevents for setting remuneration for the Group’s during the next financial year, supporting business to the Board at regular intervals and manages any potential conflicts of Senior Management team, as well as having the economy and those whose employment within the year. interest. Should any conflicts arise these oversight of the remuneration of the has been affected by the pandemic back It is without doubt that COVID-19 has and will be alerted to the Committee who will workforce as a whole, and so is satisfied into sustainable jobs. will continue to have a significant impact undertake any appropriate adjustments. that it is already compliant with the Code’s on our business. Whilst we do not currently requirement in this respect. The Committee have intentions to further revisit the Policy POLICY OVERVIEW takes both of these into account when during its three year term, as a Committee The Committee designed the Policy around setting remuneration for the Executive we will undertake a review in due course the following key principles, which are Directors. to assess its effectiveness in the context unchanged: The Group has continued to engage and of the disruption caused by COVID-19 and • The Group operates in a highly consult with the workforce in relation to any implications for the future state of the competitive global retail environment remuneration via a series of employee business and its strategy. and the Committee seeks to ensure that forums led by the Group’s HR Business the level and form of remuneration is Partners and attended by the Group’s appropriate to attract, retain and motivate Senior Management team, including the Executive Directors of the right calibre to Executive Chairman. The outcomes of ensure the success of the Group into the these forums are included in regular board Andrew Leslie future. updates and discussions. Chairman of the Remuneration Committee 13 April 2021

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In reviewing the Policy, the Committee has considered the following: DISCRETION PROPOSED CHANGES TO THE EXISTING The Committee has discretion in several DIRECTORS’ REMUNERATION POLICY ASPECT HOW THIS IS ADDRESSED IN THE POLICY areas of policy as set out in this report. The Committee believes that the overall The Committee may also exercise structure of the Policy does remain fit for operational and administrative discretions purpose, but is proposing to make a change CLARITY The Committee’s approach has been clearly set out in this report, under relevant plan rules approved by to the LTIP scheme for Executive Directors including the individual elements of remuneration and their shareholders and as set out in those rules. In in response to shareholder feedback and to operation. addition, the Committee has the discretion reflect current market best practice. SIMPLICITY Overall the structure of remuneration is in line with normal market to change the operation of the Policy with practice and is viewed to be simpler than the arrangements regards to minor or administrative matters operated by many other companies. where it would be, in the opinion of the Committee, disproportionate to seek or It is accepted that, whilst the LTIP arrangement with a hybrid cash await shareholder feedback. and share scheme brings additional levels of complexity, this will drive performance that is aligned to business goals. DIFFERENCES IN POLICY FROM THE The introduction of share-based arrangements brings the Group WIDER EMPLOYEE POPULATION further into line with standard market practice. The Group aims to provide a remuneration RISK The Committee believes that the incentive arrangements do not package for all employees that is market encourage undue risk-taking, as remittance caps work to ensure competitive and operates the same reward that values remain in line with standard market practice. and performance philosophy throughout the business. As with many companies, the PREDICTABILITY The Policy table and the illustrations of remuneration provide an Group operates variable pay plans primarily indication of the possible levels of remuneration that may result but not exclusively focused on the Senior from the application of the policy under different performance Management level. This currently does not scenarios. extend to the introduction of shares at the Senior Management level, but this will be The Committee believes that the range of potential total considered in the future. remuneration scenarios is appropriate for the roles and responsibilities of the Executive Directors and in the context of the performance required for incentive awards to pay out.

PROPORTIONALITY The Policy has been designed to give flexibility in operation, particularly in relation to incentive plan metrics. This allows the Committee to implement the Policy from year to year using the metrics that most closely align with the Group’s strategy.

ALIGNMENT TO The Policy has retained the simplicity it previously had in line CULTURE with our straight-forward culture, except that the introduction of shares within the LTIP has increased the complexity to a degree. There is a strong performance culture across the business, and this is reflected in the fact that the majority of the potential value for Executive Directors derives from variable pay that needs to be earned through performance.

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The proposed changes are set out in the table below: The following table sets out each element of remuneration and how it supports the Group’s short and long-term strategic objectives. These remain unchanged in all areas except the LTIP as detailed on page 186.

ELEMENT OF CURRENT PROPOSED AMENDMENT TO POLICY REASON FOR CHANGE HOW THE OPERATION MAXIMUM OPPORTUNITY PERFORMANCE TARGETS REMUNERATION POLICY ELEMENT SUMMARY SUPPORTS OUR SHORT AND LONG-TERM LONG TERM Cash awards of The awards made will be a hybrid Provides alignment STRATEGIC INCENTIVE up to 250% of of cash awards and / or share with shareholder OBJECTIVES PLAN (LTIP) base salary. awards within the previous caps. value in the long Awards vest Awards will be subject to meeting term and aligns BASE Base salaries for the Base salaries None at the end of minimum financial performance with other FTSE SALARY Executive Directors will normally be a three-year conditions. 100 remuneration Provides a are normally reviewed reviewed annually, performance practice. competitive annually by the but the Committee The cash awards will vest at the fixed level of Committee. reserves the right period subject end of a three year period. The participation to continued of the Executive remuneration The following factors to review fees on a employment The share awards will vest at the Chairman in the to attract are taken into account discretionary basis and end of a five year period. LTIP ensures and retain when determining if it believes an Executive adjustment is required performance Performance conditions will apply consistency of base salary levels: Directors of to reflect market rates against financial to the first three years of the cash approach at Board the necessary • Remuneration levels or performance. targets. and share awards. level and aligns at comparable both Executive calibre to There is no prescribed The following two-year vesting quoted UK retail Directors pay execute maximum annual period of the share award will companies. with shareholder the Group’s increase. determine the value of the award • The need for salaries interest. strategy at vesting. and deliver to be competitive. The Committee is Creates a long • The performance guided by the general Any share awards in place shareholder term pay policy of the individual increase for the after three years (when the value. with investment Executive Director. broader employee performance conditions are met) in the business’ • Experience and population but on may continue to vest following future through responsibilities of the occasion may need termination of employment. shareholding. individual Executive to recognise, for Executive Chairman shall Supports succession Director. example, an increase participate in the LTIP on a Share planning and • Pay for other in the scale, scope or Award only basis. encourages employees in the responsibility of the Clawback and Malus provisions shareholding at Group. role, as well as market apply to the LTIP for both cash and Senior Management • The total rates. share elements. level. remuneration available to the Any discretion exercised by the Executive Directors Committee in relation to the and the components performance criteria or in relation thereof and the cost to the value and application of to the Group. the award will be applied only in exceptional circumstances, where the results would create an unintended and unfair result to the individual or would not be in line with Group objectives. Such occasions are intended to be very exceptional circumstances for example large acquisitions, disposals or pandemics.

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HOW THE OPERATION MAXIMUM OPPORTUNITY PERFORMANCE TARGETS HOW THE OPERATION MAXIMUM PERFORMANCE TARGETS ELEMENT ELEMENT OPPORTUNITY SUPPORTS OUR SUPPORTS OUR SHORT AND SHORT AND LONG-TERM LONG-TERM STRATEGIC STRATEGIC OBJECTIVES OBJECTIVES

BENEFITS The current benefit The Committee None ANNUAL The bonus is paid The maximum The targets are set by the Ensures provision is detailed determines the BONUS annually in cash and bonus Committee each year and are the overall on page 197. appropriate level Provides is non-pensionable. opportunity based on a combination of package is Other benefits may taking into account Executive Clawback and may be up to financial and strategic KPIs, with competitive be provided where market practice Directors malus provisions 200% of salary. target and maximum levels. for Executive appropriate, including and individual with the apply to the bonus. Two thirds of the annual bonus Directors. circumstances. opportunity health insurance, life The Committee can will be linked to financial targets. insurance / death in There is no prescribed to earn Illustrations of minimum and performance use its discretion service, travel and maximum. to reduce, cancel maximum awards can be found relocation expenses. related within the illustration of the bonuses or impose further conditions on the application of the policy section based on the of this report. achievement awards where of financial it considers The Committee retains the targets such action is discretion to adjust the and key appropriate. performance targets in the event performance This includes of significant corporate activity indicators where there has during the year. PENSIONS Payments are made The maximum None which been a material The Committee will review the Provides into a defined pension provision is incentivise misstatement of Group’s overall performance market contribution pension 8% of salary. the the Group’s audited before determining final bonus competitive scheme with company achievement financial results, a levels. post- contributions set as of the serious failure of The Committee may in retirement a percentage of base business risk management or exceptional circumstances benefits for salary. strategy. serious reputational amend the bonus pay-out Executive damage. The Committee has should this not, in the view Directors. the discretion to On change of of the Committee, reflect the pay a cash amount control the overall business performance or in lieu of a pension Committee may pay individual contribution. contribution. Any such bonuses on a pro- The Committee is of the opinion payment would not rata basis measured that given the commercial form part of the salary on performance sensitivity arising in relation to for the purposes of up to the date of the detailed targets used for determining the extent change of control. the annual bonus, disclosing of participation in precise targets for the bonus the Group’s incentive plan in advance would not arrangements. be in shareholder interests. Actual targets, performance achieved, and awards made will be published in the following year’s Annual Report so that shareholders can fully assess the basis for any pay-outs under the annual bonus.

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HOW THE OPERATION MAXIMUM OPPORTUNITY PERFORMANCE TARGETS HOW THE OPERATION MAXIMUM OPPORTUNITY PERFORMANCE TARGETS ELEMENT ELEMENT SUPPORTS OUR SUPPORTS OUR SHORT AND SHORT AND LONG-TERM LONG-TERM STRATEGIC STRATEGIC OBJECTIVES OBJECTIVES

LONG TERM Both the cash and Base award on grant Subject to performance NON- The Board as a The fees paid to Non- None INCENTIVE award will be subject equal to 100% of criteria being met, EXECUTIVE whole is responsible Executive Directors PLAN (LTIP) to a three-year salary. the value of the base DIRECTOR for setting the normally will be Provides the performance period. If Pay-out is capped at award will trigger from FEES remuneration of reviewed annually, Executive met, the cash element 250% of salary. the agreed financial Provides a the Non-Executive but the Committee Directors will vest after three performance metrics. level of fees Directors, other reserves the right with the years. Any share This applies to the to reflect than the Chairman to review fees on total value of both The final value of the opportunity based elements will award is linked to the the time whose remuneration a discretionary to earn vest after five years. cash and share based commitment is considered by basis if it believes elements combined. change in profits and / competitive Clawback and malus or share price, subject and the Committee and an adjustment is rewards. provisions apply to to the overall cap. contributions recommended to the required to reflect that are Board. market rates, scope Aligns the unvested awards. Targets will be Executive expected Non-Executive of responsibilities or The Committee can disclosed in the from the Non- performance. Directors’ use its discretion Annual Report for Directors are paid interests Executive a base fee in cash. There is no prescribed to reduce, cancel the year following a Directors. more closely or impose further performance period. Additional fees may maximum increase, with those of conditions on the be paid for additional but in general the shareholders. awards where it responsibilities such level of fee increase Focuses the considers such action as acting as Senior for the Non-Executive Executive is appropriate. This Independent Director Directors will be Directors on includes where there or the Chairman of set taking account sustaining has been a material a Committee of the of any change in and misstatement of Board. responsibility and improving the Group’s audited Fee levels are the general rise in the long- financial results, a reviewed annually. salaries across the UK workforce. term financial serious failure of The Non-Executive performance risk management or Directors do not of the serious reputational participate in the Group and damage. Group’s incentive rewards them LTIP awards track the arrangements and no appropriately Group’s share price pension contributions for doing so. and / or a measure of are made in respect Group profit. of them. Reasonable travel and subsistence expenses may be paid or reimbursed by the Group.

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SHARE OWNERSHIP GUIDELINES same basis as existing Executive Directors. It is the Group’s policy that notice periods In the event of gross misconduct, the Group Initially the LTIP will be a hybrid scheme of In the event that a new Non-Executive for Executive Director service contracts are may terminate the service contract of an cash and / or share awards. As the share Director was to be appointed, the fees no more than 12 months. Executive Director immediately and with based element of the scheme is a new payable would be determined in a manner The service contracts and letters of no liability to make further payments other basis of remuneration for the Group, the which is consistent with the Policy. appointment are available for inspection by than in respect of amounts accrued at the intention is to allow the scheme to mature If it were necessary to attract the right shareholders at the forthcoming AGM and date of termination. prior to setting Minimum Share Ownership candidate, due consideration would be during normal business hours at the Group’s The current Executive Director service guidelines. given to making awards necessary to registered office address. contracts permit the Group to put an Over time the Group will be working compensate for forfeited awards in a Executive Director on garden leave for the towards Executive Directors holding a previous employment. In making any such NON-EXECUTIVE DIRECTORS duration of the notice period. minimum percentage of Base Salary held award, the Committee will take into account The Non-Executive Directors have entered Where cessation of employment is due in the shares of the Company. This will any performance conditions attached to into letters of appointment with the Group to ill-health, injury, disability or the sale of be reviewed within the first three years the forfeited awards, the form in which which are terminable by the Non-Executive the employing entity out of the Group, the following the first Share Award under the they were granted and the timeframe of Director or the Group on not less than three unvested LTIP award will continue. It will revised LTIP arrangement. At the discretion the forfeited awards. The value of any months’ notice. continue to vest in accordance with the of the Committee this may also include such award will be capped to be no higher The Board recognises that Executive original vesting date unless the Committee post-employment termination periods. It on recruitment than the forfeited awards determines that it should vest as soon as is not intended that this will be reviewed and will not be pensionable nor count for Directors may be invited to become Non- Executive Directors of other businesses and reasonably practicable following the date of during the duration of the Policy but this the purposes of calculating bonus and cessation. In these cases the award may be may be subject to review or change at the LTIP awards. Any such award would be that the knowledge and experience which they gain in those appointments could be of subject to a proration and the incremental discretion of the Committee. in addition to the normal bonus and LTIP value changes may be capped. awards set out in the policy table. benefit to the Group. Prior approval of the Board is required before acceptance of any Where cessation of employment is due PREVIOUS REMUNERATION The Committee retains the right under new appointments. to death, the LTIP award will, unless the ARRANGEMENTS Listing Rule 9.4.2 where necessary to Committee determine otherwise, vest as The Company may honour any outstanding put in place an arrangement established soon as reasonably practicable following remuneration commitments entered PAYMENTS FOR LOSS OF OFFICE specifically to facilitate, in unusual death. Where the Executive Director is into with current or former Directors (as In the event of early termination, the Group circumstances, the recruitment of a new dismissed lawfully without notice, the LTIP disclosed to shareholders) before this may make a termination payment not Executive Director. Where appropriate, award will lapse on the date of cessation. policy took effect or before they became a exceeding one year’s salary and benefits. the Group will offer to pay reasonable In these cases the award may be subject Director. Incidental expenses may also be payable relocation expenses and admission to LTIP to a proration and the incremental value arrangements for new Executive Directors. where appropriate. It is in the discretion of the Committee as to whether departing changes may be capped. RECRUITMENT POLICY In respect of an internal promotion to the Directors would be paid a bonus. In In all other circumstances the Committee In the event that a new Executive Director Board, any commitments made before the exercising its discretion on determining will determine if the award will lapse was to be appointed, a remuneration promotion will continue to be honoured the amount payable to an Executive otherwise, in which case it will determine package would be determined consistent even if they would otherwise be inconsistent Director on termination of employment, the extent to which the unvested LTIP with the Policy. In particular any new with the Policy prevailing when the the Board would consider each instance on award shall vest taking into account the Executive Directors will participate in commitment is fulfilled. an individual basis and take into account extent to which the performance target variable remuneration arrangements on the contractual terms, circumstances of the is satisfied at the end of the performance termination and the commercial interests period or, as appropriate, on the date on of the Group. When determining whether which employment ceases. The period of SERVICE CONTRACTS a bonus or any other payment should time that has elapsed since the start of the Details of the contracts currently in place for Executive Directors are as follows: be made to a departing Director, the performance period to the date of cessation Committee will ensure that no ‘reward for of employment will also be taken into NAME DATE OF CONTRACT NOTICE PERIOD UNEXPIRED TERM failure’ is made. The Committee may make account unless the Committee determines (MONTHS) a payment to a departing Director for otherwise. agreeing to enter into enhanced restrictive Peter Cowgill 16 March 2004 12 Rolling 12 months covenants following termination where it considers that it is in the best interests of Neil Greenhalgh 1 November 2018 12 Rolling 12 months the Company to do so.

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CHANGE OF CONTROL ILLUSTRATIONS OF THE APPLICATION OF The scenarios in the graphs are defined as follows: The Executive Director service contracts THE POLICY Minimum On target performance Maximum performance Maximum contain a change of control provision The chart below illustrates the remuneration performance with whereby if 50% or more of the shares in the that would be paid to each of the Executive 50% share price growth Group come under the direct or indirect Directors in the first year of operation of the control of a person or persons acting in amended Policy. Fixed elements • The base salary is the salary as at 1 April 2021 of remuneration • The benefits are taken as those in the single figure table on page 197 concert, an Executive Director may serve Each bar gives an indication of the minimum • The pension contribution is equal to 8% of base salary notice on the Group, at any time within amount of remuneration payable at target (for Neil Greenhalgh only) the 12 month period following a change of performance and remuneration payable at control, terminating their employment. maximum performance to each Director Annual Bonus Nil 100% of salary 200% of salary 200% of salary In the event of a change of control, LTIP under the Policy. Each of the bars is broken Long term Nil 150% of salary 250% of salary 250% of salary awards will vest at the date of change of down to show how the total under each incentive plan control (other than in respect of an internal scenario is made up of fixed elements of (1) Both Peter Cowgill and Neil Greenhalgh will be granted LTIP awards in the 2021/22 financial year. The minimum base award will be minimum of reorganisation) unless the Committee remuneration and variable remuneration. 33% of Base Salary as shares, and the additional amounts in cash-based remuneration to a maximum of 67%. The cash element can be substituted determines otherwise. for additional shares at the discretion of the Committee and for Peter Cowgill the 2021/22 award is proposed as a 100% of Base Salary as share awards. (2) The Executive Chairman’s Special Bonus, which was disclosed in the 2018/19 Remuneration Report, has been excluded. (3) The total value of the LTIP awards at vesting (both cash and share elements) is capped at 250% of salary.

STATEMENT OF EMPLOYEE CONDITIONS The Committee has obtained the views P COWGILL EXECUTIVE CHAIRMAN ELSEWHERE IN THE GROUP of the workforce on issues such as £4.8m Remuneration arrangements are determined remuneration via the various workforce throughout the Group based on the same forums led by the Group’s HR business principle that reward should be achieved partners and attended by Senior £3.0m for delivery of the Group’s business Management, including the Executive 82% strategy and should be competitive within Chairman. Such views have been the market to attract and retain high communicated, as appropriate, to the 71% calibre talent, without paying more than is Committee and the Board via the monthly £0.9m necessary. Board reporting process. The workforce Senior Managers below Board level with committee has provided further insights 100% 29% 18% a significant ability to influence company into the Group’s engagement practices which have been fully considered by the Minimum On target Maximum results may participate in an annual bonus plan and LTIP which reward both Committee and the Board. Changes which performance and loyalty and are designed have been implemented as a result of these N GREENHALGH CHIEF FINANCIAL OFFICER are: £1.9m to retain and motivate. This currently does not include any share-based element, but • The introduction of an employee welfare this will be reviewed in the future. committee. The Committee considers pay and • Global campaign for diversity and £1.2m employment conditions across the Group inclusion. when reviewing the remuneration of the 81% • Employee recognition competition with Executive Directors and other senior Anthony Joshua. employees. In particular, the Committee 70% considers the range of base pay increases £0.4m across the Group when determining the increases to award to the Executive 100% 30% 19% Directors.

Minimum On target Maximum

Variable elements of remuneration Fixed elements of remuneration

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CONSIDERATION OF SHAREHOLDER time as a result of the COVID-19 pandemic. Name Salary / Fee Benefits Bonus LTIP Pension Others Total Fixed Total Variable VIEWS This will be reviewed as and when the (£’000) (£’000) (£’000) (£’000) (£’000) (£’000) Remuneration Remuneration (£’000) (£’000) The Committee has engaged with several current situation changes. To address 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 major shareholders to obtain their views on concerns in relation to the mechanism of /21 /20 /21 /20 /21 /20 /21 /20 /21 /20 /21 /20 /21 /20 /21 /20 key aspects of the proposed Policy. remuneration the Executive Chairman will take part in a revised LTIP on a share only Peter 701 863 3 3 1,295 1,726 – – – – 3,000 3,000 704 866 4,295 4,726 The shareholders confirmed that one of Cowgill their main concerns was that the LTIP basis. scheme implemented did not go far enough Additional succession planning has Neil 278 288 12 12 300 300 259 223 22 30 – – 312 330 559 523 to align remuneration with shareholder occurred throughout the financial year Greenhalgh interests. As such, the Committee has taken following concerns relating to the single the first step and introduced a significant appointment of the Executive Chairman. Andrew 52 63 – – – – – – – – – – 52 63 – – change to the LTIP scheme from 2021/22 Reviews of future structures, identification Leslie for Executive Directors which introduces of organisation planning requirements a minimum element of share based award and consideration for future additions to Martin 58 71 – – – – – – – – – – 58 71 – – of 33% of Base Salary building over a five the Executive team have been discussed, Davies year period. All Executive Directors will be and further steps will be taken, with the eligible for participation. The scheme will Committees participation to secure the Heather 45 56 – – – – – – – – – – 45 56 – – Jackson operate initially as a hybrid of cash and future success of the Group. / or shares, and at the discretion of the There were concerns raised previously Kath 45 40 – – – – – – – – – – 45 40 – – Committee the full award can be issued as in relation to the loss of simplicity of the Smith shares. arrangement. Whilst there are added A further concern related to the mechanism complexities with the new LTIP given that, Andy – – – – – – – – – – – – – – – – of the remuneration of the Executive for the CFO only, it is a hybrid scheme Rubin Chairman. A benchmarking exercise against involving cash and shares, the intention Notes: publicly available data from other FTSE of the Committee is that this will move (1) Salary reviews are effective annually from 1 April. No salary increases were awarded for 2020/21. 100 businesses has been undertaken to towards an all share based scheme at the (2) With effect from April 2021 a salary increase in the amount of £40,000 will be awarded to the Chief Financial Officer. (3) The 2019/20 salary figure for Kath Smith represents a part year figure based on when she commenced her role. review as to whether the remuneration was appropriate time in the future, which should (4) As disclosed in the 2018/19 Remuneration Report and as approved by shareholders, a Special Bonus was awarded to the Executive Chairman appropriate. Whilst this has shown that also have the effect of simplifying the in four instalments of £1.5m. The first two instalments were made in October 2019 and February 2020. In the light of developments caused by the COVID-19 pandemic, it was agreed that the remaining payments would be deferred and paid when the Board and Committee were satisfied it is the salary level is in the lower quartile and scheme. appropriate to do so. Following a detailed review, the payment originally due in October 2020 was made in January 2021. overall remuneration is not out of kilter with (5) The basis of calculation has been updated to ensure all figures are based on year to date values. This has resulted in Neil Greenhalgh’s salary being updated for the financial year 2019/20. the market, no changes are proposed at this (6) Neil Greenhalgh’s benefits have been updated to include a car allowance for 2019/20. (7) Neil Greenhalgh’s pension value is provided by means of a pension allowance salary supplement and an Employers Pension Scheme contribution. The values for 2019/20 have been updated to reflect what was paid during the financial year 2019/20. ANNUAL REPORT ON REMUNERATION (8) The reduction in the remuneration is as a result of voluntary salary reductions for three months during the 2020/21 financial year. This was applied as a reduction of 30% for the Chief Financial Officer and a 75% reduction for the Executive Chairman.

SINGLE TOTAL FIGURE OF REMUNERATION (AUDITED) The benefit received by Peter Cowgill and Neil Greenhalgh is healthcare insurance. A car The table opposite sets out the single total figure of remuneration and breakdown for each allowance is also payable to Neil Greenhalgh. Executive and Non-Executive Director in respect of the 2021 financial year. Comparative Pension contributions are: figures for the 2020 financial year have also been provided. Figures provided have been calculated in accordance with the new UK disclosure requirements: The Large and Medium- • Peter Cowgill – 0% of salary Sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 • Neil Greenhalgh – 8% of salary (Schedule 8 to the Regulations). ADDITIONAL INFORMATION REGARDING THE SINGLE FIGURE TABLE (AUDITED)

2021 ANNUAL BONUS AWARDS The annual bonuses for the Executive Directors are based on a mix of financial targets (66.7%) and strategic / non-financial performance objectives (33.3%). The Committee maintains the view that this is an appropriate method of incentivising the Executive Directors to focus their efforts on the fundamental drivers for growth and exceptional performance during the course of the financial year. The apportioning and determination of the award values for the 2021 annual bonus values were measured against the following criteria.

196 197 DIRECTORS’ REMUNERATION REPORT

Weighting Criteria Target Outcome Actual performance % Weighting Criteria Target Outcome Actual performance % vesting vesting

Profit Before 67% £348.5m minimum £265.93m £460.1m 100% Sustainability 6.7% Increase internal and Improve The Group repurposed and 100% Tax and (£400m for external awareness the internal relaunched the corporate Exceptional maximum value) of environmental and external website, providing details of Items performance awareness of our position and progress (proforma IAS through education, the Group’s on critical ESG matters, 17 basis) communication and environmental supported by case studies disclosures. performance that demonstrate the People 6.7% Promote and Identify a All senior leadership 100% and progress on environmental progress of expand the succession plan team members have a climate change. the Group. succession planning for the senior succession plan to develop The Group developed a and development leadership team. the appropriate skills and new online training module, of people within the Provide an leadership to step into “IAMSustainable”, with an Group. infrastructure business-critical roles and external ESG specialist, that supports have highlighted pathway consisting of six modules development planning strategies for the covering topics such as and mobility. forthcoming financial year. climate change, materials Changes to infrastructures and waste. Three of these have been put in place modules are to be launched to allow for growth of to 10,000 colleagues in apprenticeships, skills March 2021. training, qualifications and engagement in government Governance 6.7% Deliver greater Bring together The Group has successfully 100% initiatives. accessibility key information continued the use of the and visibility of and engage key investor and stakeholder- Environmental 6.7% Demonstrate Monitor and In December 2020, 100% environmental, stakeholders facing website, engaging ‘leading’ sector- adjust Group the Group achieved a social and corporate to ensure stakeholders and disclosing level performance and supply Leadership grade of ‘A-’ governance all relevant a range of key governance on climate change, chain emission within the Carbon Disclosure information. information topics via a concise and evidenced via reduction Project (CDP) ‘Carbon is available to accessible format. independent, strategies based Management’ assessment. shareholders in global climate on feedback The Group outperformed a user friendly change surveys received the retail sector benchmark format and is and memberships from leading score by three grades and updated on a aligned with TCFD climate change achieved recognition as a regular basis. best practice. benchmarking ‘CDP Supplier Engagement Ensure that the organisations. Leader’. Digital 6.7% Ensure that the Maximise Internet sales increased by 100% Group is proactively Embed Group Scope One and Two Innovation business is at consumer 17% in response to adapting reducing emissions appropriate emissions data has been the forefront interactions flexibly to consumer originating from governance verified by, and Scope of consumer via digital demand during the our organisational structures Three data screened by innovation and innovations. COVID-19 pandemic. activities, in and business independent auditors technology Quick adoption The introduction of ship accordance with the objectives. (Schneider Electric). JD adoption in order to of new from store to ensure Paris Agreement Establish an Group is a signatory of maximise consumer alternative customer orders were goal to limit global auditable the UK governments’ engagement. approaches fulfilled. warming (to 1.5 process for the ‘Business Ambition Pledge to enable our degrees Celsius, disclosure of for 1.5C’, and is now customers to compared to pre- Group Scope recognised (by the Science shop with us industrial levels). One, Two and Based Target Initiative in new and Three emissions. Board) as ‘Committed’ to innovative ways. implementing and publicly disclosing science-based targets. 199 DIRECTORS’ REMUNERATION REPORT

As a result of this performance, the • Three-year performance period. The aim of the LTIP is to provide the and the PBT for the three financial years Committee determined that the following • The performance condition (linked to Executive Directors with the opportunity will be determined before the date of grant bonuses were appropriate in the context of Group profit before tax) can be amended to earn competitive rewards, to align the of the Award. Performance measurement the truly exceptional performance in both or substituted if events occur which Executive Directors’ interests more closely for the PBT for the 2020 Award will be financial and non-financial measures: cause the Committee to consider that with those of the shareholders and to based on the increase in the PBT over • Peter Cowgill: Exceptional bonus (as an amended or substituted performance focus the Executive Directors on sustaining the Performance Period. Awards will vest previously disclosed) equal to 200% of target would be more appropriate. Any and improving the long-term financial on the basis of the level of performance salary, or £1.7 million. Given the current amended or substituted target would performance of the Company and reward achieved in relation to the PBT targets for climate it has been agreed that this will be not be materially more or less difficult to them appropriately for doing so. the relevant year. Details of the specific reduced to 150% of salary (£1.3 million). satisfy. PBT targets will be disclosed in the annual PERFORMANCE CONDITIONS OF THE report on remuneration following the end of • Neil Greenhalgh: Bonus equal to 100% of • Malus and clawback provisions apply to the relevant Performance Period. salary, or £0.3 million. all share awards. The Committee can use EXECUTIVE DIRECTOR LTIP (CHIEF FINANCIAL OFFICER) The Committee will have the flexibility Both the Executive Chairman and the Chief its discretion to reduce, cancel or impose further conditions on the awards where it An award under the Executive Director to make appropriate adjustments to the Financial Officer are in the lower quartile LTIP shall be in the form of a conditional performance conditions in exceptional of total remuneration (when compared to considers such action is appropriate. This includes where there has been a material right to receive a pre-determined cash circumstances such as large acquisitions, publicly available information of other FTSE amount ‘Award’. Awards will generally only disposals or pandemics, to ensure 100 businesses). As a result an increase to misstatement of the Company’s audited financial results, a serious failure of risk vest or become exercisable subject to the that the Award achieves its original the salary of the Chief Financial Officer is satisfaction of a performance condition purpose. Any vesting is also subject to proposed as detailed in the single figure management or serious reputational damage. measured over a three-year period the Committee being satisfied that the table, but given the current climate the ‘Performance Period’ determined by the Company’s performance on these measures level of bonus for the Chief Financial Officer • The maximum award which will be payable Committee at the time of grant. Awards is consistent with underlying business has not been increased, and the Executive to the Chief Financial Officer is 250% of will vest dependent on the satisfaction of performance. Chairman’s level has been decreased. base salary. The level of any awards under performance conditions, determined by As stated in the Policy, a revised LTIP the LTIP remains under the consideration the Committee prior to the date of grant. As previously disclosed, the Committee that introduces a share based award of the Committee. The performance conditions must contain previously determined that the special is being proposed for financial years objective conditions, which must be related bonus was appropriate for Peter Cowgill, • The award will track performance against 2021/22 onwards subject to approval by to the underlying financial performance of given his leadership of the business in again agreed financial metrics and the overall shareholders at the 2021 AGM. achieving record results for the Company. award value will be determined based on the Company. No alteration to this award value was made. a percentage of base salary for 67% of the The Award granted to the Chief Financial STATEMENT OF DIRECTORS’ award and tracking of share price for 33% Officer in 2020 is based on a performance of the award. SHAREHOLDINGS AND SHARE INTERESTS LONG TERM INCENTIVES VESTING condition of headline earnings of the Group (AUDITED) DURING 2020/21 • The element of the award utilised to track Profit Before Tax (‘PBT’) over a three-year The interests of the Directors who held The LTIP and annual bonus payments that share performance will be determined performance period commencing from the office at 30 January 2021 and persons Neil Greenhalgh is entitled to for this period based on the share price as at 2 February start of the financial year immediately prior closely associated with them in the were granted under the Senior Manager 2020 and at the end of the performance to the grant of the Award. Company’s ordinary shares are shown LTIP and bonus schemes. period. The initial Performance Period commenced below: • The LTIP will measure financial on 2 February 2020 for the 2020 Award LONG TERM INCENTIVES AWARDED performance over a 3 year period. DURING 2020/21 30 January 1 February • 100% of any award will vest at threshold 2021 2020 As stated in the Remuneration Report for performance increasing on a straight-line DIRECTOR the 2019/20 financial year, the Committee basis to 250% for maximum performance. determined that it was appropriate to grant Peter Cowgill 3,892,934 8,465,260 an award under the new Executive Director • A minimum award value will be granted Neil Greenhalgh 2,000 2,000 LTIP to the Chief Financial Officer. The should consistent growth targets be award granted will vest in 2023. No awards obtained once the initial performance were made to the Executive Chairman under threshold has been met, this minimum this arrangement. value will not be less than awards received in previous years. This is to ensure To summarise, the terms of the 2020/21 that focus remains on sustainable and Executive Director LTIP are as follows: consistent growth. • Cash awards (not shares).

200 201 DIRECTORS’ REMUNERATION REPORT

The Company was notified by Peter Cowgill life of the Policy to work towards setting EXECUTIVE CHAIRMAN’S REMUNERATION OVER PAST TEN YEARS (UNAUDITED) (the Company’s Executive Chairman) that appropriate targets as the LTIP matures. The total remuneration figures for the Executive Chairman during each of the last ten he had disposed of the following: financial years are shown in the table below. The total remuneration figure includes the • 1,985,000 ordinary shares of 0.25 pence PAYMENTS TO PAST DIRECTORS annual bonus based on that year’s performance and the LTIP award based on three-year each in the Company on 5 June 2020 at an (AUDITED) performance periods ending in the relevant financial year. The annual bonus pay-out and average price of 671.77 pence per ordinary No such payments were made. LTIP vesting level as a percentage of the maximum opportunity are also shown for each of share. these years. PAYMENTS FOR LOSS OF OFFICE Year ended • 2,587,326 ordinary shares of 0.25 Salary Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan pence each in the Company on 30 (AUDITED) 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 October 2020 at an average price No such payments were made. of 745.6162 pence per ordinary share. Total remuneration £m 2.3 2.0 3.1 2.0 2.7 2.8 2.3 2.6 5.6 5.0 TOTAL SHAREHOLDER RETURN Following these disposals, Peter Cowgill has Annual bonus % 75 37 100 100 200 200 200 200 200 150 a total interest in 3,892,934, representing (UNAUDITED) 0.4% of the issued share capital of the The following graph shows the Total LTIP vesting % 100 100 n/a n/a* n/a* 100* n/a n/a n/a n/a Company. Shareholder Return (‘TSR’) of the Group in comparison to the FTSE All Share General There have been no other changes in Retailers Index over the past ten years. The * The LTIP performance criteria was achieved over the full three-year period to 28 January 2017 and the award was paid on 30 October 2017 the interests of the Directors or persons Committee consider the FTSE All Share closely associated with them between 30 General Retailers Index a relevant index PERCENTAGE CHANGE IN EXECUTIVE AND NON-EXECUTIVE DIRECTORS’ January 2021 and the latest practicable for total shareholder return comparison REMUNERATION (UNAUDITED) date prior to the publication of this report. disclosure required under the Regulations as The table below shows the percentage change in the Executive and Non-Executive Directors’ The holdings stated above are held directly the index represents the broad range of UK salary and annual bonus between financial years 1 February 2020 and 30 January 2021 by the Directors and persons closely quoted retailers. TSR is calculated for each compared to UK Head Office employees in the JD and Size? businesses, being deemed by associated with them are not subject to any financial year end relative to the base date the Board as the most appropriate comparator group based on being the ones who are performance targets. The Directors have no of 31 January 2011 by taking the percentage remunerated in the most comparable way within the Group. other interests in Company shares. As stated change of the market price over the relevant % change in the Policy, the Company did not have a period, reinvesting any dividends at the ex- SALARY minimum share ownership requirement for dividend rate. Directors. This will be reviewed over the Executive Chairman (18.77%) CFO (3.47%) Non-Executive Director – Martin Davies (18.31%) 10000 Non-Executive Director – Andrew Leslie (17.46%) Non-Executive Director – Heather Jackson (19.64%) 8000 Non-Executive Director – Kath Smith 12.50% UK Head Office employee average 1.28%

% change 6000 BENEFITS Executive Chairman 3.05%

4000 CFO 0% Non-Executive Director – Martin Davies 0% Non-Executive Director – Andrew Leslie 0% 2000 Non-Executive Director – Heather Jackson 0% Non-Executive Director – Kath Smith 0% UK Head Office employee average (18.86%) 0 % change ANNUAL BONUS Executive Chairman (24.97%)

31/01/2011 CFO 0% 31/01/2017 31/01/2013 31/01/2012 31/01/2015 31/01/2018 31/01/2016 31/01/2019 31/01/2014 29/01/2021 31/01/2020 Non-Executive Director – Martin Davies 0% JD Sports Fashion PLC FTSE all share general retailers index Non-Executive Director – Andrew Leslie 0% Non-Executive Director – Heather Jackson 0% Non-Executive Director – Kath Smith 0% UK Head Office employee average 4.53% 202 203 DIRECTORS’ REMUNERATION REPORT

Benefit comparisons are undertaken on information held at the point in time of calculation within the warehouse population rather than our stores. This is therefore unusual given this includes year to date figures for the Executive Directors, and last submitted P11D benefit typical practice in the retail sector but is a reflection of the unprecedented time that we values for all other employees. continue to experience. However, following consideration, we believe these ratios, and the This does not include any special bonus for the Executive Chairman as previously disclosed. individuals, are representative and appropriate given the guidelines that we have been required to apply.

CEO PAY RATIO (UNAUDITED) All comparator employees were full time for this year’s calculation, as such we have now Set out below are ratios which compare the total remuneration of the Executive Chairman converted any hourly rate of pay into the equivalent 40-hour week. (as included in the single figure table on page 197) to the remuneration of the 25th, 50th and As disclosed in the 2019/20 Remuneration Report and as approved by shareholders, a 75th percentile of our UK employees. Special Bonus was paid to the Executive Chairman. As the Executive Chairman is in receipt of variable pay that is linked to the Group’s performance, the level of remuneration will vary Financial year end Method used 25th Percentile Ratio 50th Percentile Ratio 75th Percentile Ratio vastly from year to year and this combined with the factors above contribute to the level of the ratios. 2019/20 B 348:1 310:1 304:1 RELATIVE IMPORTANCE OF THE SPEND ON PAY (UNAUDITED) 25th Percentile 50th Percentile 75th Percentile The following table shows the Group’s actual spend on pay (for all employees) relative to Remuneration Remuneration Remuneration dividends, tax and retained profits:

Base Salary £16,067 £17,877 £17,981 IMPLEMENTATION OF REMUNERATION POLICY IN FINANCIAL YEAR 2021/22 (UNAUDITED) Total Remuneration £16,067 £18,299 £18,366 The Committee proposes to implement the policy for 2021/22 as set out below:

Financial year end Method used 25th Percentile Ratio 50th Percentile Ratio 75th Percentile Ratio SALARIES AND BENEFITS An increase in salary will not be given to the Executive Chairman as a result of the current 2020/21 B 251:1 183:1 140:1 COVID-19 pandemic. An increase in salary of £40,000 for the Chief Financial Officer is being applied to the 2021/22 financial year, to bring total remuneration more in line with market standards. 25th Percentile 50th Percentile 75th Percentile Remuneration Remuneration Remuneration Pay reviews were not applied to Senior Management teams or the wider workforce during the 2020/21 financial year outside of critical roles or statutory requirements. In addition, Base Salary £15,624 £21,174 £27,929 bonuses were deferred for a six month period. This has meant that the total remuneration packages have become out of kilter with the market. To ensure that key talent is retained Total Remuneration £15,624 £21,511 £28,139 and to drive the continued success of the business as we return to trading, it has been agreed that pay changes and bonuses will be applied during the 2021/22 financial year. We have used Option B in the legislation to identify the 25th, 50th and 75th percentile UK 2021 2020 % change employees. This has utilised the most recent data from our UK gender pay gap reporting for (£m) (£m) April 2020. Staff costs 785.9 873.8 (10.1%) The Group has elected to utilise this approach for this year as to prepare individual employee Dividends – 16.7 (100.0%) calculations across a vast employee base would be overly complicated. However, it should be Tax 94.8 97.8 (3.1%) noted that the impact of the COVID-19 pandemic and subsequent measures that the business Retained profits 229.2 250.7 (8.6%) took in April 2020, has had an impact on the calculation of our Gender Pay Gap this year. We have followed the published guidelines in preparing our figures, but this has meant we have EXECUTIVE DIRECTOR LTIP performance conditions are met after had to exclude any employee receiving a furlough payment in the period as not being a full The Executive Chairman and Chief Financial three years. The share element entitlement pay relevant employee. The figures above are also impacted by this requirement. Officer will be granted an award for the will be satisfied if the performance However, by utilising the Gender Pay Gap data we have identified the employees at the three financial year 2021/22 under the new conditions are met after three years. percentiles. To then calculate total remuneration for these individuals, we have used the same Executive Director LTIP in accordance with The share element will vest after five methodology applied in the single figure calculation. the Remuneration Policy, further details of years. The performance condition can which are set out below. be amended or substituted if events The largest population of employees within the Group are store colleagues and warehouse occur which cause the Committee to operatives and the individuals represented at the 25th, 50th and 75th percentile identified To summarise, the terms of the new Executive Director LTIP are as follows: consider that an amended or substituted by the use of the gender pay data. Given the impact above this year, all employees are from performance target would be more • Hybrid scheme of cash and share based appropriate. Any amended or substituted awards (Maximum of 67% cash / Minimum target would not be materially more or of 33% shares). less difficult to satisfy. This discretion • The cash element will vest if the is only intended to be used where the 204 205 DIRECTORS’ REMUNERATION REPORT

result would be deemed unfair and out • A minimum award value will be granted underlying business performance. This of the control of the individual as a result should consistent growth targets be 1 A maximum of 67% of the award value discretion is only intended to be used where of additional factors, for example, large obtained once the initial performance will be based on achieving a minimum the result would be deemed unfair and out acquisitions, disposals or pandemics. threshold has been met, this minimum level of Profit Before Tax. Should this of the control of the individual as a result minimum level be achieved awards will vest • Malus and clawback provisions apply value will not be less than awards received of additional factors, for example, large in previous years. This is to ensure based on a sliding scale and details of the acquisitions, disposals or pandemics. to awards. The Committee can use its specific targets will be disclosed in the discretion to reduce, cancel or impose that focus remains on sustainable and consistent growth; and targets will be Annual Report on remuneration following further conditions on the awards where it the end of the relevant performance period. FINANCIAL TARGETS AND STRATEGIC considers such action is appropriate. This disclosed in the annual accounts for the OBJECTIVES FOR THE ANNUAL BONUS year following a performance period. The Committee can apply up to 100% of the includes where there has been a material award as shares at its discretion. AWARDS IN 2020/21 misstatement of the Company’s audited The aim of the LTIP is; to provide the The split between financial targets and financial results, a serious failure of risk Executive Directors with the opportunity 2 Should consistent growth targets be strategic objectives will remain two thirds management or serious reputational to earn competitive rewards, to align the met in each of the three years within and one third respectively. The targets in damage. Executive Directors’ interests more closely the performance period, and the minimum respect of the annual bonus for the financial level of Profit Before Tax as outlined above, year to 30 January 2021 were as follows: • The performance condition for the 2021/22 with those of the shareholders and to focus the Executive Directors on sustaining have been achieved, the award will pay out award will be linked to Profit Before Tax. at a minimum level of the value of previous • A minimum criteria of £348.5 million Profit and improving the long-term financial Before Tax (moved to actual Profit Before • The maximum award which can be awards received in the year prior to the performance of the Company and reward Tax rather than prior to exceptional items payable to the Executive Chairman and award being made. Specific targets for the them appropriately for doing so. and IFRS16 adjustments) for any bonus Chief Financial Officer is 250% of base three-year growth targets will be disclosed payment to be made. salary inclusive of both cash and share in the annual report on remuneration PERFORMANCE CONDITIONS OF THE elements. The level of any awards under following the end of the relevant • A target level of £365.9 million Profit EXECUTIVE DIRECTOR LTIP the LTIP remains under the consideration Performance Period. Before Tax (moved to actual Profit Before An award under the Executive Director Tax rather than prior to exceptional items of the Committee. A minimum of 33% of the award value LTIP shall be in the form of a conditional 3 and IFRS16 adjustments). • The award cap will be applied to the right to receive a pre-determined Award. will be calculated by reference to the cash and / or share award at the point of Awards will generally only vest or become share price as at the start of the financial • 100% of the maximum award being vesting. exercisable subject to the satisfaction of year in which the award is made. The award achieved where Profit Before Tax (prior to exceptional items and IFRS16 adjustments) • Awards are subject to the achievement of a performance condition measured over right will crystallise if the performance reaches £400 million. performance conditions and the value of a three-year period ‘Performance Period’ criteria of achieving a minimum level of the award will track performance against determined by the Committee at the time Profit Before Tax is achieved after the As disclosed above, earnings were in excess agreed financial metrics (currently Profit of grant. Awards will vest dependent on three-year performance period. A further of the maximum payment figure due to Before Tax) or change in share price and the satisfaction of performance conditions two years of vesting will apply, and the exceptional performance. determined by the Committee prior to the value at vesting will be utilised to create a the overall award value will be determined The strategic objectives will be set against date of grant. The performance conditions number of shares subject to the caps noted based on a percentage of base salary. criteria in the following categories: must contain objective conditions related to in point four. • The element of the award utilised to track the underlying financial performance of the 1 People – focused on increased share performance will be determined 4 The combined value of the points Company. retention and development based on the share price as at the above will be capped at a maximum share issue date and at the end of the It is intended that, for the Award to be value of 250% of base salary at the point of 2 Environmental – focused in our integral performance period. granted to the Chief Financial Officer and award. re-use strategy Executive Chairman in 2021/22 financial • The LTIP will measure financial The intention of this arrangement is to 3 Sustainability – focused on the supply year, the performance conditions must have performance over a three-year period. diversify the metrics used in assessing chain for our private label business been met. This is to apply over a three-year performance with the LTIP, and to reward Governance – increasing transparency • 100% of any award will increase on a performance period commencing from the 4 either exceptional and / or consistent for our shareholder base straight-line basis to 250% for maximum start of the financial year immediately prior growth reflecting the challenging conditions performance. to the grant of the Award. Following the facing retailers in the current climate. 5 Digital Innovation – focused on the three-year performance period, there will be adoption of new technologies • The Committee can exercise its discretion The Committee will have the flexibility a further two years of vesting to determine over the value of any award should it be to make appropriate adjustments to the The Board considers that both the financial the value of any share based element. deemed unfair or unreasonable for the performance conditions in exceptional targets and the strategic objectives for individual. This will only be exercised in The award will be calculated based on four circumstances, to ensure that the Award the financial year to 29 January 2022 exceptional circumstances such as large principles: achieves its original purpose. Any vesting are commercially sensitive and so will be acquisitions, disposals or pandemics. is also subject to the Committee being disclosed in the 2022 Annual Report. satisfied that the Company’s performance on these measures is consistent with

206 207 DIRECTORS’ REMUNERATION REPORT

STATEMENT OF VOTING AT GENERAL The Committee can obtain independent MEETING (UNAUDITED) advice at the Company’s expense where At the 2020 AGM, the Directors’ they consider it appropriate and in order Remuneration Report received the following to perform their duties. Advice was taken votes from shareholders: from Addleshaw Goddard in the amount FINANCIAL of £8,000 during 2020/21 to support the For Against Withheld introduction of a share scheme into the LTIP 584,501,276 264,320,264 11,833,271 STATEMENTS arrangement. (68.86%) (31.14%) The Committee is formally constituted At the 2019 AGM, the Directors’ with written terms of reference, which Remuneration Report received the following are available on the Company’s corporate votes from shareholders: website www.jdplc.com. The Committee engages with the major shareholders For Against Withheld or other representative groups where 597,455,707 262,409,076 8,702,483 appropriate concerning remuneration (69.48%) (30.52%) matters. COMPOSITION OF THE COMMITTEE AND The Committee is mindful of the Company’s ADVISORS (UNAUDITED) social, ethical and environmental The Committee comprises four independent responsibilities and is satisfied that the Non-Executive Directors, being Andrew current remuneration arrangements and Leslie, Martin Davies, Heather Jackson and policies do not encourage irresponsible Kath Smith. Andrew Leslie was appointed behaviour. as the Chairman of the Committee on 1 The Committee has met twice during the October 2013. year under review with each member The Committee assists the Board in attending all the meetings. Details of determining the Group’s policy on Executive attendance at the Committee meetings are Directors’ remuneration and determines set out on page 170. the specific remuneration packages for Senior Executives, including the Executive Directors, on behalf of the Board. Peter Cowgill, the Executive Chairman and Neil Greenhalgh, the Chief Financial Officer, have Andrew Leslie assisted the Committee when requested Chairman of the Remuneration Committee with regards to matters concerning key 13 April 2021 Executives below Board level.

208 209 STATEMENT OF DIRECTORS’ RESPONSIBILITIES

taking such steps as are reasonably open to STATEMENT OF DIRECTORS’ them to safeguard the assets of the Group and to prevent and detect fraud and other RESPONSIBILITIES IN RESPECT OF THE irregularities. Neil Greenhalgh Chief Financial Officer ANNUAL REPORT AND THE FINANCIAL Under applicable law and regulations, 13 April 2021 the Directors are also responsible for STATEMENTS preparing a Strategic Report, Directors’ Report, Directors’ Remuneration Report The Directors are responsible for preparing • For the Group financial statements, state and Corporate Governance Statement the Annual Report and the Group and whether they have been prepared in that complies with that law and those parent Company financial statements accordance with international accounting regulations. in accordance with applicable law and standards in conformity with the The Directors are responsible for the regulations. requirements of the Companies Act 2006 maintenance and integrity of the corporate and International Financial Reporting Company law requires the Directors to and financial information included on Standards adopted pursuant to Regulation prepare Group and parent Company the Company’s website. Legislation in (EC) No 1606/2002 as it applies in the financial statements for each financial the UK governing the preparation and European Union (“IFRSs as adopted by the year. Under that law they are required to dissemination of financial statements may EU”). prepare the Group financial statements differ from legislation in other jurisdictions. in accordance with international • For the parent Company financial accounting standards in conformity statements, state whether applicable UK RESPONSIBILITY STATEMENT OF THE with the requirements of the Companies accounting standards have been followed, DIRECTORS IN RESPECT OF THE ANNUAL Act 2006 and applicable law and have subject to any material departures FINANCIAL REPORT elected to prepare the parent Company disclosed and explained in the parent We confirm that to the best of our financial statements in accordance with Company financial statements. knowledge: UK accounting standards and applicable • Assess the Group and parent Company’s • The financial statements, prepared in law, including FRS 101 Reduced Disclosure ability to continue as a going concern, accordance with the applicable set of Framework. In addition, the Group financial disclosing, as applicable, matters related accounting standards, give a true and statements are required under the UK to going concern. Disclosure Guidance and Transparency fair view of the assets, liabilities, financial Rules to be prepared in accordance with • Use the going concern basis of accounting position and profit or loss of the Company International Financial Reporting Standards unless they either intend to liquidate the and the undertakings included in the adopted pursuant to Regulation (EC) No Group or the parent Company or to cease consolidation taken as a whole. operations, or have no realistic alternative 1606/2002 as it applies in the European • The Strategic Report and the Directors’ but to do so. Union (“IFRSs as adopted by the EU”). Report includes a fair review of the Under company law the Directors must not The Directors are responsible for keeping development and performance of the approve the financial statements unless adequate accounting records that are business and the position of the issuer they are satisfied that they give a true and sufficient to show and explain the parent and the undertakings included in the fair view of the state of affairs of the Group Company’s transactions and disclose consolidation taken as a whole, together and parent Company and of their profit or with reasonable accuracy at any time the with a description of the principal risks loss for that period. In preparing each of financial position of the parent Company and uncertainties that they face. and enable them to ensure that its financial the Group and parent Company financial We consider the Annual Report and statements comply with the Companies Act statements, the Directors are required to: Accounts, taken as a whole, is fair, balanced 2006. They are responsible for such internal and understandable and provides the • Select suitable accounting policies and control as they determine is necessary information necessary for shareholders then apply them consistently. to enable the preparation of financial to assess the Group’s position and • Make judgements and estimates that statements that are free from material performance, business model and strategy. are reasonable, relevant and reliable and misstatement, whether due to fraud or prudent. error, and have general responsibility for

210 211 INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF JD SPORTS FASHION PLC

1. OUR OPINION IS UNMODIFIED BASIS FOR OPINION OVERVIEW We have audited the financial statements We conducted our audit in accordance of JD Sports Fashion plc (“the Group”) for with International Standards on Auditing Materiality: £16.5m (2020: £17.4m) the 52 week period ended 30 January 2021 (UK) (“ISAs (UK)”) and applicable law. Our Group financial which comprise the Consolidated Income responsibilities are described below. We statements as a 4.1% (2020: 4.1%) of normalised profit before tax* Statement, the Consolidated Statement of believe that the audit evidence we have whole Comprehensive Income, the Consolidated obtained is a sufficient and appropriate Coverage 84.8% (2020: 91.8%) of Group normalised profit before tax Statement of Financial Position, the basis for our opinion. Our audit opinion KEY AUDIT MATTERS VS 2020 Consolidated Statement of Changes in is consistent with our report to the Audit Recurring risks Group and parent Company: Going Equity, the Consolidated Statement of Committee. concern Cash Flows, the Company Balance Sheet, We were first appointed as auditor by the Group: Valuation of the recoverable the Company Statement of Changes in shareholders in March 1996. The period of amount of the Go Outdoors CGU Equity and the related notes, including total uninterrupted engagement is for the the accounting policies in Note 1 to the 25 financial years ended 30 January 2021. Group and parent Company: consolidated financial statements and Note We have fulfilled our ethical responsibilities Valuation of inventory C1 to the company financial statements. under, and we remain independent of New risks Group: Valuation of the recoverable In our opinion: the Group in accordance with, UK ethical amount of the Footasylum CGU • the financial statements give a true and fair requirements including the FRC Ethical view of the state of the Group’s and of the Standard as applied to listed public interest Group: Valuation of the Separately parent Company’s affairs as at 30 January entities. No non-audit services prohibited by Identifiable Intangible Assets 2021 and of the Group’s profit for the 52 that standard were provided. Recognised as Part of the Shoe week period then ended; Palace acquisition * 2021 profit before tax normalised by excluding Go Outdoors impairment of £33.3m, Footasylum impairment of £55.6m and the movement in fair • the Group financial statements have been value of the Sport Zone put option of £18.6m and by averaging over the last three years (2020: normalised to exclude Go Outdoors impairment of properly prepared in accordance with £43.1m and the movement in the fair value of the Sport Zone put option (£32.7m). international accounting standards in conformity with the requirements of the 2. KEY AUDIT MATTERS: OUR as required for public interest entities, Companies Act 2006; ASSESSMENT OF RISKS OF MATERIAL our results from those procedures. These • the parent Company financial statements MISSTATEMENT matters were addressed, and our results have been properly prepared in Key audit matters are those matters that, in are based on procedures undertaken, in the accordance with UK accounting standards, our professional judgement, were of most context of, and solely for the purpose of, our including FRS 101 Reduced Disclosure significance in the audit of the financial audit of the financial statements as a whole, Framework; and statements and include the most significant and in forming our opinion thereon, and assessed risks of material misstatement consequently are incidental to that opinion, • the financial statements have been (whether or not due to fraud) identified by and we do not provide a separate opinion prepared in accordance with the us, including those which had the greatest on these matters. requirements of the Companies Act effect on: the overall audit strategy; the 2006 and, as regards the Group financial allocation of resources in the audit; and statements, Article 4 of the IAS Regulation directing the efforts of the engagement to the extent applicable. team. We summarise below the key audit matters, in decreasing order of audit significance, in arriving at our audit opinion above, together with our key audit procedures to address those matters and,

212 213 INDEPENDENT AUDITOR’S REPORT THE RISK OUR RESPONSE

THE RISK OUR RESPONSE VALUATION OF THE SEPARATELY IDENTIFIABLE INTANGIBLE ASSETS RECOGNISED AS GOING CONCERN PART OF THE SHOE PALACE ACQUISITION Refer to Note 1 page 230 (accounting policy and financial disclosures). (£105.6m million; 2020: N/a) Refer to page 177 (Audit Committee Report), page 245 (accounting policy) and Note 11 on page 248 (financial disclosures). DISCLOSURE QUALITY: OUR PROCEDURES INCLUDED: SUBJECTIVE VALUATION: OUR PROCEDURES INCLUDED: The financial statements explain how the We considered whether these risks could On 14 December 2020 the Group acquired a • Methodology choice: with the assistance Board has formed a judgement that it is plausibly affect the liquidity or covenant controlling interest in Shoe Palace Corporation, of our valuation specialists, we assessed appropriate to adopt the going concern basis compliance in the going concern period by a US company. The purchase price allocation the results of the valuation by checking of preparation for the Group and parent assessing the Directors’ sensitivities over valuation is subject to estimation uncertainty. that the valuation was in accordance Company. the level of available financial resources and with relevant accounting standards and covenant thresholds indicated by the Group’s The fair value of the Shoe Palace trade name That judgement is based on an evaluation acceptable valuation practice; financial forecasts taking account severe, but has been identified as the significant area of of the inherent risks to the Group’s and • Benchmarking assumptions: with the plausible, adverse effects that could arise judgement in the purchase price allocation, Company’s business model and how those assistance of our valuation specialists, from these risks individually and collectively. specifically the royalty rate used in deriving this risks might affect the Group’s and Company’s we challenged the key assumptions Our procedures also included: fair value. financial resources or ability to continue used in the valuation, in particular the • Funding assessment: We assessed the loan operations over a period of at least a year As part of our risk assessment, we determined royalty rate used by comparing them to covenant compliance to check whether from the date of approval of the financial that the valuation of the separately identifiable externally derived data and comparable the Group is at risk of breaching the statements. intangible assets identified as part of the transactions; covenants, considered the availability of Shoe Palace acquisition had a high degree of • Sensitivity analysis: we performed The risk most likely to adversely affect the cash and evaluated the cash flow forecasts estimation uncertainty. There is a potential sensitivity analysis on the key Group’s and Company’s available financial to determine whether the assumptions are range of reasonable outcomes greater than assumptions noted above; resources over this period is the increased realistic, achievable and consistent with the our materiality for the financial statements as • Our sector experience: assessing uncertainty in the retail industry as a result of external and internal environment; a whole, and possibly many times that amount. whether the key assumptions used, in COVID-19. • Historical comparisons: we considered The financial statements (Note 1) disclose the particular the royalty rate, reflect our the historical accuracy of the Group’s There are also less predictable but realistic sensitivity estimated by the Group. knowledge of the business and industry; forecasting in the previous year in second order impacts, such as the impact of and comparison to actual performance achieved; Brexit and the erosion of customer or supplier • Assessing transparency: assessing • Sensitivity analysis: we considered confidence, which could result in a rapid the appropriateness of the Group’s sensitivities over the level of financial reduction of available financial resources. disclosures in respect of the valuation resources indicated by the Group’s financial The risk for our audit was whether or not of separately identifiable intangible forecasts taking account of reasonably those risks were such that they amounted assets recognised on acquisition of Shoe possible (but not unrealistic) adverse effects to a material uncertainty that may have cast Palace. that could arise from the risks identified significant doubt about the ability to continue individually and collectively; We performed the tests above rather as a going concern. Had they been such, then • Evaluating Directors’ intent: we evaluated than seeking to rely on any of the Group’s that fact would have been required to have the achievability of the actions the Directors controls because the nature of the been disclosed. consider they would take to improve the balance is such that we would expect to position should the risks materialise; and obtain audit evidence primarily through • Assessing transparency: we assessed the detailed procedures described. whether the going concern disclosure in Note 1 to the financial statements gives a full OUR RESULTS and accurate description of the Directors’ We found the valuation of the separately assessment of going concern and related identifiable intangible assets of Shoe sensitivities. Palace to be acceptable. We performed the tests above rather than seeking to rely on any of the Group’s controls because the nature of the balance is such that we would expect to obtain audit evidence primarily through the detailed procedures described.

OUR RESULTS We found the going concern disclosure without any material uncertainty to be acceptable (2020: acceptable). However, no audit should be expected to predict the unknowable factors or all possible future implications for a company and this is particularly the case in relation to COVID-19. 215 INDEPENDENT AUDITOR’S REPORT THE RISK OUR RESPONSE

THE RISK OUR RESPONSE VALUATION OF THE RECOVERABLE AMOUNT OF THE GO OUTDOORS AND VALUATION OF INVENTORY FOOTASYLUM CGUs Go Outdoors: (CGU carrying value £66.2 million; 2020: £140 million) Group: (£813.7 million; 2020: £811.8 million) Footasylum: (CGU carrying value £50 million; 2020: £112 million) Parent company: (£193 million; 2020: £181.6m) Refer to page 177 (Audit Committee Report), Note 12 on pages 253 to 261 (accounting policy and financial disclosures). Refer to page 176 (Audit Committee Report), Note 16 page 270 (accounting policy and financial disclosures).

SUBJECTIVE ESTIMATE OUR PROCEDURES INCLUDED: SUBJECTIVE ESTIMATE: OUR PROCEDURES INCLUDED: Inventory is one of the most significant items • Our sector experience: we assessed The value of the assets held in the Go • Historical comparisons: we assessed on the Group and Parent Company’s balance the Directors’ methodology and key Outdoors and Footasylum cash generating the reasonableness of the budgets by sheets and is stated at the lower of cost and assumptions behind the inventory provision, units (CGU) are highly material and are at considering the historical accuracy of net realisable value. including the expected level of inventory risk of irrecoverability due to challenging previous forecasts by comparing to actual trading conditions in a number of high street financial information; As the Group operates in the retail business that will not be in demand and respective sales prices, against our knowledge of the retail sectors, particularly with the increased • Our sector experience: we assessed where branded products are subject to uncertainties presented by COVID-19. whether assumptions used, in particular frequent changes in fashion / season, the business and industry and historical track record of the Group; those relating to short term forecast assessment of net realisable value involves GO OUTDOORS: revenue growth, profit margins, the significant estimation uncertainty. COVID-19 • Expectation vs. outcome: we formed our own expectation of the inventory provision During the year the Group recognised discount rate and the long term growth has increased the uncertainty due to the an impairment of £33m against Goodwill rate, reflect our knowledge of the business potential impacts on consumer confidence using our own view of the key assumptions above and comparing our expectation to (£2m) and fascia name (£31m) triggered by and industry, including known or probable and uncertainty of future closure periods. The COVID-19. changes in the business environment; result of this is a risk of excess stock being the actual provision amount. This included analysing inventory balances by season and There is still a risk of irrecoverability over • Benchmarking assumptions: using our own unsold in the correct season or becoming valuation specialists, we challenged the key obsolete as a result of a change in trends and criteria such as inventory not purchased in the remaining assets held in the CGU. At the the last year and slower moving inventory; FY21 period-end, there is £22m of Property, inputs used in the Group’s calculation of future lockdown periods with key trading the discount rates by comparing them to periods still to come. • Test of detail: we examined recent selling Plant and Equipment (PPE) (excluding IFRS prices of a sample of inventory lines 16 Right of use (ROU) assets), £43m ROU externally derived data, including available The effect of these matters is that, as part of to check whether lines already being assets, £16m fascia name, £5m brand and sources for comparable companies; our risk assessment, we determined that the discounted below cost are included in the £48m stock. • Sensitivity analysis: we performed valuation of inventories has a high degree of inventory provisions; and sensitivity analysis on the key assumptions estimation uncertainty, with a potential range noted above; and • Assessing transparency: we assessed FOOTASYLUM: of reasonable outcomes greater than our • Assessing transparency: we assessed the adequacy of the financial statement The Group has recognised a material materiality for the financial statements as whether the Group’s disclosures for the Go disclosures about the degree of estimation impairment of goodwill and fascia name of a whole. in arriving at the net realisable value. Outdoors and Footasylum CGUs relating £56m, leaving a £3m Brand name intangible to the impairment tests and resulting We performed the tests above rather asset at risk in the CGU, in addition to £95m impairment losses appropriately reflect the than seeking to rely on any of the Group’s ROU Assets, £27m PPE and £32m stock. risks inherent in the valuation of goodwill controls because the nature of the balance The estimated recoverable amounts are and fascia names in those CGUs. is such that we would expect to obtain audit subjective due to the inherent uncertainty We performed the tests above rather evidence primarily through the detailed involved in forecasting and discounting procedures described. than seeking to rely on any of the Group’s future cash flows. controls because the nature of the balance OUR RESULTS The effect of these matters is that, as part is such that we would expect to obtain audit We consider the carrying amount of of our risk assessment, we determined evidence primarily through the detailed inventories to be acceptable (2020 result: that the value in use of the Go Outdoors procedures described. acceptable). and Footasylum CGUs have a high degree of estimation uncertainty, with a OUR RESULTS potential range of reasonable outcomes We found the determination of the greater than our materiality for the recoverable amount of the Go Outdoors and financial statements as a whole. The Footasylum CGUs to be acceptable (2020: financial statements (Note 12) disclose Go Outdoors: acceptable). the sensitivities estimated by the Group.

216 217

INDEPENDENT AUDITOR’S REPORT

We continue to perform procedures over In line with our audit methodology, our GROUP MATERIALITY PROFIT BEFORE TAX the carrying amount of IFRS 16 right of procedures on individual account balances £16.5M £403.0M use assets and lease liabilities. However, and disclosures were performed to a following the initial adoption of IFRS 16 in lower threshold, performance materiality, the prior year, we have not assessed this so as to reduce to an acceptable level as one of the most significant risks in our the risk that individually immaterial current year audit and, therefore, it is not misstatements in individual account separately identified in our report this year. balances add up to a material amount In the prior year we also reported a key across the financial statements as a whole. audit matter in respect of the impact of Performance materiality was set at uncertainties due to the UK exiting the 65% (2020: 65%) of materiality for the European Union. Following the trade financial statements as a whole, which agreement between the UK and the EU, equates to £10.7m (2020: £11.3m) for and the end of the EU-exit implementation the Group and £7.2m (2020: £7.4m) NORMALISED period, the nature of these uncertainties for the Parent Company. We applied GROUP has changed. We continue to perform this percentage in our determination of GROUP PROFIT procedures over material assumptions in performance materiality based on the level BEFORE TAX MATERIALITY forward looking assessments such as going of identified misstatements and control £16.5m (2020: £17.4m) concern and impairment tests however we deficiencies during the prior period. £403.0m (2020: £423.8m) no longer consider the effect of the UK’s We agreed to report to the Audit departure from the EU to be a separate key Committee any corrected or uncorrected audit matter. identified misstatements exceeding £0.8m (2020: £0.9m), in addition to other 3. OUR APPLICATION OF MATERIALITY identified misstatements that warranted AND AN OVERVIEW OF THE SCOPE OF reporting on qualitative grounds. OUR AUDIT Of the Group’s 79 (2020: 71) reporting Materiality for the Group financial components, we subjected 10 (2020: 9) statements as a whole was set at £16.5m to full scope audits for Group purposes (2020: £17.4m), determined with reference and 1 (2020: 1) to specified risk-focused to a benchmark of Group normalised audit procedures. The latter were not profit before tax, normalised to exclude individually financially significant enough this year’s impairment of Go Outdoors to require a full scope audit for Group of £33.3m, Footasylum impairment of purposes, but did present specific individual £55.6m and movement in fair value of risks that needed to be addressed. Sport Zone put options of £18.6m as disclosed in Note 4 and by averaging over The components within the scope of our work accounted for the £16.5M £0.8M £13.2M the last three years (2020: Normalised to WHOLE FINANCIAL MISSTATEMENTS REPORTED RANGE OF MATERIALITY AT 11 exclude Go Outdoors impairment (£43.1m) percentages illustrated opposite. The STATEMENTS MATERIALITY TO THE AUDIT COMMITTEE COMPONENTS (£2.0M–£13.2M) (2020: £17.4M) (2020: £0.9M) (2020: £1.0M TO £11.4M) and the movement in the fair value of Group team performed procedures on the items excluded from normalised £10.7M the Sport Zone put option (£32.7m)), of WHOLE FINANCIAL which it represents 4.1% (2020: 4.1%). Group profit before tax. STATEMENTS PERFORMANCE MATERIALITY (2020: £11.4M) Materiality for the Parent Company financial statements as a whole was set at £11.1m (2020: £11.4m), determined with reference to a benchmark of Parent Company profit before tax normalised by averaging over the last three years of £262.6m (2020: £291.5m), of which it represents 4.2% (2020: 3.9%).

218 219 GROUP REVENUE Full scope for group audit purposes 2021 Specified risk focused audit procedures 2021 3. OUR APPLICATION OF MATERIALITY 4. WE HAVE NOTHING TO REPORT ON Full scope for group AND AN OVERVIEW OF THE SCOPE OF GOING CONCERN audit purposes 2020 OUR AUDIT (CONT.) The Directors have prepared the financial The remaining 15.7% (2020: 17.8%) of total statements on the going concern basis as Specified risk focused 1.6 Group revenue, 13.4% (2020: 8.2%) of the they do not intend to liquidate the Group or audit procedures 2020 1.8 total profits and losses that made up Group the Company or to cease their operations, Residual profit before tax and 9.7% (2020: 9%) of and as they have concluded that the Group’s 84.3% 82.7 components total Group assets is represented by 68 and the Company’s financial position (2020: 82.2%) (2020: 61) of reporting components, none means that this is realistic. They have 80.4 of which individually represented more also concluded that there are no material than 3% (2020: 3%) of any of total Group uncertainties that could have cast significant revenue, Group profit before tax or total doubt over their ability to continue as a Group assets. For these components, we going concern for at least a year from the performed analysis at an aggregated Group date of approval of the financial statements level to re-examine our assessment that (“the going concern period”). there were no significant risks of material An explanation of how we evaluated GROUP PROFIT BEFORE TAX misstatement within these. management’s assessment of going concern The Group team instructed component is set out in the related key audit matter in auditors as to the significant areas to be section 2 of this report. covered, including the relevant risks detailed Our conclusions based on this work: 2.0 above and the information to be reported back. The Group team approved the • we consider that the Directors’ use of the component materialities, which ranged from going concern basis of accounting in the £2.0m to £13.2m (2020: £1.0m to £11.4m), preparation of the financial statements is having regard to the mix of size and risk appropriate; profile of the Group across the components. • we have not identified, and concur with 84.8 84.8% The work on 7 of the 11 components (2020: the Directors’ assessment that there is not, (2020: 91.8%) 6 of the 10 components) was performed by 89.8 a material uncertainty related to events or component auditors and the rest, including conditions that, individually or collectively, the audit of the Parent Company, was may cast significant doubt on the Group’s performed by the Group team. The Group or Company’s ability to continue as a going team performed procedures on the items concern for the going concern period; excluded from normalised Group profit • we have nothing material to add or before tax. GROUP TOTAL ASSETS draw attention to in relation to the Site visits were prevented by movement Directors’ statement in Note 1 to the restrictions relating to COVID-19 pandemic. financial statements on the use of the Instead the Group team attended video going concern basis of accounting with and telephone conference meetings with no material uncertainties that may cast 6 (2020: 5) component teams from Spain, significant doubt over the Group and Portugal, France, USA, Australia and Company’s use of that basis for the going Footasylum to assess the audit risk and concern period; and strategy. At these meetings, the findings • the related statement under the Listing reported to the Group team were discussed Rules set out on page 77 to 78 is materially 89.3 in more detail, and any further work required 89.3% consistent with the financial statements (2020: 91.0%) by the Group team was then performed by 91 and our audit knowledge. the component auditor. However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the Group or the Company will continue in operation.

220 221 INDEPENDENT AUDITOR’S REPORT

5. FRAUD AND BREACHES OF LAWS AND of the Group-wide fraud risk management legislation), distributable profits legislation In addition, as with any audit, there REGULATIONS – ABILITY TO DETECT controls, page 174 of the Audit Committee and taxation legislation, and we assessed remained a higher risk of non- Identifying and responding to risks of report. the extent of compliance with these laws detection of fraud, as these may involve material misstatement due to fraud We also performed procedures including: and regulations as part of our procedures collusion, forgery, intentional omissions, To identify risks of material misstatement on the related financial statement items. misrepresentations, or the override of • Identifying journal entries and other due to fraud (“fraud risks”) we assessed internal controls. Our audit procedures are adjustments to test for all full scope Secondly, the Group is subject to many events or conditions that could indicate an designed to detect material misstatement. components based on risk criteria and other laws and regulations where the incentive or pressure to commit fraud or We are not responsible for preventing comparing the identified entries to consequences of non-compliance could provide an opportunity to commit fraud. Our non-compliance or fraud and cannot be supporting documentation. These included have a material effect on amounts or risk assessment procedures included: disclosures in the financial statements, for expected to detect non-compliance with all those posted to unusual accounts. laws and regulations. • Enquiring of Directors, the Audit instance through the imposition of fines or Committee and inspection of policy litigation or the loss of the Group’s license 6. WE HAVE NOTHING TO REPORT documentation as to the Group’s high-level Identifying and responding to risks to operate. We identified the following ON THE OTHER INFORMATION IN THE policies and procedures to prevent and of material misstatement due to non- areas as those most likely to have such an ANNUAL REPORT detect fraud including the Group’s channel compliance with laws and regulations effect: competition rules, health and safety, The Directors are responsible for the other for “whistleblowing”, as well as whether We identified areas of laws and regulations anti-bribery, employment law, regulatory information presented in the Annual Report they have knowledge of any actual, that could reasonably be expected to have capital and liquidity and certain aspects together with the financial statements. suspected or alleged fraud. a material effect on the financial statements of company legislation recognising the Our opinion on the financial statements from our general commercial and sector regulated nature of the Group’s activities. • Reading Board and Audit Committee does not cover the other information and, experience and through discussion with Auditing standards limit the required audit meeting minutes. accordingly, we do not express an audit the Directors and other management (as procedures to identify non-compliance opinion or, except as explicitly stated below, • Considering remuneration incentive required by auditing standards), and from with these laws and regulations to enquiry any form of assurance conclusion thereon. schemes and performance targets for inspection of the Group’s regulatory and of the Directors and other management, Our responsibility is to read the other management and Directors including legal correspondence, and discussed with and inspection of regulatory and legal information and, in doing so, consider the profit target for management the Directors and other management correspondence, if any. Therefore if a whether, based on our financial statements remuneration. the policies and procedures regarding breach of operational regulations is not audit work, the information therein is • Using analytical procedures to identify any compliance with laws and regulations. disclosed to us or evident from relevant correspondence, an audit will not detect materially misstated or inconsistent with unusual or unexpected relationships. As the Group is regulated, our assessment that breach. the financial statements or our audit We remained alert to any indications of of risks involved gaining an understanding knowledge. Based solely on that work we fraud throughout the audit. This included of the control environment including the We discussed with the Audit Committee have not identified material misstatements communication from the Group to full entity’s procedures for complying with other matters related to actual or suspected in the other information. scope component audit teams of relevant regulatory requirements. breaches of laws or regulations, for which disclosure is not necessary, and considered fraud risks identified at the Group level We communicated identified laws and any implications for our audit. and request to full scope component audit regulations throughout our team and Strategic report and Directors’ report teams to report to the Group audit team any remained alert to any indications of non- Based solely on our work on the other instances of fraud that could give rise to a information: compliance throughout the audit. This Context of the ability of the audit to detect material misstatement at Group. included communication from the Group fraud or breaches of law or regulation • we have not identified material As required by auditing standards, and to full-scope component audit teams of Owing to the inherent limitations of an misstatements in the strategic report and taking into account possible pressures to relevant laws and regulations identified at audit, there is an unavoidable risk that the Directors’ report; meet profit targets, we perform procedures the Group level, and a request for full scope we may not have detected some material • in our opinion the information given in to address the risk of management override component auditors to report to the Group misstatements in the financial statements, those reports for the financial year is of controls and the risk of fraudulent team any instances of non-compliance with even though we have properly planned consistent with the financial statements; revenue recognition, in particular the risk laws and regulations that could give rise to a and performed our audit in accordance and that Group and component management material misstatement at Group. with auditing standards. For example, the • in our opinion those reports have may be in a position to make inappropriate further removed non-compliance with The potential effect of these laws and been prepared in accordance with the accounting entries. laws and regulations is from the events regulations on the financial statements Companies Act 2006. We did not identify any additional fraud varies considerably. and transactions reflected in the financial statements, the less likely the inherently risks. Firstly, the Group is subject to laws and limited procedures required by auditing regulations that directly affect the financial In determining the audit procedures we took standards would identify it. into account the results of our evaluation statements including financial reporting and testing of the operating effectiveness legislation (including related companies

222 223 INDEPENDENT AUDITOR’S REPORT

Directors’ remuneration report Our work is limited to assessing these 7. WE HAVE NOTHING TO REPORT ON Auditor’s responsibilities In our opinion the part of the Directors’ matters in the context of only the knowledge THE OTHER MATTERS ON WHICH WE ARE Our objectives are to obtain reasonable Remuneration Report to be audited has acquired during our financial statements REQUIRED TO REPORT BY EXCEPTION assurance about whether the financial been properly prepared in accordance with audit. As we cannot predict all future events Under the Companies Act 2006, we are statements as a whole are free from the Companies Act 2006. or conditions and as subsequent events may required to report to you if, in our opinion: material misstatement, whether due to result in outcomes that are inconsistent with • adequate accounting records have not fraud or error, and to issue our opinion in judgements that were reasonable at the time been kept by the parent Company, or an auditor’s report. Reasonable assurance Disclosures of emerging and principal risks they were made, the absence of anything returns adequate for our audit have not is a high level of assurance, but does not and longer-term viability to report on these statements is not a been received from branches not visited guarantee that an audit conducted in We are required to perform procedures guarantee as to the Group’s and Company’s by us; or accordance with ISAs (UK) will always to identify whether there is a material longer-term viability. detect a material misstatement when it inconsistency between the Directors’ • the parent Company financial exists. Misstatements can arise from fraud disclosures in respect of emerging and statements and the part of the Directors’ or error and are considered material if, principal risks and the viability statement, Corporate governance disclosures Remuneration Report to be audited are individually or in aggregate, they could and the financial statements and our audit We are required to perform procedures not in agreement with the accounting reasonably be expected to influence the knowledge. to identify whether there is a material records and returns; or economic decisions of users taken on the Based on those procedures, we have inconsistency between the Directors’ • certain disclosures of Directors’ basis of the financial statements. corporate governance disclosures and nothing material to add or draw attention to remuneration specified by law are not A fuller description of our responsibilities is the financial statements and our audit in relation to: made; or provided on the FRC’s website at www.frc. knowledge. • the Directors’ confirmation within the • we have not received all the information org.uk/auditorsresponsibilities. viability statement page 77 to 78 that they Based on those procedures, we have and explanations we require for our audit. concluded that each of the following is have carried out a robust assessment of 9. THE PURPOSE OF OUR AUDIT materially consistent with the financial We have nothing to report in these respects. the emerging and principal risks facing the WORK AND TO WHOM WE OWE OUR statements and our audit knowledge: Group, including those that would threaten RESPONSIBILITIES 8. RESPECTIVE RESPONSIBILITIES its business model, future performance, • the Directors’ statement that they This report is made solely to the Company’s solvency and liquidity; consider that the annual report and Directors’ responsibilities members, as a body, in accordance with As explained more fully in their statement • the Principal Risks disclosures describing financial statements taken as a whole is Chapter 3 of Part 16 of the Companies Act set out on page 210 and 211, the Directors these risks and how emerging risks are fair, balanced and understandable, and 2006. Our audit work has been undertaken are responsible for: the preparation of identified, and explaining how they are provides the information necessary for so that we might state to the Company’s the financial statements including being being managed and mitigated; and shareholders to assess the Group’s position members those matters we are required and performance, business model and satisfied that they give a true and fair view; to state to them in an auditor’s report and • the Directors’ explanation in the viability strategy; such internal control as they determine for no other purpose. To the fullest extent statement of how they have assessed is necessary to enable the preparation of • the section of the annual report describing permitted by law, we do not accept or the prospects of the Group, over what financial statements that are free from the work of the Audit Committee, including assume responsibility to anyone other than period they have done so and why they material misstatement, whether due to the significant issues that the Audit the Company and the Company’s members, considered that period to be appropriate, fraud or error; assessing the Group and Committee considered in relation to the as a body, for our audit work, for this report, and their statement as to whether they parent Company’s ability to continue as a financial statements, and how these issues or for the opinions we have formed. have a reasonable expectation that the going concern, disclosing, as applicable, were addressed; and Group will be able to continue in operation matters related to going concern; and using and meet its liabilities as they fall due • the section of the annual report that the going concern basis of accounting over the period of their assessment, describes the review of the effectiveness of unless they either intend to liquidate the Frances Simpson including any related disclosures drawing the Group’s risk management and internal Group or the parent Company or to cease (Senior Statutory Auditor) for and on attention to any necessary qualifications or control systems. operations, or have no realistic alternative behalf of KPMG LLP, Statutory Auditor assumptions. but to do so. We are required to review the part of the Chartered Accountants We are also required to review the viability Corporate Governance Statement relating to St. Peter’s Square, Manchester, M2 3AE statement, set out on page 77 under the Group’s compliance with the provisions 13 April 2021 the Listing Rules. Based on the above of the UK Corporate Governance Code procedures, we have concluded that the specified by the Listing Rules for our review. above disclosures are materially consistent We have nothing to report in these respects. with the financial statements and our audit knowledge.

224 225 CONSOLIDATED INCOME STATEMENT CONSOLIDATED STATEMENT OF FINANCIAL POSITION

For the 52 weeks ended 30 January 2021 As at 30 January 2021

52 weeks to 52 weeks to 52 weeks to 52 weeks to As at As at 30 January 2021 30 January 2021 1 February 2020 1 February 2020 30 January 2021 1 February 2020 Note £m £m £m £m Note £m £m Revenue 6,167.3 6,110.8 Assets Cost of sales (3,205.7) (3,236.0) Intangible assets 12 819.7 413.7 Property, plant and equipment 13 2,316.4 2,420.1 Gross profit 2,961.6 2,874.8 Other assets 15 63.2 47.9 Selling and distribution expenses  (2,126.4) (2,020.2) Investment in associates 2.7 2.6 Administrative expenses – normal  (381.2) (348.6) Deferred tax assets 23 40.6 – Administrative expenses – exceptional 4 (97.3) (90.3) Total non-current assets 3,242.6 2,884.3 Administrative expenses (478.5) (438.9) Sales commission 15.2 5.7 Inventories 16 813.7 811.8 Trade and other receivables 17 141.2 183.9 Other operating income 13.1 5.2 Cash and cash equivalents 18 964.4 465.9 Operating profit before financing 385.0 426.6 Total current assets 1,919.3 1,461.6 Before exceptional items 482.3 516.9 Total assets 5,161.9 4,345.9 Exceptional items 4 (97.3) (90.3) Liabilities Financial income 7 1.5 1.7 Interest-bearing loans and borrowings 19 (120.9) (20.4) Financial expenses 8 (62.5) (79.8) Lease liabilities 14 (301.8) (285.0) Net financial expense (61.0) (78.1) Trade and other payables 21 (1,102.0) (900.7) Profit before tax 3 324.0 348.5 Provisions 22 (0.7) – Income tax expense 9 (94.8) (97.8) Income tax liabilities (29.5) (34.3) Profit for the period 229.2 250.7 Total current liabilities (1,554.9) (1,240.4) Attributable to equity holders of the parent 224.3 246.1 Interest-bearing loans and borrowings 19 (48.1) (15.6) Lease liabilities 14 (1,628.0) (1,707.7) Attributable to non-controlling interest 25 4.9 4.6 Other payables 21 (374.4) (80.5) Basic earnings per ordinary share 10 23.05p 25.29p Provisions 22 (5.1) – Diluted earnings per ordinary share 10 23.05p 25.29p Deferred tax liabilities 23 (55.0) (12.5) Total non-current liabilities (2,110.6) (1,816.3) Total liabilities (3,665.5) (3,056.7) CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Total assets less total liabilities 1,496.4 1,289.2 For the 52 weeks ended 30 January 2021 Capital and reserves Issued ordinary share capital 24 2.4 2.4 52 weeks to 52 weeks to 30 January 2021 1 February 2020 Share premium 11.7 11.7 £m £m Retained earnings 1,560.8 1,245.7 Profit for the period 229.2 250.7 Other reserves (336.2) (40.6) Other comprehensive income: Total equity attributable to equity holders of the parent 1,238.7 1,219.2 Non-controlling interest 25 70.0 Items that may be classified subsequently to the Consolidated 257.7 Income Statement: Total equity 1,496.4 1,289.2 Exchange differences on translation of foreign operations (20.0) (21.5) The accompanying notes form part of these financial statements. Total other comprehensive income for the period (20.0) (21.5) These financial statements were approved by the Board of Directors on 13 April 2021 and were Total comprehensive income and expense for the period signed on its behalf by: (net of income tax) 209.2 229.2 Attributable to equity holders of the parent 200.7 227.2 Attributable to non-controlling interest 8.5 2.0

The accompanying notes form part of these financial statements. N Greenhalgh 226 Director 227 Registered number: 1888425 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CASH FLOWS

For the 52 weeks ended 30 January 2021 For the 52 weeks ended 30 January 2021

Total equity 52 weeks to 52 weeks to Foreign attributable 30 January 1 February Ordinary currency to equity Non- 2021 2020 share Share Retained Other translation holders of the controlling Total Note £m £m capital premium earnings equity reserve parent interest equity £m £m £m £m £m £m £m £m Cash flows from operating activities Profit for the period 229.2 250.7 Balance at 2 February 2019 2.4 11.7 1,016.3 (36.3) 14.7 1,008.8 68.0 1,076.8 Income tax expense 9 94.8 97.8 Profit for the period – – 246.1 – – 246.1 4.6 250.7 Financial expenses 8 62.5 79.8 Other comprehensive income:        Financial income 7 (1.5) (1.7) Exchange differences on translation Depreciation and amortisation of non-current assets 3 499.2 450.0 of foreign operations – – – – (18.9) (18.9) (2.6) (21.5) Forex losses on monetary assets and liabilities 3.6 9.9 Impairment of other intangibles and non-current assets  8.7 12.9 Total other comprehensive income – – – – (18.9) (18.9) (2.6) (21.5) Loss on disposal of non-current assets 1.2 6.3 Total comprehensive income Other exceptional items 2.9 47.2 for the period – – 246.1 – (18.9) 227.2 2.0 229.2 Impairment of goodwill and fascia names (exeptional) 3 89.5 43.1 Dividends to equity holders – – (16.7) – – (16.7) (1.3) (18.0) Impairment of property, plant and equipment (exeptional) 3 4.9 – Put options held by Decrease / (increase) in inventories 63.5 (9.5) non-controlling interests – – – (0.1) – (0.1) – (0.1) Decrease / (increase) in trade and other receivables  46.2 (13.0) Non-controlling interest arising Increase in trade and other payables 150.8 58.1 on acquisition – – – – – – 1.3 1.3 Interest paid (7.6) (7.9) Lease interest 14 (54.9) (71.9) Balance at 1 February 2020 2.4 11.7 1,245.7 (36.4) (4.2) 1,219.2 70.0 1,289.2 Income taxes paid (130.4) (97.8) Profit for the period – – 224.3 – – 224.3 4.9 229.2 Net cash from operating activities 1,062.6 854.0 Other comprehensive income:        Cash flows from investing activities Exchange differences on translation of foreign operations – – – – (23.6) (23.6) 3.6 (20.0) Interest received 1.5 1.7 Proceeds from sale of non-current assets 2.1 3.1 Total other comprehensive income – – – – (23.6) (23.6) 3.6 (20.0) Investment in software 12 (19.1) (23.2) Total comprehensive income Acquisition of property, plant and equipment 13 (105.2) (147.2) for the period – – 224.3 – (23.6) 200.7 8.5 209.2 Acquisition of non-current other assets 12,15 (7.7) (6.8) Dividends to equity holders – – – – – – (1.2) (1.2) Acquisition of subsidiaries, net of cash acquired (206.3) (89.3) Put options held by Net cash used in investing activities (334.7) (261.7) non-controlling interest – – – (272.0) – (272.0) – (272.0) Aquisition of Cash flows from financing activities non-controlling interest – – (3.7) – – (3.7) (1.7) (5.4) Draw down / (repayment) of interest-bearing loans and borrowings 51.6 (88.6) Divestment of Repayment of lease liabilities 29 (285.2) (264.8) non-controlling interest – – 94.5 – – 94.5 181.4 275.9 Subsidiary shares issued in the period 0.3 – Non-controlling interest arising Acquisition and divestment of non-controlling interests  (5.2) – on acquisition – – – – – – 0.4 0.4 Equity dividends paid 26 – (16.7) Non-controlling interest share Dividends paid to non-controlling interest in subsidiaries  (1.2) (1.3) capital issued – – – – – – 0.3 0.3 Net cash used in financing activities (239.7) (371.4) Balance at 30 January 2021 2.4 11.7 1,560.8 (308.4) (27.8) 1,238.7 257.7 1,496.4 Net increase in cash and cash equivalents 29 488.2 220.9 Cash and cash equivalents at the beginning of the period 29 460.3 237.7 The accompanying notes form part of these financial statements. Foreign exchange gains on cash and cash equivalents 29 0.2 1.7 Cash and cash equivalents at the end of the period 29 948.7 460.3 The accompanying notes form part of these financial statements.

228 229 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Preparation 1. Basis of Preparation (continued)

GENERAL INFORMATION GOING CONCERN covenant compliance. These forecasts net assets of consolidated subsidiaries JD Sports Fashion Plc (the ‘Company’) is a The global COVID-19 pandemic has presented include a number of assumptions including are identified separately from the equity company incorporated and domiciled in the a series of unprecedented challenges gross profit margins and the response attributable to holders of the parent. Non- United Kingdom. The financial statements which have severely tested all aspects of of customers to transition from physical controlling interests consist of the amount for the 52 week period ended 30 January our business including our multichannel sales to online and vice versa as lockdown of those interests at the date that control 2021 represent those of the Company and capabilities, the robustness of our operational restrictions ease. For the purposes of both commences and the attributable share of its subsidiaries (together referred to as the infrastructure and the resilience of our Viability and Going Concern Reporting, changes in equity subsequent to that date. ‘Group’). colleagues. Whilst COVID-19 has inevitably the Directors have prepared severe but II. Joint Ventures constrained our short term progress, we The financial statements were authorised for plausible downside scenarios which cover Joint ventures are entities over which firmly believe that we have a robust premium issue by the Board of Directors on 13 April the same period as the base case, including the Group has joint control based on a branded multichannel proposition with our 2021. specific consideration of a range of impacts contractual arrangement. The results and loyal consumers comfortable engaging with that could arise from the continued assets and liabilities of joint ventures are us in any channel. COVID-19 pandemic. These scenarios incorporated in the consolidated financial BASIS OF PREPARATION included more prolonged store closures, These Group financial statements were The financial statements are prepared on statements using the equity method of transition from physical sales to online and prepared in accordance with international a going concern basis, which the Directors accounting. Investments in joint ventures disruptions to supply chain causing delays accounting standards in conformity with the believe to be appropriate for the following are carried in the Consolidated Statement in receiving stock. As part of this analysis, requirements of the Companies Act 2006 reasons. of Financial Position at cost and adjusted mitigating actions within the Group’s and in accordance with international financial for post-acquisition changes in the Group’s At 30 January 2021, the Group had net control should these severe but plausible reporting standards adopted pursuant to share of the net assets. Losses of the joint cash balances of £795.4 million (2020: scenarios occur have also been considered. Regulation (EC) No 1606/2002 as it applies in venture in excess of the Group’s interest in £429.9 million) with available committed UK These forecast cash flows indicate that the European Union. it are not recognised. borrowing facilities of £700 million (2020: there remains sufficient headroom for the The financial statements are presented in £700 million) of which £nil (2020: £nil) has Group to operate within the committed III. Transactions Eliminated on pounds sterling, rounded to the nearest tenth been drawn down (see Note 19) and US facilities and to comply with all relevant Consolidation of a million. facilities of approximately $300 million of banking covenants during the forecast Intragroup balances, and any unrealised which $nil was drawn down. These facilities period. income and expenses arising from The financial statements have been prepared are subject to certain covenants (see Note intragroup transactions, are eliminated under the historical cost convention, as 19). With a UK facility of £700 million The Directors have considered all of the in preparing the consolidated financial modified for financial assets and liabilities available up to 6 November 2024 and a US factors noted above, including the inherent statements. (including derivative instruments) at fair value facility of approximately $300m available uncertainty in forecasting the impact of through the Consolidated Income Statement up until 18 June 2023, the Directors believe the COVID-19 pandemic, and are confident and also put and call options held by the non- that the Group has adequate resources to CHANGES IN OWNERSHIP INTEREST that the Group is well placed to manage its WITHOUT A LOSS OF CONTROL controlling interests. business risks successfully despite the current continue to meet all liabilities as and when they fall due for a period of at least 12 In accordance with IFRS 10 ‘Consolidated The accounting policies set out below uncertain economic outlook. Financial Statements’, upon a change in have unless otherwise stated been applied months from the date of approval of these Since the year end, the Company completed financial statements. Accordingly, the ownership interest in a subsidiary without a consistently to all periods present in these the placing of new ordinary shares in loss of control, the carrying amounts of the financial statements and have been applied financial statements have been prepared on the capital of the Company raising gross a going concern basis. controlling and non-controlling interests consistently by all Group entities. proceeds of approximately £456.0 million are adjusted to reflect the changes in their The Group’s business activities, together after costs. In addition, the Group has relative interests in the subsidiary. Any with the factors likely to affect its future completed acquisitions in the new year to BASIS OF CONSOLIDATION difference between the amount by which development, performance and position are date with aggregate cash consideration paid I. Subsidiaries the non-controlling interests are adjusted set out in the Executive Chairman’s Statement of approximately £380 million. The Group had Subsidiaries are entities controlled by the and the fair value of the consideration paid and Financial and Risk Review on pages net cash of £709.5 million as at 6 April 2021. Group. The Group controls an entity when or received is recognised directly in equity 36 and 83 respectively. In addition, details it is exposed to, or has rights to, variable and attributed to the owners of the parent. The Directors have prepared cash flow returns from its involvement with the entity of financial instruments and exposures to forecasts for the Group covering a period of Acquisitions or disposals of non-controlling interest rate, foreign currency, credit and and has the ability to affect those returns interests are therefore accounted for as at least 12 months from the date of approval through its power over the entity. liquidity risks are outlined in Note 20. of these financial statements, which indicate transactions with owners in their capacity that the Group will be able to operate The financial statements of subsidiaries as owners and no goodwill is recognised within the level of its agreed facilities and are included in the consolidated financial as a result of such transactions. Associated statements from the date that control transaction costs are accounted for within commences until the date that control equity. ceases. Non-controlling interests in the 230 231 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Preparation (continued) 1. Basis of Preparation (continued)

ALTERNATIVE PERFORMANCE MEASURES AMENDMENT TO IFRS 16 ‘LEASES a material adjustment to the carrying FOOTASYLUM ACQUISITION The Directors measure the performance COVID-19 RELATED RENT CONCESSIONS’ amount of assets and liabilities. All other The Competition and Markets Authority of the Group based on a range of This amendment to IFRS16 provided an accounting estimates and judgements are (‘CMA’) announced in its Final Report in financial measures, including measures accounting policy choice for lessees where disclosed within the relevant accounting May 2020 that it had decided to prohibit not recognised by international financial a COVID-19 related rent concession had policy in the notes to the financial the merger with Footasylum and that, reporting standards (‘IFRS’) adopted been received or granted from a landlord. statements. consequently, it required the Group to pursuant to Regulation (EC) No 1606/2002 The Group has elected not to account for fully divest its investment. This decision as it applies in the European Union. These COVID-19 related rent concessions under CHANGES TO CRITICAL ACCOUNTING was subsequently quashed on appeal alternative performance measures may the amendment effective from 1 June 2020. ESTIMATES in November 2020 by the Competition not be directly comparable with other The Group instead continues to remeasure The following critical accounting estimates Appeal Tribunal (‘CAT’) who determined companies’ alternative performance right of use assets and lease liabilities are new as a result of the acquisition that the case should be passed back to the measures and the Directors do not intend following the lease modification definitions of Shoe Palace or, with reference to CMA for full reconsideration. Subsequently, these to be a substitute for, or superior within IFRS16 as originally issued, Footasylum, have been revised due to the CMA asked both the CAT and the to, IFRS measures. The Directors believe recalculating using a revised discount rate changes during the financial period ended Court of Appeal for leave to appeal the that these alternative performance where applicable. 30 January 2021 impacting the carrying CAT’s decision but, on each occasion, this measures assist in providing additional value of the intangible assets: was refused. Accordingly, the merger with useful information on the underlying OTHER Footasylum will now be re-examined by the performance of the Group. Alternative The Group continues to monitor the DETERMINATION OF THE FAIR VALUE CMA, a process expected to take several performance measures are also used to potential impact of other new standards OF ASSETS AND LIABILITIES ON months. enhance the comparability of information and interpretations which may be endorsed ACQUISITION and require adoption by the Group in The continuation of the temporary store between reporting periods, by adjusting for Included within critical accounting policies closures into the new financial year exceptional items, which could distort the future reporting periods. The Group does in the current year is the valuation of the not consider that any other standards, together with the reduction in the support understanding of the performance for the intangible assets recognised as part of available for local authority rates have year. amendments or interpretations issued the acquisition of Shoe Palace (see Note by the IASB, but not yet applicable, will inevitably had a negative impact on the Further information can be found in the 11). The estimates used in the valuation expectations for the performance of have a significant impact on the financial of the intangible assets are considered to Alternative Performance Measures section statements. Footasylum in the year to 29 January 2022. on page 329. have a significant risk of causing a material Further, there is inevitably considerable misstatement, specifically; the estimation uncertainty as to whether levels of footfall CRITICAL ACCOUNTING ESTIMATES AND of future cash flows, the useful economic ADOPTION OF NEW AND REVISED into the Footasylum stores, which attract JUDGEMENTS life of the asset, the selection of suitable an older demographic than JD, will recover STANDARDS The preparation of financial statements in royalty relief rates and the selection of a The following amendments to accounting to historic levels which could adversely conformity with adopted IFRSs requires suitable discount rate. impact the longer term viability of certain standards and interpretations, issued by management to make judgements, the International Accounting Standards The key assumption used by management stores. As a consequence, the financial estimates and assumptions that affect in the valuation of the fascia name was the projections no longer support the carrying Board (IASB), have been adopted for the the application of policies and reported first time by the Group in the period with royalty rate. The royalty rate assumption value of the fascia name and goodwill amounts of assets and liabilities, income used in the valuation was estimated based which arose on the acquisition in the no significant impact on the consolidated and expenses. The estimates and results or financial position: on published comparable licence fees in the year to 1 February 2020 with a charge of associated assumptions are based on sports fashion market and a calculation of £55.6 million recognised in relation to the • Amendments to References to the historical experience and various other the expected return on assets of the Shoe impairment of these assets. Conceptual Framework in IFRS Standards. factors that are believed to be reasonable Palace business. If the royalty rate used in under the circumstances, the results • Amendments to IFRS 3 ‘Definition of a the valuation was 1% higher or lower, this CRITICAL ACCOUNTING ESTIMATES Business’ of which form the basis of making the would lead to a change in the fascia name judgements about carrying values of assets valuation of plus or minus £25.1 million. IMPAIRMENT OF GOODWILL • Amendments to IAS 1 and IAS 8 and liabilities that are not readily apparent Goodwill arising on acquisition is allocated ‘Definition of Material’ 1% was determined to be a reasonable from other sources. Actual results may royalty rate sensitivity by comparing the to groups of cash-generating units that • Amendments to IFRS 9, IAS 39, IFRS differ from these estimates. royalty rate used to publicly disclosed are expected to benefit from the synergies 7, IFRS 4 and IFRS 16 ‘Interest Rate The estimates disclosed below are those licensing transactions related to the retail of the business combination from which Benchmark Reform’ which have a significant risk of causing of sportswear and footwear. goodwill arose. Goodwill is allocated to

232 233

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Preparation (continued) 1. Basis of Preparation (continued) groups of cash-generating units, being PROVISIONS TO WRITE INVENTORIES put options, being the discount rate and REVENUE RECOGNITION portfolios of stores or individual businesses. DOWN TO NET REALISABLE VALUE the approved forecasts. A discount rate Revenue is measured at the fair value of the The cash-generating units used to monitor The Group makes provisions for increase of 1% would result in a reduction consideration received or receivable and goodwill and test it for impairment are obsolescence, mark downs and shrinkage in the put option liability of £0.9 million represents amounts receivable for goods therefore the store portfolios and individual based on historical experience, the quality and an increase of 1% to the forecasted and services provided in the normal course businesses rather than individual stores, of the current season buy, market trends EBITDA % would result in an increase in the of business, net of price discounts and as the cash flows of individual stores and management estimates of future put option liability of £0.6 million. 1% was sales related taxes. are not considered to be independent. events. The provision requires estimates for determined to be a reasonable variance The recoverable amounts of these cash- shrinkage, the expected future selling price to demonstrate the sensitivity of the put GOODS SOLD THROUGH RETAIL STORES generating units are determined based of items and identification of aged and option valuation to the key inputs used. AND TRADING WEBSITES on value-in-use calculations. The use obsolete items. In the case of goods sold through the retail stores and trading websites, revenue of this method requires the estimation OTHER ACCOUNTING ESTIMATES of future cash flows expected to arise VALUATION OF ROLLING LEASES is recognised when goods are sold and from the continuing operation of the In initially applying IFRS16 Leases, the GENESIS TOPCO PUT-OPTIONS the title has passed, less provision for cash-generating unit and the choice of a Group has applied judgement to determine Following the acquisition of Shoe Palace, returns. Accumulated experience is used suitable discount rate in order to calculate the lease term for certain lease contracts the Group now holds Put Options over to estimate and provide for such returns the present value. See Note 12 for further in which the Group is a lessee that either 20% of the Non-Controlling Interest in the at the time of the sale and this provision disclosure on impairment of goodwill and have no specified end date, or where the Genesis Topco sub-group. A valuation has is included within accruals. Retail sales are review of the key assumptions used. Group continues to occupy the property been performed using an EBITDA multiple, usually in cash, by debit card or by credit despite the contractual lease end date a suitable discount rate and approved card. forecasts and the initial liability has been IMPAIRMENT OF OTHER INTANGIBLE having passed. In determining the lease • For online sales and click and collect recognised with the corresponding entry ASSETS WITH DEFINITE LIVES term, the Group takes into consideration orders, where the customer pays online to Other Equity in accordance with the The Group is required to assess whether its commercial strategy on a store by but collects in store, title is deemed present access method of accounting. there is an indication that other intangible store basis and the future intentions of the to have passed when the goods are These options are required to be fair valued assets with a definite useful economic Group regarding the duration of continuing dispatched from the warehouse. life have suffered any impairment. The occupation of the property. For lease at each accounting period date. Given recoverable amount of brand names is contracts falling into these parameters, the proximity of the transaction to the • For reserve and collect, where the based on an estimation of future sales the associated lease liability is calculated reporting date, the estimation uncertainty customer reserves online but pays at the and the choice of a suitable royalty at the present value of the minimum lease as at the current reporting date is limited, point of collection from the store, the and discount rate in order to calculate payments over the estimated lease term, however in future periods this estimation title is deemed to have passed when the the present value, when this method is discounted at the Group’s incremental cost uncertainty will be significant. Sensitivity goods are collected by the customer. deemed the most appropriate. The use of borrowing. A corresponding right of use was performed over the key variable WHOLESALE REVENUE of this method requires the estimation of asset is also recognised. inputs to the valuation of the put options, Wholesale revenue is recognised when future cash flows expected to arise from being the discount rate and the approved goods are dispatched and the title and the continuing operation of the asset until IBERIAN SPORTS RETAIL GROUP PUT forecasts. A discount rate increase of control over a product have passed to the the licence expiry date and the choice OPTION 1% would result in a reduction in the put customer. In some instances, goods are of a suitable discount rate in order to The Group holds Put Options over part option liability of £13.9 million and an sold with a right of return. Where wholesale calculate the present value. Impairment of the remaining Non-Controlling Interest increase of 1% to the forecasted EBITDA % goods are sold with a right of return, a losses are recognised in the Consolidated in Iberian Sport Retail Group and these would result in an increase in the put option provision is made to estimate the expected Income Statement. Note 12 provides options are required to be fair valued at liability of £14.7 million. 1% was determined level of returns based on accumulated further disclosure on impairment of each accounting period date. A valuation to be a reasonable variance to demonstrate experience and historical rates. The other intangible assets with definite lives, has been performed by management the sensitivity of the put option valuation provision for returns is included within including review of the key assumptions using an EBITDA multiple, a suitable to the key inputs used. accruals. Wholesale sales are either settled used. discount rate and approved forecasts. The valuation is considerably higher than the by cash received in advance of the goods previous year which is primarily due to an being dispatched or made on agreed credit improved forecast trading performance. terms. Sensitivity was performed over the key variable inputs to the valuation of the

234 235

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Preparation (continued) 2. Segmental Analysis 2. Segmental Analysis (continued)

GYM MEMBERSHIP REVENUE IFRS 8 ‘Operating Segments’ requires the The Board consider that certain items are cross divisional in nature and cannot be allocated Revenue from the sale of fitness club Group’s segments to be identified on the between the segments on a meaningful basis. Net funding costs and taxation are treated memberships is recognised in the period basis of internal reports about components as unallocated reflecting the nature of the Group’s syndicated borrowing facilities and its the membership relates to. JD Gyms of the Group that are regularly reviewed tax group. A deferred tax asset of £40.6 million and a deferred tax liability of £55.0 million offers gym membership with no contract by the Chief Operating Decision Maker to (2020: net liability of £12.5 million) and an income tax liability of £29.5 million (2020: £34.3 therefore income related to joining fees are allocate resources to the segments and million) are included within the unallocated segment. recognised immediately on the basis that to assess their performance. The Chief Each segment is shown net of intercompany transactions and balances within that the related service has been performed. For Operating Decision Maker is considered to segment. The eliminations remove intercompany transactions and balances between new club openings, memberships are sold be the Executive Chairman of JD Sports different segments which primarily relate to the net down of long term loans and short and joining fees are collected in the period Fashion Plc. term working capital funding provided by JD Sports Fashion Plc (within Sports Fashion) to before the new club is opened. Membership Information reported to the Chief other companies in the Group, and intercompany trading between companies in different income received in advance of the club Operating Decision Maker is focused on the segments. opening is deferred until the club is open nature of the businesses within the Group. and then recognised on an accruals basis The Group’s operating and reportable over the related membership period. segments under IFRS 8 are therefore BUSINESS SEGMENTS Information regarding the Group’s reportable operating segments for the 52 weeks to 30 DISCOUNT CARD REVENUE Sports Fashion and Outdoor. January 2021 is shown below: Income from the sale of annual discount The Chief Operating Decision Maker cards is accounted for on a systematic receives and reviews segmental operating Sports Fashion Outdoor Unallocated Total Income statement £m £m £m £m basis over the 12 month life of the card profit. Certain central administrative costs which best matches the profile of the including Group Directors’ salaries are Gross revenue 5,808.2 359.1 – 6,167.3 spend on these cards. included within the Group’s core Sports Intersegment revenue (0.2) 0.2 – – Fashion result. This is consistent with the Revenue 5,808.0 359.3 – 6,167.3 GIFT CARDS results as reported to the Chief Operating Gross profit % 48.4% 42.2% – 48.0% The initial sale of a gift card is treated as Decision Maker. an exchange of tender with the revenue IFRS 8 requires disclosure of information Operating profit / recognised when the cards are redeemed (loss) before exceptional items 484.7 (2.4) – 482.3 regarding revenue from major products by the customer. Revenue from gift card Exceptional items (76.9) (20.4) – (97.3) breakage is recognised when the likelihood and customers. The majority of the of the customer utilising the gift card Group’s revenue is derived from the retail Operating profit / (loss) 407.8 (22.8) – 385.0 becomes remote. of a wide range of apparel, footwear and Financial income – – 1.5 1.5 accessories to the general public. As such, Financial expenses (51.2) (3.7) (7.6) (62.5) the disclosure of revenues from major Profit / (loss) before tax 356.6 (26.5) (6.1) 324.0 OTHER ACCOUNTING POLICIES customers is not appropriate. Disclosure Income tax expense (94.8) FURLOUGH RECEIPTS of revenue from major product groups is Furlough income is recognised in the not provided at this time due to the cost Profit for the period 229.2 Consolidated Financial Statements when it involved to develop a reliable product can be reliably measured which the Group split on a same category basis across all Sports Fashion Outdoor Unallocated Eliminations Total considers to be on receipt. In accordance companies in the Group. Total assets and liabilities £m £m £m £m £m with IAS 20 Government Grants the Intersegment transactions are undertaken Total assets 4,940.2 293.2 40.6 (112.1) 5,161.9 furlough income of £86.1 million has been in the ordinary course of business on arm’s Total liabilities (3,420.3) (272.8) (84.5) 112.1 (3,665.5) shown as a deduction from employed staff length terms. costs in the period ended 30 January 2021. Total segment net assets / (liabilities) 1,519.9 20.4 (43.9) – 1,496.4

236 237

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2. Segmental Analysis (continued) 2. Segmental Analysis (continued)

Sports Fashion Outdoor Total GEOGRAPHICAL INFORMATION Other segment information £m £m £m The Group’s operations are located in the UK, Australia, Austria, Belgium, Canada, Denmark, Capital expenditure: Dubai, Finland, France, Germany, Hong Kong, India, Italy, Malaysia, the Netherlands, New Software development 19.1 – 19.1 Zealand, Portugal, Republic of Ireland, Singapore, South Korea, Spain and the Canary Property, plant and equipment 102.1 3.1 105.2 Islands, Sweden, Thailand and the United States of America. Right of use assets 168.3 46.6 214.9 The following table provides analysis of the Group’s revenue by geographical market, Non-current other assets 7.7 – 7.7 irrespective of the origin of the goods / services: Depreciation, amortisation and impairments: 52 weeks to 52 weeks to Depreciation and amortisation of non-current assets  161.8 16.0 177.8 30 January 2021 1 February 2020 Depreciation and amortisation of right of use assets  301.5 19.9 321.4 Revenue £m £m Impairment of intangible assets (exceptional items)  56.2 33.3 89.5 UK 2,527.0 2,599.2 Impairment of non-current assets (exceptional items)  – 4.9 4.9 Europe 1,579.4 1,619.2 Impairment of non-current assets (non-exceptional items) 4.9 0.4 5.3 US 1,780.5 1,611.0 Impairment of right of use assets (non-exceptional items) 2.4 1.0 3.4 Rest of world 280.4 281.4 6,167.3 6,110.8 The comparative segmental results for the 52 weeks to 1 February 2020 are shown below: Sports Fashion Outdoor Unallocated Total The revenue from any individual country, with the exception of the UK & US, is not more Income statement £m £m £m £m than 10% of the Group’s total revenue. Revenue 5,696.8 414.0 – 6,110.8 The following is an analysis of the carrying amount of segmental non-current assets by Gross profit % 47.4% 41.9% – 47.0% the geographical area in which the assets are located. Taxation is treated as unallocated Operating profit before exceptional items 533.2 (16.3) – 516.9 reflecting the nature of the Group’s tax group. Exceptional items (40.6) (49.7) – (90.3) 2021 2020 Non-current assets £m £m Operating profit / (loss) 492.6 (66.0) – 426.6 UK 1,011.0 1,296.2 Financial income – – 1.7 1.7 Europe 1,003.4 979.2 Financial expenses (64.7) (7.2) (7.9) (79.8) US 1,078.6 497.4 Profit / (loss) before tax 427.9 (73.2) (6.2) 348.5 Rest of world 109.0 111.5 Income tax expense (97.8) Unallocated 40.6 – Profit for the period 250.7 3,242.6 2,884.3

Sports Fashion Outdoor Unallocated Eliminations Total Total assets and liabilities £m £m £m £m £m Total assets 4,047.7 411.7 – (113.5) 4,345.9 Total liabilities (2,723.5) (393.9) (52.8) 113.5 (3,056.7) Total segment net assets / (liabilities) 1,324.2 17.8 (52.8) – 1,289.2

Sports Fashion Outdoor Total Other segment information £m £m £m Capital expenditure: Software development   23.2 – 23.2 Property, plant and equipment   138.4 8.8 147.2 Right of use assets   408.5 9.6 418.1 Non-current other assets   6.8 – 6.8 Depreciation, amortisation and impairments: Depreciation and amortisation of non-current assets  132.3 14.4 146.7 Depreciation and amortisation of right of use assets  274.9 28.4 303.3 Impairment of intangible assets (exceptional Items)  0.6 42.5 43.1 Impairment of non-current assets (non-exceptional Items) 5.0 – 5.0 Impairment of right of use assets   7.0 0.8 7.8 238 239 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3. Profit Before Tax 4. Exceptional Items

52 weeks to 52 weeks to Items that are, in aggregate, material in size and / or in nature, are included within 30 January 2021 1 February 2020 operating profit and disclosed separately as exceptional items in the Consolidated Income £m £m Statement. Exceptional items are disclosed separately as they are considered unusual in Profit before tax is stated after charging: nature and not reflective of the underlying trading and profitability of the Group. Auditor’s remuneration: Audit of these financial statements (KPMG LLP) 0.4 0.2 The separate reporting of exceptional items, which are presented as exceptional within the Amounts receivable by the Company’s auditor (KPMG LLP) relevant category in the Consolidated Income Statement, helps provide an indication of the and its associates in respect of: Group’s underlying business performance. The principal items which may be included as Audit of financial statements of subsidiaries of the Company 1.5 1.5 exceptional items are: Interim review 0.1 0.1 • Profit / (loss) on the disposal of non-current assets Depreciation and amortisation of non-current assets: • Impairment of right of use assets Depreciation of property, plant and equipment 458.2 409.2 Amortisation of intangible assets 41.0 40.8 • Impairment of property, plant and equipment Impairments of non-current assets: • Impairment of non-current other assets Property, plant and equipment (exceptional) 4.9 – • Impairment of goodwill, brand names and fascia names Property, plant and equipment (non-exceptional) 8.6 12.2 Goodwill & fascia names (exceptional) 89.5 43.1 • Impairment of investment property Other intangibles assets (non-exceptional) 0.1 0.7 • Profit / (loss) on disposal of subsidiary undertakings Loss on disposal of non-current assets 1.2 6.3 • Negative goodwill Rentals payable under non-cancellable operating leases for: Land and buildings – non-contingent rentals payable 37.9 36.2 • Business restructuring and business closure related costs Land and buildings – contingent rentals payable 3.4 21.4 • (Gains) / losses arising on changes in ownership interest where control has been obtained Other – plant and equipment 0.5 1.3 Movement in the fair value of forward contracts 31.5 – • Fair value adjustments to put option liabilities

Profit before tax is stated after crediting: 52 weeks to 52 weeks to Sales commission received 15.2 5.7 30 January 2021 1 February 2020 Sundry income 13.1 5.2 £m £m Movement in the fair value of forward contracts – 1.7 Impairment of goodwill and fascia names1 56.2 43.1 Foreign exchange gain recognised 18.5 2.1 Movement in fair value of put and call options2 20.7 31.4 Restructuring of Go Outdoors3 20.4 – Integration of Outdoor systems and warehousing4 – 7.2 In addition, fees of £0.1 million (2020: £0.1 Since transition to IFRS 16 on 2 February Integration of Sport Zone into Sprinter infrastructure5 – 8.6 million) were incurred and paid to KPMG 2019, only lease rentals in relation to LLP by Pentland Group Limited in relation contingent rents, low value assets or short Administrative expenses – exceptional 97.3 90.3 to the non-coterminous audit of the term leases have been charged to the (1) The impairment in the current period primarily relates to the impairment of goodwill and fascia name arising in prior years on the acquisition Group for the purpose of inclusion in their Income Statement. The contingent rents of Footasylum (£55.6m). The impairment in the prior period relates to the impairment of the goodwill arising in prior years on the acquisition of consolidated financial statements. shown above relate to turnover rents which Go Outdoors Topco Limited and Choice Limited (see Note 12). (2) Movement in the fair value of the liabilities in respect of the put and call options (see Note 21). Non-current other assets comprise key are impacted by changes in sales at certain (3) The net impact consequent to the restructuring of Go Outdoors in the period including a charge of £33.3 million in relation to the impairment stores where the lease includes an element of intangible assets, a charge of £4.9 million in relation to the impairment of leasehold improvements and a credit of £17.8 million in relation to money and store deposits associated with the extinguishment of lease commitments. the acquisition of leasehold interests (see of turnover rent. The non-contingent (4) The costs arising in the prior period relates to the integration and consolidation of the principal IT systems, warehousing and other rentals payable relate to rents payable for infrastructure in Go Outdoors. Note 15). (5) The prior period costs associated with transferring the stocks and other operations of Sport Zone into the Sprinter infrastructure. low value assets or short term leases. Items (1) and (2) are exceptional items as they are considered unusual in nature and not reflective of the underlying trading and profitability of the Group. Items (3), (4) and (5) are presented as an exceptional item as these costs relate to one off projects.

240 241 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

5. Remuneration of Directors 7. Financial Income

The remuneration of the Executive Directors includes provision for future LTIP payments Financial income comprises interest receivable on funds invested. Financial income is of £0.3m (2020: £0.2m). Further information on Directors’ emoluments is shown in the recognised in the Consolidated Income Statement on an effective interest method. Directors’ Remuneration Report on page 179. 52 weeks to 52 weeks to 30 January 2021 1 February 2020 In the opinion of the Board, the key management as defined under revised IAS 24 ‘Related £m £m Party Disclosures’ are the seven Executive and Non-Executive Directors (2020: seven). During the year there was one (2020: one) Director within the defined contribution Bank interest 1.5 1.7 pension scheme. Full disclosure of the Directors’ remuneration is given in the Directors’ Remuneration Report on page 179.

52 weeks to 52 weeks to 30 January 2021 1 February 2020 8. Financial Expenses £m £m Directors’ emoluments: Financial expenses comprise interest payable on interest-bearing loans and borrowings. As Non-Executive Directors 0.2 0.2 Financial expenses are recognised in the Consolidated Income Statement on an effective As Executive Directors 5.9 6.4 interest method. Pension contributions – – 52 weeks to 52 weeks to 30 January 2021 1 February 2020 6.1 6.6 £m £m On bank loans and overdrafts 5.7 6.6 Amortisation of facility fees 1.5 1.0 Lease interest (Note 14) 54.9 71.9 6. Staff Numbers and Costs Other interest 0.4 0.3 Financial expenses 62.5 79.8 The average number of persons employed by the Group (including Directors) during the period, analysed by category, was as follows: 2021 2020

Sales and distribution 52,234 51,475 9. Income Tax Expense Administration 2,151 2,002 Tax on the profit or loss for the year comprises current and deferred tax. 54,385 53,477

Full time equivalents 37,297 34,885 CURRENT INCOME TAX Current income tax expense is calculated using the tax rates which have been enacted or The aggregate payroll costs of these persons were as follows: substantively enacted by the reporting date, adjusted for any tax paid in respect of prior 52 weeks to 52 weeks to years. 30 January 2021 1 February 2020 £m £m DEFERRED TAX Wages and salaries 682.8 759.4 Deferred tax is recognised in respect of temporary differences between the carrying Social security costs 79.8 87.0 amounts of assets and liabilities for financial reporting purposes and the amounts used for Pension costs 14.7 13.1 taxation purposes. The following temporary differences are not provided for: Other employed staff costs 8.6 14.3 • Goodwill not deductible for tax purposes 785.9 873.8 • The initial recognition of assets or liabilities that affect neither accounting nor taxable profit • Differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future The amount of deferred tax provided is based on the expected realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted by the reporting date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. 242 243 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

9. Income Tax Expense (continued) 10. Earnings Per Ordinary Share (continued)

52 weeks to 52 weeks to ADJUSTED BASIC AND DILUTED EARNINGS PER ORDINARY SHARE 30 January 2021 1 February 2020 Adjusted basic and diluted earnings per ordinary share have been based on the profit £m £m for the period attributable to equity holders of the parent for each financial period but Current tax excluding the post-tax effect of certain exceptional items. The Directors consider that this UK corporation tax at 19.0% (2020: 19.0%) 129.8 106.7 gives a more useful measure of the underlying performance of the Group. Adjustment relating to prior periods (3.6) (2.6) 52 weeks to 52 weeks to Total current tax charge 126.2 104.1 30 January 2021 1 February 2020 Note £m £m Deferred tax Profit for the period attributable to equity holders Deferred tax (origination and reversal of temporary differences) (28.0) (4.7) of the parent 224.3 246.1 Adjustment relating to prior periods (3.4) (1.6) Exceptional items excluding loss on disposal of Total deferred tax credit (31.4) (6.3) non-current assets 4 97.3 90.3 Tax relating to exceptional items (8.3) (3.0) Income tax expense 94.8 97.8 Profit for the period attributable to equity holders of the parent excluding exceptional items 313.3 333.4 52 weeks to 52 weeks to 30 January 2021 1 February 2020 Adjusted basic and diluted earnings per ordinary share  32.19p 34.26p £m £m Unadjusted basic and diluted earnings per ordinary share  23.05p 25.29p Profit before tax multiplied by the standard rate of corporation tax 19.0% (2020: 19.0%) 61.6 66.2 Effects of: Expenses not deductible 10.9 12.8 Depreciation and impairment of non-qualifying non-current assets  11. Acquisitions (including brand names arising on consolidation) 8.6 10.9 Non taxable income (0.5) (1.1) BUSINESS COMBINATIONS Effect of tax rates in foreign jurisdictions 6.8 6.3 The Group accounts for business combinations using the acquisition method when control Research and development tax credits and other allowances (0.3) (0.3) is transferred to the Group. The Group controls an entity when it is exposed to, or has rights Recognition of previously unrecognised tax losses – (0.2) to, variable returns from its involvement with the entity and has the ability to affect the Reduction in tax rate 0.5 (1.2) returns through its power over the entity. Change in unrecognised temporary differences 5.6 4.3 Costs related to the acquisition, other than those associated with the issue of debt or Over provided in prior periods (7.0) (4.2) equity securities, that the Group incurs in connection with a business combination are Other taxes due 8.6 4.3 expensed as incurred. Income tax expense 94.8 97.8 The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in the Consolidated Income Statement. 10. Earnings Per Ordinary Share Any contingent consideration is measured at fair value at the date of acquisition. If BASIC AND DILUTED EARNINGS PER ORDINARY SHARE an obligation to pay contingent consideration that meets the definition of a financial The calculation of basic and diluted earnings per ordinary share at 30 January 2021 is based instrument is classified as equity, then it is not remeasured, and the settlement is accounted on the profit for the period attributable to equity holders of the parent of £224.3 million for within equity. Otherwise, subsequent changes in the fair value of the contingent (2020: £246.1 million) and a weighted average number of ordinary shares outstanding consideration are recognised in the Consolidated Income Statement. during the 52 week period ended 30 January 2021 of 973,233,160 (2020: 973,233,160). The valuation techniques used for measuring the fair value of material assets acquired are 52 weeks to 52 weeks to as follows: 30 January 2021 1 February 2020 Number Number • Assembled workforce - In accordance with IAS 38, the assembled workforce should Issued ordinary shares at beginning and end of period 973,233,160 973,233,160 not be recognised as a separate intangible asset but is subsumed within goodwill. The assembled workforce is valued using the cost savings method which estimates the costs saved by the acquirer from purchasing the asset versus building or developing the asset internally.

244 245 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

11. Acquisitions (continued) 11. Acquisitions (continued)

• Intangible assets (computer software) - the estimated value of the land to the Fair The cost approach is used which reflects cost of constructing a reproduction Measurement value as at 10 the amount that would be required to or replacement for the improvements Book value adjustments February 2020 £m £m £m currently replace the service capacity and then subtracting the amount of of an asset (often referred to as current depreciation. Acquiree’s net assets at acquisition date: replacement cost). Intangible assets – 1.2 1.2 • Property, plant and equipment – The Property, plant and equipment 0.5 – 0.5 • Intangible assets (fascia names and brand depreciated replacement cost new Right of use assets 0.5 – 0.5 names) – The relief from royalty method valuation approach is utilised reflecting Inventories 0.5 – 0.5 considers the discounted estimated adjustments for physical deterioration Cash and cash equivalents (0.8) – (0.8) royalty payments that are expected to as well as functional and economic Trade and other receivables 0.1 – 0.1 be avoided as a result of the intangible obsolescence. Trade and other payables (0.5) – (0.5) assets being owned. Deferred tax liablity – (0.3) (0.3) • Inventories - The fair value is determined CURRENT PERIOD ACQUISITIONS Lease liabilities (0.5) – (0.5) based on the estimated selling price in Corporation tax (0.3) – (0.3) Onepointfive Ventures Limited trading as the ordinary course of business less the Livestock (‘Livestock’) Net identifiable (liabilities) / assets (0.5) 0.9 0.4 estimated costs of completion and sale, On 10 February 2020, the Group acquired and a reasonable profit margin based on Goodwill on acquisition 8.4 100% of the issued share capital of the effort required to sell the inventories. Onepointfive Ventures Limited DBA Consideration – satisfied in cash 6.4 • Leases - a right of use asset and lease Livestock (‘Livestock’) through a newly Consideration – fair value of shares issued 1.8 liability are recognised, measured as if established Canadian holding company Consideration – deferred 0.6 the acquired lease were a new lease at (JDSF Holdings (Canada) Inc.) (‘Holdco’). Total consideration 8.8 the date of acquisition. The fair value Based in Vancouver, this business and its Included in the 52 week period ended 30 January 2021 is revenue of £10.1 million and a of the acquired leases is estimated management will provide the platform to profit before tax of £1.4 million in respect of Livestock. by comparing the annual rent to a develop JD Group fascias in Canada. normalised rent level based on a market- Consideration was comprised of £7.0 oriented occupancy rate. million in cash, of which £0.6m is deferred, X4L Gyms Limited acquisition providing immediate reach • The difference is calculated over the plus 20% of the equity in Holdco. The fair On 22 July 2020, X4L Gyms Limited, a to a wider membership base as well as remaining lease term and discounted value of the 20% equity in Holdco was 100% owned subsidiary of JD Gyms Limited facilitating the Group’s presence as a key at the estimated pre-tax discount rate, £1.8 million. acquired certain assets of Wright Leisure player in the market. Xercise4less is a adjusting the value of the right of use Limited t/a Xercise4less following the well-established business with a wealth of Included within the fair value of the net asset recognised under IFRS16 Leases. Group being placed into administration on knowledge in the UK fitness market which identifiable assets on acquisition is an The lease liability recognised is measured the same date. the board believes will be complementary intangible asset of £1.2 million, representing at the present value of the remaining to JD Gyms. The Board also believes that the ‘Livestock’ fascia name. The Board Xercise4less is a UK-based value-gym chain lease payments, using a discount rate there will be significant operational and believes that the excess of consideration with 50 operational clubs at the date of determined in accordance with IFRS 16 at strategic benefits from a combination of paid over net assets on acquisition of £8.4 administration. The company offers high- the date of acquisition. the two businesses. million is best considered as goodwill on quality, low-cost contract and non-contract • Owned property - The cost approach acquisition representing future operating memberships to its members from large The Board believes the excess of cash considers the cost to replace the existing synergies. The goodwill calculation is operational facilities nationwide. consideration paid over the net identifiable improvements, less accrued depreciation, summarised on the next page: The Board believes that Xercise4Less assets on acquisition of £14.2 million is plus the fair value of the land. The value further strengthens the Group’s presence best considered as goodwill representing of the properties is derived by adding in the growing UK fitness market with the future operating synergies. The goodwill calculation is summarised on the next page:

246 247 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

11. Acquisitions (continued) 11. Acquisitions (continued)

Fair value at Provisional fair value Measurement 22 July Measurement at 14 December Book value adjustments 2020 Book value adjustments 2020 £m £m £m £m £m £m Acquiree’s net assets at acquisition date: Acquiree’s net assets at acquisition date: Intangible assets 16.3 (16.1) 0.2 Intangible assets 0.2 106.8 107.0 Property, plant and equipment 7.8 4.4 12.2 Property, plant and equipment 22.7 2.9 25.6 Trade and other receivables 0.1 (0.1) – Right of use assets 139.8 – 139.8 Trade and other payables – (1.5) (1.5) Other non-current assets 0.6 – 0.6 Deferred tax liability – (0.9) (0.9) Inventories 49.7 5.0 54.7 Cash and cash equivalents 3.1 – 3.1 Net identifiable assets 24.2 (14.2) 10.0 Bank loans and overdrafts (1.7) – (1.7) Goodwill on acquisition 14.2 Trade and other receivables 10.6 – 10.6 Consideration paid – satisfied in cash 24.2 Trade and other payables – current (64.2) 6.4 (57.8) Trade and other payables – non-current (9.5) 9.5 – Included in the 52 week period ended 30 January 2021 is revenue of £8.1 million and a loss Deferred tax liability – (32.7) (32.7) before tax of £3.3 million in respect of X4L Gyms Limited. Lease liabilities (139.8) – (139.8)

SHOE PALACE CORPORATION AND NICE been performed using an EBITDA multiple, Net identifiable assets 11.5 97.9 109.4 KICKS LLC a suitable discount rate and approved Goodwill on acquisition 408.2 On 14 December 2020, JD Sports Fashion forecasts and the initial liability of £261.6 Plc’s wholly owned intermediate holding million has been recognised with the Consideration – satisfied in cash 170.4 company in the United States, Genesis corresponding entry to Other Equity in Consideration – fair value of shares issued 274.1 Holdings, acquired 100% of the issued accordance with the present access method Consideration – deferred 73.1 shares in both the Shoe Palace Corporation of accounting. These options are required Total consideration 517.6 and the members’ interests in Nice Kicks to be fair valued at each accounting period Included in the 52 week period ended 30 January 2021 is revenue of £56.1 million and a LLC (together ‘Shoe Palace’). date. profit before tax of £13.9 million in respect of Shoe Palace. Shoe Palace has an established retail Included within the provisional fair value presence in California, Texas, Nevada, of the net identifiable assets on acquisition Arizona, Florida, Colorado, New Mexico and is an intangible asset of £105.6 million, A NUMBER OF NAMES LIMITED million was deemed to be the provisional Hawaii with 163 stores trading under the representing the ‘Shoe Palace’ fascia On 23 December 2020, the Group acquired fair value of the deferred consideration Shoe Palace fascia and four stores trading as name and an intangible asset of £1.2 100% of the issued share capital of A based on management’s judgement and Nice Kicks. million, representing the ‘Nice Kicks’ fascia Number of Names Limited (‘ANON’). ANON best estimates as at 23 December 2020. name. The Board believes that the excess Total consideration for the acquisition was is primarily a wholesale business with the The Board believes the provisional excess of consideration paid over net assets $672.9 million, comprising $316.7 million of licence to the Billionaire Boys Club (‘BBC’) of consideration over the net assets on acquisition of £408.2 million is best cash consideration (of which $100 million brand in the UK, Europe, Middle East, acquired of £1.9 million is best considered considered as goodwill on acquisition has been deferred and will be paid on Africa, Russia, Ukraine, Australia, Canada as goodwill on acquisition representing representing future operating synergies. various dates through 2021) and $356.2 and certain other territories. future operating synergies. Due to the proximity of the date of the million, being the initial fair value of the Due to the proximity of the date of the acquisition and the financial period end, Included in the 52 week period ended 30 equity in the enlarged group in the United acquisition and the financial period end, it has not been possible to present a final January 2021 is revenue of £0.2 million and States calculated using an EBITDA multiple it has not been possible to finalise the goodwill calculation or the final fair values a break even result before tax in respect of and approved forecasts. Additionally, several goodwill calculation or the fair values of of the assets and liabilities acquired. A Number of Names Limited. put and call options, to enable future exit the assets and liabilities acquired. The The provisional goodwill calculation is opportunities for the minority interest have total provisional fair value of consideration summarised on the next page: also been agreed, which commence after recognised at 23 December 2020 was £4.8 OTHER ACQUISITIONS the end of the financial year to 1 February million comprising £3.3 million of cash During the period, the Group made several 2025. A valuation of these put options has consideration and £1.5 million of deferred small acquisitions. These transactions were consideration that is contingent on ANON not material. meeting certain performance criteria. £1.5

248 249 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

11. Acquisitions (continued) 11. Acquisitions (continued)

FULL YEAR IMPACT OF ACQUISITIONS 2019 and converted from an unlisted Plc to Fair value at Measurement 12 April Had the acquisitions of the entities listed a private company on 19 September 2019. Book value adjustments 2019 above been effected at 2 February 2020, Footasylum is a UK-based fashion retailer £m £m £m the revenue and profit before tax of founded in 2005 focusing on the footwear Acquiree’s net assets at acquisition date: the Group for the 52 week period to 30 and apparel market. The company operates Intangible assets – 37.3 37.3 January 2021 would have been £6.5 billion a multichannel model which combined a Property, plant and equipment 29.1 (3.5) 25.6 and £334.9 million respectively. store estate of 69 stores on acquisition in Right of use assets 100.4 – 100.4 a variety of high street, mall and retail park Inventories 39.6 – 39.6 ACQUISITION COSTS locations in cities and towns throughout Cash and cash equivalents 5.7 – 5.7 Acquisition related costs amounting to Great Britain, complemented by an Trade and other receivables 19.4 – 19.4 £4.0 million have been excluded from online platform and a wholesale arm for Deferred tax asset / (liability) 0.2 (6.3) (6.1) the consideration transferred and have distributing its own brand ranges via a Trade and other payables – current (42.0) – (42.0) been recognised as an expense in the network of partners. Trade and other payables – non-current (0.2) – (0.2) year, within administrative expenses in the The Board believes that Footasylum is a Lease liabilities (107.5) – (107.5) Consolidated Income Statement. well-established business with a strong Interest bearing loans and borrowings (13.5) – (13.5) reputation for lifestyle fashion and, with Net identifiable assets 31.2 27.5 58.7 PRIOR PERIOD ACQUISITIONS its offering targeted at a slightly older Goodwill on acquisition 27.3 consumer to JD’s existing offering, it is FOOTASYLUM PLC (‘FOOTASYLUM’) complementary to JD. The Board also Consideration paid – satisfied in cash 86.0 On 18 February 2019, JD Sports Fashion Plc believes that there will be significant acquired 19,579,964 Footasylum Plc shares operational and strategic benefits from a Given that this transaction is being that Rascal was on course to meet the at prices between 50 pence and 75 pence combination of the two businesses. reviewed by the Competition and Markets performance criteria for the maximum per share, representing 18.7% of the issued Included within the fair value of the Authority (‘CMA’), the Directors of the contingent consideration to be payable and ordinary share capital. net identifiable assets on acquisition Company have had to assess whether therefore the fair value of the contingent On 18 March 2019, in conjunction with was an intangible asset of £34.3 million the Group had control over Footasylum. consideration at this time was £1.0 million. the board of Footasylum Plc, JD Sports representing the Footasylum fascia name In making their judgement, the Board The Group has the ability to direct the Fashion Plc announced the terms of an and an intangible asset of £3.0 million considered the Group’s ability to direct relevant activities of Rascal Clothing offer to be made for the remaining 81.3% for Footasylum exclusive brands. No the relevant activities of Footasylum and there are restrictions on the existing of the ordinary share capital of Footasylum measurement adjustments have been made during the investigation period. Ultimately, shareholders via a shareholder agreement. at a price of 82.5 pence per ordinary share. to the fair value during the 52 week period after careful consideration, the Board Accordingly, the Board have concluded This offer was declared unconditional in all ended 30 January 2021 and the period in concluded that the Group had control that the Group has control and that Rascal respects on 12 April 2019 with acceptances which measurement adjustments could be and, accordingly, Footasylum should be Clothing should be consolidated from the received for a total of 78,176,481 shares made has now closed on this acquisition. consolidated from the date of acquisition. date of acquisition. representing a further 74.8% of the issued The Board believed the excess of cash Included within the 52 week period ended 1 The Board believes that the excess of ordinary share capital. On 26 April 2019, the consideration paid over the net identifiable February 2020 is revenue of £215.9 million consideration paid over the net assets first bulk transfer was made to acquire an assets on acquisition of £27.3 million was and a profit before tax of £1.7 million in on acquisition of £2.2 million is best additional 80.5 million shares (in addition best considered as goodwill representing respect of Footasylum. considered as goodwill on acquisition to the 19.5 million already owned). The future operating synergies. The carrying representing future operating synergies. No formal process to acquire the remaining value of the goodwill and fascia name has RASCAL CLOTHING LIMITED measurement adjustments have been made Footasylum shares (incl. the dissenting been impaired in full in the financial year On 5 February 2019, the Group acquired to the fair value during the 52 week period shareholders) was completed on 4 June ended 30 January 2021. See Note 1 and 50% of the issued share capital of Rascal ended 30 January 2021 and the period in 2019. Footasylum was delisted on 16 May Note 12 for further details. Clothing Limited (‘Rascal’) for cash which measurement adjustments could be consideration of £2.5 million with additional made has now closed on this acquisition. consideration of up to £1.0 million payable Included within the 52 week period ended if certain performance criteria were 1 February 2020 is revenue of £4.4 million achieved. Rascal is a wholesaler and online and a profit before tax of £0.6 million in retailer of sports inspired leisurewear. respect of Rascal Clothing Limited. At acquisition, management believed

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11. Acquisitions (continued) 12. Intangible Assets

PG2019 LIMITED (‘PRETTY GREEN’) The Board believes the excess of cash ACQUISITIONS (ii) The impairment of the goodwill and fascia On 4 April 2019, the Group acquired, consideration paid over the net identifiable The acquisition of intangible assets in the name arising in prior years on the acquisition via its 100% subsidiary PG2019 Limited, assets on acquisition of £2.7 million is best current year principally relate to the acquisition of Go Outdoors Topco Limited totalling the trading assets and trade of Pretty considered as goodwill representing future of Shoe Palace Corporation and Nice Kicks £33.3 million consequent to the restructuring Green Limited (in administration), the operating synergies. No measurement LLC, Onepointfive Ventures Limited and X4L of Go Outdoors in the period. boutique men’s clothing brand, from its adjustments have been made to the fair Gyms Limited. The acquisitions in the prior The impairment in the prior period relates to administrator. The acquisition included the value during the 52 week period ended year principally relate to the acquisition of the impairment of the goodwill arising in prior business, brand, website and wholesale 30 January 2021 and the period in which Footasylum plc, Rascal Clothing Limited, Pretty years on the acquisition of Go Outdoors Topco business as well as a flagship store in measurement adjustments could be made Green Limited and Giulio Fashion Limited. Limited and Choice Limited. Manchester. Cash consideration of £1.5 has now closed on this acquisition. Further details, including the fair value of the million was paid on completion with the assets acquired, are provided in Note 11. Included within the 52 week period ended INTANGIBLES ASSETS WITH DEFINITE LIVES Group also assuming a further £1.8 million 1 February 2020 is revenue of £5.6 million of debt. and a profit before tax of £0.2 million in AMORTISATION BRAND LICENCES Included within the fair value of the net respect of Giulio Fashion Limited. Included within the amortisation charge for the Brand licences are stated at cost less identifiable assets on acquisition is an period ended 30 January 2021 is accelerated accumulated amortisation and impairment intangible asset of £1.0 million representing OTHER ACQUISITIONS amortisation of £4.0 million (2020: £7.0 million) losses. Amortisation of brand licences is charged the Pretty Green fascia name and an During the prior period, the Group following a review of the useful economic to the Consolidated Income Statement within intangible asset of £0.7 million representing made several small acquisitions. These life of certain items of software development cost of sales over the term to the licence expiry the Pretty Green brand name. The Board transactions were not material. capitalised. on a straight line basis. believes the excess of cash consideration At each reporting date, the Group reviews paid over the net identifiable assets IMPAIRMENT the carrying amounts of its brand licences to on acquisition of £2.7 million is best FULL YEAR IMPACT OF ACQUISITIONS Had the acquisitions of the entities listed The impairment in the current period primarily determine whether there is any indication of considered as goodwill representing future above been effected at 3 February 2019, relates to: impairment. If any such indication exists, then operating synergies. No measurement the revenue and profit before tax of the the asset’s recoverable amount is estimated. adjustments have been made to the fair (i) The impairment of goodwill and fascia name Group for the 52 week period to 1 February Impairment losses are recognised in the value during the 52 week period ended arising in prior years on the acquisition 2020 would have been £6.2 billion and Consolidated Income Statement. 30 January 2021 and the period in which of Footasylum. The continuation of the £349.2 million respectively. measurement adjustments could be made temporary store closures into the new The recoverable amount of brand licences is has now closed on this acquisition. financial year together with the reduction determined based on value-in-use calculations. ACQUISITION COSTS in the support available for local authority The use of this method requires the estimation Included within the 52 week period ended Acquisition related costs amounting to rates have inevitably had a negative impact of future cash flows expected to arise from 1 February 2020 is revenue of £13.5 million £7.4 million (Footasylum Plc, £7.3 million, on the expectations for the performance of the continuing operation of the relevant asset and a profit before tax of £1.7 million in other acquisitions £0.1 million) have Footasylum in the year to 29 January 2022. until the licence expiry date and the choice of a respect of PG2019 Limited. been excluded from the consideration Further, there is inevitably considerable suitable discount rate in order to calculate the transferred and have been recognised as an uncertainty as to whether levels of footfall present value. GIULIO FASHION LIMITED expense in the year, within administrative into the Footasylum stores, which attract an On 30 April 2019, the Group acquired 80% expenses in the Consolidated Income older demographic than JD, will recover to of the issued share capital of Giulio Fashion Statement. historic levels which could adversely impact Limited including two wholly owned the longer term viability of certain stores. subsidiaries, Giulio Limited (a trading As a consequence, the financial projections company) and Giulio Woman Limited (a no longer support the carrying value of the dormant company) for cash consideration fascia name and goodwill which arose on the of £3.0 million. The acquisition included put acquisition in the year to 1 February 2020 and call options over the remaining stores with a charge of £55.6 million recognised in exercisable after three years. relation to the impairment of these assets.

252 253

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

12. Intangible Assets (continued) 12. Intangible Assets (continued)

Brand Brand Fascia Software BRAND NAMES SOFTWARE DEVELOPMENT Goodwill licences names name development Total Brand names acquired as part of a business Software development costs (including £m £m £m £m £m £m combination are stated at fair value as website development costs) are capitalised Cost or valuation at the acquisition date less accumulated as intangible assets if the technical and At 2 February 2019 261.6 11.8 24.4 181.6 48.1 527.5 amortisation and impairment losses. Brand commercial feasibility of the project has Additions 34.8 – 3.7 35.3 23.2 97.0 names separately acquired are stated at been demonstrated, the future economic Acquisitions – – – – 0.6 0.6 cost less accumulated amortisation and benefits are probable, the Group has an Reclassifications – – – – 6.6 6.6 impairment losses. The useful economic intention and ability to complete and Disposals – – (2.0) – (0.4) (2.4) life of each purchased brand name is use or sell the software and the costs Exchange differences 3.4 – (0.2) (2.9) (0.6) (0.3) considered to be finite. In determining the can be measured reliably. Costs that do At 1 February 2020 299.8 11.8 25.9 214.0 77.5 629.0 useful economic life of each brand name, not meet these criteria are expensed as Additions – 3.8 – – 19.1 22.9 the Board considers the market position incurred. Software development costs are Acquisitions 434.8 – – 108.9 0.2 543.9 of the brands acquired, the nature of the stated at historic cost, less accumulated Reclassifications – – – – 1.8 1.8 market that the brands operate in, typical amortisation. Disposals – – – – (0.7) (0.7) product life cycles of brands and the useful Software development costs are all Exchange differences (36.1) – – 5.2 2.2 (28.7) economic lives of similar assets that are amortised over a period of two to seven used in comparable ways. At 30 January 2021 698.5 15.6 25.9 328.1 100.1 1,168.2 years and the amortisation charge is Brand names are amortised over a period included within administrative expenses in Amortisation and impairment of 10 years and the amortisation charge is the Consolidated Income Statement. At 2 February 2019 47.3 10.5 13.6 39.8 22.0 133.2 included within administrative expenses in Charge for the period – 1.4 1.8 15.4 22.2 40.8 the Consolidated Income Statement. Impairments 43.1 – – – 0.7 43.8 FASCIA NAME Reclassifications – – – – 0.8 0.8 At each reporting date, the Group reviews Separately identifiable fascia names Disposals – – (2.1) – (0.2) (2.3) the carrying amounts of its brand names to acquired are stated at fair value as at Exchange differences – (0.8) – (0.2) – (1.0) determine whether there is any indication the acquisition date less accumulated of impairment. If any such indication exists, amortisation and impairment losses. The At 1 February 2020 90.4 11.1 13.3 55.0 45.5 215.3 then the asset’s recoverable amount is initial fair value is determined by using a Charge for the period – 2.2 1.7 16.2 20.9 41.0 estimated. The recoverable amount of ‘royalty relief’ method of valuation. This Impairments 29.8 – – 59.7 0.1 89.6 brand names is determined based on a is based on an estimation of future sales Reclassifications – – – – 0.9 0.9 ‘royalty relief’ method of valuation. The and the choice of a suitable royalty and Disposals – – – – (0.4) (0.4) recoverable amount of brand names is discount rate in order to calculate the Exchange differences – – – 1.0 1.1 2.1 based on an estimation of future sales present value, when this method is deemed At 30 January 2021 120.2 13.3 15.0 131.9 68.1 348.5 and the choice of a suitable royalty and the most appropriate. This method involves discount rate in order to calculate the calculating a net present value for each Net book value At 30 January 2021 578.3 2.3 10.9 196.2 32.0 819.7 present value, when this method is deemed fascia name by discounting the projected the most appropriate. The use of this future royalties expected using an indefinite At 1 February 2020 209.4 0.7 12.6 159.0 32.0 413.7 method requires the estimation of future useful economic life for each fascia. The At 2 February 2019 214.3 1.3 10.8 141.8 26.1 394.3 cash flows expected to arise from the future royalties are estimated by applying a continuing operation of the asset and the suitable royalty rate to the sales forecast. choice of a suitable discount rate in order Store and online fascia names are to calculate the present value. Impairment considered to have a finite useful economic losses are recognised in the Consolidated life. The useful economic life of an online Income Statement. fascia name is lower than that of a store fascia name due to increased competition in the marketplace as a result of reduced barriers to entry. The estimated useful economic lives are as follows:

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

12. Intangible Assets (continued) 12. Intangible Assets (continued)

• Online fascia names 3 to 5 years INTANGIBLE ASSETS WITH INDEFINITE The recoverable amount of a cash- • Store fascia names 10 years LIVES generating unit is determined based on value-in-use calculations. The intangible The factors that are considered when GOODWILL assets have been reviewed for indicators determining the useful life of each fascia Goodwill represents amounts arising on of impairment and none were noted. name are: acquisition of subsidiaries. The Group The carrying amount of goodwill • The strength of the respective fascia measures goodwill at the acquisition date and fascia name by cash-generating names in the relevant sector and as: units, along with the key assumptions geographic region where the fascia is • the fair value of the consideration used in the value-in-use calculation located. transferred; plus is as follows on the next page: • The history of the fascia names and that • the recognised amount of any non- of similar assets in the relevant retail controlling interests in the acquiree; plus sectors. • if the business combination is achieved • The commitment of the Group to in stages, the fair value of the existing continue to operate these stores equity interest in the acquiree; less separately for the foreseeable future, • the net recognised amount of the including the ongoing investment in new identifiable assets acquired and liabilities stores and refurbishments. assumed. At each reporting date, the Group reviews When the excess is negative, negative the carrying amounts of its fascia names to goodwill is recognised immediately in the determine whether there is any indication Consolidated Income Statement. of impairment. If any such indication exists, then the asset’s recoverable amount is On disposal of a subsidiary, the attributable estimated. The recoverable amount of amount of goodwill is included in the these assets is determined based on value- determination of the profit / loss on in-use calculations. The use of this method disposal. requires the estimation of future cash flows Goodwill is stated at cost less any expected to arise from the continuing accumulated impairment losses. Goodwill operation of the cash-generating unit is allocated to groups of cash-generating and the choice of a suitable discount rate units and is tested annually for impairment in order to calculate the present value. and whenever there is an indication that Impairment losses are recognised in the the goodwill may be impaired. The cash- Consolidated Income Statement. generating units used are individual stores and the groups of cash-generating units are either the store portfolios or individual businesses acquired. The recoverable amount is compared to the carrying amount of the cash-generating units including goodwill.

256 257 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

12. Intangible Assets (continued) 12. Intangible Assets (continued)

Basic financial information Impairment model assumptions used Fascia Total Fascia Total Short term Long term Pre Tax Pre Tax Goodwill name intangible Goodwill name intangible growth growth Discount rate(3) Discount rate(3) 2021 2021 2021 2020 2020 2020 rate (1) rate (2) 2021 2020 Segment £m £m £m £m £m £m % % Margin rate % % Champion store Sports Fashion 9.7 – 9.7 9.0 – 9.0 1.0% 1.0% Gross margins are assumed to be broadly 8.5% 7.0% portfolio consistent with recent historic and approved budget levels Finish Line Sports Fashion 97.2 51.3 148.5 100.7 61.0 161.7 2.0% 1.0% Gross margins are assumed to be broadly 13.7% 11.8% consistent with recent historic and approved budget levels First Sport store Sports Fashion 15.0 – 15.0 15.0 – 15.0 1.0% 1.0% Gross margins are assumed to be broadly 8.5% 6.7% portfolio consistent with recent historic and approved budget levels Mainline Menswear Sports Fashion 7.4 0.2 7.6 7.4 0.3 7.7 1.0% 1.0% Gross margins are assumed to be broadly 10.1% 8.5% Limited consistent with recent historic and approved budget levels Sport Zone Sports Fashion 17.2 7.3 24.5 17.2 8.2 25.4 2.0% 2.0% Gross margins are assumed to be broadly 12.3% 10.6% consistent with recent historic and approved budget levels Sprinter store portfolio Sports Fashion 6.8 3.0 9.8 6.2 3.1 9.3 2.0% 2.0% Gross margins are assumed to be broadly 12.2% 10.6% consistent with recent historic and approved budget levels Go Outdoors Outdoor – 16.1 16.1 1.9 50.2 52.1 2.0% 2.0% Gross margins are assumed to be broadly 16.0% 12.9% consistent with recent historic and approved budget levels Footasylum Sports Fashion – – – 27.3 31.7 59.0 2.0% 2.0% Gross margins are assumed to be broadly 11.7% 8.9% consistent with recent historic and approved budget levels Shoe Palace Sports Fashion 386.3 101.1 487.4 – – – 4.0% 1.5% Gross margins are assumed to be broadly 15.6% – consistent with recent historic and approved budget levels Other Sports Fashion 38.7 17.2 55.9 24.7 4.5 29.2 1.0%– 1.0%– A range of gross margin assumptions, from 7.0%– 7.5%– & Outdoor 3.0% 3.0% broadly consistent with approved budget 13.1% 14.3% levels to improvements of up to 2% in the short term to reflect implementation of enhanced group terms and focused strategy regarding stock and merchandising 578.3 196.2 774.5 209.4 159.0 368.4 The total intangible assets for Finish Line include a decrease of £8.5m in relation to exchange rate fluctuations (2020: increase of £8.4m). The total intangible assets for Shoe Palace include a decrease of £27.7 million due to exchange rate fluctuations (2020: £nil). (1) The short term growth rate is the Board approved compound annual growth rate for the four year period following the January 2022 financial year currently underway. (2) The long term growth rate is the rate used thereafter, which is an estimate of the growth based on past experience within the Group taking account of economic growth forecast for the relevant industries. (3) The discount rate applied is a pre-tax measure based on the historical industry average weighted-average cost of capital, with a possible debt leverage of 15% at a market interest rate of 5%. The discount rate applied reflects any specific risk premiums relevant to the individual cash-generating unit. The impact of the Right of Use asset funding under IFRS 16 has been taken into consideration and factored into the calculation of the discount rate. These discount rates are considered to be equivalent to the rates a market participant would use.

258 259 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

12. Intangible Assets (continued) 12. Intangible Assets (continued)

The cash flow projections used in the value- costs, the Board would also take actions to For the Footasylum cash-generating unit, • Reducing the assumed short term store in-use calculations are all based on actual mitigate the loss of gross profit by reducing as noted above, an impairment charge of and online sales growth by 1%, assuming operating results, together with financial other costs. With regards to the assessment £55.6 million has been recorded in relation the business would be unable to reduce forecasts and strategy plans approved of value-in-use of all cash-generating units, to the fascia name and goodwill in the selling and distribution and administrative by the Board covering a five year period. with the exception of Go Outdoors and year, leaving £2.5 million of brand names. costs, would result in headroom of £22.8 These forecasts and plans are based on Footasylum, the Board believes that there Following this impairment, the headroom million. All other assumptions remain both past performance and expectations are no reasonably possible changes in any available at 30 January 2021 is nil and unchanged. for future market development. of the key assumptions, which would cause therefore any change in key assumption • Increasing the pre-tax discount rate by 1% the carrying value of the unit to exceed about future business performance of would result in headroom of £19.6 million. its recoverable amount and the amount SENSITIVITY ANALYSIS Footasylum could lead to a material All other assumptions remain unchanged. A sensitivity analysis has been performed of headroom would cover large negative adjustment to the carrying amount of • Reducing the margin rate by 1% would on the base case assumptions used growth rates. fascia name through reversal of the lead to an impairment of £9.4 million. All for assessing the goodwill and other The table below shows the amount of head recognised impairment up to a maximum other assumptions remain unchanged. intangibles. room for each cash generating unit, as of £23.9 million within the next financial year. • If the UK entered a further lockdown for The Board has considered the possibility well as the current assumption used and one month in November 2021, this would of each business achieving less revenue the revised assumption which would be For the Go Outdoors cash-generating result in headroom of £21.0 million. The and gross profit % than forecast. Whilst required to eliminate the headroom. unit, there is £26.6 million of headroom impact on store profit and the retention any reduction in revenue would be partially following the impairment of £33.3 million of online sales were assumed to be similar offset by a reduction in revenue related in the first half of the year (2020: full year impairment of £42.5 million). Any change to the impact that Go Outdoors has seen during previous UK lockdown periods. All Headroom Short Term Growth Rate Long Term Growth Rate Pre Tax Discount Rate in key assumptions may therefore result in other assumptions remain unchanged. Company £m % Used Revised % % Used Revised % % Used % Revised further impairments. Despite the level of Champion store portfolio 213.5 1.0 -50.5 1.0 more than 7.0 86.0 headroom in the Go Outdoors impairment    -1,000.0 model, it was not considered appropriate Finish Line 812.7 2.0 -73.3 1.0 more than 13.7 53.2 to reverse any of the impairments made    -1,000.0 during the first half of the financial year First Sport store portfolio 248.7 1.0 -58.9 1.0 more than 8.5 121.2 given how sensitive the model is to    -1,000.0 changes in the assumptions, particularly Mainline Menswear 37.4 1.0 -33.6 1.0 -235.03 10.1 30.0 the margin rate. Significant changes in key assumptions Sport Zone 140.8 2.0 -75.7 2.0 more than 12.3 39.0 could cause the carrying value of the unit    -1,000.0 to exceed its recoverable amount. The Sprinter store portfolio 226.1 2.0 -75.6 2.0 more than 12.2 46.2 following sensitivities were performed:    -1,000.0 Go Outdoors 26.6 2.0 -22.0 2.0 -7.71 16.0 20.8

260 261 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

13. Property, Plant and Equipment 13. Property, Plant and Equipment (continued)

Freehold land, Improvements OWNED ASSETS costs to sell and value-in-use. Impairment long leasehold & to short freehold leasehold Assets under Fixtures and Computer Motor Right of use Items of property, plant and equipment losses recognised in prior periods are properties properties construction fittings equipment vehicles assets Total are stated at cost less accumulated assessed at each reporting period date for £m £m £m £m £m £m £m £m depreciation and impairment losses. Where any indications that the loss has decreased Cost parts of an item of property, plant and or no longer exists. An impairment loss At 2 February 2019 54.8 108.0 3.1 621.1 79.4 1.1 – 867.5 equipment have different useful economic is reversed if there has been a change Recognised on adoption lives, they are accounted for as separate in the estimates used to determine the of IFRS16 – – – – – – 1,895.1 1,895.1 items. recoverable amount. An impairment loss is Additions 0.6 23.0 20.6 89.4 13.0 0.6 418.1 565.3 reversed only to the extent that the assets Disposals – (3.9) – (18.3) (1.8) (0.2) (36.4) (60.6) DEPRECIATION carrying amount does not exceed the Reclassifications (0.2) (5.6) (14.3) 9.6 (3.4) (0.4) (92.6) (106.9) Depreciation is charged to the carrying amount that would be held (net Acquisitions – 0.3 1.9 18.9 3.0 0.2 – 24.3 Consolidated Income Statement over the of depreciation) if no impairment had been Exchange differences (0.7) (1.4) (0.1) (9.1) (0.7) – (19.0) (31.0) estimated useful life of each part of an realised. At 1 February 2020 54.5 120.4 11.2 711.6 89.5 1.3 2,165.2 3,153.7 item of property, plant and equipment. Additions 4.1 16.6 0.2 68.9 14.6 0.8 214.9 320.1 The estimated useful economic lives are as LEASED ASSETS Disposals – (1.7) – (7.4) (1.2) (0.1) (204.0) (214.4) follows: Assets funded through finance leases and similar hire purchase contracts and those Reclassifications – (22.7) (7.5) (23.6) (14.5) (0.8) 14.4 (54.7) Freehold land not depreciated Acquisitions 0.4 26.6 0.7 10.2 1.5 0.2 143.2 182.8 previously classified as operating leases Exchange differences 1.2 3.8 0.6 3.1 1.2 0.1 22.4 32.4 Warehouse 15–25 years on a are now recognised in the consolidated straight line basis statement of financial position under At 30 January 2021 60.2 143.0 5.2 762.8 91.1 1.5 2,356.1 3,419.9 IFRS16 Leases as a right of use asset. Depreciation and impairment Long leasehold and 2% per annum on a Note 14 describes the recognition and At 2 February 2019 2.7 30.5 – 241.2 53.0 0.3 – 327.7 freehold properties straight line basis subsequent measurement of leased assets Charge for the period 1.9 16.4 – 75.8 11.2 0.6 303.3 409.2 Improvements to life of lease on a under IFRS16. Disposals – (2.0) – (11.4) (1.4) (0.1) – (14.9) short leasehold straight line basis Impairment charges of £13.5 million Reclassifications – (2.2) – 3.7 (0.2) – – 1.3 properties (2020: £12.2 million) relate to all classes Impairments – 0.3 – 4.0 0.1 – 7.8 12.2 of property, plant and equipment in Computer 3–4 years on a Exchange differences – (0.2) – (1.4) (0.3) – – (1.9) cash-generating units which are loss equipment straight line basis At 1 February 2020 4.6 42.8 – 311.9 62.4 0.8 311.1 733.6 making and where it is considered that Charge for the period 5.1 18.8 – 98.4 13.8 0.7 321.4 458.2 Fixtures and fittings 5–7 years, or length the position cannot be recovered as a Disposals – (1.0) – (4.6) (1.2) (0.1) (32.2) (39.1) of lease if shorter, result of a continuing deterioration in the Reclassifications 0.1 (24.7) – (25.9) (15.7) (0.4) – (66.6) on a straight line performance in the particular store. The Impairments – 7.0 – 2.9 0.2 – 3.4 13.5 basis cash-generating units represent individual Exchange differences 0.1 1.1 – 2.1 0.6 – – 3.9 stores with the loss based on the specific Motor vehicles 25% per annum on revenue streams and costs attributable At 30 January 2021 9.9 44.0 – 384.8 60.1 1.0 603.7 1,103.5 a reducing balance to those cash-generating units. Assets in Net book value basis impaired stores are written down to their At 30 January 2021 50.3 99.0 5.2 378.0 31.0 0.5 1,752.4 2,316.4 recoverable amount which is calculated as IMPAIRMENT OF PROPERTY, PLANT AND At 1 February 2020 49.9 77.6 11.2 399.7 27.1 0.5 1,854.1 2,420.1 the greater of the fair value less costs to EQUIPMENT AND NON-CURRENT OTHER sell and value-in-use. At 2 February 2019 52.1 77.5 3.1 379.9 26.4 0.8 – 539.8 ASSETS Included within the depreciation charge Property, plant and equipment and for the period ended 30 January 2021 is non-current other assets are reviewed accelerated depreciation of £16.5 million for impairment if events or changes in (2020: £0.3 million) following a review of circumstances indicate that the carrying the useful economic life of certain items of amount of an asset or a cash-generating property, plant and equipment and assets unit is not recoverable. A cash-generating capitalised. unit is an individual store. The recoverable amount is the greater of the fair value less

262 263 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

14. Leases 14. Leases (continued)

The Group adopted IFRS 16 Leases from 3 In rare cases the decision about how and of the end of the useful life of the right-of- modification. Any revised consideration February 2019. IFRS 16 introduced a single, for what purpose the asset is used is use asset or the end of the lease term. A and / or revised lease length are taken into on-balance sheet accounting model for predetermined, the Group has the right to right-of-use asset’s useful economic life is account in a remeasurement calculation lessees. As a result, the Group, as a lessee, direct the use of the asset if either: determined on the same basis as for land that includes a revised discount rate at the recognised right-of-use assets representing The Group has the right to operate the and buildings recognised in property, plant effective date of the modification of terms. its rights to use the underlying assets and asset; or and equipment. In addition, the right-of-use The revised discount rate is determined as lease liabilities representing its obligation asset is periodically reduced by impairment the lessee’s incremental borrowing rate at to make lease payments. The Group applied The Group designed the asset in a way losses, if any and adjusted for certain the effective date of the modification. IFRS 16 using the modified retrospective that predetermines how and for what remeasurements of the lease liability. The Group has applied judgement to approach, under which any cumulative purpose it will be used. The lease liability is initially measured at determine the lease term for some lease effect of initial application was recognised This policy is applied to contracts entered the present value of the lease payments contracts in which it is a lessee that in retained earnings at 3 February 2019. into, or changed, on or after 3 February that are not paid at the commencement include renewal options. The assessment 2019. date, discounted at the rate implicit in of whether the Group is reasonably certain SIGNIFICANT ACCOUNTING POLICY At inception or on reassessment of a the lease. If the rate implicit in the lease to exercise such options impacts the The Group leases assets which consist of contract that contains a lease component, is not readily available then payments are lease term, which significantly affects the properties, vehicles and equipment. The the Group allocates the consideration in discounted using the Group’s incremental amount of lease liabilities and right-of-use most significant leases in size for the Group the contract to each lease component borrowing rate. assets recognised. are its retail stores, offices and warehouses. on the basis of their relative stand-alone Lease payments included in the When the lease liability is remeasured in Some leases include an option to renew prices. However, for the leases of land and measurement of the lease liability comprise this way, a corresponding adjustment is the lease for an additional number of years buildings in which it is a lessee, the Group the following: made to the carrying amount of the right- after the end of the non-cancellable period. has elected not to separate non-lease of-use asset, or is recorded in profit or loss Some leases provide for additional rent • Fixed payments, including in-substance components and account for the lease and if the carrying amount of the right-of-use payments that are based on changes in fixed payments; non-lease components as a single lease asset has been reduced to zero. local price indices. component. • Variable lease payments that depend The Group has also applied judgement to The Group assesses whether a contract on an index or a rate, initially measured On transition to IFRS 16, the Group determine the lease term for some lease is or contains a lease. Under IFRS 16, a using the index or rate as at the elected to apply the practical expedient contracts in which it is a lessee that either contract is, or contains, a lease if the commencement date; and to grandfather the assessment of which have no specified end date, or where the contract conveys a right to control the use transactions are leases. It applied IFRS • Lease payments in an optional renewal Group continues to occupy the property of an identified asset for a period of time 16 only to contracts that were previously period if the Group is reasonably certain despite the contractual lease end date in exchange for consideration. To assess identified as leases. Therefore, the to exercise an extension option and having passed. In determining the lease whether a contract conveys the right to definition of a lease under IFRS 16 has been penalties for early termination of a lease term, the Group takes into consideration control the use of an identified asset, the applied only to contracts entered into or unless the Group is reasonably certain not its commercial strategy on a store by Group assesses whether: changed on or after 3 February 2019. to terminate early. store basis and the future intentions of the • The contract involves the use of an AS A LESSEE The lease liability is measured at amortised Group regarding the duration of continuing identified asset – this may be specified The Group recognises a right-of-use cost using the effective interest method. occupation of the property. explicitly or implicitly and should asset and a lease liability at the lease It is remeasured when there is a change The Group presents right-of-use assets that be physically distinct or represent commencement date. Lease liabilities in future lease payments arising from a do not meet the definition of investment substantially all of the capacity of a are measured at the present value of the change in index or rate, a change in the property in ‘property, plant and equipment’, physically distinct asset. If the supplier remaining lease payments, discounted at estimate of the amount expected to be the same line item as it presents underlying has a substantive substitution right, then the Group’s incremental borrowing rate for payable under a residual value guarantee, assets of the same nature that it owns. The the asset is not identified; the relevant subsidiary in which the lease or as appropriate in the assessment of Group presents lease liabilities separately • The Group has the right to obtain is represents a contractual commitment. whether a purchase or extension option within the statement of financial position. substantially all of the economic benefits Right-of-use assets are measured at an is reasonably certain to be exercised or a from use of the asset throughout the amount equal to the lease liability, adjusted termination option is reasonably certain not SHORT-TERM LEASES AND LEASES OF period of use; and by the amount of any prepaid or accrued to be exercised. LOW-VALUE ASSETS The Group has elected not to recognise • The Group has the right to direct the use lease payments plus any initial direct costs Where revised lease terms involve a change right-of-use assets and lease liabilities for of the asset. The Group has this right incurred less any lease incentives received. in the scope of a lease, or the consideration short-term leases that have a lease term of when it has the decision-making rights for a lease, that was not part of the original The right-of-use asset is subsequently 12 months or less and leases of low-value that are most relevant to changing how terms and conditions of the lease then depreciated using the straight line method assets, including IT equipment. The Group and for what purpose the asset is used. these changes are accounted for as a lease from the commencement date to the earlier recognises the lease payments associated 264 265 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

14. Leases (continued) 14. Leases (continued) with these leases as an expense on a above, then it classifies the sub-lease as an Property Vehicles Total straight-line basis over the lease term. operating lease. £m £m £m Cost AS A LESSOR The Group recognises lease payments received under operating leases as income Recognised on adoption of IFRS16 1,891.3 3.8 1,895.1 The Group sub-leases a small number Additions 416.5 1.6 418.1 of properties. When the Group acts as on a straight-line basis over the lease term as part of ‘other income’. Disposals (36.4) – (36.4) a lessor, it determines at lease inception Remeasurement adjustments (93.5) 0.9 (92.6) whether each lease is a finance lease or an When the Group is an intermediate lessor Foreign exchange retranslation (19.0) – (19.0) operating lease. the sub-leases are classified with reference At 1 February 2020 2,158.9 6.3 2,165.2 to the right-of-use asset arising from To classify each lease, the Group makes an Additions 211.6 3.3 214.9 overall assessment of whether the lease the head lease, not with reference to the underlying asset. On acquisition 143.2 – 143.2 transfers substantially all of the risks and Disposals (203.8) (0.2) (204.0) rewards incidental to ownership of the Remeasurement adjustments 8.2 6.2 14.4 underlying asset. If this is the case, the THE GROUP AS A LESSEE Foreign exchange retranslation 22.3 0.1 22.4 lease is a finance lease; if not, then it is an The Group leases many assets including At 30 January 2021 2,340.4 15.7 2,356.1 operating lease. As part of this assessment, land and buildings, vehicles, machinery and the Group considers certain indicators such IT equipment. Information about leases for Depreciation and impairment as whether the lease is for the major part of which the Group is a lessee is presented Depreciation charge for the period 301.4 1.9 303.3 the economic life of the asset. below. Impairment of Right of use assets 7.8 – 7.8 At 1 February 2020 309.2 1.9 311.1 When the Group is an intermediate lessor, The Group presents right-of-use assets that it accounts for its interests in the head do not meet the definition of investment Depreciation charge for the period 317.2 4.2 321.4 lease and the sub-lease separately. It property in ‘property, plant and equipment’, Depreciation on disposals (32.2) – (32.2) assesses the lease classification of a sub- the same line item as it presents underlying Impairment of Right of use assets 3.4 – 3.4 lease with reference to the right-of-use assets of the same nature that it owns. The At 30 January 2021 597.6 6.1 603.7 asset arising from the head lease, not with carrying amount of the right-of-use asset is At 30 January 2021 1,742.8 9.6 1,752.4 reference to the underlying asset. If a head as below. At 1 February 2020 1,849.7 4.4 1,854.1 lease is a short-term lease to which the Group applies the exemption described Within remeasurement adjustments are lease modifications totalling £53.7 million which increase the value of the right of use asset as a result of recalculating leases for modifications made during the year, which are predominantly the result of altered terms 2021 2020 due to discussions with landlord in light of the COVID-19 pandemic. Lease modifications Note £m £m have been accounted for by remeasuring the right of use asset and corresponding lease Property, plant and equipment owned 13 564.0 566.0 liability for any change in lease length and total consideration, recalculating using a Right-of-use assets, except for investment property 13 1,752.4 1,854.1 revised discount rate of the lessee’s incremental borrowing rate at the effective date of the 2,316.4 2,420.1 modification. Other remeasurement adjustments to the right of use asset predominantly relate to deferred income and rolling leases. The Group presents lease liabilities separately within the statement of financial position. The carrying amount of the lease liability as at 30 January 2021 is below, along with a maturity analysis of contractual undiscounted cash flows to which the Group is committed. As at 30 January 2021, the weighted average discount rate applied to the lease portfolio of the Group is 3.1% (2020: 3.5%) 2021 2020 £m £m Maturity analysis – contractual undiscounted cash flows Within one year 355.3 333.2 Later than one year and not later than five years  1,104.2 1,076.7 After five years  713.5 835.1 Total undiscounted lease liabilities 2,173.0 2,245.0

266 267 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

14. Leases (continued) 14. Leases (continued)

2021 2020 THE GROUP AS A LESSOR £m £m Lease income from lease contracts in which the Group acts as a lessor is as below. Lease liabilities included in the statement of financial position 1,929.8 1,992.7 52 weeks to 52 weeks to Current  301.8 285.0 30 January 2021 1 February 2020 £m £m Non-current  1,628.0 1,707.7 Operating Lease Lease income 0.8 0.8 Amounts recognised in profit or loss: The Group leases out residential and office properties. The Group has classified these 52 weeks to 52 weeks to 30 January 2021 1 February 2020 leases as operating leases, because they do not transfer substantially all the risk and £m £m rewards incidental to the ownership of the assets. Interest on lease liabilities 54.9 71.9 The following table sets out a maturity analysis of lease payments, showing the Variable lease payments not included in the undiscounted lease payments to be received after the reporting date. measurement of lease liabilities 37.9 36.2 Income from subleasing right-of-use assets 0.8 0.8 2021 2020 Expenses relating to short terms leases and low value leases 3.9 22.7 £m £m Within one year 0.2 0.2 Later than one year and not later than five years – 0.3 Amounts recognised in statement of cash flows: 52 weeks to 52 weeks to 0.2 0.5 30 January 2021 1 February 2020 £m £m Total cash outflow for leases 285.2 264.8 15. Non-current Other Assets PROPERTY LEASES excluding the element linked to sales since KEY MONEY LEGAL FEES The Group leases buildings for its office the variable element of these payments is Monies paid in certain countries to give Legal fees and other costs associated with space, retail stores and warehouses. These not based on an index or rate. Where the access to retail locations are capitalised the acquisition of a leasehold interest are leases typically run for a period of ten variable element of the payments is based within non-current assets. Key money is capitalised within non-current other assets years. Some leases include an option to on an index or rate, initial and subsequent stated at historic cost less impairment and amortised over the life of the lease. On renew the lease for an additional number of measurement of the lease liability includes losses. These assets are not depreciated adoption of IFRS 16 Leases, initial direct years after the end of the non-cancellable these index linked payments. as past experience has shown that the key costs incurred by the Group of entering into period. Some require the Group to make The Group sub-leases some of its money is recoverable on disposal of a retail property leases relating to legal fees were payments that relate to the property properties under operating leases. location and is deemed to have an indefinite deducted from the right of use asset initially taxes levied on the lessor and insurance useful economic life but will be impaired recognised in the statement of financial payments made by the lessor. OTHER LEASES if evidence exists that the market value is position. The Group leases vehicles and equipment Some properties leased by the Group less than the historic cost. Gains / losses on provide for additional rent payments that (including IT equipment) with lease terms key money from the subsequent disposal of LEASE PREMIA are based on changes in local price indices of three to five years. Leases of equipment these retail locations are recognised in the Money paid in certain countries specifically or sales that the Group makes at the leased are of low-value items, therefore the Group Consolidated Income Statement. to landlords or tenants as an incentive to store in the period. In respect of contracts has elected not to recognise right-of-use exit an existing lease commonly referred linked to store sales, initial recognition assets and lease liabilities for these leases. DEPOSITS to as compensation for early termination, of the lease liability is measured at the Money paid in certain countries as deposits to enable acquisition of that lease. These present value of the minimum lease to store landlords as protection against payments are capitalised within other non- payments specified in the contract non-payment of rent, is capitalised within current assets and amortised over the life non-current assets. Deposits are assessed of the lease. On adoption of IFRS 16 Leases, for recoverability on leased stores on a initial direct costs incurred by the Group practical basis and a provision for the of entering into property leases relating impairment of these deposits is established to lease premia were deducted from the when there is objective evidence that the right of use asset initially recognised in the landlord will not repay the deposit in full. statement of financial position.

268 269 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

15. Non-current Other Assets (continued) 17. Trade and Other Receivables

Key Money Deposits Legal Fees Lease Premia Total CREDIT RISK EXPECTED CREDIT LOSS ASSESSMENT £m £m £m £m £m The Group’s exposure to credit risk Each subsidiary within the Group allocates Cost is influenced mainly by the individual each exposure to a credit risk grade At 2 February 2019 24.1 35.3 25.5 13.0 97.9 characteristics of each customer. However, based on the data that is determined to IFRS16 reclassification – – (25.5) (13.0) (38.5) management also considers the factors be predictive of the risk of loss (including Additions 0.1 6.7 – – 6.8 that may influence the credit risk of its but not limited to external ratings, audited Disposals (0.9) (2.9) – – (3.8) customer base, including the default risk financial statements, management Exchange differences (0.3) (12.6) – – (12.9) associated with the industry and country in accounts and available press information At 1 February 2020 23.0 26.5 – – 49.5 which customers operate. about customers) and by applying Additions 0.4 3.5 – – 3.9 The trade receivables balances are typically experienced credit judgement. Disposals (0.1) (2.1) – – (2.2) held by the wholesale businesses within the An allowance matrix is used to measure Acquisitions – 0.6 – – 0.6 Group. Each subsidiary establishes a credit the expected credit losses (ECL’s) of trade Reclassifications – 0.2 – – 0.2 policy under which each new customer is receivables from smaller customers, which Exchange differences 0.2 12.4 – – 12.6 analysed individually for creditworthiness comprise a very large number of small before the payment and delivery terms and balances. Loss rates are based on actual At 30 January 2021 23.5 41.1 – – 64.6 conditions are offered. The Group review credit loss experience over the past five Depreciation and impairment includes financial statements, credit agency years, factoring in other information such At 2 February 2019 1.5 0.1 12.3 4.9 18.8 information and industry information. Each as current conditions, age of the customer IFRS16 reclassification – – (12.3) (4.9) (17.2) subsidiary limits its credit exposure by relationship and the view of the economic At 1 February 2020 1.5 0.1 – – 1.6 setting payment periods and, in certain conditions over the expected lives of the Exchange differences (0.2) – – – (0.2) circumstances, these are approved by receivables. Group management. At 30 January 2021 1.3 0.1 – – 1.4 The Group recognises loss allowances Customers are monitored by taking for ECL’s on financial assets measured Net book value into account their credit characteristics; at amortised cost and measures the loss At 30 January 2021 22.2 41.0 – – 63.2 whether they are a wholesale or retail allowances at an amount equal to the At 1 February 2020 21.5 26.4 – – 47.9 customer, their geographic location, lifetime ECL’s for trade receivables. industry, trading history with the Group and At 2 February 2019 22.6 35.2 13.2 8.1 79.1 existence of previous financial difficulties.

2021 2020 £m £m 16. Inventories Current assets Trade receivables 46.2 42.6 Inventories are stated at the lower of cost and net realisable value. Cost is based on the Other receivables 26.0 39.0 weighted average principle. Provisions are made for obsolescence, mark downs and Prepayments and accrued income 69.0 102.3 shrinkage. 141.2 183.9 2021 2020 £m £m A summary of the Group’s exposure to credit risk for trade receivables is as follows: Finished goods and goods for resale 813.7 811.8 2021 2020 Gross Provision Net Gross Provision Net The cost of inventories recognised as expenses and included in cost of sales for the 52 £m £m £m £m £m £m weeks ended 30 January 2021 was £3,205.7 million (2020: £3,236.0 million). Not past due 21.7 (0.2) 21.5 28.1 (0.7) 27.4 The Group has £89.0 million (2020: £74.9 million) of stock provisions at the end of the Past due 0 – 30 days 10.0 – 10.0 7.1 – 7.1 period. Past due 30 – 60 days 7.6 (0.1) 7.5 5.1 (0.2) 4.9 Cost of inventories includes a net charge of £21.7 million (2020: £21.1 million) in relation to Past 60 days 8.2 (1.0) 7.2 3.6 (0.4) 3.2 net provisions recognised against inventories. 47.5 (1.3) 46.2 43.9 (1.3) 42.6

At 30 January 2021, the exposure to credit risk for trade receivables by geographic region was as follows:

270 271 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

17. Trade and Other Receivables (continued) 18. Cash and Cash Equivalents At 30 January 2021, the exposure to credit risk for trade receivables by geographic region Cash and cash equivalents comprise cash balances and call deposits with an original was as follows: maturity of three months or less. Bank overdrafts are included as a component of cash and As at As at cash equivalents for the purpose of the Consolidated Statement of Cash Flows, as these are 30 January 2021 1 February 2020 used as an integral part of the Group’s cash management. Total Total 2021 2020 £m £m £m £m UK 20.8 13.4 Cash at bank and in hand 964.4 465.9 Europe 19.6 21.0 US 4.0 5.2 Rest of world 3.1 4.3 Total 47.5 43.9 19. Interest-bearing Loans and Borrowings

At 30 January 2021, the exposure to credit risk for trade receivables by type of Interest-bearing borrowings are recognised initially at fair value less attributable transaction counterparty was as follows: costs. Following the initial recognition, interest-bearing borrowings are stated at amortised As at As at cost with any difference between cost and redemption value being recognised in the 30 January 2021 1 February 2020 Total Total Consolidated Income Statement over the period of the borrowings on an effective interest £m £m basis. Wholesale customers 22.6 25.3 2021 2020 Retail customers 7.3 9.6 £m £m End user customers 8.5 5.5 Current liabilities Other 9.1 3.5 Bank loans and overdrafts 52.0 20.4 Other loans 68.9 – Total 47.5 43.9 120.9 20.4 At 30 January 2021, the carrying amount of the Group’s most significant customer was £5.0 Non-current liabilities million (2020: £3.0 million). Bank loans 48.1 14.9 Other loans – 0.7 The following table provides information about the exposure to credit risk and expected credit losses for trade receivables as at 30 January 2021: 48.1 15.6 Weighted Gross carrying Loss Credit average loss rate amount allowance impaired The following provides information about the contractual terms of the Group’s interest- £m £m £m £m bearing loans and borrowings. For more information about the Group’s exposure to interest Not past due 0.9% 21.7 (0.2) – rate risk, see Note 20. Past due 0 – 30 days – 10.0 – – Past due 30 – 60 days 1.3% 7.6 (0.1) – Past due 61 – 90 days – 0.6 – – BANK FACILITIES More than 90 days past due 13.2% 7.6 (1.0) – As at 30 January 2021, the Group has a syndicated committed £700 million bank facility which expires on 6 November 2024. The Group is subject to covenants on Net Worth, Net Total 2.7% 47.5 (1.3) – Debt Leverage and a Fixed Charge Cover. Under this facility, a maximum of 15 drawdowns can be outstanding at any time with Movement on this provision is shown below: drawdowns made for a period of one, two, three or six months with interest currently £m payable at a rate of LIBOR plus a margin of 0.9% (2020: 0.9%). The arrangement and At 2 February 2019 (as per IFRS 9) 1.3 underwriting fee payable on the facility is 1.0% and the commitment fee on the undrawn Created (0.3) element of the facility is 35% of the applicable margin rate. Released 0.4 As at 30 January 2021, this facility encompassed cross guarantees between the Company, Acquired (0.1) Blacks Outdoor Retail Limited, Tessuti Limited, Go Outdoors Retail Limited, The Finish Line At 1 February 2020 1.3 Inc, The Finish Line USA Inc, Genesis Holdings Inc, Genesis Finco Limited, Focus Brands Created 0.1 Limited and Focus International Limited. From 16 March 2021, Genesis Topco Inc and Shoe Released (0.1) Palace Corporation were also included within the cross guarantee. At 30 January 2021 1.3

The other classes within trade and other receivables do not contain impaired assets. 273 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

19. Interest-bearing Loans and Borrowings (continued) 20. Financial Instruments (continued)

At 30 January 2021, £nil was drawn down on this facility (2020: £nil). FINANCIAL ASSETS The Group’s second principal bank facility is a syndicated Asset Based Lending Facility The Group’s financial assets are non-derivative and derivative financial assets. The non- in the United States which has a maximum revolving advance amount of approximately derivative assets have fixed or determinable payments that are not quoted in an active $300 million and expires on 18 June 2023. At 30 January 2021 $nil was drawn down on this market. The Group’s financial assets comprise ‘Trade receivables’ and ‘Cash and cash facility (2020: $nil). equivalents’ in the Consolidated Statement of Financial Position. Cash and cash equivalents comprise short-term cash deposits with major clearing banks BANK LOANS AND OVERDRAFTS earning floating rates of interest based upon bank base rates or rates linked to LIBOR and The bank loans and overdrafts attract interest rates at 0.5% - 9.9%. The overdrafts are EURIBOR. repayable on demand and the bank loans are repayable over periods between two and 65 The currency profile of cash and cash equivalents is shown below: months. Included within bank loans and overdrafts are bank loans of £84.4 million (2020: 2021 2020 £29.7 million) and overdrafts of £15.7 million (£5.6 million). The maturity of the bank loans £m £m and overdrafts is as follows: Cash and cash equivalents 964.4 465.9 2021 2020 Sterling 378.7 120.1 £m £m Euros 306.8 188.9 Within one year 52.0 20.4 US Dollars 212.2 114.1 Between one and five years 48.1 14.9 Australian Dollars 30.2 15.6 100.1 35.3 Danish Krone 7.1 5.1 Canadian Dollars 6.1 – Other 23.3 22.1 OTHER LOANS 964.4 465.9 The acquisition of Pretty Green Limited included loans with balances remaining of £1.8 The currency profile of trade receivables is shown below: million at the time of acquisition, £1.1m of the loans were repaid during the prior period and the remaining £0.7m was repaid during the current period. 2021 2020 £m £m Other loans < 1 year is the deferred consideration payable at 30 January 2021 in respect of Trade receivables 46.2 42.6 the acquisition of Shoe Palace Corporation (see Note 11). The deferred consideration is not contingent. Sterling 20.6 15.3 Euros 17.7 16.3 The maturity of the other loans is as follows: US Dollars 5.1 8.3 2021 2020 Australian Dollars 0.2 0.4 £m £m Canadian Dollars 0.1 0.1 Less than one year 68.9 – Other 2.5 2.2 Between one and five years – 0.7 46.2 42.6

FINANCE LEASES FINANCIAL LIABILITIES As at 30 January 2021 and 1 February 2020, the Group’s liabilities under finance leases are The Group’s financial liabilities are all categorised as other financial liabilities. Other included in Leases, see Note 14. financial liabilities, with the exception of foreign exchange forward contracts and put option liabilities are measured at amortised cost. The Group’s other financial liabilities comprise ‘Interest-bearing loans and borrowings’ and ‘Trade payables’. The currency profile of interest-bearing loans and borrowings is shown below: 20. Financial Instruments 2021 2020 £m £m Financial assets and financial liabilities are recognised in the Group’s Statement of Financial Interest-bearing loans and borrowings 169.0 36.0 Position when the Group becomes a party to the contractual provisions of the instrument. Sterling 15.9 8.9 Financial assets are derecognised when the contractual rights to the cash flows from the Euros 78.5 19.9 financial assets expire or are transferred. Financial liabilities are derecognised when the US Dollars 68.9 – obligation specified in the contract is discharged, cancelled or expires. Other 5.7 7.2 169.0 36.0

274 275 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

20. Financial Instruments (continued) 20. Financial Instruments (continued)

The currency profile of trade payables is shown below: rate for the accounting period. Foreign loss on the hedging instrument is recognised 2021 2020 currency differences are recognised in Other in the Consolidated Income Statement. £m £m Comprehensive Income and are presented in The Group is exposed to foreign currency risk Trade payables 514.2 426.6 the foreign currency translation reserve. on sales and purchases that are denominated Sterling 241.6 201.8 DERIVATIVE FINANCIAL INSTRUMENTS in a currency other than pound sterling. The Euros 114.5 86.7 The Group uses derivative financial currencies giving rise to this risk are the Euro US Dollars 142.1 127.6 instruments to hedge its exposure to foreign and US Dollar with sales made in Euros and Australian Dollars 11.9 7.6 exchange and interest rate risks arising from purchases made in both Euros and US Dollars Danish Krone 0.5 0.1 operational activities. In accordance with (principal exposure). To protect its foreign Canadian Dollars 1.2 – its treasury policy, the Group does not hold currency position, the Group sets a buying Other 2.4 2.8 or issue derivative financial instruments for rate in each country for the purchase of goods in US Dollars at the start of the buying 514.2 426.6 trading purposes. However, derivatives that do not qualify for hedge accounting are season (typically six to nine months before the product actually starts to appear in the RISK MANAGEMENT Group is exposed to cash flow interest risk accounted for as trading instruments. stores) and then enters into a number of local The Group’s operations expose it to a variety with interest paid at a rate of LIBOR plus a Derivative financial instruments are currency / US Dollar contracts whereby the of financial risks that include the effects of margin of 0.9% (2020: 0.9%). recognised initially at fair value and minimum exchange rate on the purchase of changes in exchange rates, interest rates, A change of 1.0% in the average interest remeasured at each period end. The gain dollars is guaranteed. credit risk and its liquidity position. The Group rates during the year, applied to the Group’s or loss on remeasurement to fair value is As at 30 January 2021, options have been manages these risks through the use of floating interest rate loans and borrowings recognised immediately in the Consolidated entered into to protect approximately 95% derivative instruments, which are reviewed on as at the reporting date, would change profit Income Statement. of the US Dollar trading requirement for the a regular basis. Derivative instruments are not before tax by £nil (2020: £nil) and would Interest rate swaps are recognised at fair period to January 2022. The balance of any entered into for speculative purposes. There change equity by £nil (2020: £nil). The value in the Consolidated Statement of US Dollar requirement for the period will be are no concentrations of risk in the period to calculation is based on any floating interest 30 January 2021. Financial Position with movements in fair satisfied at spot rates. rate loans and borrowings drawn down at the value recognised in the Consolidated Income period end date. Calculations are performed Statement for the period. The fair value of As at 30 January 2021, the fair value of INTEREST RATE RISK on the same basis as the prior year and interest rate swaps is the estimated amount these instruments was a net liability of £20.7 The Group finances its operations by assume that all other variables remain that the Group would receive or pay to million (2020: net asset of £10.8 million). a mixture of retained profits and bank unchanged. terminate the swap at the reporting date, £12.7 million is due within one year and the borrowings. The Group’s borrowings are at taking into account current interest rates remaining £8.0 million is due between one floating rates, partially hedged by floating FOREIGN CURRENCY RISK and the respective risk profiles of the swap and two years. A loss of £31.5 million (2020: rate interest on deposits, reflecting the counterparties. gain of £5.3 million) has been recognised in seasonality of its cash flow. Interest rate FOREIGN CURRENCY TRANSLATION cost of sales within the Consolidated Income risk therefore arises from bank borrowings. Transactions denominated in foreign HEDGING OF MONETARY ASSETS AND Statement for the change in fair value of Interest rate hedging has not been put in currencies are translated into sterling at LIABILITIES these instruments. place on the current facility. The Directors the exchange rate prevailing on the date Where a derivative financial instrument is of the transaction. Monetary assets and We have considered the credit risk of the continue to be mindful of the potential used to hedge the foreign exchange exposure Group’s and counterparty’s credit risk and volatility in base rates, but at present do not liabilities denominated in foreign currencies of a recognised monetary asset or liability, no are translated into sterling at the rate of this is not expected to have a material effect consider a long-term interest rate hedge to hedge accounting is applied and any gain or on the valuation of these options. be necessary given the inherent short-term exchange at the reporting date. Exchange differences in monetary items are recognised nature of both the revolving credit facility A 10.0% strengthening of sterling relative to the following currencies as at the reporting in the Consolidated Income Statement. and working capital facility. This position is date would have reduced profit before tax and equity as follows: reviewed regularly, along with the level of Non-monetary assets and liabilities that Profit before tax Equity facility required. are measured in terms of historical cost in 2021 2020 2021 2020 The Group has potential bank floating a foreign currency are translated using the £m £m £m £m rate financial liabilities on the £700 million exchange rate at the date of the transaction. Euros 4.5 3.9 23.6 23.4 committed bank facility, together with On consolidation, the assets and liabilities US Dollars 6.6 0.4 67.5 31.4 overdraft facilities in subsidiary companies of the Group’s overseas operations are Australian Dollars 0.5 0.9 2.1 0.6 (see Note 19). At 30 January 2021 £nil was translated into sterling at the rate of exchange Other 0.8 0.4 2.8 2.6 drawn down from the committed bank facility at the reporting date. Income and expenses 12.4 5.6 96.0 58.0 (2020: £nil). When drawdowns are made, the are translated at the average exchange

276 277 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

20. Financial Instruments (continued) 20. Financial Instruments (continued)

A 10.0% weakening of sterling relative to the following currencies as at the reporting date FAIR VALUES would have increased profit before tax and equity as follows: The fair values together with the carrying amounts shown in the Statement of Financial Profit before tax Equity Position as at 30 January 2021 are as follows: 2021 2020 2021 2020 Carrying amount Fair value £m £m £m £m 2021 2021 Euros 5.4 4.7 29.2 28.7 Note £m £m US Dollars 8.1 0.5 82.5 38.4 Trade and other receivables 17 72.2 72.2 Australian Dollars 0.7 1.1 2.5 0.8 Cash and cash equivalents 18 964.4 964.4 Other 1.0 0.5 3.4 3.1 Interest-bearing loans and borrowings – current 19 (120.9) (120.9) 15.2 6.8 117.6 71.0 Interest-bearing loans and borrowings – non-current 19 (48.1) (41.2) Trade and other payables – current (976.6) (976.6) Calculations are performed on the same basis as the prior year and the method assumes Trade and other payables – non-current (374.4) (374.4) that all other variables remain unchanged. (483.4) (476.5) CREDIT RISK cash equivalents of £964.4 million (2020: Credit risk arises from the possibility of £465.9 million). Unrecognised gains 6.9 customers and counterparties failing The comparatives at 1 February 2020 are as follows: to meet their obligations to the Group. LIQUIDITY RISK Investments of cash surpluses, borrowings Carrying amount Fair value Liquidity risk is the risk that the Group 2020 2020 and derivative instruments are made will encounter difficulty in meeting the Note £m £m through major clearing banks, which must obligations associated with its financial Trade and other receivables 17 81.6 81.6 meet minimum credit ratings as required by liabilities that are settled by delivering the Board. Cash and cash equivalents 18 465.9 465.9 cash or another financial asset. The Interest-bearing loans and borrowings – current 19 (20.4) (20.4) All customers who wish to trade on credit Group manages its cash and borrowing Interest-bearing loans and borrowings – non-current 19 (15.6) (13.0) terms are subject to credit verification requirement to minimise net interest Trade and other payables – current (806.1) (806.1) procedures. Receivable balances are expense, whilst ensuring that the Group Trade and other payables – non-current (73.2) (73.2) monitored on an ongoing basis and a has sufficient liquid resources to meet the provision is made for impairment where operating needs of the business. (367.8) (365.2) amounts are not thought to be recoverable The forecast cash and borrowing profile Unrecognised gains 2.6 (see Note 17). At the reporting date there of the Group is monitored on an ongoing were no significant concentrations of credit basis, to ensure that adequate headroom In the opinion of the Board, the fair value FAIR VALUE HIERARCHY risk and receivables which are not impaired remains under committed borrowing of the Group’s current financial assets As at 30 January 2021, the Group held the are believed to be recoverable. facilities. The Board review 13 week and and liabilities as at 30 January 2021 and 1 following financial instruments carried at The Group considers its maximum annual cash flow forecasts each month. See February 2020 are not considered to be fair value on the Statement of Financial exposure to credit risk to be equivalent to Note 19 for the overdraft facilities available materially different to that of the book Position: total trade and other receivables of £72.2 to the Group. The commitment fee on value. On this basis, the fair value hierarchy • Foreign exchange forward contracts - million (2020: £81.6 million) and cash and these facilities is 0.35% (2020: 0.35%). reflects the carrying values. In respect of non-hedged. the Group’s non-current financial assets The following are the remaining contractual maturities of financial liabilities at the and liabilities as at 30 January 2021 and • Put and call option. reporting date. The amounts are gross and undiscounted and exclude the impact of netting 1 February 2020, the fair value has been The Group uses the following hierarchy agreements. calculated using a pre-tax discount rate of for determining and disclosing the fair 8.1% (2020: 6.6%) which reflects the current value of financial instruments by valuation 2021 0–3 months 3–12 months 1–2 years 2–5 years >5 years market assessments of the time value of technique: £m £m £m £m £m £m money and the specific risks applicable to Non-derivative financial instruments Level 1: quoted (unadjusted) prices in active the liability. Bank loans and overdrafts 100.1 28.5 23.5 31.5 15.6 1.0 markets for identical assets or liabilities. Other loans 68.9 12.2 56.7 – – – Level 2: other techniques for which all ESTIMATION OF FAIR VALUES Trade and other payables 965.0 643.4 321.1 0.5 – – inputs which have a significant effect on For trade and other receivables / payables, Lease liabilities 1,929.8 75.5 226.4 304.0 690.3 633.6 the recorded fair value are observable, the notional amount is deemed to reflect either directly or indirectly. Derivative financial instruments the fair value. Put options 365.9 – – 67.4 32.4 266.1 Level 3: techniques which use inputs that Forward contracts 20.7 0.6 12.1 8.0 – – have a significant effect on the recorded 3,450.4 760.2 639.8 411.4 738.3 900.7 fair value that are not based on observable market data. 279 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

20. Financial Instruments (continued) 21. Trade and Other Payables (continued)

Carrying amount Level 1 Level 2 Level 3 PUT AND CALL OPTIONS The present value of the estimated exercise At 30 January 2021 £m £m £m £m Put options held by non-controlling price is calculated using the option price Loans and receivables interests are accounted for using the formula agreed on acquisition. All existing Deposits 41.0 – 41.0 – present access method. The Group option price formulas are based on a profit Cash and cash equivalents 964.4 – 964.4 – recognises put options held by non- measure, which is estimated by applying an Financial liabilities at fair value through profit or loss controlling interests in its subsidiary approved growth assumption to the current Foreign exchange forward contracts – non-hedged (20.7) – (20.7) – undertakings as a liability in the budget profit for the January 2022 financial Consolidated Statement of Financial year, if appropriate for the individual Other financial liabilities Position at the present value of the business the put or call option directly Interest-bearing loans and borrowings – current (120.9) – (120.9) – estimated exercise price of the put option. relates to. A discount rate is also applied Interest-bearing loans and borrowings – non-current (48.1) – (48.1) – The present value of the non-controlling to the option price which is pre-tax and Put options held by non-controlling interests (365.9) – – (365.9) interests’ put options is estimated based reflects the current market assessments of on expected earnings in Board approved the time value of money and any specific The comparatives at 1 February 2020 are as follows: forecasts and the choice of a suitable risk premiums relevant to the individual Carrying amount Level 1 Level 2 Level 3 discount rate or earnings multiple. businesses involved. These discount rates At 1 February 2020 £m £m £m £m Upon initial recognition of put options are considered to be equivalent to the rates Loans and receivables a corresponding entry is made to other a market participant would use. Deposits 26.4 – 26.4 – equity, and for subsequent changes Sensitivity analysis was performed over Cash and cash equivalents 465.9 – 465.9 – on remeasurement of the liability the the key variable inputs to the valuation of Financial assets at fair value through profit or loss corresponding entry is made to Exceptional the following put options. The key variable Foreign exchange forward contracts – non-hedged 10.8 – 10.8 – Items in the Income Statement. inputs were determined to be the discount Other financial liabilities Call options held by the Group are also rate and approved forecasts: Interest-bearing loans and borrowings – current (20.4) – (20.4) – accounted for using the present access IBERIAN SPORTS RETAIL GROUP PUT Interest-bearing loans and borrowings – non-current (15.6) – (15.6) – method. The Group recognises call OPTION Put options held by non-controlling interests (73.2) – – (73.2) options over non-controlling interests in its subsidiary undertakings as a liability in A discount rate increase of 1% would result the Consolidated Statement of Financial in a reduction in the put option liability Position at the present value of the of £0.9 million and an increase of 1% to estimated exercise price of the call option. the forecasted EBITDA % would result in 21. Trade and Other Payables The present value of the non-controlling an increase in the put option liability of interests’ call options is estimated based £0.6 million. 1% was determined to be a TRADE AND OTHER PAYABLES after the end of the relevant supplier’s on expected earnings in Board approved reasonable variance to demonstrate the Trade and other payables are non- financial year. forecasts and the choice of a suitable sensitivity of the put option valuation to interest-bearing and are stated at their discount rate or earnings multiple. Upon the key inputs used. cost. Volume related rebates or other REVERSE PREMIA initial recognition and for subsequent GENESIS TOPCO PUT-OPTIONS contributions from suppliers are recognised Reverse premia represent monies received changes on remeasurement of the liability A discount rate increase of 1% would result in the Consolidated Financial Statements by the Group on assignment of property of call options a corresponding entry is in a reduction in the put option liability when it is contractually agreed with the leases and are included within other made to Exceptional Items in the Income of £13.9 million and an increase of 1% to supplier and can be reliably measured. All payables and accrued expenses. Reverse Statement. the forecasted EBITDA % would result in significant rebates and contributions are premia are amortised over the life of the The Group has a number of options to an increase in the put option liability of agreed with suppliers retrospectively and remaining lease. buy the remaining shares in partly-owned £14.7 million. 1% was determined to be a 2021 2020 subsidiaries from the non-controlling reasonable variance to demonstrate the £m £m interest. The present value of these options sensitivity of the put option valuation to Current liabilities has been estimated as at 30 January 2021 the key inputs used. Trade payables 514.2 426.6 and is included within non-current other Other payables and accrued expenses 463.0 379.5 payables and accrued expenses. Other tax and social security costs 124.8 94.6 1,102.0 900.7 Non-current liabilities Other payables and accrued expenses 374.4 80.5

280 281 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

21. Trade and Other Payables (continued) 21. Trade and Other Payables (continued)

Put Options Put Options

Iberian JD Sports Mainline Source JD JD Sports Sports Base Fashion Menswear Lab Germany Gyms Retail Dantra Childrenswear Tessuti Holdings Catchbest Holdings JDSF Holdings Genesis Topco Oi Polloi Total Put Limited GmbH Limited Group Limited Limited Limited Australia Pty Limited Limited (Canada) Inc. Inc. Limited Options £m £m £m £m £m £m £m £m £m £m £m £m £m £m Put and call options At 1 February 2020 0.1 0.4 1.5 68.8 0.6 – 0.3 1.5 – – – – – 73.2 Acquisitions – – – – – – – – 1.1 6.0 3.4 261.6 0.1 272.2 New options – – 2.8 – – – – – – – – – – 2.8 Option lapsed during the period – – (1.5) – – – – (1.5) – – – – – (3.0) Increase / (decrease) in the present – 1.3 – 18.6 (0.1) 0.1 0.8 – – – – – – 20.7 value of the existing option liability At 30 January 2021 0.1 1.7 2.8 87.4 0.5 0.1 1.1 – 1.1 6.0 3.4 261.6 0.1 365.9

Recognised as a liability

Company Options in existence Exercise periods Methodology Maximum price At 30 January At 1 February 2021 2020

£m £m

Source Lab Put and call option whereby JD Exercisable by either party after the The option price is calculated based on The option price shall 0.1 0.1 Limited Sports Fashion Plc may acquire or be third anniversary of the completion of a multiple of the audited profit before not exceed £12.5 required to acquire (in stages) the the initial transaction, during the 30 distributions, interest, amortisation and million. remaining 15% of the issued share day period commencing on the date exceptional items but after taxation for capital of Source Lab Limited. on which the statutory accounts of the relevant financial year prior to the Source Lab Limited for the relevant exercise date. financial year have been approved by the board of directors.

JD Germany Put option whereby JD Sports Fashion The put option is exercisable The option price is calculated based The put option price 1.7 0.4 GmbH Plc may be required to acquire all or after 1 July 2018 during the 30 on a multiple of the average earnings shall not exceed €20 some of the remaining 20% of the days following approval of the before tax for the relevant two financial million. issued share capital of JD Germany shareholders meeting of the audited years prior to the exercise date. GmbH. annual accounts of the Company for the relevant financial year.

JD Sports Put and call option whereby JD Sports The put and call options are The option price is calculated based The option price 2.8 1.5 Gyms Limited Fashion Plc may acquire 6% of the exercisable 30 days after the on a multiple of profit before tax for shall not exceed £7.8 issued share capital of JD Sports Gyms approval by the Board of the annual the relevant financial year prior to the million. Limited in five equal tranches with the audited accounts of: exercise date. ability to roll over a tranche that has • The year ended 31 January 2023 not previously been subject to the • The year ended 31 January 2024 exercise of a put option. • The year ended 31 January 2025 • The year ended 31 January 2026 • The year ended 31 January 2027

282 283 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

21. Trade and Other Payables (continued) 21. Trade and Other Payables (continued)

Recognised as a liability

Company Options in existence Exercise periods Methodology Maximum price At 30 January At 1 February 2021 2020

£m £m

Iberian Sports First put option whereby JD Sports The first put option is exercisable The option price is calculated The option price shall not 87.4 68.8 Retail Group Fashion Plc may acquire or be after 31 January 2021. based on the equity value exceed £332 million. required to acquire 70% of the option The second put option is exercisable plus the outstanding loans holders 20% holding of the issued after at least one year has lapsed or financing provided by the share capital of Iberian Sports Retail since the first put option was option holder with unpaid Group. exercised. The 30% option, in three interest accrued. Second put option whereby JD separate tranches of 10%, need not be Sports Fashion Plc may acquire or be exercised in consecutive years. required to acquire 30% of the option holders 20% holding of the issued share capital of Iberian Sports Retail Group in three tranches of 10%.

Dantra Limited First put and call option whereby JD The first put option is exercisable The option price is calculated Each put option price shall not 0.5 0.6 Sports Fashion Plc may acquire 12.5% for a ten year period beginning the based on a multiple of the exceed £7.8 million. of the issued share capital of Dantra day after the accounts of Dantra average earnings before tax for Limited. Second put and call option Limited are signed by the auditors for the relevant two financial years whereby JD Sports Fashion Plc may the financial year ending 31 January prior to the exercise date. acquire 12.5% of the issued share 2022. The second put option is capital of Dantra Limited. exercisable after at least one year has lapsed since the first put option was exercised.

Base Put and call options whereby JD The put and call options are The option price is calculated The maximum option price is 0.1 – Childrenswear Sports Fashion Plc may acquire or be exercisable 3 months after the based on the lower of average £20 million. Limited required to acquire 20% of the issued approval by the auditors of the annual earnings before interest, tax, share capital in Base Childrenswear accounts of: depreciation and amortisation Limited. • The year ended 31 January 2021 or forecast earnings before • The year ended 31 January 2022 interest, tax, depreciation and • The year ended 31 January 2023 amortisation for the relevant • The year ended 31 January 2024 financial period.

284 285 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

21. Trade and Other Payables (continued) 21. Trade and Other Payables (continued)

Recognised as a liability

Company Options in existence Exercise periods Methodology Maximum price At 30 January At 1 February 2021 2020

£m £m

Tessuti Limited First put and call option whereby JD The first put option is exercisable The option price is calculated based on The option price 1.1 0.3 Sports Fashion Plc may acquire or be 30 days after the approval by the a multiple of earnings before interest, shall not exceed £30 required to acquire 100% of the option auditors of the annual Tessuti Limited tax, depreciation and amortisation for million for the first and holders 6.8% of the issued share accounts of: the relevant two financial years prior to second put and call capital of Tessuti Limited over four • The year ended 31 January 2021 the exercise date. option. separate tranches. • The year ended 31 January 2022 The maximum option Second put and call option whereby • The year ended 31 January 2023 price for the third and JD Sports Fashion Plc may acquire • The year ended 31 January 2024 fourth put option is or be required to acquire 100% of the The second put option is exercisable £7.5 million. option holders 1.7% of the issued share 3 months after the approval by the capital of the issued share capital of auditors of the annual Tessuti Limited Tessuti Limited in one tranche. accounts of: Third put option whereby JD Sports • The year ended 31 January 2024 Fashion Plc may acquire or be The third put option option is required to acquire 3% of the initial exercisable 30 days after the approval share capital of Tessuti Limited in two by the auditors of the annual Tessuti tranches of 183 shares and a further Limited accounts of: two tranches of 182 shares. • The year ended 31 January 2023 Fourth put option whereby JD • The year ended 31 January 2024 Sports Fashion Plc may acquire or be • The year ended 31 January 2025 required to acquire 1% of the initial • The year ended 31 January 2026 share capital of Tessuti Limited in one tranch of 183 shares. The fourth put option is exercisable 30 days after the approval by the auditors of the annual Tessuti Limited accounts of: • The year ended 31 January 2026 JD Sports Put option whereby JD Sports Fashion The put option was exercised in the The option price is calculated based on Not applicable. The – 1.5 Fashion Plc may acquire 20% of the issued 52 week period ended 30 January a multiple of earnings before interest, put option has been Holdings share capital of JD Sports Fashion 2021 and JD Sports Fashion Holdings depreciation and amortisation for the exercised. Australia Pty Australia Holdings Pty in tranches of Australia Pty is now wholly owned by relevant period, less net debt as a % of 10%. JD Sports Fashion Plc. the total number of shares in issue as at the date of the proposed completion.

Bernard Esher Put and call option whereby JD The put option is exercisable 30 days The option price is calculated based on The maximum – – Limited Sports Fashion Plc may acquire or be after the approval by the auditors of the a multiple of earnings before interest, consideration is £4.7 required to acquire 20% of the share annual Bernard Esher Limited accounts of: depreciation and amortisation for the million. capital of Bernard Esher Limited. • The year ended 31 January 2021 relevant period, less net debt as a % of the total number of shares in issue as at The call option may be exercised: the date of the proposed completion. • 30 days following the publication of the audited accounts of the year ended 31 January 22, or • within a period of six calendar months commencing on the date the relevant Seller ceases to be employee or director of the Company. 287 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

21. Trade and Other Payables (continued) 21. Trade and Other Payables (continued)

Recognised as a liability

Company Options in existence Exercise periods Methodology Maximum price At 30 January At 1 February 2021 2020

£m £m

Catchbest Put and call option whereby JD The put and call option is exercisable The option price is calculated based on The maximum option 1.1 – Limited Sports Fashion Plc may acquire or 30 days after the approval by the a multiple of earnings before interest, price is £25 million. be required to acquire the remaining auditors of the annual Catchbest tax, depreciation and amortisation 20% of the issued share capital of Limited accounts of: for the relevant financial period, less Catchbest Limited. • The year ended 31 January 2024 net debt as a percentage of the total • The year ended 31 January 2025 number of shares in issue as at the date • The year ended 31 January 2026 of the proposed completion. • The year ended 31 January 2027

Mainline Put and call option whereby JD The put and call option is exercisable The option price is calculated on a The maximum option 6.0 – Menswear Sports Fashion Plc may acquire or be 30 days after the approval by the multiple of the lower of (i) Average price is £6 million. Holdings required to acquire the remaining 20% auditors of the annual accounts of: profit after tax for the previous two Limited of the issued share capital of Mainline • The year ended 30 January 2021 periods, or (ii) Forecast profit after tax Menswear Holdings Limited. for the following year, as a percentage of the total number of shares in issue as at the date of the proposed completion.

JDSF Holdings Put and call option whereby JD The put and call option is exercisable The option price is calculated based on The maximum option 3.4 – (Canada) Inc. Sports Fashion Plc may acquire or be 3 months after the approval by the a multiple of earnings before interest, price is £300 million. required to acquire the remaining 20% auditors of the annual accounts of: tax, depreciation and amortisation for of the issued share capital of JDSF • The year ended 31 January 2025 the relevant financial period, less total Holdings (Canada) Inc. in four equal • The year ended 31 January 2026 debt, plus total cash as a percentage of tranches with the ability to roll over a • The year ended 31 January 2027 the total number of shares in issue as at tranche that has not previously been • The year ended 31 January 2028 the date of the proposed completion. subject to the exercise of a put option.

Genesis Topco Put and call option whereby JD The put options are exercisable The option price is calculated based on The maximum option 261.6 – Inc. Sports Fashion Plc may acquire or be within 30 calendar days after the a multiple of earnings before interest, price is £1.2 billion. required to acquire the remaining 20% determination of the final put / tax, depreciation and amortisation of the issued share capital of Genesis call value for the fiscal year. The for the relevant financial period, less Topco Inc. in four equal tranches with first put period will occur after net post-closing cash and debt as a the ability to roll over a tranche that the determination of the put / call percentage of the total number of has not previously been subject to the value for the fascia year ending on 1 shares in issue as at the date of the exercise of a put option. February 2025. proposed completion. The call options are exercisable for a period of 30 days commencing 30 days after the put period has closed.

288 289 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

21. Trade and Other Payables (continued) 21. Trade and Other Payables (continued)

Recognised as a liability

Company Options in existence Exercise periods Methodology Maximum price At 30 January At 1 February 2021 2020

£m £m

Oi-Polloi Put and call option whereby JD Sports The first option is exercisable 60 days The option price is calculated based on The maximum option 0.1 – Limited Fashion Plc may be required to sell after the approval by the auditors of a multiple of earnings before interest price is £10 million. 9.9% of the issued share capital of Oi the annual accounts of: and tax for the relevant financial Polloi Limited followed by a put option • The year ended 31 January 2022 period, less total debt, plus total cash whereby JD Sports Fashion may be • The year ended 31 January 2023 as a percentage of the total number required to acquire the remaining 30% • The year ended 31 January 2024 of shares in issue as at the date of the of the issued share capital of Oi Polloi • The year ended 31 January 2025 proposed completion. Limited in three equal tranches of 10%. • The year ended 31 January 2026 The second option is excercisable 60 days after the approval by the auditors of the annual accounts of: • The year ended 31 January 2025

Total liability 365.9 73.2

22. Provisions 23. Deferred Tax Assets and Liabilities

A provision is recognised in the Consolidated Statement of Financial Position when the RECOGNISED DEFERRED TAX ASSETS AND LIABILITIES Group has a present legal or constructive obligation as a result of a past event, it is more Deferred tax assets and liabilities are attributable to the following: likely than not that an outflow of economic benefits will be required to settle the obligation Assets Assets Liabilities Liabilities Net Net and the obligation can be estimated reliably. 2021 2020 2021 2020 2021 2020 £m £m £m £m £m £m ONEROUS CONTRACTS PROVISION Property, plant and equipment 14.7 – (12.0) (6.4) 2.7 (6.4) Within the onerous contracts provision, management have provided against the minimum Fascia name – – (37.4) (20.3) (37.4) (20.3) contractual cost for the remaining term on a non-cancellable logistics services contract for Other temporary differences 24.2 13.0 (5.6) – 18.6 13.0 the Azambuja warehouse in Portugal within the SportZone division. The provision will be Tax losses 1.7 1.2 – – 1.7 1.2 unwound over a ten year period ending 30 September 2030. Tax assets / (liabilities) 40.6 14.2 (55.0) (26.7) (14.4) (12.5)

Onerous contracts Total The UK Budget on 3 March 2021 included an announcement that the UK corporation tax rate £m £m will increase to 25% from 1 April 2023 for certain companies. This increase has not yet been Balance at 1 February 2020 – – substantively enacted. Under IAS 12, deferred tax is required to be calculated using rates that Provisions created during the period  5.8 5.8 have been substantively enacted at the balance sheet date. Consequently, the deferred tax asset Balance at 30 January 2021 5.8 5.8 and liability have been calculated based on a rate of 19%. Had the deferred tax been calculated at 25%, the deferred tax asset would increase by £4.7m and the deferred tax liability would increase Provisions have been analysed between current and non-current as follows: by £2.1m. 2021 2020 £m £m Current 0.7 – Non-current 5.1 – 5.8 –

290 291 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

23. Deferred Tax Assets and Liabilities (continued) 24. Capital and Reserves

Deferred tax asset on losses of £89.4m (2020: £56.6m) have not been recognised as there ISSUED ORDINARY SHARE CAPITAL The Board monitors capital using a ratio of is uncertainty over the utilisation of these losses. The losses sit within the following Group The total number of authorised net debt to equity using net cash / financial subsidiaries: ordinary shares at 30 January 2021 are debt. Net cash / financial debt is calculated 2021 2020 1,243,000,000 (2020: 1,243,000,000) with as per Note 29 and equity is calculated £m £m a par value of 0.25p per share (2020: 0.25p using the share price as at the financial year SDSR – Sports Division SR, S.A 21.7 17.4 per share). All issued shares are fully paid. end multiplied by the number of ordinary JD Sports Fashion Germany GmbH 6.7 – The capital structure of the Group consists shares in issue. The net debt to equity ratio JD Size GmbH 4.0 3.6 of equity attributable to equity holders of as at 30 January 2021 was 18.0% (2020: JD Sports Fashion AT GmbH 5.3 1.9 the parent, comprising issued share capital, 24.3%). There were no changes to the JD Sports Fashion Sweden AB 4.1 3.2 share premium and retained earnings. Group’s approach to capital management JD Sports Fashion Finland OY 2.7 2.0 during the period. It is the Board’s policy to maintain a strong Sports Unlimited Retail BV 13.6 – capital base so as to maintain investor, On 3 February 2021, JD Sports Fashion JD Sports (Thailand) Limited 3.0 0.9 creditor and market confidence and to Plc completed the placing of new ordinary JD Sports Fashion Korea Inc 12.9 8.2 sustain future development of the business. shares in the capital of the company. A Clothingsites.co.uk Limited 4.5 4.5 The processes for managing the Group’s total of 58,393,989 new ordinary shares KGR Rugby Limited – 3.6 capital levels are that the Board regularly were issued, increasing the total ordinary Tiso Group Limited and its subsidiaries 4.7 4.7 monitors the net cash / debt in the shares in issue to 1,031,627,149. This was a Other 6.2 6.6 business, the working capital requirements non-adjusting post balance sheet event. 89.4 56.6 and forecast cash flows. Based on this Further details are provided in Note 31. analysis, the Board determines the Full disclosure on the rights attached to MOVEMENT IN DEFERRED TAX DURING THE PERIOD appropriate return to equity holders while shares is provided in the Directors’ Report ensuring sufficient capital is retained in the on page 163. Property, plant and equipment Fascia name Other Tax losses Total business to meet its strategic objectives. £m £m £m £m £m Number of Ordinary Balance at 2 February 2019 1.2 (13.6) 0.6 0.8 (11.0) ordinary shares share capital Recognised on acquisition (0.6) (6.3) 0.5 – (6.4) thousands £m Recognised on disposal 0.1 – (1.3) – (1.2) At 1 February 2020 and 30 January 2021 973,233 2.4 Recognised in income (8.0) 4.3 9.6 0.4 6.3 Reclassifications 0.7 (4.4) 3.7 – – FOREIGN CURRENCY TRANSLATION OTHER EQUITY Foreign exchange movements 0.2 (0.3) (0.1) – (0.2) RESERVE Put and call options held by non- Balance at 1 February 2020 (6.4) (20.3) 13.0 1.2 (12.5) The foreign currency translation reserve controlling interests are accounted for Recognised on acquisition (1.7) (28.2) (3.8) – (33.7) comprises all foreign currency differences using the present access method. Upon Recognised in income 11.5 10.9 8.6 0.4 31.4 arising from the translation of the financial initial recognition of the put or call option Foreign exchange movements (0.7) 0.2 0.8 0.1 0.4 statements of foreign operations. liability a corresponding entry is made to other equity, and for subsequent changes Balance at 30 January 2021 2.7 (37.4) 18.6 1.7 (14.4) on remeasurement of the liability the corresponding entry is made to Exceptional As at 30 January 2021, the Group has no recognised deferred income tax liability (2020: Items in the Income Statement. £nil) in respect of taxes that would be payable on the unremitted earnings of certain overseas subsidiaries. As at 30 January 2021, the unrecognised gross temporary differences in respect of overseas subsidiaries is £425.4 million (2020: £192.7 million). No deferred income tax liability has been recognised in respect of this temporary difference due to the foreign profits exemption and the availability of double tax relief. There are no income tax consequences attached to the payment of dividends by the Group to its shareholder.

292 293 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

25. Non-controlling Interests 25. Non-controlling Interests (continued)

The following disclosure provides summarised financial information for investments that Iberian Sports Iberian Sports Genesis Topco Inc have non-controlling interests (‘NCI’). NCI is initially measured at the proportionate interest Retail Group SL Retail Group SL (sub-group) 52 weeks to 52 weeks to 6 week period to in identifiable net assets of the acquiree. 30 January 2021 1 February 2020 30 January 2021 The table below provides a list of the subsidiaries which include NCI at 30 January 2021 and Summarised results of operations £m £m £m 1 February 2020: Revenue 579.2 629.9 156.3 Profit / (loss) for the period, net of tax 3.7 23.1 (8.7) Net income/ Net income/ (loss) (loss) attributable attributable to NCI for to NCI for Iberian Sports Iberian Sports Genesis Topco Inc 52 weeks 52 weeks Retail Group SL Retail Group SL (sub-group) NCI at ending NCI at ending 1 NCI at Country of 30 January NCI at 30 January 30 January February 1 February 52 weeks to 52 weeks to 6 week period to incorporation 2021 1 February 2020 2021 2021 2020 2020 30 January 2021 1 February 2020 30 January 2021 % % £m £m £m £m Summarised statement of cash flows £m £m £m Name of Net cash provided by / subsidiary: (used in) operating activities 35.7 42.2 (33.8) Net cash used in investing activities (16.3) (22.2) (8.6) Iberian Sports Spain / 50.0% 50.0% 5.9 67.6 8.9 62.4 Net cash from / (used in) financing activities 57.2 0.4 (15.7) Retail Group Portugal / SL Canaries Cash and cash equivalents: At the beginning of the period presented 82.5 62.1 182.9 JD Sports Korea 50.0% 50.0% (2.3) 7.8 (3.0) 10.1 At the end of the period 159.1 82.5 124.8 Fashion Korea Genesis United States 20.0% – (1.2) 178.4 – – Topco Inc Other Various* 6%–50% 12.5% – 50% 2.5 3.9 (1.3) (2.5) 26. Dividends 4.9 257.7 4.6 70.0

* Other includes subsidiaries incorporated in the UK, Canada, Germany, India and Malaysia (2020: UK, Australia, Germany, India and Malaysia). Dividend distribution to the Company’s shareholders is recognised as a liability in the Group and Company financial statements in the period in which it is approved. During the period, the Group has increased its shareholding in one non-wholly owned After the reporting date the following dividend was proposed by the Directors and will subsidiary. Furthermore, JD Sports Fashion Holdings Pty in Australia was previously non- be payable to all shareholders on the register at 25 June 2021. The dividends were not wholly owned, however, during the period ended 30 January 2021 the Group increased its provided for at the reporting date. shareholding to 100%. 52 weeks to 52 weeks to 30 January 2021 1 February 2020 For newly acquired non-wholly owned subsidiaries, further details are provided in Note 11. £m £m The following table summarises the information relating to each of the Group’s subsidiaries 1.44p per ordinary share (2020: 0.00p) 14.9 – that has material NCI. On 14 December 2020, the Group’s equity interest in the Genesis sub- group reduced from 100% to 20% as part of the Shoe Palace acquisition (further details are provided in Note 11). Accordingly, the information relating to the Genesis sub-group is only Dividends on Issued Ordinary Share Capital for the period from 14 December to 30 January 2021: 52 weeks to 52 weeks to 30 January 2021 1 February 2020 Iberian Sports Iberian Sports Genesis Topco Inc £m £m Retail Group SL Retail Group SL (sub-group) 2021 2020 2021 Final dividend of 0.00p (2020: 1.44p) per qualifying ordinary share paid in respect of prior period, but Summarised statement of financial position £m £m £m not recognised as a liability in that period – 14.0 Current assets 269.0 216.1 319.0 Interim dividend of 0.00p (2020: 0.28p) per qualifying Non-current assets 456.3 467.6 1,091.3 ordinary share paid in respect of current period – 2.7 Total assets 725.3 683.7 1,410.3 – 16.7 Current liabilities (239.9) (243.5) (387.6) Non-current liabilities (343.4) (294.4) (359.7) Net assets 142.0 145.8 663.0

294 295 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

27. Commitments 30. Related Party Transactions and Balances

As at 30 January 2021, the Group had entered into contracts to purchase property, plant Transactions and balances with each category of related parties during the period are shown and equipment as follows: below. Transactions were undertaken in the ordinary course of business on an arm’s length 2021 2020 basis. Outstanding balances are unsecured (unless otherwise stated) and will be settled in cash. £m £m Contracted 12.8 20.3 TRANSACTIONS WITH RELATED PARTIES WHO ARE NOT MEMBERS OF THE GROUP

PENTLAND GROUP LIMITED During the financial year, Pentland Group Limited owned 55% (2020: 55%) of the issued ordinary share capital of JD Sports Fashion Plc. The Group made purchases of inventory from 28. Pension Schemes Pentland Group Limited in the period and the Group also sold inventory to Pentland Group Limited. The Group also paid royalty costs to Pentland Group Limited for the use of a brand. The Group operates defined contribution The pension charge for the period pension schemes, the assets of which are represents contributions payable by the During the period, the Group entered into the following transactions with Pentland Group held separately from those of the Group Group of £14.7 million (2020: £13.1 million) Limited: in independently administered funds. in respect of employees. Disclosure of the Income from Expenditure with Income from Expenditure with Obligations for contributions to the defined pension contributions payable in respect related parties related parties related parties related parties contribution schemes are recognised as of the Directors is included in the Directors 2021 2021 2020 2020 an expense in the Consolidated Income Remuneration Report. The amount owed £m £m £m £m Statement when incurred. to the schemes at the period end was £2.4 Sale of inventory 1.4 – 1.6 – million (2020: £1.8 million). Purchase of inventory – (46.7) – (48.4) Royalty costs – (1.8) – (5.1) Marketing costs – (0.3) 0.1 – Other income – – 0.5 – 29. Analysis of Net Cash

Net cash consists of cash and cash equivalents together with other borrowings from bank At the end of the period, the following balances were outstanding with Pentland Group Plc: loans and overdrafts, other loans, loan notes, finance leases and similar hire purchase Amounts owed by Amounts owed to Amounts owed by Amounts owed to related parties related parties related parties related parties contracts. 2021 2021 2020 2020 At 1 February On acquisition of Non-cash At 30 January £m £m £m £m 2020 subsidiaries Cash flow movements 2021 Trade receivables / (payables) 0.9 (3.1) 1.4 (1.1) £m £m £m £m £m Cash at bank and in hand 465.9 3.3 495.0 0.2 964.4 Overdrafts (5.6) – (10.1) – (15.7) Other than the remuneration of Directors as shown in Note 5 and in the Directors’ Remuneration Report on page 179 there have been no other transactions with Directors in Cash and cash equivalents 460.3 3.3 484.9 0.2 948.7 the year (2020: nil). Interest-bearing loans and borrowings: Bank loans (29.7) (0.6) (52.4) (1.7) (84.4) Other loans (0.7) (73.1) 0.8 4.1 (68.9) Net cash / (financial debt) 429.9 (70.4) 433.3 2.6 795.4 Lease liabilities (1,992.7) (143.2) 285.2 (79.1) (1,929.8) Net cash / (financial debt) (1,562.8) (213.6) 718.5 (76.5) (1,134.4)

Other loans of £68.9 million is the deferred consideration payable at 30 January 2021 in respect of the acquisition of Shoe Palace Corporation (see Note 11). The deferred consideration is not contingent and is due within one year.

296 297 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

31. Post Balance Sheet Events 31. Post Balance Sheet Events (continued)

DTLR VILLA LLC (‘DTLR’) Due to the proximity of the date of the MARKETING INVESTMENT GROUP S.A. On 31 January 2021, JD Sports Fashion acquisition and the date of this Annual (‘MIG’) Plc entered into a conditional agreement Report, it is not possible to present a On 11 March 2021, JD Sports Fashion Plc for the acquisition of 100% of DTLR Villa goodwill calculation, or the fair values entered into a conditional agreement for LLC (‘DTLR’ or ‘Company’). Completion of of the assets and liabilities acquired. The the acquisition of 60% of the share capital the acquisition was subject to customary goodwill calculation and fair value table will of Marketing Investment Group S.A. The closing conditions, including expiration be presented in the announcement of our business operates 410 retail stores and or termination of the applicable waiting Interim Results on the 14 September 2021. associated trading websites across nine period under the U.S. Hart-Scott-Rodino countries in Central and Eastern Europe. In the year ended 31 January 2020, MIG Antitrust Improvements Act (HSR Act). The PLACING OF NEW ORDINARY SHARES generated revenues of approximately £200 acquisition subsequently completed on 17 On 3 February 2021, JD Sports Fashion Plc million (£stg equivalent). The estimated March 2021. (‘the Company’) completed the placing date of completion of the acquisition is Total cash consideration for the acquisition of new ordinary shares in the capital May 2021 subject to customary closing was $495 million, subject to customary of the Company. A total of 58,393,989 conditions and competition clearance. working capital and other adjustments new ordinary shares in the capital of the at completion, of which approximately Company were placed by Investec Bank plc The net assets of MIG at the date $100 million will be used to repay existing and Peel Hunt LLP at an issue price of 795 of completion are expected to be indebtedness of the Company. This cash pence per share (the ‘Placing Price’). approximately £15 million. Put and call options to enable future exit opportunities consideration is being funded from the The Placing Shares represent for the 40% shareholders have also been Group’s cash resources and existing bank approximately 6.0 per cent of the existing agreed and become exercisable after the facilities. The DTLR Management Team issued share capital of the Company and year ended January 2025. (‘Management’), headed up by Glenn raised proceeds of approximately £456.0 Gaynor and Scott Collins, who will be million after costs. The Placing Price continuing in their roles as Co-CEOs, have represents a discount of approximately 2.5 also reinvested a portion of their proceeds per cent to the mid-market closing price of back into DTLR in exchange for a new 815 pence on 3 February 2021. The Placing minority stake of approximately 1.4%. Put was implemented on a non-pre-emptive and call options, to enable future exit basis. opportunities for Management, have also been agreed and become exercisable after The admission of the Placing Shares to a minimum period of three years. trading on the main market for listed securities took place on the 8 February DTLR is based in Baltimore, Maryland and is 2021. The Placing Shares rank pari passu a hyperlocal athletic footwear and apparel in all respects with each other and with streetwear retailer. Originally named the existing issued Ordinary Shares. This Downtown Locker Room, the Company includes, without limitations, the right to later re-branded as DTLR and, in 2017, receive all dividends and other distributions merged with Sneaker Villa Inc (previously declared or paid in respect of such based in Philadelphia). At acquisition, Ordinary Shares after the date of issue of DTLR operated from 247 stores across 19 the Placing Shares. states, principally in the North and East of the United States. The acquisition of The Company now has a total of DTLR, with its differentiated consumer 1,031,627,149 Ordinary Shares in issue. The proposition, will enhance the Group’s Company does not hold any shares in presence in the North and East of the treasury and the total number of voting United States complementing not only our shares in issue is therefore 1,031,627,149. existing JD and Finish Line fascias but also the recent acquisition of Shoe Palace which is based on the West Coast.

298 299 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

32. Subsidiary Undertakings 32. Subsidiary Undertakings (continued)

The following companies were the subsidiary undertakings of JD Sports Fashion Plc at 30 January 2021.

Name of subsidiary Place of Registered Address Nature of Business and Operation Ownership Name of subsidiary Place of Registered Address Nature of Business and Operation Ownership Registration & Voting Registration & Voting Rights Rights Interest Interest 2Squared UK Hollinsbrook Way, Distributor of fashion 100% Blue Retail UK Hollinsbrook Way, Dormant company 100% Agency Limited Pilsworth, Bury, Lancashire, apparel and accessories Limited* Pilsworth,Bury, Lancashire, BL9 8RR BL9 8RR A Number of UK Hollinsbrook Way, Wholesale of clothing and 100% Capso Holdings Isle of 33–37 Athol Street, Isle Of Intermediate holding 100% Names Limited Pilsworth, Bury, Lancashire, footwear Limited* Man Man, IM1 1LB company BL9 8RR Castlebrook UK Hollinsbrook Way, Dormant Company 100% ActivInstinct UK Hollinsbrook Way, Intermediate holding 100% Management Pilsworth, Bury, Lancashire, Holdings Pilsworth, Bury, Lancashire, company Company BL9 8RR Limited BL9 8RR Limited ActivInstinct UK Hollinsbrook Way, Dormant company 100% Catchbest UK Hollinsbrook Way, Retail of clothing in a 80% Limited* Pilsworth, Bury, Lancashire, Limited Pilsworth, Bury, Lancashire, specialised store BL9 8RR BL9 8RR Allsports.co.uk UK Hollinsbrook Way, Dormant company 100% CCC Outdoors UK Hollinsbrook Way, Dormant company 100% Limited* Pilsworth, Bury, Lancashire, Limited* Pilsworth, Bury, Lancashire, BL9 8RR BL9 8RR Alpine Bikes UK 41 Commercial Street, Leith, Dormant company 60% Champion Retail Ireland 3 Burlington Road, Dublin Retailer of sports and 100% Limited* Edinburgh, EH6 6JD Limited* 4, D04RD68, Republic of leisure goods Alpine Group UK 41 Commercial Street, Leith, Intermediate holding 60% Ireland (Scotland) Edinburgh, EH6 6JD company Champion Ireland 3 Burlington Road, Dublin Dormant company 100% Limited* Sports 4, D04RD68, Republic of Ark Fashion UK Hollinsbrook Way, Dormant company 100% (Holdings) Ireland Limited Pilsworth, Bury, Lancashire, Unlimited* BL9 8RR Champion Ireland 3 Burlington Road, Dublin Intermediate holding 100% Aspecto UK Hollinsbrook Way, Dormant company 100% Sports Group 4, D04RD68, Republic of company (Holdings) Pilsworth, Bury, Lancashire, Limited* Ireland Limited BL9 8RR Champion Ireland 3 Burlington Road, Dublin Retailer of sports and 100% Aspecto Trading UK Hollinsbrook Way, Dormant company 100% Sports Ireland* 4, D04RD68, Republic of leisure goods Limited* Pilsworth, Bury, Lancashire, Ireland BL9 8RR Champion Ireland 3 Burlington Road, Dublin Dormant company 100% Athleisure UK Hollinsbrook Way, Intermediate holding 100% Sports Newco 4, D04RD68, Republic of Limited Pilsworth, Bury, Lancashire, company Limited* Ireland BL9 8RR Choice 33 UK Hollinsbrook Way, Dormant company 88% Base UK Hollinsbrook Way, Retailer of childrens 80% Limited* Pilsworth, Bury, Lancashire, Childrenswear Pilsworth, Bury, Lancashire, fashion apparel and BL9 8RR Limited BL9 8RR footwear Choice Limited* UK Hollinsbrook Way, Retailer of fashion apparel 88% Bernard Esher UK Hollinsbrook Way, Retailer of premium 80% Pilsworth, Bury, Lancashire, and footwear Limited Pilsworth, Bury, Lancashire, womens fashion apparel BL9 8RR BL9 8RR and footwear Cloggs Online UK Hollinsbrook Way, Dormant company 100% Blacks Outdoor UK Hollinsbrook Way, Retailer of outdoor 100% Limited Pilsworth, Bury, Lancashire, Retail Limited Pilsworth, Bury, Lancashire, footwear, apparel and BL9 8RR BL9 8RR equipment Clothingsites UK Hollinsbrook Way, Intermediate holding 100% Holdings Pilsworth, Bury, Lancashire, company

*Indirect holding of the Company Limited BL9 8RR 300 *Indirect holding of the Company 301 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

32. Subsidiary Undertakings (continued) 32. Subsidiary Undertakings (continued)

Name of subsidiary Place of Registered Address Nature of Business and Operation Ownership Name of subsidiary Place of Registered Address Nature of Business and Operation Ownership Registration & Voting Registration & Voting Rights Rights Interest Interest Clothingsites. UK Hollinsbrook Way, Pilsworth, Retailer of fashion apparel 100% Genesis US 3308 N. Mitthoeffer Rd. Intermediate holding 80% co.uk Limited* Bury, Lancashire, BL9 8RR and footwear Holdings Inc Indianapolis, IN 46235 company Dantra Limited UK Hollinsbrook Way, Pilsworth, Retailer of childrens 75% Genesis Topco US 3308 N. Mitthoeffer Rd. Intermediate holding 80% Bury, Lancashire, BL9 8RR fashion apparel and Inc Indianapolis, IN 46235 company footwear George Fisher UK Hollinsbrook Way, Intermediate holding 60% Duffer of St UK Hollinsbrook Way, Pilsworth, Licensor of a fashion 100% Holdings Pilsworth, Bury, Lancashire, company George Limited Bury, Lancashire, BL9 8RR brand Limited* BL9 8RR Exclusive UK Hollinsbrook Way, Pilsworth, Dormant company 90% George Fisher UK Hollinsbrook Way, Retailer of outdoor 60% Footwear Bury, Lancashire, BL9 8RR Limited* Pilsworth, Bury, Lancashire, footwear, apparel and Limited BL9 8RR equipment First Sport UK Hollinsbrook Way, Pilsworth, Dormant company 100% GetTheLabel. UK Hollinsbrook Way, Dormant company 80% Limited* Bury, Lancashire, BL9 8RR com Limited* Pilsworth, Bury, Lancashire, BL9 8RR Focus Brands UK Hollinsbrook Way, Pilsworth, Intermediate holding 100% Limited Bury, Lancashire, BL9 8RR company Giulio Fashion UK 24–32 King Street, Intermediate holding 88% Limited* Cambridge, company Focus UK Hollinsbrook Way, Pilsworth, Dormant company 100% Cambridgeshire, CB1 1LN Equipment Bury, Lancashire, BL9 8RR Limited* Giulio Limited* UK 24–32 King Street, Retailer of premium 88% Cambridge, fashion apparel and Focus Group UK Hollinsbrook Way, Pilsworth, Intermediate holding 100% Cambridgeshire, CB1 1LN footwear Holdings Bury, Lancashire, BL9 8RR company Limited* Giulio Woman UK 24–32 King Street, Dormant company 88% Limited* Cambridge, Focus UK Hollinsbrook Way, Pilsworth, Distributor of sports 100% Cambridgeshire, CB1 1LN International Bury, Lancashire, BL9 8RR apparel and footwear Limited* Go Explore UK Hollinsbrook Way, Dormant company 100% Consulting Pilsworth, Bury, Lancashire, Focus Italy Italy Viale Majno Luigi 17/A, Distributor of sports 100% Limited* BL9 8RR S.pa.* 20122 Milano Italy apparel and footwear Go Outdoors UK Hollinsbrook Way, Retailer of outdoor leisure 100% Focus Sports UK Hollinsbrook Way, Pilsworth, Dormant company 100% Fishing Limited* Pilsworth, Bury, Lancashire, equipment and apparel & Leisure Bury, Lancashire, BL9 8RR BL9 8RR International Limited* GOL Realisations UK Hollinsbrook Way, Intermediate holding 100% Holdings Limited Pilsworth, Bury, Lancashire, company Footasylum UK Hollinsbrook Way, Pilsworth, Retailer of sports inspired 100% BL9 8RR Limited Bury, Lancashire, BL9 8RR footwear and apparel Go Outdoors UK Hollinsbrook Way, Dormant company 100% Footasylum UK Hollinsbrook Way, Pilsworth, Dormant company 100% Equestrian Pilsworth, Bury, Lancashire, Brands Limited* Bury, Lancashire, BL9 8RR Limited * BL9 8RR Footasylum Germany Wittestraße 30 K, 13509 Retailer of sports inspired 100% Go Outdoors UK Hollinsbrook Way, Retailer of outdoor leisure 100% GmbH Berlin footwear and apparel Retail Limited* Pilsworth, Bury, Lancashire, equipment and apparel Footpatrol UK Hollinsbrook Way, Pilsworth, Dormant company 100% BL9 8RR London 2002 Bury, Lancashire, BL9 8RR Graham Tiso UK 41 Commercial Street, Leith, Retailer of outdoor 60% Limited Limited* Edinburgh, EH6 6JD footwear, apparel and Frank Harrison UK Hollinsbrook Way, Pilsworth, Dormant company 72% equipment Limited* Bury, Lancashire, BL9 8RR Henleys UK Hollinsbrook Way, Dormant company 100% Genesis Finco UK Hollinsbrook Way, Pilsworth, Intermediate holding 100% Clothing Pilsworth, Bury, Lancashire, Limited* Bury, Lancashire, BL9 8RR company Limited BL9 8RR

*Indirect holding of the Company *Indirect holding of the Company 302 303 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

32. Subsidiary Undertakings (continued) 32. Subsidiary Undertakings (continued)

Name of subsidiary Place of Registered Address Nature of Business and Operation Ownership Name of subsidiary Place of Registered Address Nature of Business and Operation Ownership Registration & Voting Registration & Voting Rights Rights Interest Interest Hip UK Hollinsbrook Way, Dormant company 100% IRG Stoke UK Hollinsbrook Way, Dormant company 100% (Birmingham) Pilsworth, Bury, Lancashire, Limited* Pilsworth, Bury, Lancashire, Limited BL9 8RR BL9 8RR Hip Store UK Hollinsbrook Way, Retailer of premium 100% IRG Warrington UK Hollinsbrook Way, Dormant company 100% Limited Pilsworth, Bury, Lancashire, mens fashion apparel and Limited* Pilsworth, Bury, Lancashire, BL9 8RR footwear BL9 8RR Iberian Sports Spain Polígono Industrial de las Intermediate holding 50% J D Sports UK Hollinsbrook Way, Dormant company 100% Retail Group SL Atalayas, Avenida Euro, N2, company Limited Pilsworth, Bury, Lancashire, Alicante 03114. BL9 8RR I Am Athlete, US 3308 N. Mitthoeffer Rd. Retailer of sports and 80% Jandernama Spain Polígono Industrial de las Intermediate holding 100% LLC* Indianapolis, IN 46235 leisure inspired goods Atalayas, Avenida Euro, N2, company Infinities Retail UK Hollinsbrook Way, Intermediate holding 100% Alicante 03114. Group Holdings Pilsworth, Bury, Lancashire, company JD Academy UK Hollinsbrook Way, Management consultancy 100% Limited BL9 8RR Limited Pilsworth, Bury, Lancashire, activities other than Infinities Retail UK Hollinsbrook Way, Dormant company 100% BL9 8RR financial management Group Limited* Pilsworth, Bury, Lancashire, JDSF Retail Canada 1200 Waterfront Centre, Retailer of sports inspired 88% BL9 8RR (Canada) Inc 200 Burrard Street, footwear and apparel IRG Altrincham UK Hollinsbrook Way, Dormant company 100% Vancouver BC V6C 3L6 Limited* Pilsworth, Bury, Lancashire, JD Canary Spain Polígono Industrial de las Retailer of sports inspired 65% BL9 8RR Islands Sports Atalayas, Avenida Euro, N2, footwear and apparel IRG Birkenhead UK Hollinsbrook Way, Dormant company 100% SL* Alicante 03114. Limited* Pilsworth, Bury, Lancashire, JD Newco 2 UK Hollinsbrook Way, Dormant company 100% BL9 8RR Limited Pilsworth, Bury, Lancashire, IRG Blackburn UK Hollinsbrook Way, Dormant company 100% BL9 8RR Limited* Pilsworth, Bury, Lancashire, JD Size GmbH Germany Neusser Strasse 93, 50670 Retailer of sports inspired 100% BL9 8RR Cologne footwear and apparel IRG Bradford UK Hollinsbrook Way, Dormant company 100% JD Spain Sports Spain Polígono Industrial de las Retailer of sports inspired 65% Limited* Pilsworth, Bury, Lancashire, Fashion 2010 Atalayas, Avenida Euro, N2, footwear and apparel BL9 8RR SL* Alicante 03114. IRG Bury UK Hollinsbrook Way, Dormant company 100% JD Sports Thailand Room No. TT04 No. Retailer of sports inspired 80% Limited* Pilsworth, Bury, Lancashire, (Thailand) 1106 Sukhumvit Road, footwear and apparel BL9 8RR Limited* Phrakhanong Sub-district, IRG Chesterfield UK Hollinsbrook Way, Dormant company 100% Klongtoey District, Bangkok Limited* Pilsworth, Bury, Lancashire, JD Sports UK Hollinsbrook Way, Dormant company 100% BL9 8RR Active Limited Pilsworth, Bury, Lancashire, IRG Denton UK Hollinsbrook Way, Dormant company 100% BL9 8RR Limited* Pilsworth, Bury, Lancashire, JD Sports France 96 R Du Pont Rompu, Intermediate holding 100% BL9 8RR Fashion 59200 Tourcoing. company IRG Derby UK Hollinsbrook Way, Dormant company 100% (France) SAS Limited* Pilsworth, Bury, Lancashire, JD Sports Austria Wallnerstraße 1, 3. Stock, Retailer of sports inspired 100% BL9 8RR Fashion AT 1010 Vienna, Austria footwear and apparel IRG Stockport UK Hollinsbrook Way, Dormant company 100% GmbH Limited* Pilsworth, Bury, Lancashire, JD Sports Australia Level 12, 54 Park St, Sydney, Retailer of sports inspired 100% BL9 8RR Fashion Aus NSW 2000 footwear and apparel Pty* *Indirect holding of the Company

304 *Indirect holding of the Company 305 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

32. Subsidiary Undertakings (continued) 32. Subsidiary Undertakings (continued)

Name of subsidiary Place of Registered Address Nature of Business and Operation Ownership Name of subsidiary Place of Registered Address Nature of Business and Operation Ownership Registration & Voting Registration & Voting Rights Rights Interest Interest JD Sports Belgium Wiegstraat 21, 2000 Retailer of sports inspired 100% JD Sports Gyms UK Hollinsbrook Way, Operator of fitness 94% Fashion Antwerpen. footwear and apparel Limited Pilsworth, Bury, Lancashire, centres Belgium BV BL9 8RR JD Sports Netherlands Oosteinderweg 247 B 1432 Retailer of sports inspired 100% JDSF Holdings Canada 1200 Waterfront Centre, Intermediate holding 80% Fashion BV AT Aalsmeer. footwear and apparel (Canada) Inc 200 Burrard Street, company Vancouver BC V6C 3L6 JD Sports Denmark c/o Harbour House, Retailer of sports inspired 100% Fashion Sundkrogsgade 21, 2100 footwear and apparel John David Ireland 3 Burlington Road, Dublin Retailer of sports inspired 100% Denmark APS Copenhagen. Sports Fashion 4, D04RD68, Republic of footwear and apparel (Ireland) Ireland JD Sports Finland c/o Intertrust Finland Oy, Retailer of sports inspired 100% Limited Fashion Finland Lautatarhankatu 6, 00580, footwear and apparel OY Helsinki KGR Rugby UK Hollinsbrook Way, Distributor of rugby 100% Limited Pilsworth, Bury, Lancashire, apparel and accessories JD Sports Germany Neusser Strasse 93, 50670 Retailer of sports inspired 80% BL9 8RR Fashion Cologne footwear and apparel Germany GmbH Kukri (Asia) Hong Unit 4, 27th Floor, Global Distributor of sports 80% Limited* Kong Trade Square, 21 Wong apparel and accessories JD Sports Australia Level 12, 54 Park St, Sydney, Intermediate holding 100% Chuk Hang Road, Hong Fashion NSW 2000 company Kong Holdings Aus Pty Kukri (HK) Hong Unit 4, 27th Floor, Global Dormant company 80% Limited* Kong Trade Square, 21 Wong JD Sports India B-808 The Platina, Outsourced multichannel 100% Chuk Hang Road, Hong Fashion India Gachibawli, Hyderabad, operations Kong LLP Telangana, India – 500032 Kukri Australia Australia 39 Charles Street, Distributor of sports 80% JD Sports Korea 6F Yoonik Bldg. 430 Eonju- Retailer of sports inspired 50% Pty Limited* Norwood, SA 5067 apparel and accessories Fashion Korea ro, Gangnam-gu, Seoul footwear and apparel Inc Kukri Events UK Hollinsbrook Way, Dormant company 80% Limited* Pilsworth, Bury, Lancashire, JD Sports New Anderson Lloyd, Level 10 Retailer of sports inspired 100% BL9 8RR Fashion NZ Pty Zealand Otago House, Cnr Moray footwear and apparel Limited* Place & Princes Street, Kukri GB UK Hollinsbrook Way, Distributor and retailer 80% Dunedin, 9016, NZ Limited* Pilsworth, Bury, Lancashire, of sports apparel and BL9 8RR accessories JD Sports Singapore 190 Middle Road, 14–05, Retailer of sports inspired 80% Fashion PTE Fortune Centre, Singapore, footwear and apparel Kukri NZ New Unit 2, 45 The Boulevard, Distributor of sports 60% LTD* 188979 Limited* Zealand Te Rapa Park, Hamilton apparel and accessories JD Sports Malaysia Suite D23, 2ND Floor, Plaza Retailer of sports inspired 80% Kukri Pte Singapore 10 Anson Road, 19–15 Distributor of sports 80% Fashion SDN Pekeliling, No. 2, Jalan footwear and apparel Limited* International Plaza, apparel and accessories BHD Tun Razak, 50400 Kuala Singapore 079903 Lumpur, Malaysia Kukri Shanghai Shanghai Room 221–225, No. 2 Distributor of sports 80% JD Sports Italy Via Montenapoleone n. 29 – Retailer of sports inspired 100% Limited* Building, No.38 Debao apparel and accessories Fashion SRL 20121 Milan, Italy footwear and apparel Road, China (Shanghai) Pilot Free Trade Zone, JD Sports Sweden C/o Intertrust CN (Sweden) Retailer of sports inspired 100% Shanghai, 200131, China Fashion Sweden AB, PO Box 16285, 103 25 footwear and apparel AB Stockholm, Sweden Kukri Sports Canada 106-1533 Broadway St, Distributor of sports 60% Canada Inc* Port Coquitlam, British apparel and accessories JD Sports Gyms UK Hollinsbrook Way, Dormant company 94% Columbia, V3c 6P3 Acquisitions Pilsworth, Bury, Lancashire, Limited* BL9 8RR Kukri Sports Ireland 3 Burlington Road, Dublin Distributor of sports 80% Ireland Limited* 4, D04RD68, Republic of apparel and accessories Ireland *Indirect holding of the Company 306 *Indirect holding of the Company 307 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

32. Subsidiary Undertakings (continued) 32. Subsidiary Undertakings (continued)

Name of subsidiary Place of Registered Address Nature of Business and Operation Ownership Name of subsidiary Place of Registered Address Nature of Business and Operation Ownership Registration & Voting Registration & Voting Rights Rights Interest Interest Kukri Sports UK Hollinsbrook Way, Intermediate holding 80% OneTrueSaxon UK Hollinsbrook Way, Dormant company 100% Limited Pilsworth, Bury, Lancashire, company Limited Pilsworth, Bury, Lancashire, BL9 8RR BL9 8RR Kukri Sports Middle Lakeview Tower, Jumeirah Distributor of sports 80% Open Fashion UK Hollinsbrook Way, Dormant company 100% Middle East East Lake Towers, Dubai, United apparel and accessories Limited Pilsworth, Bury, Lancashire, JLT* Arab Emirates BL9 8RR Onepointfive Canada 1200 Waterfront Centre, Retailer of fashion 80% PCPONE* Ireland 3 Burlington Road, Dublin Intermediate holding 100% Ventures 200 Burrard Street, apparel and footwear 4, D04RD68, Republic of company Limited* Vancouver BC V6C 3L6 Ireland Mainline UK Hollinsbrook Way, Intermediate holding 80% Pear Sports US 3308 N. Mitthoeffer Rd. Retailer of sports and 80% Menswear Pilsworth, Bury, Lancashire, company LLC* Indianapolis, IN 46235 leisure inspired goods Holdings BL9 8RR Peter Werth UK Millae & Bryce Limited, Dormant company 100% Limited Limited* Bonnington Bond 2 Mainline UK Hollinsbrook Way, Retailer of premium 80% Anderson Place, Edinburgh, Menswear Pilsworth, Bury, Lancashire, mens fashion apparel and EH6 5NP Limited* BL9 8RR footwear PG2019 Limited UK Hollinsbrook Way, Retailer of fashion 100% Marathon Ireland 3 Burlington Road, Dublin Dormant company 100% Pilsworth, Bury, Lancashire, apparel and footwear Sports Limited* 4, D04RD68, Republic of BL9 8RR Ireland Pink Soda UK Hollinsbrook Way, Intermediate holding 100% Millets Limited UK Hollinsbrook Way, Dormant company 100% Limited Pilsworth, Bury, Lancashire, company Pilsworth, Bury, Lancashire, BL9 8RR BL9 8RR Premium UK Hollinsbrook Way, Dormant company 100% Mitchell’s UK Hollinsbrook Way, Dormant company 100% Fashion Pilsworth, Bury, Lancashire, Practical Pilsworth, Bury, Lancashire, Limited BL9 8RR Campers BL9 8RR Prima Designer UK Hollinsbrook Way, Intermediate holding 100% Limited* Limited* Pilsworth, Bury, Lancashire, company Nanny State UK Hollinsbrook Way, Dormant company 100% BL9 8RR Limited Pilsworth, Bury, Lancashire, R.D. Scott UK Hollinsbrook Way, Retailer of fashion 100% BL9 8RR Limited Pilsworth, Bury, Lancashire, apparel and footwear Naylor’s UK Hollinsbrook Way, Retailer of Equestrian 100% BL9 8RR Equestrian LLP* Pilsworth, Bury, Lancashire, equipment Rascal Clothing UK Acre House, 11/15 William Retailer of fashion 50% BL9 8RR Ltd Road, London, United apparel and footwear NiceKicks US 755 Jarvis Drive, Morgan Retailer of athletic 80% Kingdom, NW1 3ER Holdings LLC Hill, CA 95037 footwear and streetwear SDSR – Sports Portugal Rua Joao Mendoça, nº Retailer of sports and 50% apparel Division SR, 505, Matosinhos Freguesia, leisure goods Nicholas UK Hollinsbrook Way, Distributor of fashion 100% S.A* São Mamede de Infesta e Deakins Limited Pilsworth, Bury, Lancashire, footwear Senhora da Hora, 4464 503, BL9 8RR Matosinhos, Portugal Oi-Polloi UK 63 Thomas Street, Retail sale of clothing in 80% SEA Sports Malaysia Level 19–01, Block B, Wholesaler and retailer 60% Limited Manchester, M4 1LQ specialised stores Fashion SDN. Plaza Zurich, No. 12, of sports inspired Old Brown UK Hollinsbrook Way, Dormant company 100% BHD. Jalan Gelenggang, Bukit footwear and apparel Bag Clothing Pilsworth, Bury, Lancashire, Damansara, 50490 Limited* BL9 8RR Kuala Lumpur, Wilayah Persekutuan KL.

*Indirect holding of the Company *Indirect holding of the Company 308 309 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

32. Subsidiary Undertakings (continued) 32. Subsidiary Undertakings (continued)

Name of subsidiary Place of Registered Address Nature of Business and Operation Ownership Name of subsidiary Place of Registered Address Nature of Business and Operation Ownership Registration & Voting Registration & Voting Rights Rights Interest Interest Shoe Palace US 755 Jarvis Drive, Morgan Retailer of athletic 80% Tessuti Limited* UK Hollinsbrook Way, Retailer of fashion 88% Corporation Hill, CA 95037 footwear and streetwear Pilsworth, Bury, apparel and footwear apparel Lancashire, BL9 8RR Size? Limited UK Hollinsbrook Way, Retailer of sports 100% Tessuti Retail UK Hollinsbrook Way, Dormant company 100% Pilsworth, Bury, inspired footwear and Limited* Pilsworth, Bury, Lancashire, BL9 8RR apparel Lancashire, BL9 8RR Sonneti UK Hollinsbrook Way, Dormant company 100% The Alpine UK 41 Commercial Street, Intermediate holding 60% Fashions Pilsworth, Bury, Group Limited* Leith, Edinburgh, EH6 company Limited* Lancashire, BL9 8RR 6JD Source Lab UK Hollinsbrook Way, Design and distributor of 85% The Finish Line US 3308 N. Mitthoeffer Rd. Retailer of sports and 80% Limited Pilsworth, Bury, sportswear Distribution, Inc* Indianapolis, IN 46235 leisure inspired goods Lancashire, BL9 8RR The Finish Line US 3308 N. Mitthoeffer Rd. Dormant company 80% South South UK Hollinsbrook Way, Intermediate holding 100% MA, Inc* Indianapolis, IN 46235 East Limited Pilsworth, Bury, company The Finish Line US 3308 N. Mitthoeffer Rd. Retailer of sports and 80% Lancashire, BL9 8RR Puerto Rico, Inc* Indianapolis, IN 46235 leisure inspired goods Spikes Holding US 3308 N. Mitthoeffer Rd. Dormant company 80% The Finish Line US 3308 N. Mitthoeffer Rd. Retailer of sports and 80% LLC* Indianapolis, IN 46235 Transportation, Indianapolis, IN 46235 leisure inspired goods Spodis SA* France 96 R Du Pont Rompu, Retailer of sports and 100% Inc* 59200 Tourcoing, France leisure goods The Finish Line US 3308 N. Mitthoeffer Rd. Retailer of sports and 80% Sport Zone Spain Avenida el Paso, 10, Retailer of sports and 30% USA, Inc* Indianapolis, IN 46235 leisure inspired goods Canarias (SL)* 1º, Edificio Multiusos, leisure goods The Finish Line, US 3308 N. Mitthoeffer Rd. Intermediate holding 80% Polígono Industrial Los Inc* Indianapolis, IN 46235 company Majuelos, La Laguna 38201, Santa Cruz de The John David UK Hollinsbrook Way, Dormant company 100% Tenerife, Spain Group Limited Pilsworth, Bury, Lancashire, BL9 8RR Sportiberica Portugal Avenida das Indústrias, n.º Retailer of sports and 65% – Sociedade 63, Agualva do Cacém, leisure goods Tiso Group UK 41 Commercial Street, Intermediate holding 60% de Arigos de Sintra, Portugal Limited Leith, Edinburgh, EH6 company Desporto S.A. 6JD Sports Netherlands Oosteinderweg 247 B Retailer of sports and 100% Topgrade UK Hollinsbrook Way, Dormant company 80% Unlimited 1432 AT Aalsmeer, The leisure goods Sportswear Pilsworth, Bury, Retail BV Netherlands Holdings Lancashire, BL9 8RR Limited Sprinter Spain Polígono Industrial de las Retailer of sports and 50% Megacentros Atalayas, Avenida Euro, leisure goods Topgrade UK Hollinsbrook Way, Distributor and 80% Del Deporte N2, Alicante 03114, Spain Sportswear Pilsworth, Bury, multichannel retailer SLU* Limited* Lancashire, BL9 8RR of sports and fashion apparel and footwear Squirrel Sports UK Hollinsbrook Way, Dormant company 80% Limited* Pilsworth, Bury, Touchwood UK Hollinsbrook Way, Dormant company 100% Lancashire, BL9 8RR Sports Limited Pilsworth, Bury, Lancashire, BL9 8RR Tessuti Group UK Hollinsbrook Way, Intermediate holding 100% Limited Pilsworth, Bury, company Ultimate UK Hollinsbrook Way, Dormant company 100% Lancashire, BL9 8RR Outdoors Pilsworth, Bury, Limited* Lancashire, BL9 8RR

*Indirect holding of the Company *Indirect holding of the Company 310 311 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS COMPANY BALANCE SHEET

32. Subsidiary Undertakings (continued) As at 30 January 2021

Name of subsidiary Place of Registered Address Nature of Business and Operation Ownership As at 30 January As at 1 February Registration & Voting 2021 2020 Rights Interest Note £m £m Varsity Kit UK Hollinsbrook Way, Dormant company 100% Assets Limited* Pilsworth, Bury, Intangible assets C5 28.9 27.9 Lancashire, BL9 8RR Property, plant and equipment C6 502.5 607.6 Investment property C8 2.8 3.0 Weaver’s Door UK Hollinsbrook Way, Dormant Company 100% Investments C9 532.2 587.3 Ltd Pilsworth, Bury, Investment in associates 2.5 2.5 Lancashire, BL9 8RR Deferred tax assets C15 3.4 1.0 Wellgosh UK Hollinsbrook Way, Retailer of fashion 100% Limited Pilsworth, Bury, apparel and footwear Total non-current assets 1,072.3 1,229.3 Lancashire, BL9 8RR Stocks C10 193.0 181.6 X4L Gyms UK Hollinsbrook Way, Operator of fitness 94% Debtors C11 502.1 487.6 Limited* Pilsworth, Bury, centres Cash and cash equivalents C12 398.0 143.8 Lancashire, BL9 8RR Total current assets 1,093.1 813.0 Total assets 2,165.4 2,042.3 *Indirect holding of the Company Liabilities Creditors: amounts falling due within one year C13 (436.0) (370.8) Lease liabilities C7 (61.9) (68.3) Income tax liabilities (8.9) (27.4) Total current liabilities (506.8) (466.5) Creditors: amounts falling due after more than one year C14 (8.0) (5.6) Lease liabilities C7 (371.2) (420.9) Total non-current liabilities (379.2) (426.5) Total liabilities (886.0) (893.0) Total assets less total liabilities 1,279.4 1,149.3 Capital and reserves Issued ordinary share capital C16 2.4 2.4 Share premium 11.7 11.7 Retained earnings 1,265.3 1,135.2 Total equity 1,279.4 1,149.3 The Company has taken advantage of the exemption in s408 of the Companies Act 2006 not to present its individual income statement and related notes. The accompanying notes form part of these financial statements. These financial statements were approved by the Board of Directors on 13 April 2021 and were signed on its behalf by:

N Greenhalgh Director Registered number: 1888425

312 313 COMPANY STATEMENT OF CHANGES IN EQUITY NOTES TO THE COMPANY FINANCIAL STATEMENTS

C1. BASIS OF PREPARATION (CONTINUED) For the 52 weeks ended 30 January 2021 • Certain disclosures required by IFRS 13 Fair The financial statements have been prepared Ordinary Value Measurement and the disclosures on a going concern basis under the historical share Share Retained Total required by IFRS 7 Financial Instrument cost convention except as disclosed in the capital premium earnings equity Disclosures. accounting policies in Note 1 of the Group £m £m £m £m financial statements. The preparation of Balance at 2 February 2019 2.4 11.7 974.1 988.2 The Company has taken advantage of the exemption in s408 of the Companies Act financial statements in conformity with Profit for the period – – 177.8 177.8 2006 not to present its individual income FRS 101 requires the use of certain critical accounting estimates. It also requires Total comprehensive income for the period – – 177.8 177.8 statement and related notes. The total management to exercise its judgement in the Dividends to equity holders – – (16.7) (16.7) recognised comprehensive income included in these consolidated financial statements is process of applying the Company’s accounting Balance at 1 February 2020 2.4 11.7 1,135.2 1,149.3 £130.1 million (2020: £177.8 million). policies. The areas involving a higher degree Profit for the period – – 130.1 130.1 of judgement or complexity, or areas where The accounting policies have, unless otherwise assumptions and estimates are significant Total comprehensive income for the period – – 130.1 130.1 stated, been applied consistently to all periods to the financial statements are the same for presented in these financial statements. Balance at 30 January 2021 2.4 11.7 1,265.3 1,279.4 the Company as they are for the Group. For further details, see page 232 in the Group The accompanying notes form part of these financial statements. financial statements.

C2. DIRECTORS REMUNERATION The remuneration of Executive Directors for both the Company and Group are disclosed in Note 5 of the Group financial statements. NOTES TO THE COMPANY FINANCIAL STATEMENTS

C1. BASIS OF PREPARATION • Disclosures in respect of the compensation C3. AUDITOR’S REMUNERATION The parent company financial statements of Key Management Personnel; and Fees payable to the Company’s auditor for the audit of the Company and Group financial of JD Sports Fashion Plc were prepared in • Disclosures of transactions with a statements are disclosed in Note 3 of the Group financial statements. accordance with Financial Reporting Standard management entity that provides key 101 Reduced Disclosure Framework (‘FRS 101’). management personnel services to the C4. STAFF NUMBERS AND COSTS In preparing these financial statements, Company. The average number of persons employed by the Company (including Directors) during the period, analysed by category, was as follows: the Company applies the recognition, As the consolidated financial statements of measurement and disclosure requirements JD Sports Fashion Plc include the equivalent 2021 2020 of international accounting standards in disclosures, the Company has also taken the Sales and distribution 15,510 14,767 conformity with the requirements of the exemptions under FRS 101 available in respect Administration 619 566 Companies Act 2006 (‘Adopted IFRSs’) and of the following disclosures: 16,129 15,333 has set out below where advantage of the FRS 101 disclosure exemptions has been taken. • Certain disclosures required by IAS 36 Full time equivalents 10,388 10,173 Impairment of assets in respect of the In these financial statements, the Company impairment of goodwill and indefinite life has applied the exemptions available under intangible assets; The aggregate payroll costs of these persons were as follows: FRS 101 in respect of the following disclosures: 52 weeks to 52 weeks to • Certain disclosures required by IFRS15 30 January 2021 1 February 2020 • A Cash Flow Statement and related notes; Revenue from contracts with customers in £m £m • Comparative period reconciliations for share respect of disaggregation of revenue and Wages and salaries 188.4 225.7 capital, tangible fixed assets, intangible performance obligations; Social security costs 13.7 15.8 assets and investment properties; • Certain disclosures required by IFRS16 Pension costs 3.6 3.4 • Disclosures in respect of transactions with Leases in respect of the Company acting as Other employed staff costs – 1.2 wholly owned subsidiaries; a lessor; 205.7 246.1 • Disclosures in respect of capital • Certain disclosures required by IFRS management; 3 Business Combinations in respect of • The effects of new but not yet effective business combinations undertaken by the IFRSs; Company; and

314 315 NOTES TO THE COMPANY FINANCIAL STATEMENTS NOTES TO THE COMPANY FINANCIAL STATEMENTS

C5. INTANGIBLE ASSETS C7. LEASES Goodwill in the Company comprises the goodwill on acquisition of First Sport (£15.0 million) and The Company has adopted the same accounting policies as the Group in respect of IFRS16 Allsports (£0.9 million). Leases and adopted IFRS16 on 3 February 2019. Details of the accounting policies applied from 3 Brand names in the Company comprise all brand names included in the Group table (Note 12) February 2019 onwards can be found in Note 1 to the Group financial statements on page 232 and within the Sport Fashion segment with the exclusion of the Duffer brand name which is included Note 14 to the Group financial statements on page 264. within Duffer of St George Limited and the Doone brand name which is included in the Sport As a lessee Zone group. ‘Property, plant and equipment’ comprise owned and leased assets that do not meet the Brand licences in the Company comprise all brand licenses included in the Group table (Note 12). definition of investment property. Brand licences are stated at cost less accumulated amortisation and impairment losses. 2021 2020 Note £m £m Software Goodwill Brand licences Brand names development Total Property, plant and equipment owned C6 135.6 156.6 £m £m £m £m £m Right-of-use assets, except for investment property C6 366.9 451.0 Cost or valuation 502.5 607.6 At 1 February 2020 19.9 11.7 7.4 36.3 75.3 Additions – 3.8 – 7.6 11.4 The Company leases assets including land and buildings, vehicles, machinery and IT equipment. At 30 January 2021 19.9 15.5 7.4 43.9 86.7 Information about leases for which the Company is a lessee is presented below. Amortisation and impairment Right-of-use assets At 1 February 2020 4.0 11.0 7.4 25.0 47.4 Vehicles Charge for the period – 2.2 – 8.2 10.4 Property and Equipment Total At 30 January 2021 4.0 13.2 7.4 33.2 57.8 £m £m £m Cost Net book value At 1 February 2020 522.2 1.7 523.9 At 30 January 2021 15.9 2.3 – 10.7 28.9 Additions 21.0 1.1 22.1 At 1 February 2020 15.9 0.7 – 11.3 27.9 Disposals (4.2) – (4.2) Remeasurement adjustments (30.0) 0.2 (29.8) C6. PROPERTY, PLANT AND EQUIPMENT At 30 January 2021 509.0 3.0 512.0

Improvements Depreciation and impairment to short At 1 February 2020 72.1 0.8 72.9 Land and leasehold Computer Fixtures and Motor Right of use Depreciation charge for the period 71.0 0.9 71.9 buildings properties equipment fittings vehicles assets Total Impairment of right-of-use assets 0.3 – 0.3 £m £m £m £m £m £m £m At 30 January 2021 143.4 1.7 145.1 Cost At 1 February 2020 13.0 20.4 45.4 274.2 0.1 523.9 877.0 At 30 January 2021 365.6 1.3 366.9 Additions 3.9 1.9 4.7 10.9 – 22.1 43.5 At 1 February 2020 450.1 0.9 451.0 Disposals – (0.4) (0.1) (1.9) – (4.2) (6.6) Lease modifications and remeasurements – – – – – (29.8) (29.8) Lease liabilities Reclassifications to other 2021 2020 asset categories – (0.6) – (0.1) – – (0.7) £m £m At 30 January 2021 16.9 21.3 50.0 283.1 0.1 512.0 883.4 Maturity analysis – contractual undiscounted cash flows Less than one year 76.4 78.4 Depreciation and impairment One to five years 235.0 246.9 At 1 February 2020 – 15.9 39.4 141.1 0.1 72.9 269.4 More than five years 190.2 218.9 Charge for period 3.1 4.6 4.4 30.5 – 71.9 114.5 Total undiscounted lease liabilities 501.6 544.2 Disposals – (0.4) – (1.8) – – (2.2) Impairments – – – – – 0.3 0.3 Lease liabilities included in the statement of financial position 433.1 489.2 Reclassifications to other asset categories – (1.1) – – – – (1.1) Current 61.9 68.3 At 30 January 2021 3.1 19.0 43.8 169.8 0.1 145.1 380.9 Non-current 371.2 420.9 Net book value At 30 January 2021 13.8 2.3 6.2 113.3 – 366.9 502.5 As at 30 January 2021, the weighted average discount rate applied to the lease portfolio of the Company is 3.2% (2020: 3.2%) At 1 February 2020 13.0 4.5 6.0 133.1 – 451.0 607.6

316 317 NOTES TO THE COMPANY FINANCIAL STATEMENTS NOTES TO THE COMPANY FINANCIAL STATEMENTS

C7. LEASES (CONTINUED) C8. INVESTMENT PROPERTY (CONTINUED) Amounts recognised in profit or loss The investment properties brought forward relate to properties leased to Focus Brands Limited 52 weeks to 52 weeks to (£4.2 million) and Kukri Sports Limited (£0.6 million). 30 January 1 February 2021 2020 These properties remain Investment Properties from the Company perspective as at 30 January £m £m 2021. Interest on lease liabilities 13.4 14.6 Based on an external valuation prepared as at 31 December 2018, the fair value of the investment Variable lease payments not included in the measurement of lease liabilities 2.9 13.0 properties as at that date was £4.5 million. Income from subleasing right-of-use assets 0.1 0.1 Management do not consider either of the investment properties to be impaired as the future Expenses relating to short term leases and low value leases  0.3 5.8 rental income supports the carrying value. Impairment of right-of-use assets 0.3 2.3

As a lessor C9. INVESTMENTS Lease income from lease contracts in which the Company acts as a lessor is as below. In the Company’s accounts all investments in subsidiary undertakings and joint ventures are 52 weeks to 52 weeks to stated at cost less provisions for impairment losses. 30 January 1 February 2021 2020 £m Operating Lease £m £m Cost Lease Income 0.1 0.1 At 1 February 2020 635.3 Additions 24.6 Disposals (38.5) The Company leases out residential and office properties. The Company has classified these leases as operating leases, because they do not transfer substantially all the risk and rewards At 30 January 2021 621.4 incidental to the ownership of the assets. Impairment The following table sets out a maturity analysis of lease payments, showing the undiscounted At 1 February 2020 48.0 lease payments to be received after the reporting date. Impairments 41.2 2021 2020 At 30 January 2021 89.2 £m £m Net book value Within one year 0.1 0.1 At 30 January 2021 532.2 Later than one year and not later than five years – 0.1 At 1 February 2020 587.3 0.1 0.2

C8. INVESTMENT PROPERTY The additions to investments in the current year comprise the following. Unless otherwise stated Investment property, which is property held to earn rentals, is stated at cost less accumulated the investment is 100% owned. depreciation and impairment losses. Investment property is depreciated over a period of 50 2021 years on a straight line basis, with the exception of freehold land, which is not depreciated. The £m Company has not elected to revalue investment property annually but to disclose the fair value JDSF Holdings (Canada) Inc – 80% 8.2 below. An external valuation to determine the fair value is prepared every three years by persons A Number of Names Limited 4.7 having the appropriate professional experience. When an external valuation is not prepared, an JD Sports Fashion Holdings Australia Pty Ltd 4.1 annual assessment is conducted using internal expertise. Catchbest Limited – 80% 3.2 £m JD Sports Gyms Limited – 94% 1.2 Cost Sportiberica Sociedade De Artigos De Desporto S.A. – 65%  1.3 At 1 February 2020 and 30 January 2021 4.8 Wellgosh Limited 1.2 Kukri Sports Limited – 80% 0.6 Depreciation and impairment Oi-Polloi Limited – 79.9% 0.1 At 1 February 2020 1.8 Charge for period 0.2 Total additions 24.6 The disposal relates to a capital reduction in the year in respect of the investment held in Genesis At 30 January 2021 2.0 Finco Limited. Net book value A list of subsidiaries is disclosed in Note 32 of the Group financial statements. At 30 January 2021 2.8 At 1 February 2020 3.0

318 319 NOTES TO THE COMPANY FINANCIAL STATEMENTS NOTES TO THE COMPANY FINANCIAL STATEMENTS

C10. STOCKS C11. TRADE AND OTHER RECEIVABLES (CONTINUED) A summary of the Company’s exposure to credit risk for trade receivables is as follows: 2021 2020 Weighted Gross carrying Loss Credit £m £m average loss rate amount allowance impaired Finished goods and goods for resale 193.0 181.6 As at 30 January 2021 £m £m £m £m Not past due – 0.7 – – Past due 0–30 days – 1.3 – – The Company has £19.7 million (2020: £19.0 million) of stock provisions at the end of the period. Past due 30–60 days – 0.6 – – Past due 61–90 days – 0.3 – – C11. TRADE AND OTHER RECEIVABLES More than 90 days past due 12.0% 2.5 (0.3) – Total 5.6% 5.4 (0.3) – 2021 2020 £m £m Weighted Gross carrying Loss Credit Current assets average loss rate amount allowance impaired Trade receivables 5.1 2.0 As at 1 February 2020 £m £m £m £m Other receivables 1.0 14.5 Not past due – 1.6 – – Prepayments and accrued income 24.5 33.8 Past due 0–30 days – 0.1 – – Amounts owed by other Group companies 471.5 437.3 Past due 30–60 days – 0.3 – – 502.1 487.6 Past due 61–90 days 100.0% 0.2 (0.2) – More than 90 days past due 100.0% 0.1 (0.1) –

A summary of the Company’s exposure to credit risk for trade receivables is as follows: Total 13.0% 2.3 (0.3) – 2021 2020 Gross Provision Net Gross Provision Net Movement on this provision is shown below: £m £m £m £m £m £m £m Not past due 0.7 – 0.7 1.6 – 1.6 Past due 0 – 30 days 1.3 – 1.3 0.1 – 0.1 At 1 February 2020 0.3 Past due 30–60 days 0.6 – 0.6 0.3 – 0.3 Created – Past 60 days 2.8 (0.3) 2.5 0.3 (0.3) – At 30 January 2021 0.3 5.4 (0.3) 5.1 2.3 (0.3) 2.0 The Amounts owed by other Group companies is after a provision of £114.8 million (2020: £106.6 million) against the balances outstanding at the end of the period. At 30 January 2021, the exposure to credit risk for trade receivables by geographic region was as follows: The other classes within trade and other receivables do not contain impaired assets. As at As at 30 January 2021 1 February 2020 Total Total C12. FINANCIAL INSTRUMENTS Trade receivables £m £m Financial Assets The currency profile of cash and cash equivalents is shown below: UK 4.3 – Europe 0.8 2.3 2021 2020 Rest of world 0.3 – £m £m Bank balances and cash floats 398.0 143.8 Total 5.4 2.3 Sterling 265.9 91.3 Euros 39.1 32.1 At 30 January 2021, the exposure to credit risk for trade receivables by type of counterparty was US Dollars 79.9 6.0 as follows: Australian Dollars 5.4 10.0 As at As at Other 7.7 4.4 30 January 2021 1 February 2020 Total Total 398.0 143.8 Trade receivables £m £m Supplier rebates and royalties 5.4 2.3

At 30 January 2021, the carrying amount of the Company’s most significant customer was £1.7 million (2020: £0.2 million).

320 321 NOTES TO THE COMPANY FINANCIAL STATEMENTS NOTES TO THE COMPANY FINANCIAL STATEMENTS

C12. FINANCIAL INSTRUMENTS (CONTINUED) C15. DEFERRED TAX ASSETS AND LIABILITIES Credit Risk The Company has provided guarantees on working capital and other banking facilities entered Recognised Deferred Tax Assets and Liabilities Deferred tax assets and liabilities are attributable to the following: into by Spodis SA (€6.6 million) and Kukri Sports Limited and Kukri GB Limited (£1.0 million). In addition, the syndicated committed £700 million bank facility, which was in place as at 30 Assets Assets Liabilities Liabilities Net Net 2021 2020 2021 2020 2021 2020 January 2021, encompassed cross guarantees between the Company, Blacks Outdoor Retail £m £m £m £m £m £m Limited, Tessuti Limited, Go Outdoors Retail Limited, The Finish Line, Inc., The Finish Line USA Inc., Genesis Holdings Inc., Genesis Finco Limited, Focus Brands Limited and Focus International Property, plant and equipment 1.1 – – (1.2) 1.1 (1.2) Limited to the extent to which any of these companies were overdrawn. As at 30 January 2021, Other 2.3 2.2 – – 2.3 2.2 these facilities were drawn down by £nil (2020: £nil). Tax assets / (liabilities) 3.4 2.2 – (1.2) 3.4 1.0 Fair Values The fair values together with the carrying amounts shown in the Balance Sheet as at 30 January Movement in Deferred Tax during the Period 2021 are as follows: Property, plant and equipment Other Total Carrying £m £m £m amount Fair value 2021 2021 Balance at 2 February 2019 (0.6) 2.3 1.7 Note £m £m Recognised in income (0.6) (0.1) (0.7) Trade and other receivables C11 477.6 477.6 Balance at 1 February 2020 (1.2) 2.2 1.0 Cash and cash equivalents C12 398.0 398.0 Recognised in income 2.3 0.1 2.4 Trade and other creditors – current (395.1) (395.1) Trade and other creditors – non-current (8.0) (8.0) Balance at 30 January 2021 1.1 2.3 3.4 472.5 472.5 The UK Budget on 3 March 2021 included an announcement that the UK corporation tax rate Unrecognised gains – will increase to 25% from 1 April 2023 for certain companies. This increase has not yet been substantively enacted. Under IAS 12, deferred tax is required to be calculated using rates that Fair Value Hierarchy have been substantively enacted at the balance sheet date. Consequently, the deferred tax asset For information on Company balances which are categorised at the same level as for Group, see and liability have been calculated based on a rate of 19%. Had the deferred tax been calculated at Note 20. In addition, Investment property held in the Company of £2.8 million (2020: £3.0 million) 25%, the deferred tax asset would increase by £1.1m. is categorised as Level 3 within the fair value hierarchy. C16. CAPITAL C13. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR Issued Ordinary Share Capital for both the Company and Group is disclosed in Note 24 of the Group financial statements. 2021 2020 £m £m C17. DIVIDENDS Trade creditors 199.2 162.5 After the reporting date the dividend proposed by both Company and Group Directors is Other creditors and accrued expenses 195.9 164.9 disclosed in Note 26 of the Group financial statements. Other tax and social security costs 9.1 8.5 Amounts payable to other Group companies 31.8 34.9 C18. COMMITMENTS 436.0 370.8 As at 30 January 2021, the Company had entered into contracts to purchase property, plant and equipment as follows: C14. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR 2021 2020 £m £m 2021 2020 Contracted 8.0 7.4 £m £m Other creditors and accrued expenses 8.0 5.6 C19. RELATED PARTY TRANSACTIONS AND BALANCES During the period, the Company entered into the following transactions with Pentland Group Limited: Income from Expenditure with Income from Expenditure with related parties related parties related parties related parties 2021 2021 2020 2020 £m £m £m £m Purchase of inventory – (26.0) – (23.5) Other income – – 0.1 –

322 323 NOTES TO THE COMPANY FINANCIAL STATEMENTS NOTES TO THE COMPANY FINANCIAL STATEMENTS

C19. RELATED PARTY TRANSACTIONS AND BALANCES (CONTINUED) C20. CONTINGENT LIABILITIES C21. ULTIMATE PARENT COMPANY At the end of the period, the Company had the following balances outstanding with Pentland Where the Company enters into contracts The immediate parent undertaking is Pentland Group Limited: to guarantee the indebtedness of other Group Limited (formerly known as ‘Pentland companies within its Group, the Company Group Plc’), a company registered in England Amounts owed by Amounts owed to Amounts owed by Amounts owed to related parties related parties related parties related parties treats the guarantee contract as a contingent and Wales. R S Rubin and his close family 2021 2021 2020 2020 liability until such time as it becomes probable are considered the ultimate controlling party £m £m £m £m that the Company will be required to make a by virtue of their control of Pentland Group Trade payables – (0.1) – (0.1) payment under the guarantee. Limited (a company registered in Jersey). The Company has provided the following Consolidated financial statements will be guarantees: prepared by Pentland Group Limited (a company registered in England and Wales), TRANSACTIONS WITH RELATED PARTIES WHO ARE MEMBERS OF THE GROUP • Guarantee on the working capital facilities which is the parent undertaking of the Subsidiaries and bonds and guarantees in Spodis SA of smallest and largest group of undertakings In the disclosure below the Company has applied the exemptions available under FRS 101 in €6.6 million (2020: €6.6 million). to consolidate these financial statements respect of transactions with wholly owned subsidiaries. • Guarantee on the working capital facilities for the year ended 31 December 2020. The Loans represent historic intercompany balances and initial investment in subsidiary undertakings Kukri Sports Limited and Kukri GB Limited of consolidated financial statements of Pentland to enable them to purchase other businesses. For subsidiaries with a non-controlling interest, £1.0 million (2020: £1.0 million). Group Limited can be obtained from the these long term loans attract interest at the UK base rate plus an applicable margin. company’s registered office at 8 Manchester • Guarantee to Kiddicare Properties Limited in Square, London, W1U 3PH, England. Other intercompany balances and trade receivables / payables relates to: relation to the rental commitments on four • The sale and purchase of stock between the Company and its subsidiaries on arm’s length stores assigned to Blacks Outdoor Retail The Consolidated Financial Statements of JD terms; and Limited. The total value of the remaining Sports Fashion Plc are available to the public rental commitments at 30 January 2021 was and may be obtained from The Company • Recharges for administrative overhead and distribution costs. £1.3 million (2020: £2.9 million). Secretary, JD Sports Fashion Plc, Hollinsbrook Other intercompany balances are settled a month in arrears. These balances do not accrue Way, Pilsworth, Bury, BL9 8RR or online at • Guarantee on loan facility with HSBC in JD interest. In certain circumstances where the subsidiaries have not repaid these balances, they www.jdplc.com. Australia of AUD1.1 million (2020: AUD1.1 have been reclassified to long term loans, and therefore accrue interest as applicable. million). During the period, the Company entered into the following transactions with subsidiaries not C22. POST BALANCE SHEET EVENTS • Guarantee on overdraft facility with Lloyds wholly owned: Please refer to Note 31 in the Group accounts for Tiso Limited of £5.7 million (2020: £5.7 Income from Expenditure with Income from Expenditure with for disclosure of the post balance sheet events million). related parties related parties related parties related parties impacting JD Sports Fashion Plc. 2021 2021 2020 2020 £m £m £m £m Sale / (purchase) of inventory 150.5 (1.4) 169.1 – Interest receivable 4.0 – 0.3 – Dividend income received 3.8 – 11.6 – Rental income 0.1 – 0.2 – Royalty income 28.9 – 3.1 – Management charge receivable 2.3 – 6.0 –

At the end of the period, the Company had the following balances outstanding with subsidiaries not wholly owned: Amounts owed by Amounts owed to Amounts owed by Amounts owed to related parties related parties related parties related parties 2021 2021 2020 2020 £m £m £m £m Non-trading loan receivable 50.2 – 22.8 – Non-trading loan receivable (interest bearing) 111.5 – 96.1 – Trade receivables 22.5 – 34.4 – Other intercompany balances – (3.4) – (3.4) Income tax group relief 0.6 – 2.6 (0.9)

324 325 FINANCIAL CALENDAR SHAREHOLDER INFORMATION

Financial Statements Published   27 May 2021 REGISTERED OFFICE FINANCIAL ADVISERS AND STOCKBROKERS Annual General Meeting   01 July 2021 JD SPORTS FASHION PLC PEEL HUNT LLP INVESTEC BANK PLC Interim Results Announced   14 September 2021 Hollinsbrook Way 7th Floor, 100 30 Gresham Street Period End (52 Weeks)   29 January 2022 Pilsworth Liverpool Street London Final Results Announced   12 April 2022 Bury London EC2V 7QP Lancashire EC2M 2AT BL9 8RR

COMPANY NUMBER PRINCIPAL BANKERS Registered in England and Wales, BARCLAYS BANK PLC Number 1888425 43 High Street Sutton Surrey SM1 1DR

SOLICITORS FINANCIAL PUBLIC RELATIONS LINKLATERS LLP ADDLESHAW ENGINE MHP One, Silk Street GODDARD LLP 60 Great Portland Street London 1 St. Peter’s Square London EC2Y 8HQ Manchester W1W 7RT M2 3DE

REGISTRARS AUDITOR EQUINITI LIMITED KPMG LLP Aspect House 1 St. Peter’s Square Spencer Road Manchester Lancing M2 3AE West Sussex BN99 6DA

326 327 FIVE YEAR RECORD (UNAUDITED) ALTERNATIVE PERFORMANCE MEASURES (TERMS LISTED IN ALPHABETICAL ORDER)

52 weeks to 53 weeks to 52 weeks to 52 weeks to 52 weeks to The Directors measure the performance of the Group based on a range of financial measures, 28 January 2017 3 February 2018 2 February 2019 1 February 2020 30 January 2021 including measures not recognised by international financial reporting standards (‘IFRS’) adopted £m £m £m £m £m pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. These alternative Revenue 2,378.7 3,161.4 4,717.8 6,110.8 6,167.3 performance measures may not be directly comparable with other companies’ alternative Cost of sales (1,215.1) (1,629.8) (2,474.5) (3,236.0) (3,205.7) performance measures and the Directors do not intend these to be a substitute for, or superior Gross profit 1,163.6 1,531.6 2,243.3 2,874.8 2,961.6 to, IFRS measures. The Directors believe that these alternative performance measures assist in Selling and distribution expenses (813.0) (1,080.5) (1,632.9) (2,020.2) (2,126.4) providing additional useful information on the underlying performance of the Group. Alternative Performance Measures are also used to enhance the comparability of information Administrative expenses – normal (106.2) (144.7) (253.6) (348.6) (381.2) between reporting periods, by adjusting for exceptional items. Exceptional items are disclosed Administrative expenses – exceptional (6.4) (12.9) (15.3) (90.3) (97.3) separately as they are considered unusual in nature and not reflective of the underlying trading Administrative expenses (112.6) (157.6) (268.9) (438.9) (478.5) and profitability of the Group. The separate reporting of exceptional items, which are presented Other operating income 1.8 2.4 4.7 10.9 28.3 as exceptional within the relevant category in the Consolidated Income Statement, helps provide an indication of the Group’s underlying business performance. The principal items which may be Operating profit 239.8 295.9 346.2 426.6 385.0 included as exceptional items are listed in Note 4. Before exceptional items 246.2 308.8 361.5 516.9 482.3 Exceptional items (6.4) (12.9) (15.3) (90.3) (97.3) ADJUSTED EARNINGS PER ORDINARY SHARE BEFORE EXCEPTIONALS Operating profit before financing 239.8 295.9 346.2 426.6 385.0 The calculation of basic earnings per share is detailed in Note 10. Adjusted basic earnings per ordinary share has been based on the profit for the period attributable to equity holders of the Financial income 0.8 0.6 1.2 1.7 1.5 parent for each financial period but excluding the post-tax effect of certain exceptional items. A Financial expenses (2.2) (2.0) (7.5) (79.8) (62.5) reconciliation between basic earnings per share and adjusted earnings per share is shown below: Profit before tax 238.4 294.5 339.9 348.5 324.0 2021 2020 Income tax expense (53.8) (58.1) (75.7) (97.8) (94.8) Basic earnings per share 23.05p 25.29p Profit for the period 184.6 236.4 264.2 250.7 229.2 Exceptional items excluding loss on disposal of non-current assets 10.00p 9.27p Attributable to equity holders of the parent 178.9 231.9 261.8 246.1 224.3 Tax relating to exceptional items (0.86)p (0.30)p Attributable to non-controlling interest 5.7 4.5 2.4 4.6 4.9 Adjusted earnings per ordinary share 32.19p 34.26p Basic earnings per ordinary share from Core continuing operations (i) 18.38p 23.83p 26.90p 25.29p 23.05p The Group’s core Sports Fashion fascia is JD and the Group’s core market is the UK and Republic Adjusted basic earnings per ordinary of Ireland. share from continuing operations (i) (ii) 19.04p 25.15p 28.44p 34.26p 32.19p Effective Core Rate of Taxation Dividends per ordinary share (i) (iii) 1.55p 1.63p 1.71p 0.28p 1.44p A reconciliation between the UK main rate of corporation tax and the effective core rate from (i) Basic and adjusted earnings per ordinary share and dividends per ordinary share have been adjusted to reflect the share split, effective 24 November continuing activities is as follows: 2016, as if the event had occurred at the beginning of the earliest period presented. (ii) Adjusted basic earnings per ordinary share is based on earnings excluding the post-tax effect of certain exceptional items (see Note 10). 2021 2020 (iii) Represents dividends declared for the year. Under IFRS dividends are only accrued when approved. % % (iv) 52 weeks to 1 February 2020 reflects the application of IFRS16 ‘Leases’ for the first time, the impact is on Operating Profit and Financial Expenses. UK main rate of corporation tax 19.0 19.0 Depreciation and impairment of non-qualifying non-current assets 1.1 0.7 Effect of tax rates in foreign jurisdictions 2.0 1.8 Expenses not deductible and income not taxable 1.7 1.8 Recognition of previously unrecognised tax losses / movement in deferred tax assets 1.8 (0.5) Other 2.6 2.4 Effective core rate of taxation 28.2 25.2

328 329 ALTERNATIVE PERFORMANCE MEASURES (TERMS LISTED IN ALPHABETICAL ORDER) ALTERNATIVE PERFORMANCE MEASURES (TERMS LISTED IN ALPHABETICAL ORDER)

EBITDA before exceptional items Proforma IAS 17 Earnings before interest, tax, depreciation and amortisation. The Group presents results on a proforma basis with rents recognised under the provisions of IAS 2021 2020 17 ‘Leases’ as opposed to IFRS 16 ‘Leases’ so as to assist the user in the interpretation of current £m £m performance when compared to previous years. Further, certain management incentives are Profit for the period 229.2 250.7 linked to the results on this basis. Addback: A reconciliation from the IFRS 16 headline profit before tax and exceptional items to the proforma Financial expenses 62.5 79.8 Income tax expense 94.8 97.8 IAS 17 headline profit before tax and exceptional items is as follows: Depreciation, amortisation and impairment of non-current assets 507.9 462.9 2021 2020 Exceptional items 97.3 90.3 £m £m Deduct: Headline profit before tax and exceptional items (IFRS 16) 421.3 438.8 Financial income (1.5) (1.7) Addback: Depreciation and impairment of the Right of Use asset under IFRS 16 324.8 311.1 EBITDA before exceptional items 990.2 979.8 Lease interest expense 54.9 71.9 Deduct: LFL (Like for Like) sales Lease costs expensed to the income statement under IAS 17 (340.9) (356.2) The percentage change in the year-on-year sales, removing the impact of new store openings and Headline profit before tax and exceptional items (Proforma IAS 17) 460.1 465.6 closures in the current or previous financial year. Segmental Profit Before Tax and Exceptional Items Like for Like Sports Fashion businesses A reconciliation between profit before tax and profit before tax and exceptional items for each The performance in the Sports Fashion segment excluding acquisitions in the current financial segment is as follows: year and the annualisation period of businesses acquired in the previous financial year. Sports Fashion Net Cash Net cash consists of cash and cash equivalents together with interest-bearing loans and 2021 2020 borrowings. £m £m Profit before tax 356.6 427.9 Operating Profit Before Exceptional Items Exceptional items 76.9 40.6 A reconciliation between operating profit and exceptional items can be found in the Consolidated Profit before tax and exceptional items – Sports Fashion 433.5 468.5 Income Statement. Outdoor Profit Before Tax and Exceptional Items 2021 2020 A reconciliation between profit before tax and profit before tax and exceptional items is as £m £m follows: Loss before tax (26.5) (73.2) 2021 2020 Exceptional items 20.4 49.7 £m £m Loss before tax and exceptional items – Outdoor (6.1) (23.5) Profit before tax 324.0 348.5 Exceptional items 97.3 90.3 Profit before tax and exceptional items 421.3 438.8

330 331 JD PLC .COM

CBP006948

JD Sports Fashion Plc has balanced through World Land Trust the equivalent of 207kg of carbon dioxide. Printed (ISO 14001 compliant) using vegetable inks on FSC accredited stock. © JD Sports Fashion Plc 2021 Design and production: Navig8 www.navig8.co.uk ANNUAL REPORT AND ACCOUNTS