Join our community of smart investors

Sports Direct delays, then dives

The group unexpectedly delayed its results announcement for a second time after being presented with a £609m tax bill
July 29, 2019

It is hardly surprising that so much drama surrounded Sports Direct’s (SPD) second delay to its full-year numbers. The group had already delayed the results from their original 18 July release. But when the new date of 26 July came around, the results failed to materialise – prompting media and market speculation.

IC TIP: Hold at 209p

In the event, the numbers were published after market close that day. It transpired that this latest postponement had stemmed from an unexpected €674m (£609m) tax bill sent to the group by the Belgian tax authorities the day before. The sum includes 200 per cent penalties and interest, but before payment is due, the group must go through a fiscal mediation. Management said it was “less than probable” that material taxes and penalties would be due in Belgium as a result, and included it as a contingent liability.

Statutory profits were up on last year, but improvements were mainly due to a weak comparator, as writedowns related to investments such as Debenhams did not recur. However, underlying cash profits were down 6 per cent. Like for likes in the core UK sports retail business were down 1.6 per cent.

Bloomberg consensus forecasts an adjusted EPS of 18.7 for the year to April 2020, up from 17.6p in 2019.

SPORTS DIRECT (SPD)  
ORD PRICE:209pMARKET VALUE:£ 1.11bn
TOUCH:208.6-209p12-MONTH HIGH:417pLOW: 167p
DIVIDEND YIELD:nilPE RATIO:10
NET ASSET VALUE:234pNET DEBT:30%
Year to 28 AprTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20152.8331340.6nil
20162.9036246.8nil
20173.2528239.4nil
2018 (restated)3.3661.13.8nil
20193.7017921.6nil
% change+10+193+468-
Ex-div:na   
Payment:na