20
Mar

Mar 2016: Sports Direct – Pile ’em high… with a smile

March 20, 2016

Download PDF

Sports Direct – Pile ‘em high…with a smile

Mar 2016 (401p)

 

We have followed the Sports Direct business and management closely for many years. However its multi-year streak of profit growth and a share price that more than matched this rise kept our enthusiasm in check. A recent negative trading surprise fuelled the fires of those that love to hate Mike Ashley and its shares slumped. This is music to our ears. Sports Direct (SPD) is a high return business that dominates its industry, was built from scratch and still passionately run by a driven owner-manager. Its shares are now offered to us at c.7.4x EV EBIT, but notably, that EBIT is deemed to have significant growth potential by management. We also notice an interesting change underway at SPD – we think service and average prices are rising just a little in what looks to us a lot like a replay of Ryanair’s highly profitable repositioning since 2012.

In this note, we look at three key issues:

  1. How SPD defies convention (for the good of customers and all shareholders).
  2. What is SPD’s secret sauce that led it to capture 2/3 of the sports apparel market?
  3. Could Ashley be following in Michael O’Leary’s footsteps and upping customer services (and prices)? We sense that he is.

Finally we address the big concerns touted by many: namely whether weak LFL sales are structural (we think not) and supposedly dubious corporate governance and pay incentives.

We think SPD is a cheap franchise that might even be under-earning. Buy.

Fig.1: Unconventional management but excellent returns

Source: Capital IQ

Defying convention

Retail is a fairly conventional business activity. You buy stuff, stock your shelves and sell it with a sufficient margin to pay your costs and generate a profit. So how does one disrupt this well-worn path if you are not Amazon?

Here’s the Sports Direct way: target a niche retail segment that is growing faster than GDP. Focus relentlessly on ultra-low operating costs and offering ultra-low prices to customers. Scale the business up. Ignore everyone’s opinion except the customer and know what that customer really values. Become important enough to your suppliers to deserve above-average discounts and pass these on. Also bring some legacy brands in-house that allow lower prices but at higher margins. Rinse and repeat. So far so boring, you might say – but what is important is the human skill and personality required to realise all this in the real world, resulting in a gain of close to 60% market share. To disrupt a market in this way (and this is disruption) requires thick skin, aggressive business practices and unwavering focus on the end game. It requires a maverick, someone often highly unlikely to be popular. Think Michael O’Leary, think Brian Souter, think Mike Ashley – all contentious business characters whose antics often triggered emotional, but not always rational, responses from the press and investors alike.

“Being rational is a moral imperative” – Charlie Munger

It is our contention that Ashley and his eponymous business Sports Direct (SPD) are misunderstood and underestimated by most. Looked at rationally, SPD commands up to two-thirds of the c.£4.5bn sports retail market in the UK – what is today essentially a duopoly market (and that is being generous to JD Sports). It has a very wide moat, enjoys a RoNTA of c.30% and has compounded its book value at 37% CAGR since listing in 2008! Any rational observer would surely agree that a 7.4x EV/EBIT price tag is far too cheap for such a business. Oh, and SPD’s business we believe is starting to move just a little upmarket – so it would also be rational to expect an easing of price aggression causing a lift average selling prices and/or margins.

This is not a call on current trading at SPD – sales could deteriorate in the near term. Nor are we totally comfortable with rising gross margins in the face of falling LFL sales. What we are highlighting here is a great retail franchise that in our assessment is misunderstood and today undervalued by Mr Market.

“Conformity is the jailer of freedom and the enemy of growth” – JFK

“Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them. Because they change things” – Apple, Think Different campaign, 1997

Unconventional behaviour always upsets the Status Quo

Watching unconventional behaviour makes most people uncomfortable and uneasy. It disturbs the status quo causing them to question their own way of doing things. Such new business approaches are almost always discredited until they later become accepted and ultimately lauded as being visionary! An example is the way we are now expected to book, check in and accept cattle-like treatment at airports. This change was hardly welcomed by the consumer but it became the norm as the benefit it brought was lower fares which we all wanted.

What these disruptive managers and businesses have in common is that they are not afraid to ruffle feathers in order to disrupt markets, displacing incumbents’ and reinforcing their own position especially if it results in lower costs for them and cheaper products for their customers. Ryanair, IKEA, Costco, JD Wetherspoons, Lidl, Aldi and Sports Direct all do this[1]. Ten+ years ago many such businesses and their low cost models were underestimated, today nearly all of them have gained substantial share and are frequented by all and sundry.

Enter stage left: The Villain

It is in this context we suggest investors consider the perception of Sports Direct and its founder Mike Ashley more rationally. Like a gate crasher seeking a late drink at a posh wedding, Ashley arrived into the City in 2008 causing consternation everywhere it seemed. Many investors still remain too distracted by the man and his unconventional ways to see just how effective his retailing methods proved to be.

Among the many criticisms of Ashley and his business, the most common prejudices could be categorised and summed up as follows:

Ashley – The Unconventional Businessman

  • Seen to be arrogant and a bully
  • He does not play by the rules
  • He doesn’t ‘fit in’
  • Runs the company as if he owned it all

Sports Direct – The unconventional retailer

  • The shops are like a jumble sale
  • Customer service is terrible

SPD – The unconventional equity

  • The IPO was a disaster
  • Corporate governance is terrible
  • Investor communication is poor – ‘they won’t come to see me’ and don’t have conference calls
  • Directors share schemes are portrayed as being devious
But “so what” if Ashley ruffles feathers….many great businesses are unconventional

We have long found a rich hunting ground in consumer-facing businesses that perhaps those with high-paying City jobs and large disposable incomes seem to struggle to relate-to or comprehend. Some, we observe, are so busy looking down their noses at what they consider an inferior product offering to see the possible wider attraction of the value offered to those on a more limited budget.

Clearly there are times when such businesses are feted and impress Mr Market, but this is often when profits are growing (so what’s not to like?). When trading may be more uncertain their models are dismissed more quickly and generalisations made about their product and managers being inferior. (We have listened to many a story about Wetherspoons selling out-of-date beer which we thought interesting bearing in mind they have won more CAMRA awards than any other pub – ever!).

We note how post the fall in Sports Direct shares after the flotation, few in the city would take the company seriously (at c.50p), but by last summer with the shares at £8 a share and post a rise in PBT from £120m to £313m over 5 years, 83% of analysts that penned on the stock rated it a ‘buy’. Six months later at less than half the share price 50% of those same scribblers looked to have changed their minds and all we can read in the papers is how Sports Direct is failing.

What’s the Secret Sauce? No big secret: just Everyday Low Prices

What Sports Direct does is actually not very different from what Costco, Wal-Mart, IKEA, Wetherspoons, Ryanair et al do so well. They sell goods at prices that are impossible for other High Street competitors to match and thus eat-up market share (SPD started with a single store in 1982, today it has close to 2/3 of the £4.5bn UK Sports Retail market according to the Competition Commission). This might sound straightforward until you appreciate the logistics, supplier-wrestling, employee relations, brand ownership etc. that all have to come together to get this right. There are nuances of course: SPD had a differentiated approach in buying a portfolio of lower-tier sports brands (such as Dunlop, Slazenger, Everlast, USA Pro) many of which were acquired at fire-sale prices and resulted in branded high margin but controlled brands. Additionally SPD’s discounting of premium brands such as Nike and Adidas, and the footfall that resulted, allowed a revival of the acquired brands (in effect ‘own-label’) not only in terms of SPD volumes but also, in time, licensing rights to third parties. SPD generates about £33m or c.10% of profits from licensing of brands (and contract agreements worth $305m in place), in addition to wholesale profits from sales to third parties. But it likely makes the bulk of its profits from these brands it now controls via store sales.

In terms of online competition (SPD has about £400m in online sales) – given the vast breadth of the market, it is near impossible to truly quantify price differentials across the market place. Random online checks suggest that Sports Direct lies either at, or very near, the low online price points for the clothes and equipment it sells. The only credible competitors being Amazon (and possibly Ebay). Online sales account for about 15% of SPD’s business but sportswear arguably has not embraced e-commerce in the same way that fashion apparel has – it seems that maybe fitting and viewing matters more in this segment. As does the impulse buy that all of us have done whilst in a SPD store as per the common refrain “Wow that’s cheap”. JD Sports is clearly a competitor but is not a committed EDLP promoter.

Anecdote #1: Yes, Service matters, but price much, much more so

Recently your author’s son needed a new hockey stick so we went to SportsDirect.com online to buy him one. My wife chose them as despite never enjoying the customer service in stores (or lack of it) she knew they would be the cheapest. The £38 stick arrived two days later but was scratched. Frustrated by this, my wife went to the local Sports Direct store. They did not stock that stick so could not offer a swap and would not give a refund. She was told that had to be dealt with online. My son wanted the stick for a game in three days’ time therefore we did not want to wait for a return of the stick to Sport Direct online and then a subsequent (likely slow) re-issue of another one. Thus I said “Just go to the local independent sports shop, and even if it costs a little more just buy it. Then we will return the original one to SPD”. I returned from work and asked how she got on. She replied “I went to the little independent shop and they did have the exact same stick, but it was £74, and I am not paying that!” The result: we purchased a second stick from Sports Direct that arrived the next day and then returned the original one for a refund.

The reason to share this story is that as a family we have not always been Sport Direct fans, due to the poor customer service. However this little experience shows that we are like all others, in that we are actually not prepared to pay the necessary premium for service, thus we still shop there – even a second time round when we receive a faulty product!

We recently read the Competition Commission’s report[2] on SPD acquisition of JJB stores and it was notable that the CC concurs. Based on its own surveys, the CC concluded that “Sports Direct customers are very price conscious, with over 50 per cent giving price as the main reason for shopping at Sports Direct”.

We will make what we think is a pertinent comparison with Ryanair below and we think there is a strong similarity with the brutally low level of customer pricing, low service offered, but market dominance. What is interesting from here is that a move up (just a little) in service and price would likely be welcome by both Sport Direct customers and shareholders alike. The pricing gap with peers suggests they, like Ryanair, now have ample room to do just that.

Anecdote #2: Claire’s “not a fan at all” (but still “buying more than intended”)

Here at Holland, we are fortunate to have on our payroll an extremely savvy and price conscious retail expert who also happens to be a regular shopper at Sports Direct. We think our colleague Claire’s frank comments about Sports Direct are spot-on, very representative (and worth reading twice).

“I was just there this morning. There are no real sensible alternative shops on the street to get cheap, branded sportswear. I hate going into the shop, it is like a jumble sale. You can never find anything, you can never find anyone to help you, they rarely have what you want and you end up spending more than you intended. Should you happen to need to return your item they will only ever exchange it or credit note, never actually giving you your money back which I don’t like. It is the classic, stack it high, sell it cheap. The branded stuff always looks a bit ‘end of line’, ‘not quite good standard’ and the staff I’ve ever met clearly would rather be somewhere else.

I’m not a fan at all. But with the children growing as they do, I don’t have any choice. I’ve often used eBay to purchase sports clothes and find it a far more pleasant transaction. However you do have the delay in posting etc. then. If you need something immediately, it is usually a trip to SPD. – Claire Brunt (emphasis ours)

To us, this again sounds an awful lot like a Ryanair customer prior to 2011 (before O’Leary’s major U-turn on customer service) – i.e. as a customer you say you hate the business but you shop there anyway as its price offering is just too compelling. The point about spending more than you intended is also very revealing (and true – who hasn’t gone into Aldi or Lidl with a grocery list only to come home also with a socket set?).

Given the possible Ryanair analogy here, we now pose the question – what would it be like if SPD upped their game in terms of customer service? Would they be able to raise prices a little perhaps (and not lose market share)?

For a moment: “what if?”

Imagine a shop that looked a bit like Sports Direct that had the same ranges of stock, but in more attractive stores and more helpful staff. The only catch being that the prices were just little higher. Would you shop there rather than Sports Direct?

Now imagine an airline that was almost (but not quite) as cheap as Ryanair, but where the staff wore nice uniforms and smiled at you and the website worked and they did not make the whole customer experience frankly appalling? Would you fly with them rather than Ryanair?

The answer you give these questions depends on how price conscious you are – however now re-read each question without the last three or four words i.e. would you shop at/fly with these new companies if old style Sports Direct/Ryan did not exist? The answer is of course you would as you would not have an alternative. That is pricing power in action.

Let’s apply our Operate, Generate, Allocate model

When we run the usual Holland ‘Operate, Generate, Allocate’ rule over Sports Direct, it looks good. Let’s start by saying that any business that, from a standing start, ends up owning 2/3 of a £4.5bn duopoly market is clearly a top notch operator. That it realises this via a low-cost, high volume model is also reassuring given the huge difficulties faced by any new competitor with such a model. We cannot deny observing some ‘sharp’ business practices and certainly we would rather better investor communication (conference call manuscripts would be a good start) – that said, the operational prowess of this team looks exceptional.

That SPD was able to gain two-thirds of a market was in spite of its store layouts which many describe as like a jumble sale – certainly not because of it. This can only mean one thing, despite more appealing alternative store formats, SPD wins because customers want lower prices and this seems true of customers across all social classes.

When JJB was still alive you had a mainstream choice in buying sports kit. Its stores were a little better laid out and in some offerings perhaps its range was better. So how could it fail against the jumble sale? The reason is that simply put, the UK consumer loves to moan about values like layout/range/customer service but if it is obvious to him he is paying too much he/she will go elsewhere i.e. they don’t really ‘value’ service that highly in truth. This is particularly true in branded goods where the products are exactly comparable – hence the whole success of Amazon’s business model. This was the ‘know what your customers really want’ fact that they deeply understood. As we have observed before for other retailers, asset turn is the lifeblood of them where scale drives prices lower, which in turn drives more scale. Once that virtuous circle model is created it is hard to break.

Fig.2: Asset Turns

 Source: Capital IQ

The Ryanair move: raising service, prices (…and er, the share price)

Establishing yourself with market leadership via a sustainable low-cost model is obviously no mean feat. But, if you ultimately gain two-thirds of the market – the hard work is surely done. If unconventional behaviour is necessary to enter and disrupt a market, then once the market is dominated, perhaps it requires a bit of conventional behaviour to really reap the rewards. This is precisely what has been happening with Ryanair since 2013, a transformation that we have discussed at length and whose impact on profitability has been nothing short of breath-taking.

“One of the weaknesses of the company now is it is a bit cheap and cheerful and overly nasty, and that reflects my personality.” – Michael O’Leary (emphasis ours)

For those not following Michael O’Leary’s Damascene conversion closely, we think his media blitz in the last week has been particularly insightful into what we suggest is currently a fascinating period in Ryanair’s corporate evolution. What Ryanair is doing – evolving its culture to reflect its status uplift from market underdog to established market leader – is, to our mind, not at all new and O Leary is following the lead of other ‘reformed’ corporate characters such Mike Ashley[3] and Brian Souter in this regard. – Holland Views, Ryanair, The Rocky Road to Damascus, Jan 2014 (emphasis ours)

We suggest that Sports Direct in 2014-2016 is in a similar position that Ryanair found itself back in 2011 – dominating its market with low costs, yet paradoxically out of favour with its customers and popular opinion. The bad press for Ashley and Sports Direct seemed to reach a peak in late-2015 with the furore around management incentives and employee conditions. The year ended with Ashley promising to treat his employees better. How long can it be before he starts treating his customers better – with a commensurate but subtle uplift in prices? We think the process has already begun.

Fig.3: SPD upping its game in the Customer Services department…very Ryanair-esque

 Source: Sports Direct Store Guildford, Feb 2016

We had long admired the Ryanair model when the company announced (post some poor trading vs. their peers) that they would invest in a better customer offering. At the time we thought this was interesting but wondered whether the much abused customer would effectively ‘forgive’ Ryanair of its past mistreatment of them. We concluded that of course they would, but it might take time. We were wrong; it took no time at all.

“If I had realised the effect of being nice to people, I would have done it years ago” – Michael O’Leary, 2015

Fig.4: O Leary changes tack – X marks the spot (Ryanair Share Price and EPS)

 Source: Capital IQ

We accept that a part of the recent rise in Ryanair’s profitability was its good fortune to benefit from a plunging oil price, but a large part was also yield (i.e. price) not falling as fast as it has in the past. Marginal price increases are, of course, 100% profit.

Importantly this was only possible because Ryan was the cost and price leader. This is crucial because as per our two questions earlier, if Ryan is 50% cheaper than the next airline seat you can choose to fly on, then you will still fly with them at a 40% discount (note the read across from the hockey stick anecdote earlier). The customer service was acceptable/poor but we still stayed with the same company and made a new order – why? The alternative was 80% more expensive.

It is very notable to us that Ryanair and Sports Direct shared a non-executive Director until last year, Charlie McCreevy. He’s a man we’re keen to meet.

Next plc – Ashley’s poster boy?

The following quote from a Telegraph interview with CEO Dave Forsey will surprise many:

“The rival that Ashley and his team appear to admire most is Next. Forsey makes constant references to the fashion retailer and its ability to run a profitable business across stores, catalogues and the internet. This focus on slickness – which Forsey refers to as “our Coca-Cola formula” – appears to be at odds with the state of the company’s high-street stores. –The Telegraph, January 2014 (the headline of the article was “Sports Direct – the rise of Britain’s craziest retailer” !!)

Firstly as regular readers will know, we regard Next as one of the best retailers globally. That SPD also seems to recognise this, in spite of its own seemingly haphazard store is, we think, very revealing. A recent interview[4] with trade magazine Retail Week and the CEO at the new Leeds ‘mega store’ format is also revealing as it suggests a business that is subtly changing from being all about value to one that is emphasising value and quality.

Fig.5: Forsey on ‘Retail Week’ Trade Press launching swanky Mega Store format in Leeds

 Source: Retail Week

In the interview Forsey is asked “is this is end to the pile-em-high, sell-em-cheap strategy?”… Forsey says in response that SPD is known for price, but range and availability is as important…a subtle indication of the change we believe it is taking place. See link to the interview in the footnotes.

Separately, post the huge furore around management and staff incentives last year, we note Ashley’s new-found pacifist stance before Christmas in which he talks about setting high moral standards (yes, moral standards – that’s not a typo). As we asked ourselves with Ryanair in 2013, “do leopards change their spots”? Pragmatic businessmen certainly do.

“I’m making a New Year’s resolution pledge to the Daily Mirror – and I’m deadly serious. I want to see Sports Direct become the best high street retail employer, after John Lewis. I realise this is ambitious and it won’t be easy but I believe that as a FTSE 100 or even 250 company we have a responsibility to set a high moral standard.” – Mike Ashley, Daily Mirror Dec 2015 (emphasis ours)

At Holland, we’ve seen this playbook before:

“As I said myself, if I had known being nicer to our customers was going to work so well I would have done it years ago.” – Michael O’Leary

A closer look at weak trading, management incentives and cash

Above all we try to be rational and pragmatic when it comes to assessing business franchises and their prospects and valuations. That said we have to be honest with ourselves and be clear on inevitable bad news (“you can have cheap stocks or good news – not both”). Thus we will be upfront and admit that growth looks to have slowed in the core UK retail business and we are not sure why. While we are at it, here’s a list of other concerns often cited:

  • Corporate communication at Sports Direct is unarguably poor. No access, no transcripts, no detailing of acquisition motivation/strategy (Debenhams, Dick’s, Sporting Stakes etc.).
  • LFL sales unlike JD Sports, are not reported and by our estimates went negative in FY15 as shown below in Fig.6.
  • Yet despite the sales trends, gross margins have risen.
So what is going on in recent trading – is a result of increased investment?

Sports Direct does not report LFL sales (rather, it discloses LFL profit contribution growth) and there is probably some logic in this given the disparity of store sizes and therefore asset turns across the portfolio. It has maintained this view since flotation in 2007. Fig.6 below shows our attempt to back-out the LFL UK retail sales based revenues and store space growth. After compounding space growth at c.5% 2010-2014, space growth accelerated with an 11% growth in H1 2016.

Fig.6: Estimating UK store sales LFL trends

 Source: Holland Advisors

We repeat that we do not have any great insights into current trading. But what is interesting to consider is that there are two other themes occurring at the group. Firstly all store managers were paid out on their FY15 bonus payment last September. The average pay-out was c.2,500 shares (worth c.£19,000 to each) with a further c.10,000 shares per employee in future stock issuance. Did that first tranche go to their heads (or indeed their livers)? Who knows?

A more likely reason can be found upon our recent visit to the company’s new Oxford Street store. It is a much better laid-out store with a huge product range and seemingly better service. A visit to this store we recommend most strongly for those wishing to understand the Ryanair analogy we made earlier. Importantly however for insight into trading, one point is very clear when visiting this store – it is huge. More specifically, it is probably 3-4x the size of the store that was there before. Having visited it last week and spoken with some staff we concluded that its current sales are not (yet) likely anywhere near 3-4x the old store. Does that mean the group was wrong to open this store? Not necessarily – it is an investment for the future. But if investors are guessing LFL sales trends as we have above by looking at square footage vs. total sales then such new stores will depress that measure. When looked at this way it is perhaps understandable why companies like Sports Direct focus on store profit contribution not like for like sales, a measure they have always avoided.

We have become more pragmatic on rising gross margins in some franchises. Fig.7 below in isolation might alarm us in a falling sales environment as it can be a bad sign if the company is just gouging customers to make it numbers (which we see no evidence of). More likely we think what is occurring at SPD is in part due to greater own label mix and possibly the start of the better service strategy we have observed above. For context, the group gross margin was 44% back in 2007 on half the sale levels and lower market share. Since then, the company’s mix has improved, and its scale has delivered material cost benefits. From the comments below it is clear that SPD still has the ability to reinvest in margins and we suspect that margins were held down at the time of JJB’s demise.

“we retain the ability to invest in margin, inventory and group marketing to deliver long term sustainable growth” – Sports Direct, Feb 2016 (emphasis ours)

Fig.7: Gross Margin

 Source: Sports Direct

Growth, Margin and Cashflows

Sports Direct as a business does not consume a lot of capital. But it is not working capital negative like many retail businesses due to higher inventory levels and ancillary business such as wholesale and licensing. That said, we believe that the P&L does not reflect the cash generation power of the business.

CAPEX to depreciation has ostensibly been about 1.5x due to the both the Shirebrook warehouse hub investment and store expansion. But in fact, maintenance CAPEX (helpfully disclosed) is actually small at c.£15m relative to depreciation (c£63m). Bearing in mind we think this share is cheap vs. current year EBIT of c.£300m, if owner earnings is c.10-20% higher, then this adds nicely to our margin of safety.

At the July 2015 results, the company guided to about 300k sq. ft. (c.6%) of space to be refitted in 2016 which would suggest a gradual continuation of maintenance CAPEX increases (indeed most of this 300k seems to be already in place at the end of H1 2016). It is possible in theory that such a group-wide relocation and refit could be expensive, but with the group having ‘form’ as a seriously canny spender of capital we think it unlikely.

Fig.8: Maintenance CAPEX (c.£15m) much lower than depreciation

 Source: Sports Direct, July 2015

The furore over Management Incentives

Sports Direct itself asserts that “The Group’s Share Schemes are some of the most generous in the country”. Under the 2009 Share Scheme, c.27m shares vested among about 2000 middle management. A further c.21m shares are expected to vest under the 2011 Share Scheme (of which it paid out 5m shares to those staff last year (c.£19,000 each) with the remaining 16m shares vesting in 2017).

Let us start by reminding you that Ashley (who does not participate in the Scheme) owns over £1bn worth of SPD stock even at today’s deflated share price – over half the company. We don’t want to get bogged down in debating the appropriateness of the controversial 2015 Share Scheme outlined below. Simply put we see it and past schemes as sensible alignments of investor, founder and store manager interests. As a reminder, of Dave Forsey’s £6.6m remuneration in the year to April 2015, £150k was fixed as shown below in Fig.10. In other years that is all he receives.

Fig.9: Share Scheme summary

 Source: Sports Direct 2015 Annual Report

As can be seen from the chart above, the 2009 and 2011 schemes realised their objective which led to dilution of c.4%. Please see the appendix for the specifics of the 2015 share scheme, but the headline EBITDA targets are as follows: (i) FY16 £420m; (ii) FY17 £570m; (iii) FY18 £650m; and (iv) FY19 £750m – i.e. compared to the £370m EBITDA likely this year – these are aggressive targets by any measure. We applaud such stretch targets and will gladly accept the market dilution (mostly not going to the board) that they may bring. We also note that it is quite possible that the targets get ratcheted down again at some point in the future especially in light of recent trading updates. Crucial to these stretched targets will, of course, be easier to achieve with the company’s move more upmarket with slightly higher prices and margins.

Fig.10: Can you find another company with such a simple/low pay directors?

 Source: Sports Direct 2015 Annual Report

Conclusion

Sports Direct is a reviled business and Mike Ashley certainly has few fans in the City it seems. Having known this business since before its IPO we have always felt it was an exceptional retail operation run by a maverick with little time for the City. A valuation of 7.4x EV/EBIT – not seen since 2009 – presents a great opportunity to buy into this great franchise.

Let’s not forget that the business enjoys an almost two-thirds share of its market and its low cost, high volume model allows significant challenges for competitors. That alone makes us interested. Yet we see significant analogies with Ryanair – another disruptive business run by a maverick once overshadowed by bad press. Ryanair’s U-turn in 2013 of being nice to customers and the commensurate tailwind to prices that this quickly enabled is a fascinating precedent for Sports Direct investors. We see very early signs that Sports Direct is following a similar path. Ryanair reminded us too that uplifts to prices are 100% marginal profit – nice optionality if you can get it!

Andrew Hollingworth & Mark Power

The Directors and employees of Holland Advisors may have a beneficial interest in some of the companies mentioned in this report via holdings in a fund that they also act as advisors to.

Appendix

2015 Share Scheme

The terms of the 2015 Share Scheme provide for the grant of nil-cost options over up to 25m ordinary shares in the Company (amounting to approximately 4.2% of the issued share capital of the Company). Senior Executive grants are limited to a maximum of one million shares each. The vesting of any options would be conditional upon the achievement by the Company of four Adjusted Underlying EBITDA targets (before scheme costs) set by the Committee. If these performance targets are all met, 25% of any award would vest following the announcement of the Company’s audited results for FY19 in July 2019 and 75% of the award would vest following the announcement of the Company’s audited results for FY21 in July 2021. When the Scheme was approved the Adjusted Underlying EBITDA targets (before scheme costs) were: (i) FY16 £480m; (ii) FY17 £570m; (iii) FY18 £650m; and (iv) FY19 £750m. Specifically tailored to Company culture and our growth strategy we continue to review the robustness of the Scheme. The Remuneration Committee considered these targets to be extremely stretching, dependent on strong organic growth and to a degree on an aggressive acquisitions strategy. However, as we enter FY16 it is clear, and also understood by the market, that planned acquisitions in FY15 did not fully materialise. As such, the Committee believes the FY16 Adjusted Underlying EBITDA target of £480m to now be an unreasonably challenging one. Following its recent review the Committee now recommends to shareholders a revised FY16 Adjusted Underlying EBITDA target of £420m. This compares to the £383m EBITDA achieved in FY15 (i.e. the delivery of c.10% growth in one year). – Sports Direct 2015 annual report (emphasis ours)

Disclaimer

This document does not consist of investment research as it has not been prepared in accordance with UK legal requirements designed to promote the independence of investment research. Therefore even if it contains a research recommendation it should be treated as a marketing communication and as such will be fair, clear and not misleading in line with Financial Conduct Authority rules. Holland Advisors is authorised and regulated by the Financial Conduct Authority. This presentation is intended for institutional investors and high net worth experienced investors who understand the risks involved with the investment being promoted within this document. This communication should not be distributed to anyone other than the intended recipients and should not be relied upon by retail clients (as defined by Financial Conduct Authority). This communication is being supplied to you solely for your information and may not be reproduced, re-distributed or passed to any other person or published in whole or in part for any purpose. This communication is provided for information purposes only and should not be regarded as an offer or solicitation to buy or sell any security or other financial instrument. Any opinions cited in this communication are subject to change without notice. This communication is not a personal recommendation to you. Holland Advisors takes all reasonable care to ensure that the information is accurate and complete; however no warranty, representation, or undertaking is given that it is free from inaccuracies or omissions. This communication is based on and contains current public information, data, opinions, estimates and projections obtained from sources we believe to be reliable. Past performance is not necessarily a guide to future performance. The content of this communication may have been disclosed to the issuer(s) prior to dissemination in order to verify its factual accuracy. Investments in general involve some degree of risk therefore Prospective Investors should be aware that the value of any investment may rise and fall and you may get back less than you invested. Value and income may be adversely affected by exchange rates, interest rates and other factors. The investment discussed in this communication may not be eligible for sale in some states or countries and may not be suitable for all investors. If you are unsure about the suitability of this investment given your financial objectives, resources and risk appetite, please contact your financial advisor before taking any further action. This document is for informational purposes only and should not be regarded as an offer or solicitation to buy the securities or other instruments mentioned in it. Holland Advisors and/or its officers, directors and employees may have or take positions in securities or derivatives mentioned in this document (or in any related investment) and may from time to time dispose of any such securities (or instrument). Holland Advisors manage conflicts of interest in regard to this communication internally via their compliance procedures.

  1. We have seen excerpts from what looks at interesting book on this area – ‘Different: Escaping the Competitive Herd’ by Youngme Moon e.g. IKEA’s intentional differentiation is discussed in some detail. IKEA’s founder, Ingvar Kamprad, was of course another maverick/eccentric businessman to say the least. ↑
  2. https://www.gov.uk/cma-cases/sports-direct-international-plc-jjb-sports-plc-merger-inquiry-cc ↑
  3. It is ironic that, at the time we wrote on Ryanair back in 2012-14, we were using Mike Ashley as a comparison for Mick O’Leary’s new-found pragmatism! ↑
  4. https://www.youtube.com/watch?v=LHKElU48soY&feature=player_embedded ↑

Related Posts

June 12, 2024

Jun 2024: Ryanair – Born to run

,
December 15, 2023

Dec 2023: A life’s work

,
Holland_logo_RGB Agree

Welcome to Holland Advisors

By continuing to use this website you:
Terms and Conditions
Disclaimer
Privacy Notice

Agreement

Please confirm the following Please confirm that you have read and understood the following terms of use of this website. THIS PORTION OF THE WEBSITE IS ONLY MADE AVAILABLE TO NON-US INVESTORS AND PROFESSIONAL CLIENTS OR ELIGIBLE COUNTERPARTIES. The content of this website has been prepared by Holland Advisors (London) Ltd on the basis of information and sources believed to be reliable. Under no circumstances should any part of this website be construed as an offering or solicitation of an offer for any investment in the products on this site Holland Advisors (London) Limited is authorised and regulated by the Financial Conduct Authority (FRN 538932). 1. Not for U.S. Persons The provision of the information in this website does not constitute an offer of securities to any person in the United States or to any U.S. Person as such term is defined under the Securities Act of 1933, as amended. The information contained in this site about Holland Advisors (London) Ltd is not directed to any person in the United States. Funds referred to herein are neither registered under the Securities Act 1933 of the USA, nor are they registered under the Investment Company Act of 1940. Consequently, they cannot be offered for sale or be sold in the USA, its territories, possessions or protectorates under its jurisdiction, nor to nationals, citizens or residents in any of those areas. No investments or services mentioned on this website are directed at US Persons who are not Eligible Counterparties as defined by the UK Financial Conduct Authority (FCA) Handbook or Qualified Purchasers as defined under the Investment Company Act of 1940. The information contained herein does not constitute a distribution, an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction in which such distribution or offer is not authorised. 2. Terms and Conditions of Use IMPORTANT LEGAL NOTICE THE FOLLOWING TERMS AND CONDITIONS OF USE (“TERMS OF USE”) APPLY TO YOUR ACCESS TO AND USE OF THE HOLLAND ADVISORS (LONDON) LTD WEBSITE (THE “WEBSITE”). EACH TIME YOU ACCESS OR USE THIS WEBSITE, YOU AGREE TO COMPLY WITH, AND BE BOUND BY, THE TERMS OF USE AND ACKNOWLEDGE THAT WE MAY RELY UPON YOUR AGREEMENT. PLEASE READ THE FOLLOWING TERMS OF USE CAREFULLY AND IF YOU DO NOT ACCEPT ANY TERMS OR CONDITIONS, PLEASE DO NOT ACCESS OR USE THIS WEBSITE. 3. Information on the Website Except where stated otherwise, the information, content and services on this Website (the “Information”) are provided by Holland Advisors (London) Ltd (referred to as “we” and “us”) as at the date indicated on the relevant material. The Information is provided for personal use and information purposes only. The Information does not take account of the investment objectives, financial situation and particular needs of any particular person and is not general advice to any class of persons. Therefore, you should not rely on the Information and should obtain relevant and specific professional advice in making any investment decision. Furthermore, nothing on this Website constitutes or should be construed to constitute: (i) an offer, advice, invitation or solicitation from us or our affiliates to buy or sell any investments or securities, futures, options or other financial instruments; (ii) an invitation or inducement to engage in investment activity or a financial promotion of any kind; or (iii) investment advice or recommendation. 4. Stock exchange prices and exchange rates The prices/values shown on this Website in relation to different underlying securities are based on the prices notified to Holland Advisors (London) Ltd as the last sale price of the relevant securities on the stock exchange on which they are traded as at the time and date shown. Those figures may vary throughout the course of, and between, stock exchange trading days, market trading times and business days in general. Holland Advisors (London) Ltd has not verified the figures with the relevant stock exchange and you should verify the accuracy of those figures separately before relying on them. 5. Permitted users of the Website The laws and regulations of the country from which you access this Website may include restrictions on the distribution of the Information. This Website is not directed at or intended for distribution to or use by any person or entity in any jurisdiction where (by reason of that jurisdiction’s applicable securities laws, person’s nationality, residence or otherwise) such distribution, publication, availability or use of this Website or any part of its contents would be contrary to applicable law or regulation or would subject Holland Advisors (London) Ltd to any registration or licensing requirement within such jurisdiction. If you are such a person or entity, you are not authorised to enter the Website. It is your responsibility to ensure that your use of this Website complies with any restrictions or any applicable local laws regarding use of the Information on this Website. Persons or entities in respect of whom such restrictions apply must not access the relevant pages on this Website. The Information displayed on this Website contains material that may be interpreted by the relevant authorities in the country where you are viewing this Website as a financial promotion or an offer to purchase securities. Accordingly, if you reside in any such country or fall within the scope of any law that seeks to regulate financial promotions in the country of your residence or in the country in which you are viewing this Website, please cease accessing or using this Website immediately. If you are uncertain about your position under the laws of the country in which you are viewing this Website, then you should seek clarification by obtaining legal advice from a lawyer practicing in the country of your residence or in the country in which you are viewing this Website before accessing this Website. You may not use any part of the material or Information on this Website to establish, maintain or provide or assist in establishing, maintaining or providing a stock market for trading in securities. 6. Investment Performance and Accuracy of Information The Site contains material about the past performance of our Funds. The value of an investment in a Fund may go up as well down so that an investor’s investment in a Fund, when redeemed, may be more or less than the original investment amount. By its nature, investment in a Fund managed by Holland Advisors (London) Ltd is only suitable for sophisticated investors who do not require immediate liquidity for their investment, for whom an investment in a Fund does not constitute a complete investment programme and who fully understand and are willing to assume the high risk involved in the investment programme of a Fund. THE PAST PERFORMANCE OF ANY INVESTMENT, INVESTMENT STRATEGY OR INVESTMENT STYLE IS NOT INDICATIVE OF FUTURE PERFORMANCE. Whilst the information contained on the Website has been given in good faith and every effort has been made to ensure its accuracy, the Information may not be complete or accurate for your purposes. This Website and the Information is provided on an “as is” basis and Holland Advisors (London) Ltd may not, and has no obligation to, update the Information or correct any inaccuracy which subsequently becomes apparent. The Information and/or opinions and estimates comprised in the Information may be changed or withdrawn without notice and may become outdated. You, therefore, should verify any information or other material obtained from this Website before you use it. HOLLAND ADVISORS (LONDON) LTD, ITS DIRECTORS OR OFFICERS DISCLAIM ALL REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING BY WAY OF EXAMPLE BUT NOT LIMITATION AS TO RELIABILITY, COMPLETENESS, FITNESS FOR PURPOSE OR ACCURACY OF THE INFORMATION ON THIS WEBSITE OR ON ANY THIRD PARTY WEBSITE LINKED TO THIS WEBSITE. IN ADDITION, WE DO NOT REPRESENT OR WARRANT THAT THIS WEBSITE OR THE SERVERS THAT MAKE THE WEBSITE AVAILABLE WILL BE UNINTERRUPTED, ERROR FREE, OR FREE FROM INFECTION, VIRUSES, WORMS OR ANY OTHER HARMFUL CODE WHICH MAY HAVE CONTAMINATING OR DESTRUCTIVE PROPERTIES. YOU ARE FULLY RESPONSIBLE FOR ENSURING PROTECTIVE STEPS TO BE TAKEN SUCH AS VIRUS CHECKING. The Information is assembled from material prepared by Holland Advisors (London Ltd) or its agents but may not include Information made known to Holland Advisors (London) Ltd officers (or agents) subsequent to the date of publication of the Information indicated on the Website. If you use the Information, you do so at your own risk. Please recognise that the previous performance of securities or other instruments does not guarantee or predict future performance. 7. Exclusion of liability TO THE FULLEST EXTENT PERMITTED BY LAW, HOLLAND ADVISORS (LONDON) LTD ACCEPT NO LIABILITY TO YOU OR ANY THIRD PARTY FOR ANY LOSSES OR DAMAGES, INCLUDING, WITHOUT LIMITATION, DIRECT OR INDIRECT DAMAGES, CONSEQUENTIAL OR SPECIAL DAMAGES, LOSS OF USE, DATA OR PROFITS, COSTS OR EXPENSES INCURRED OR SUFFERED BY YOU OR THIRD PARTY, WHETHER IN CONTRACT OR DUE TO NEGLIGENCE OR OTHER TORTIOUS ACTION, ARISING OUT OF OR IN CONNECTION WITH THE ACCESS TO, USE OF, RELIANCE ON, OR PERFORMANCE OF THIS WEBSITE OR ANY INFORMATION CONTAINED ON THIS WEBSITE, WHETHER DUE TO INACCURACY, ERROR, OMISSION OR ANY OTHER CAUSE AND WHETHER ON THE PART OF US, OUR SERVANTS, AGENTS OR ANY OTHER PERSON. NOTHING IN THE TERMS OF USE EXCLUDES, RESTRICTS OR MODIFIES ANY CONDITION, WARRANTY OR LIABILITY WHICH MAY AT ANY TIME BE IMPLIED BY STATUTE OR ANY OTHER APPLICABLE LAW WHERE TO DO SO IS ILLEGAL OR WOULD RENDER ANY PROVISION OF AN AGREEMENT VOID. 8. Third Party Websites We may provide, on our Website, links to websites operated by third parties as a convenience to you. If you use these other sites, you will leave this Website. If you decide to visit any linked site, you do so at your own risk and it is your responsibility to take all protective measures to guard against viruses or other destructive elements. Holland Advisors (London) Ltd makes no representations, warranties or guarantees of any kind about any of the content of any other website which you may access by hypertext link through this Website. When you access any other website by means of a link from this Website, you should understand that your access to that other website is independent of Holland Advisors (London) Ltd and Holland Advisors (London) Ltd has no control over the content of the website, nor does Holland Advisors (London) Ltd in any way endorse or approve the content of that website. In no event will Holland Advisors (London) Ltd in any way be liable to you or any other person(s) or organisation(s) for loss or damage (whether direct, indirect, consequential, special or other) for any use of any site linked to it by means of hypertext or otherwise. 9. Indemnity You agree to indemnify Holland Advisors (London) Ltd and its officers from and against any claim brought by third parties against Holland Advisors (London) Ltd and its officers as a consequence of your breach of the Terms of Use. Furthermore, if your use of this Website results in the need for servicing, repair or correction of equipment, software or data, you assume all costs thereof. 10. Intellectual Property Rights and Licence The copyright, trade mark or any other intellectual property rights in the Website and the Information are owned by or licensed to Holland Advisors (London) Ltd. You may download or print out a hard copy of individual pages and/or sections of this Website provided you do not remove any copyright or other proprietary notices. Any downloading or other copying from this Website will not transfer title to any software or material to you. You may not reproduce (in whole or in part), transmit (by electronic means or otherwise), modify, link to or use for any public or commercial purpose this Website without the prior written permission of Holland Advisors (London) Ltd. Any rights not expressly granted in the Terms of Use are reserved. 11. Operation of the Website You should be aware that the internet, being an open network, is not secure. If you choose to send any electronic communications by means of this Website, you do so at your own risk. Holland Advisors (London) Ltd cannot guarantee that such communications will not be intercepted or changed or that they will reach the intended recipient safely. 12. Privacy Any personal data relating to you will be collected, used and recorded by us in accordance with current data protection legislation, the Terms of Use and our Privacy Policy. You must read our Privacy Policy as it forms part of the Terms of Use. 13. Governing law The Terms of Use are governed by the laws of England and Wales and the courts of England and Wales will have exclusive jurisdiction over any disputes arising under them. 14. Waiver If you breach the Terms of Use and we take no action, we will still be entitled to use our rights and remedies in any other situation where you breach the Terms of Use. 15. Our details This website is owned and operated by Holland Advisors London Ltd. You can contact us at: Holland Advisors London Ltd, The Granary, 1 Waverley Lane, Farnham, Surrey, GU9 8BB. Updated and effective as of  31st March 2024
Disclaimer
Please read the following conditions of use of this website. This website is directed at high net worth experienced investors and institutional investors who understand the risks involved with the investments being promoted and it should not be relied upon by retail clients (as defined by Financial Conduct Authority). The information on this website is issued by Holland Advisors (London) Limited (hereafter referred to as “Holland Advisors”), a limited liability company (7431314) incorporated in England and Wales, which is authorised and regulated by the Financial Conduct Authority (FRN: 538932). This website is for information purposes only and does not constitute an offer or solicitation to buy or sell securities, funds or any other financial instrument. The information is directed inside the United Kingdom and is not directed at any persons in jurisdictions where it would be against local law or regulation.  In particular, information on this site is not directed at any person, partnership or corporation being resident in the United States of America. Holland Advisors disclaims all responsibility if you access or download any information in breach of any law or regulation of the country in which you reside. Information on this site The information provided does not constitute advice. Holland Advisors believes that the sources of the information in this website are reliable. However it cannot and does not guarantee, either expressly or implicitly, and accepts no liability for, the accuracy, validity, timeliness or completeness of any information or data (whether prepared by it or by any third party) for any particular purpose or use or that the information or data will be free from error. Holland Advisors does not undertake any responsibility for any reliance which is placed by any person on any statements or opinions which are expressed herein. Neither Holland Advisors nor any of its directors, officers or employees will be liable or have any responsibility of any kind for any loss or damage that any person may incur resulting from the use of this information. This does not exclude or restrict any duty of liability that Holland Advisors has to its customers under the regulatory system in the United Kingdom. All Information may be changed or amended without prior notice although Holland Advisors does not undertake to update this site regularly. Marketing Communications Documents on this site do not constitute investment research as they have not been prepared in accordance with UK legal requirements designed to promote the independence of investment research. Therefore, even if they contain research recommendations they should be treated as marketing communications and as such will be fair, clear and not misleading in line with Financial Conduct Authority rules. These communications are not personal recommendations to you and any opinions cited are subject to change without notice. Holland Advisors takes all reasonable care to ensure that the information on this site is accurate and complete; however no warranty, representation, or undertaking is given that it is free from inaccuracies or omissions. Documents on this site are based on, and contain, current public information, data, opinions, estimates and projections obtained from sources we believe to be reliable. Past performance is not necessarily a guide to future performance. The content of these documents may have been disclosed to the issuer(s) prior to dissemination in order to verify their factual accuracy. Investments in general involve some degree of risk, therefore Prospective Investors should be aware that the value of any investment may rise and fall and you may get back less than you invested. Value and income may be adversely affected by exchange rates, interest rates and other factors. The investments discussed on this website may not be eligible for sale in some states or countries and may not be suitable for all investors. If you are unsure about the suitability of an investment given your financial objectives, resources and risk appetite, please contact your financial advisor before taking any further action. Holland Advisors and/or its officers, directors and employees may have or take positions in securities, funds or derivatives mentioned on this site (or in any related investment) and may from time to time dispose of any such securities (or instrument). Holland Advisors manages these potential conflicts of interest internally via its compliance procedures. Fund Information Parts of this site may refer to Funds managed or advised by Holland Advisors. These are not solicitations to invest and any potential investors should refer to the “Our Funds” section of the website in order to learn more about these Funds and find out how and where to obtain the relevant full legal documentation. Linked Websites This site may be linked to third party websites or contain information provided by third parties. Holland Advisors does not make any representation as to the accuracy or completeness of such websites or information, has not and will not review or update such websites or information, and cautions browsers that any use made of such websites or information is at their own risk. Holland Advisors does not accept any liability arising out of the information contained on any linked website or Information provided by a third party and the use of such sites and information is at your own risk. This does not exclude or restrict any duty or liability that Holland Advisors has to its customers under the regulatory system in the United Kingdom. Indemnity You agree to indemnify and defend Holland Advisors, its affiliates and licensors, and the officers, directors, employees, and agents of Holland Advisors and its affiliates and licensors, from and against any and all claims, liabilities, damages, losses, or expenses, including legal fees and costs, arising out of or in any way connected with your access to or use of this website and the Information. Use of Cookies If you agree to these terms and conditions a “cookie” might be placed on your computer. A cookie is a packet of information that does not identify individual users of a website, but allows the collection of website activity (such as the number of users who visit our website, the date and time of visits, the number of pages viewed, navigation patterns, what country and what systems users have used to access the site). We can use this information for statistical purposes, which allows us to analyse and improve our website. The cookie will expire automatically after 6 months or you can manually remove cookies in your browser settings. Copyright, Trademarks and Other Rights Copyright, trademarks, database rights, patents and all similar rights in this site and the information contained in it are owned by Holland Advisors or relevant third party providers. You may use the Information and reproduce it in hard copy for your personal reference only. The information contained herein and any supplemental documentation provided is confidential and should not be copied, reproduced or redistributed without the prior consent of Holland Advisors. Governing Law You agree that your use of this site and any dispute arising from this use is subject to English law and you submit to the jurisdiction of the Courts of England & Wales.
Privacy Notice
This is the privacy notice of Holland Advisors London Ltd our company number is 07431314. Our registered office is at The Halt, Smugglers Way, The Sands, Farnham, Surrey, GU10 1NB.
Introduction
This notice describes how we collect, store, transfer and use personal data. It tells you about your privacy rights and how the law protects you. In the context of the law and this notice, ‘personal data’ is information that clearly identifies you as an individual or which could be used to identify you if combined with other information. Acting in any way on personal data is referred to as ‘processing’. This notice applies to personal data collected through our website www.hollandadvisors.co.uk. Except as set out below, we do not share, or sell, or disclose to a third party, any information collected through our website.
Data Protection Officer
We have appointed a data protection officer (‘DPO’) who is responsible for ensuring that our privacy policy is followed. If you have any questions about how we process your personal data, including any requests to exercise your legal rights, please contact our DPO, Claire Brunt at  claire@hollandadvisors.co.uk.
Personal data we process
1. How we obtain personal data The information we process about you includes information:
  • you have directly provided to us
  • that we gather from third party databases and service providers
  • as a result of monitoring how you use our website or our services
2. Types of personal data we collect directly When you use our website, you may provide personal data by submission of data by our Sign Up or Contact Us forms. This can be categorised into the following groups:
  • personal identifiers, such as your first and last names
  • contact information, such as your email address and your telephone number for communication
  • records of communication between us including messages sent through our website, email messages and telephone conversations
  • marketing preferences that tell us what types of marketing you would like to receive
3. Types of personal data we collect from your use of our services By using our website and our services, we process:
  • technical information about the hardware and the software you use to access our website and use our services, including your Internet Protocol (IP) address, your browser type and version and your device’s operating system
  • usage information, including the frequency you use our services, the pages of our website that you visit, whether you receive messages from us and whether you reply to those messages
  • your preferences to receive marketing from us; how you wish to communicate with us; and responses and actions in relation to your use of our services.
4. Our use of aggregated information We may aggregate anonymous information such as statistical or demographic data for any purpose. Anonymous information is that which does not identify you as an individual. Aggregated information may be derived from your personal data but is not considered as such in law because it does not reveal your identity. For example, we may aggregate usage information to assess whether a feature of our website is useful. However, if we combine or connect aggregated information with your personal data so that it can identify you in any way, we treat the combined information as personal data, and it will be used in accordance with this privacy notice. 5. The bases on which we process information about you The law requires us to determine under which of six defined bases we process different categories of your personal data, and to notify you of the basis for each category. If a basis on which we process your personal data is no longer relevant then we shall immediately stop processing your data. If the basis changes then if required by law we shall notify you of the change and of any new basis under which we have determined that we can continue to process your information. 6. Information we process with your consent Through certain actions when there is no contractual relationship between us, such as when you browse our website or ask us to provide you more information about our business, you provide your consent to us to process information that may be personal data. Wherever possible, we aim to obtain your explicit consent to process this information, for example, we ask you to agree to our use of non-essential cookies when you access our website. We continue to process your information on this basis until you withdraw your consent or it can be reasonably assumed that your consent no longer exists. You may withdraw your consent at any time by instructing us  claire@hollandadvisors.co.uk. 7. Information we process for the purposes of legitimate interests We may process information on the basis there is a legitimate interest, either to you or to us, of doing so. Where we process your information on this basis, we do after having given careful consideration to:
  • whether the same objective could be achieved through other means
  • whether processing (or not processing) might cause you harm
  • whether you would expect us to process your data, and whether you would, in the round, consider it reasonable to do so
For example, we may process your data on this basis for the purposes of:
  • improving our services
  • record-keeping for the proper and necessary administration of our business
  • responding to unsolicited communication from you to which we believe you would expect a response
  • preventing fraudulent use of our services
  • exercising our legal rights, including to detect and prevent fraud and to protect our intellectual property
  • insuring against or obtaining professional advice that is required to manage business risk
  • protecting your interests where we believe we have a duty to do so
How and when we process your personal data
8. Your personal data is not shared We do not share or disclose to a third party, any information collected through our website.
Use of information we collect through automated systems
9. Cookies Cookies are small text files that are placed on your computer’s hard drive by your web browser when you visit a website that uses them. They allow information gathered on one web page to be stored until it is needed for use at a later date. They are commonly used to provide you with a personalised experience while you browse a website, for example, allowing your preferences to be remembered. They can also provide core functionality such as security, network management, and accessibility; record how you interact with the website so that the owner can understand how to improve the experience of other visitors. Some cookies may last for a defined period of time, such as one visit (known as a session), one day or until you close your browser. Others last indefinitely until you delete them. Your web browser should allow you to delete any cookie you choose. It should also allow you to prevent or limit their use. Your web browser may support a plug-in or add-on that helps you manage which cookies you wish to allow to operate. The law requires you to give explicit consent for use of any cookies that are not strictly necessary for the operation of a website. 10. Personal identifiers from your browsing activity Requests by your web browser to our servers for web pages and other content on our website are recorded. We record information such as your geographical location, your Internet service provider and your IP address. We also record information about the software you are using to browse our website, such as the type of computer or device and the screen resolution. We use this information in aggregate to assess the popularity of the webpages on our website and how we perform in providing content to you.
Other matters
11. Your rights The law requires us to tell you about your rights and our obligations to you in regard to the processing and control of your personal data. We do this now, by requesting that you read the information provided at  http://www.knowyourprivacyrights.org 12. Communicating with us When you contact us, whether by telephone, through our website or by email, we collect the data you have given to us in order to reply with the information you need. We record your request and our reply in order to increase the efficiency of our business. We may keep personally identifiable information associated with your message, such as your name and email address so as to be able to track our communications with you to provide a high quality service. 13. Complaining If you are not happy with our privacy policy, or if you have any complaint, then you should tell us. When we receive a complaint, we record the information you have given to us on the basis of consent. We use that information to resolve your complaint. 14. Retention period Except as otherwise mentioned in this privacy notice, we keep your personal data only for as long as required by us to provide you with the services you have requested. 15. Compliance with the law Our privacy policy complies with the law in the United Kingdom, specifically with the Data Protection Act 2018 (the ‘Act’) accordingly incorporating the EU General Data Protection Regulation (‘GDPR’) and the Privacy and Electronic Communications Regulations (‘PECR’). 16. Review of this privacy policy We shall update this privacy notice from time to time as necessary.

Agree Disagree