TIDMFRAS
RNS Number : 0484V
Frasers Group PLC
09 December 2021
9 December 2021
Unaudited Interim Results for the 26 weeks to 24 October 2021
("FY22 H1")
Change (%)
FY22 H1 FY21 H1
--------------------------------------- ---------- ---------- -----------
GBPm GBPm
Group revenue 2,339.8 1,893.3 23.6
UK Sports Retail 1,367.1 1,071.6 27.6
Premium Lifestyle 427.9 320.4 33.6
European Retail 399.8 352.0 13.6
Rest of World Retail 65.6 77.1 (14.9)
Wholesale & licensing 79.4 72.2 10.0
Group gross margin (%) 44.7% 44.0%
Reported profit before tax 186.0 106.1 75.3
Adjusted profit before tax (PBT)(4) 186.8 115.5 61.7
Reported profit after tax 143.7 84.4 70.3
Reported basic earnings per share 28.2p 16.0p 76.3
Adjusted basic earnings per share
(EPS)(1) 29.2p 17.5p 66.9
Cash inflow from operating activities 559.8 330.5 69.4
Net debt (2) (24.3) (250.1) 90.3
Outlook: Since our last outlook statement given at our FY21
results announcement on 5 August 2021, our performance continues to
be strong in both our store estate and online. We do however remain
cautious with a number of well publicised macroeconomic headwinds
on the horizon in the form of but not limited to cost increases,
supply chain issues and potential squeezes on consumer spending
power. There is also still the risk that Covid-19 measures could
adversely affect outlook and we are now seeing restrictions return,
including lockdowns in Europe.
Notwithstanding the above risks, which are appropriately
considered in our forecasts including for impairments, we do
believe the Group can achieve an adjusted profit before tax(4) of
between GBP300m to GBP350m for the period ended 24 April 2022 on
the proviso there are no substantial lockdowns imposed in the UK,
particularly over the important Christmas period .
-- Group revenue increased by 23.6%
-- Excluding acquisitions and on a currency neutral basis,
revenue increased by 24.6%(3)
-- UK Sports Retail revenue increased by 27.6% , largely due to
the strong reopening of stores after the last lockdown in March
2021 and the comparative period being impacted by lockdowns as a
result of Covid-19
-- Excluding acquisitions, revenue increased by 27.0% (3)
-- Premium Lifestyle revenue increased by 33.6%, largely due to
new Flannels stores, continued growth in online, and the strong
reopening of stores after the last lockdown in March 2021
-- Flannels revenue growth continues to exceed all expectations.
The compound annual growth rate (CAGR) from taking full ownership
in FY18 to the end of FY22 H1 is 40%+
-- European Retail revenue increased by 13.6%, largely due to
strong growth in Ireland and the lockdowns experienced in the prior
year
-- Excluding acquisitions and on a currency neutral basis,
revenue increased by 18.4% (3)
-- Group gross margin increased to 44.7% from 44.0%, as we
maintained product margin over the period
-- Reported profit before tax was GBP186.0m, up 75.3% from
GBP106.1m driven by the strong reopening of stores after lockdown,
new Flannels stores, continued growth in online, continued
operating efficiencies, and the FY21 comparative including Covid-19
related lockdowns
-- Adjusted PBT was GBP186.8m, up 61.7%
-- Excluding acquisitions and on a currency neutral basis,
adjusted PBT increased by 88.4%(3)
-- Cash inflow from operating activities increased to GBP559.8m
compared to GBP330.5m in the prior period due to the increase in
operating profit and improved working capital
-- Reported basic earnings per share grew by 76.3% to 28.2p, from 16.0p
-- Adjusted basic earnings per share increased by 66.9% to 29.2p
from 17.5p(1)
-- Reported profit after tax was GBP143.7m up 70.3% from GBP84.4m
-- Net debt decreased to GBP24.3m from GBP248.9m at 25 April 2021 (FY21 H1: GBP250.1m)( (2)
(1) Adjusted basic EPS is reported basic EPS less the effects of
exceptional items, unhedged foreign exchange (FX), gains and losses
on strategic investments, and share schemes. Further detail on this
calculation can be found in note 9.
(2) Net debt is borrowings (excluding IFRS 16 lease liabilities)
less cash and cash equivalents held.
(3) A reconciliation excluding acquisitions and currency neutral
performance measures can be found in the Glossary.
(4) Adjusted profit before tax (PBT) is reported profit before
tax less the effects of exceptional items, unhedged foreign
exchange (FX), gains and losses on strategic investments, and share
schemes. Further detail on this calculation can be found in the
Glossary.
Frasers Group plc T: 0344 245 9200
Chris Wootton, Chief Financial Officer
Tom Piper, Company Secretary
CHAIR'S STATEMENT
BUSINESS PERFORMANCE
The Board is very pleased with the overall trading performance
of the Frasers Group during the first half of the year and I want
to extend my thanks on behalf of the Board to our hardworking and
dedicated teams across the Group. As noted in our outlook
statement, both our bricks and mortar and online businesses have
continued to perform well since reopening from the last lockdown in
the UK in March 2021.
Unfortunately we still have the shadow of uncertainty cast by
the ongoing Covid-19 pandemic, with restrictions including
lockdowns returning to parts of Europe and with the emergence of
new variants. There are also supply chain risks which to date we
have proven resilient to but which must be factored into our future
forecasting given these could continue for some time. On top of
this there are the well-publicised macroeconomic factors
contributing to a likely cost of living squeeze which could impinge
on consumers spending plans heading into the new year.
We once again remind our stakeholders of our key accounting
principles, namely being conservative, consistent, and simple.
Noting the above potential headwinds our results highlights
are:
-- Revenue increased to GBP2,339.8m (FY21 H1: GBP1,893.3m)
-- Statutory PBT increased to GBP186.0m (FY21 H1: GBP106.1m)
-- Adjusted PBT increased to GBP186.8m (FY21 H1: GBP115.5m)
-- Net debt of GBP24.3m (FY21 H1: GBP250.1m)
More underlying detail is given throughout this Results
Announcement. The highlights and explanations of these by segment
is set out in the Chief Executive's Report and Business Review.
OUTLOOK
With a successful half year's trading mitigated to some extent
by our conservative forecasting and based on the above mentioned
headwinds, we still believe we can achieve an adjusted PBT of
between GBP300m to GBP350m by the end of the financial year,
assuming no significant UK lockdowns before then.
ELEVATION NO LIMITS
Despite the current uncertainty, we continue to invest for the
long term including on our store estate and on our digital and
fulfilment capabilities.
We opened our new Sports Direct flagship store on Oxford Street
in London to great acclaim in June, and have recently opened two
Flannels regional flagship stores at Meadowhall in Sheffield and at
Leicester Fosse Park. Both are performing above expectations.
There is continued investment in our automation within the
Shirebrook warehouse and in November we completed the purchase of
land in Bitburg, Germany. The site is planned to house a new 1
million square foot warehouse and will significantly expand our
fulfilment capabilities in Europe.
MARKETING CAMPAIGNS
We've made monumental strides repositioning Sports Direct with
our brand partners. This has been fuelled by our brand campaigns -
physical proof that showcases our new direction to external
stakeholders. Momentum started with our Euros campaign, "Just A
Game?!" featuring Eric Cantona and a host of England athletes. Then
"Back To School" starred Gen-Z megastars Ollie & Jacob. But our
recent Christmas campaign shows the true extent of what we've
achieved shifting perceptions. Last year we featured 1 athlete.
Fast forward 12 months, we featured 15 athletes including Emma
Raducanu and Jack Grealish. A multi-million pound campaign that had
the brands, and their talent, fighting to be featured. It's called
"Go All Out This Christmas", and we did. It's been a pivotal year,
bringing the brands on our elevation journey. And the undeniable
progress we have made will unlock even more opportunities from our
partners next year and beyond.
OUR PEOPLE
We continue to invest in our people and our organisation as we
build the Group to make us stronger and well prepared for the
future.
Michael Murray will become CEO of Frasers Group in May 2022.
Michael has made a significant impact on the business in recent
years as we have reshaped our property portfolio. He has been a
significant driver of the Elevation No Limits strategy which has
been a great success and he is considered by the Board to be the
best person to lead the Group as we continue on this path in the
coming years.
Our Frasers Group Elevation Programme has welcomed the second
intake of twenty four highly talented people who are rotating
through different departments in the business as they learn and
develop their skills. It is intended that the future generations of
leaders for the Group will come through this recruitment programme
and we are pleased with the quality and talent that have joined
Frasers Group through this initiative.
Anouska Kapur has recently joined the Frasers Group board as a
Non-Executive Director. Anouska is a partner at the law firm Child
& Child and she brings both legal and property expertise to the
board.
The Board are proud that its composition is 37.5% female, which
is in excess of the 33% target set by the Hampton Alexander review.
The Board are also proud that as a FTSE 250 company, we are ahead
of the target of the Parker Review to have at least one director
from an ethnic minority background on the Board by 2024. The Board
continually monitors diversity at Board level not just in relation
to gender and ethnic diversity but also other factors including,
but not limited to, age and socio-economic background.
SUSTAINABILITY
Sustainability and Elevation go hand in hand and both are
important priorities for the Group and its stakeholders. We have
built a Sustainability Team structure within the organisation with
our CFO Chris Wootton as the executive sponsor. There are
Sustainability Champions across the business and hundreds of
dedicated people across our stores who are responsible for helping
deliver against our priorities.
We have set ourselves targets to reduce emissions and single use
plastic, and improve our waste management and recycling. We now
offer a carbon neutral delivery option on the web.
So far in FY22 we are surpassing our UK stores' 10% energy
reduction target for the year which is a sterling effort to effect
change and we are grateful to our store staff.
We continue to make progress with delivery of our Taskforce on
Climate-related Financial Disclosures (TCFD). We have completed a
thorough gap analysis with the support of external advisers and
have identified and ranked climate related risks and opportunities
of greatest materiality to Frasers Group. This assessment will be
used to inform scenario analysis modelling which will feed into our
risk management framework. We are on track for full TCFD
disclosures in line with the next annual reporting period.
GROUP REFINANCING
We were pleased to announce a refinance of our Group facility
whereby we now have a combined term loan and revolving credit
facility (RCF) of GBP930.0m for a period of 3 years, with the
possibility to extend this by a further 2 years. We believe this is
a great endorsement of the business and our Elevation strategy and
I want to say thank you to our banking partners both new and
existing for their support.
DIVID / SHARE BUYBACK
No dividend was paid during the half year period and the Board
has decided not to declare an interim dividend in respect of this
period.
Our share buyback programme has continued which is a
demonstration of our confidence in the Group and the strategy for
future growth.
On 4 May 2021 the Group commenced a share buyback programme with
the purpose to reduce the share capital of the Company. 3,895,385
ordinary shares of 10p each for consideration of GBP22.4m were
acquired through this programme.
On 21 June 2021 the Group commenced an irrevocable
non-discretionary share buyback programme to purchase the Group's
shares with the purpose to reduce the share capital of the Company.
2,024,127 ordinary shares of 10p each for consideration of GBP12.0m
were acquired through this programme.
On 6 August 2021 the Group commenced a share buyback programme
with the purpose to reduce the share capital of the Company.
4,309,458 ordinary shares of 10p each for consideration of GBP28.3m
were acquired through this programme.
On 4 October 2021 the Group commenced a share buyback programme
with the purpose to reduce the share capital of the Company. Up to
24 October 2021, 2,522,661 ordinary shares of 10p each were
acquired for consideration of GBP15.8m. The programme became
irrevocable on 5 November 2021. The programme has a maximum number
of ordinary shares of 10,000,000 and the aggregate purchase price
of all shares acquired will be no greater than GBP70.0m. In total
6,564,523 ordinary shares of 10p each for consideration of GBP43.1m
have been acquired through this programme.
David Daly
Non-Executive Chair
9 December 2021
CHIEF EXECUTIVE'S REPORT AND BUSINESS REVIEW
SUMMARY OF RESULTS
26 weeks ended 26 weeks ended
24 October 2021 25 October 2020
(Unaudited) (Unaudited)
Group revenue GBP2,339.8m GBP1,893.3m
Adjusted PBT (1) GBP186.8m GBP115.5m
--------------------------------------- ---------------- ----------------
Group gross margin 44.7% 44.0%
--------------------------------------- ---------------- ----------------
Adjusted basic earnings per share
(2) 29.2p 17.5p
--------------------------------------- ---------------- ----------------
Cash inflow from operating activities GBP559.8m GBP330.5m
--------------------------------------- ---------------- ----------------
Net debt GBP24.3m GBP250.1m
--------------------------------------- ---------------- ----------------
Number of retail stores (3) 1,561 1,557
--------------------------------------- ---------------- ----------------
(1) Adjusted profit before tax (PBT) is reported profit before
tax less the effects of exceptional items, unhedged foreign
exchange (FX), gains and losses on strategic investments, and share
schemes. Further detail on this calculation can be found in the
Glossary.
(2) Adjusted basic EPS is reported basic EPS less the effects of
exceptional items, unhedged foreign exchange (FX), gains and losses
on strategic investments, and share schemes. Further detail on this
calculation can be found in note 9.
(3) Excluding associates and stores in the Baltic states that
trade under fascias other than SPORTLAND or SPORTSDIRECT.com and
other niche fascias.
The Directors have adopted Alternative Performance Measures
(APM's). APM's should be considered in addition to IFRS measures.
The Directors believe that Adjusted profit before tax (PBT) and
Adjusted basic EPS provide further useful information for
shareholders on the underlying performance of the Group in addition
to the reported numbers and are consistent with how business
performance is measured internally. They are not recognised profit
measures under IFRS and may not be directly comparable with
"adjusted" or "alternative" profit measures used by other companies
.
From FY22 management changed the main reporting KPI from
Underlying EBITDA to Adjusted PBT. Adjusted PBT is Reported Profit
Before Tax less the effects of unhedged FX, exceptional items,
share scheme charges and gains and losses on strategic investments.
This change has been reviewed by the Audit Committee who have
appropriately challenged management on the presentation and the
adjusting items included in this APM. Management have taken this
decision for the following reasons:
-- With the continued significant investment in and roll out of
our elevation strategy on both the physical and digital fronts, the
importance of depreciation and amortisation to both the Board and
our stakeholders in terms of assessing performance has grown.
-- Our understanding from a number of financial sectors
including the banking sector is that IFRS 16 Leases is becoming an
increasingly important consideration.
-- With this new measure being introduced we are trying to align
with the Financial Reporting Council's thematic standpoint with
regard to 'alternative performance measures' as far as possible
whilst retaining a degree of interpretation given factors outside
of our control, such as FX and strategic investments movements
which are exceptionally difficult to forecast, particularly months
in advance.
PERFORMANCE OVERVIEW
Group revenue was up 23.6% to GBP2,339.8m, largely due to the
strong reopening of stores after lockdowns, continuing strong
online performance, and the comparative period being impacted by
lockdowns as a result of Covid-19.
Gross margin for the Group increased 70 basis points to 44.7%
(FY21 H1: 44.0%) as we maintained product margins over the
period.
Adjusted PBT is up 61.7%, largely driven by the strong reopening
of stores after lockdown, new Flannels stores, the FY21 comparative
including the impact of Covid-19 related lockdowns, and continued
operating efficiencies. Excluding acquisitions and on a currency
neutral basis adjusted PBT is up 88.4% with the difference to the
61.7% growth figure largely because of impairments.
In FY22 H1, impairments of GBP135.3m (FY21 H1: GBP128.9m) have
been recognised due to the ongoing impact of the Covid-19 pandemic,
further restrictions including lockdowns returning to parts of
Europe, the availability and cost of shipping containers and other
supply chain cost increases, and the likely cost of living squeeze
on consumers, all being factored into our future forecasting.
Adjusted basic earnings per share increased by 66.9% to 29.2p
(FY21 H1: 17.5p).
Reported Profit Before Tax increased by 75.3% to GBP186.0m (FY21
H1: GBP106.1m).
The Group generated cash inflow from operating activities of
GBP559.8m during the period, up from GBP330.5m in the prior
period.
As at 24 October 2021, the Group had a Revolving Credit Facility
(RCF) of GBP913.5m (FY21 H1: GBP913.5m) valid until November 2021
and GBP847.5m valid to November 2022. On 30 November 2021 the Group
refinanced its existing borrowings and entered into a combined term
loan and revolving credit facility of GBP930.0m for a period of 3
years, with the possibility to extend this by a further 2 years.
The Group continues to operate comfortably within its banking
facilities and covenants and the Board remains comfortable with the
Group's available headroom.
Net debt decreased to GBP24.3m at the period end (GBP248.9m at
25 April 2021). It should be noted this figure is calculated at
period end not month end and thus does not include items such as
month end supplier payments and payroll costs, this means there is
always a material difference between period end net debt and the
corresponding month end net debt.
REVIEW BY BUSINESS SEGMENT
UK SPORTS RETAIL
UK Sports Retail includes all of the Group's sports retail and
USC store operations in the UK (including Northern Ireland), all of
the Group's sports online businesses (excluding Bob's Stores,
Eastern Mountain Sports, Baltics and Malaysia), the Group's gyms,
Evans Cycles, GAME UK stores and online operations and the Group's
Shirebrook campus operations. UK Sports Retail is the main driver
of the Group and accounts for 58% of Group revenue.
26 weeks ended 26 weeks ended
24 October 2021 25 October 2020
(unaudited) (unaudited)
Revenue GBP1,367.1m GBP1,071.6m
----------------
Cost of Sales GBP(768.1)m GBP(595.4)m
---------------- ---------------- ----------------
Gross Profit GBP599.0m GBP476.2m
---------------- ---------------- ----------------
Gross Margin % 43.8% 44.4%
---------------- ---------------- ----------------
Adjusted PBT GBP117.4m GBP55.6m
---------------- ---------------- ----------------
Revenue increased 27.6% to GBP1,367.1m. Excluding acquisitions
revenue grew 27.0%. This was largely due to the strong reopening of
stores after the last lockdown in March 2021, and the prior period
comparative including Covid-19 related lockdowns.
Gross margin decreased to 43.8%, mostly due to strong growth in
GAME UK console sales which have a lower gross margin, but also
because of an increased inventory provision in this segment.
Adjusted PBT for UK Sports Retail was GBP117.4m, an increase of
111.2% for the period, largely due the strong reopening of stores
after lockdown and the comparative period being impacted by
lockdowns as a result of Covid-19 .
UK SPORTS RETAIL STORE PORTFOLIO(2)
24 October 25 October 25 April 2021
2021 2020
------------------ ----------- ----------- -------------
England 390 395 394
------------------ ----------- ----------- -------------
Scotland 39 42 39
------------------ ----------- ----------- -------------
Wales 31 32 31
------------------ ----------- ----------- -------------
Northern Ireland 20 21 21
------------------ ----------- ----------- -------------
Isle of Man 1 1 1
------------------ ----------- ----------- -------------
GAME UK (1) 258 244 247
------------------ ----------- ----------- -------------
Evans Cycles 53 53 48
------------------ ----------- ----------- -------------
USC 23 27 25
------------------ ----------- ----------- -------------
Total 815 815 806
------------------ ----------- ----------- -------------
Opened 58 42 93
------------------ ----------- ----------- -------------
Closed (49) (38) (98)
------------------ ----------- ----------- -------------
Acquired - 42 42
------------------ ----------- ----------- -------------
Area (sq.ft.) approx 6.9m approx 7.1m approx. 6.8m
------------------ ----------- ----------- -------------
(1) The GAME UK store numbers include 105 concessions operating
within Sports Direct fascia stores (25 April 2021: 71) and does not
include BELONG arenas.
(2) Table excludes the Group's standalone gyms.
PREMIUM LIFESTYLE
Premium Lifestyle consists of Flannels, Cruise, van mildert,
House of Fraser, Jack Wills and Sofa.com fascia stores and
corresponding web sales.
26 weeks ended 26 weeks ended
24 October 2021 25 October 2020
(unaudited) (unaudited)
Gross Transaction Value (GTV)(1) GBP468.0m GBP350.4m
----------------
Revenue GBP427.9m GBP320.4m
---------------------------------- ---------------- ----------------
Cost of Sales GBP(223.6)m GBP(169.9)m
---------------------------------- ---------------- ----------------
Gross Profit GBP204.3m GBP150.5m
---------------------------------- ---------------- ----------------
Gross Margin % 47.7% 47.0%
---------------------------------- ---------------- ----------------
Adjusted PBT GBP(9.7)m GBP26.3m
---------------------------------- ---------------- ----------------
(1) GTV being gross sales net of VAT, discounts and returns and
gross sales where the Group acts as agent.
Revenue grew 33.6% to GBP427.9m. This was largely due to new
Flannels stores, continued growth in online, growth in House of
Fraser, and the impact of Covid-19 related lockdowns on the prior
period comparative.
Gross margin increased to 47.7% as product margins were
maintained over the period.
It should be noted that despite year on year trading
improvements in the House of Fraser business, business rates in
their current form continue to be a significant and
disproportionate cost to House of Fraser.
Adjusted PBT for Premium Lifestyle decreased from a profit of
GBP26.3m in FY21 H1 to a loss of GBP9.7m for the period, largely
due to property and other related impairments being recognised in
the period. Adjusted PBT excluding these impairments is GBP69.6m,
compared to GBP26.9m in the prior period.
PREMIUM LIFESTYLE STORE PORTFOLIO
24 October 25 October 25 April 2021
2021 2020
Jack Wills 56 64 60
-------------
Flannels 44 38 41
--------------------------- ------------ ------------ -------------
House of Fraser / Frasers 43 45 43
--------------------------- ------------ ------------ -------------
Sofa.com (1) 25 19 24
--------------------------- ------------ ------------ -------------
Cruise 6 6 5
--------------------------- ------------ ------------ -------------
18 Montrose 4 - 3
--------------------------- ------------ ------------ -------------
Van Mildert 1 1 1
--------------------------- ------------ ------------ -------------
Garment Quarter 1 - 1
--------------------------- ------------ ------------ -------------
Psyche 1 - 1
--------------------------- ------------ ------------ -------------
Total 181 173 179
--------------------------- ------------ ------------ -------------
Opened 11 2 12
--------------------------- ------------ ------------ -------------
Acquired - - 5
--------------------------- ------------ ------------ -------------
Closed (9) (8) (17)
--------------------------- ------------ ------------ -------------
Area (sq.ft.) approx. 4.3m approx. 4.4m approx. 4.2m
--------------------------- ------------ ------------ -------------
(1) Sofa.com store numbers include 18 concessions operating
within House Of Fraser fascia stores (25 April 2021: 17).
EUROPEAN RETAIL
The European Retail division includes the Group's sports retail
store management and operations in Europe, including the Group's
European distribution centres in Belgium and Austria, stores and
corresponding web business in the Baltic regions and GAME Spain
stores and corresponding web business.
26 weeks ended 26 weeks ended
24 October 2021 25 October 2020
(unaudited) (unaudited)
Revenue GBP399.8m GBP352.0m
----------------
Cost of Sales GBP(225.0)m GBP(205.3)m
---------------- ---------------- ----------------
Gross Profit GBP174.8m GBP146.7m
---------------- ---------------- ----------------
Gross Margin % 43.7% 41.7%
---------------- ---------------- ----------------
Adjusted PBT GBP60.9m GBP19.0m
---------------- ---------------- ----------------
Revenue increased 13.6% to GBP399.8m. On a currency neutral
basis and excluding acquisitions, European Retail revenue increased
by 18.4% largely due to temporary store closures as a result of
Covid-19 in the prior period comparative.
Gross margin increased to 43.7% largely due to continually
improving product mix in the core business mitigated to some extent
by increased lower margin console sales in GAME Spain.
Adjusted PBT was GBP60.9m, an increase of 220.5% for the period,
largely due to strong reopening of stores in the current period,
particularly in The Republic of Ireland and the impact of lockdowns
on the prior period comparative.
All of the following stores are operated by companies wholly
owned by the Group, except Estonia, Latvia and Lithuania where the
Group owns 60.0%.
EUROPEAN RETAIL STORE PORTFOLIO(1)
24 October 25 October 25 April 2021
2021 2020
GAME Spain 236 241 236
------------------------- ------------ ------------ -------------
Republic of Ireland (2) 41 33 39
------------------------- ------------ ------------ -------------
Belgium 34 36 34
------------------------- ------------ ------------ -------------
Estonia (1) 21 25 21
------------------------- ------------ ------------ -------------
Austria 20 22 20
------------------------- ------------ ------------ -------------
Portugal 20 21 20
------------------------- ------------ ------------ -------------
Lithuania (1) 18 18 18
------------------------- ------------ ------------ -------------
Latvia (1) 17 19 17
------------------------- ------------ ------------ -------------
Poland 14 15 14
------------------------- ------------ ------------ -------------
Slovenia 13 14 13
------------------------- ------------ ------------ -------------
Czech Republic 12 12 12
------------------------- ------------ ------------ -------------
Spain 10 4 9
------------------------- ------------ ------------ -------------
Hungary 8 8 8
------------------------- ------------ ------------ -------------
Cyprus 6 6 6
------------------------- ------------ ------------ -------------
Holland 5 5 5
------------------------- ------------ ------------ -------------
Slovakia 5 5 5
------------------------- ------------ ------------ -------------
France 4 4 4
------------------------- ------------ ------------ -------------
Germany 2 2 2
------------------------- ------------ ------------ -------------
Luxembourg 2 2 2
------------------------- ------------ ------------ -------------
Iceland 1 1 1
------------------------- ------------ ------------ -------------
Total 489 493 486
------------------------- ------------ ------------ -------------
Opened 6 7 13
------------------------- ------------ ------------ -------------
Acquired - - (38)
------------------------- ------------ ------------ -------------
Closed (3) (25) -
------------------------- ------------ ------------ -------------
Area (sq.ft.) approx. 3.7m approx. 3.9m approx. 3.6m
------------------------- ------------ ------------ -------------
(1) Includes only stores with SPORTSDIRECT.com and SPORTLAND fascias.
(2) Excluding Heatons fascia stores.
REST OF WORLD RETAIL
Rest of World Retail includes sports stores in Malaysia trading
under the SPORTS DIRECT fascia, retail stores in the US trading
under Bob's Stores and Eastern Mountain Sports and their online
businesses. In Malaysia the stores are 51.0% owned by the
Group.
26 weeks ended 26 weeks ended
24 October 2021 25 October 2020
(unaudited) (unaudited)
Revenue GBP65.6m GBP77.1m
----------------
Cost of Sales GBP(30.8)m GBP(46.6)m
---------------- ---------------- ----------------
Gross Profit GBP34.8m GBP30.5m
---------------- ---------------- ----------------
Gross Margin % 53.0% 39.6%
---------------- ---------------- ----------------
Adjusted PBT GBP14.3m GBP7.7m
---------------- ---------------- ----------------
Revenue decreased 14.9% to GBP65.6m mostly due to Covid-19
related restrictions in Malaysia. Gross margin increased to 53.0%
from 39.6% largely due to inventory holding efficiencies combined
with less year on year promotional activity in the US businesses.
Adjusted PBT was GBP14.3m, compared to GBP7.7m in FY21 H1, largely
due to overall operating efficiencies in the US businesses.
REST OF WORLD RETAIL STORE PORTFOLIO
24 October 25 October 25 April 2021
2021 2020
Malaysia 34 31 33
------------------------- ------------ ------------ -------------
Bob's Stores 21 24 22
------------------------- ------------ ------------ -------------
Eastern Mountain Sports 21 21 21
------------------------- ------------ ------------ -------------
Total 76 76 76
------------------------- ------------ ------------ -------------
Area (sq.ft.) approx. 1.3m approx. 1.3m approx. 1.3m
------------------------- ------------ ------------ -------------
WHOLESALE & LICENSING
The portfolio of Group brands includes a wide variety of
world-famous sport and lifestyle brands. The Group's Sports Retail
division sells products under these brands in its stores, and the
Wholesale & Licensing division sells the brands through its
wholesale and licensing activities. The Wholesale & Licensing
division continues to sponsor a variety of prestigious events and
retains a variety of globally recognised celebrities and sporting
professionals as brand ambassadors.
26 weeks ended 26 weeks ended
24 October 2021 25 October 2020
(unaudited) (unaudited)
Wholesale GBP68.7m GBP61.6m
----------------
Licensing GBP10.7m GBP10.6m
---------------- ---------------- ----------------
Total Revenue GBP79.4m GBP72.2m
---------------- ---------------- ----------------
Cost of Sales GBP(46.4)m GBP(42.3)m
---------------- ---------------- ----------------
Gross Profit GBP33.0m GBP29.9m
---------------- ---------------- ----------------
Gross Margin % 41.6% 41.4%
---------------- ---------------- ----------------
Adjusted PBT GBP3.9m GBP6.9m
---------------- ---------------- ----------------
Revenue increased by 10.0% to GBP79.4m. Wholesale revenues are
up 11.5% to GBP68.7m, and Licensing revenues increased 0.9% to
GBP10.7m, largely due to the impact of Covid-19 related lockdowns
on the prior year comparative.
Total gross margin was consistent with the prior period at 41.6%
(FY21 H1: 41.4%).
Adjusted PBT decreased 43.5% to GBP3.9m (FY21 H1: GBP6.9m)
largely due to impairment of Goodwill in the period.
STRATEGIC INVESTMENTS
Included within long-term financial assets at the period ended
24 October 2021 are the following direct interests held by the
Group:
24 October 2021 25 October 2020 25 April 2021
(unaudited) (unaudited) (audited)
% % %
Mulberry Group plc 36.8 12.5 36.8
-------------
Studio Retail Group plc 27.1 36.7 35.6
----------------------------- --------------- --------------- -------------
Hugo Boss AG 6.8 2.5 5.1
----------------------------- --------------- --------------- -------------
French Connection Group plc - 26.6 -
----------------------------- --------------- --------------- -------------
In addition to those listed, there are various other interests
held, none of which represent more than 5.0% of the voting power of
the investee. The movements in fair value of these long-term
financial assets are recognised within Other Comprehensive
Income.
The Group also holds indirect strategic investments within
contracts for difference and options. The fair value of the
contracts for difference and options are recognised in Derivative
Financial Assets or Liabilities on the Group Balance Sheet, with
the movement in fair value recorded in the Income Statement.
FOREIGN EXCHANGE AND TREASURY
The Group reports its results in GBP but trades internationally
and is therefore exposed to currency fluctuations on currency cash
flows in various ways. These include purchasing inventory from
overseas suppliers, making sales in currencies other than GBP and
holding overseas assets in other currencies. The Board mitigate the
cash flow risks associated with these fluctuations with the careful
use of currency hedging using forward contracts and other
derivative financial instruments.
The Group uses forward contracts that qualify for hedge
accounting in two main ways - to hedge highly probable EUR sales
income and USD inventory purchases. This introduces a level of
certainty into the Group's planning and forecasting process.
Management has reviewed detailed forecasts and the growth
assumptions within them and are satisfied that the forecasts meet
the criteria as being highly probable forecast transactions.
As at 24 October 2021, the Group had the following forward
contracts that qualified for hedge accounting under IFRS 9
Financial Instruments, meaning that fluctuations in the value of
the contracts before maturity are recognised in the Hedging Reserve
through Other Comprehensive Income. After maturity, the sales and
purchases are then valued at the hedge rate.
Currency Hedging against Currency value Timing Rates
EUR / GBP Euro sales EUR 360m FY23, FY25 0.99 - 1.08
---------- --------------- -------------- ----------- -----------
USD / GBP USD inventory USD 720m FY22 - FY23 1.36 - 1.41
purchases
---------- --------------- -------------- ----------- -----------
USD / EUR USD inventory USD 150m FY22 - FY24 1.21 - 1.31
purchases
---------- --------------- -------------- ----------- -----------
The Group also uses currency options, swaps and spots for more
flexibility against cash flows that are less than highly probable
and therefore do not qualify for hedge accounting under IFRS 9
Financial Instruments. The fair value movements before maturity are
recognised in the Income Statement.
The Group has the following currency options and unhedged
forwards:
Currency Expected use Currency value Timing Rates
EUR / GBP Euro sales EUR 500m FY23, FY26 0.99 - 1.08
---------- ------------- -------------- ---------- -----------
USD / EUR USD inventory USD 120m FY23, FY25 1.26 - 1.31
purchases
---------- ------------- -------------- ---------- -----------
The Group also holds short-term swaps for Treasury management
purposes:
Currency Expected use Currency value Timing Rates
USD / GBP Cash flow management USD 100m FY22 1.37 - 1.39
-----------
The Group is proactive in managing its currency requirements.
The Treasury team works closely with senior management to
understand the Group's plans and forecasts, they also discuss and
understand appropriate financial products with various financial
institutions, including those within the Group's Bank Financed
Facility. This information is then used to implement suitable
currency products to align with the Group's strategy.
Regular reviews of the hedging performance are performed by the
Treasury team alongside senior management to ensure the continued
appropriateness of the currency hedging in place, and where
suitable, either implementing additional strategies and/or
restructuring existing approaches in conjunction with our financial
institution partners.
Given the potential impact of commodity prices on raw material
costs, the Group may hedge certain input costs, including cotton,
crude oil and electricity.
CASH FLOW AND NET DEBT
Net debt decreased by GBP224.6m from GBP248.9m at 25 April 2021
to GBP24.3m at 24 October 2021. N et interest on bank loans and
overdrafts decreased to GBP4.7m (FY21 H1: GBP5.6m) largely due to
reduced usage of the RCF in the period.
Analysis of net debt:
24 October 2021 25 October 2020 25 April 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Cash and cash equivalents 350.7 371.3 457.0
--------------------------- --------------- --------------- -------------
Borrowings (375.0) (621.4) (705.9)
--------------------------- --------------- --------------- -------------
Total (24.3) (250.1) (248.9)
--------------------------- --------------- --------------- -------------
On 30 November 2021 the Group refinanced its existing borrowings
and entered into a combined term loan and revolving credit facility
of GBP930.0m for a period of 3 years, with the possibility to
extend this by a further 2 years.
The Group continues to operate well within its banking covenants
and the Board remains comfortable with the Group's available
headroom.
Cash flow:
26 weeks ended 26 weeks ended 52 weeks ended
24 October 2021 25 October 2020 25 April 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Cash inflow from operating activities 559.8 330.5 578.3
----------------
Income taxes paid (62.6) (54.3) (59.3)
-------------------------------------------- ---------------- ---------------- --------------
Invested in:
-------------------------------------------- ---------------- ---------------- --------------
Purchase of subsidiaries, net of
cash acquired - (37.0) (39.4)
-------------------------------------------- ---------------- ---------------- --------------
Purchase of listed investments (107.1) (49.9) (113.3)
-------------------------------------------- ---------------- ---------------- --------------
Proceeds on disposal of listed investments
and derivatives 96.6 4.2 55.1
-------------------------------------------- ---------------- ---------------- --------------
Proceeds on disposal of subsidiary
undertaking 1.0 - -
-------------------------------------------- ---------------- ---------------- --------------
Net capital expenditure (112.0) (49.7) (192.3)
-------------------------------------------- ---------------- ---------------- --------------
Exchange movement on cash balances (1.9) 1.4 (5.3)
-------------------------------------------- ---------------- ---------------- --------------
Investment income received 5.6 0.3 0.5
-------------------------------------------- ---------------- ---------------- --------------
Finance income received less finance
costs paid (14.4) (12.5) (22.6)
-------------------------------------------- ---------------- ---------------- --------------
Lease payments (61.9) (17.1) (78.0)
-------------------------------------------- ---------------- ---------------- --------------
Purchase of own shares (78.5) - (4.3)
-------------------------------------------- ---------------- ---------------- --------------
Repayment of acquired debt - - (1.4)
-------------------------------------------- ---------------- ---------------- --------------
Dividend paid to non-controlling
interest - - (0.9)
-------------------------------------------- ---------------- ---------------- --------------
Decrease in net debt 224.6 115.9 117.1
-------------------------------------------- ---------------- ---------------- --------------
SUMMARY CONSOLIDATED BALANCE SHEET (EXTRACT)
24 October 2021 25 October 2020 25 April 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Property, plant and equipment 800.8 1,049.3 915.2
-------------
Right of use assets 211.9 259.3 249.7
------------------------------- --------------- --------------- -------------
Investment properties 52.7 18.2 14.1
------------------------------- --------------- --------------- -------------
Long-term financial assets 352.4 127.2 263.3
------------------------------- --------------- --------------- -------------
Deferred tax assets 103.7 59.3 66.8
------------------------------- --------------- --------------- -------------
Inventory 1,201.5 1,110.3 1,096.6
------------------------------- --------------- --------------- -------------
Trade and other receivables 490.7 578.8 546.5
------------------------------- --------------- --------------- -------------
Provisions 351.9 331.8 361.2
------------------------------- --------------- --------------- -------------
Trade and other payables 789.4 626.0 646.3
------------------------------- --------------- --------------- -------------
Lease liabilities 684.7 715.6 722.7
------------------------------- --------------- --------------- -------------
Borrowings 375.0 621.4 705.9
------------------------------- --------------- --------------- -------------
The decrease within property, plant and equipment is largely due
to property and other related impairments, offset by additions for
store fitouts and warehouse automation in the period. Right of use
assets relate to leasehold properties capitalised under IFRS 16.
Right of use assets have decreased from 25 April 2021 largely due
to impairments in the period of GBP29.5m.
The increase in investment properties relates to the
reclassification of the Robin Retail Park, Wigan as an investment
property.
Long-term financial assets have increased during the period due
to the additions of Hugo Boss AG and increase in fair value of the
Hugo Boss AG investment.
Deferred tax assets have increased during the period largely due
to the change in UK tax rate from 19% to 25% which was
substantively enacted in May 2021.
Inventory has increased from 25 April 2021 as holdings are
increased in the build up to the Christmas period. Inventory
provision percentages have decreased from 16.6% at 25 April 2021 to
16.1% at period end.
Trade and other receivables includes a GBP118.3m reimbursement
asset in relation to the Group's ongoing non-UK tax enquiries (25
April 2021: GBP118.3m) and GBP109.4m relating to deposits in
respect of derivative financial instruments (25 April 2021:
GBP131.0m).
Provisions have decreased to GBP351.9m largely due to
utilisation of property related provisions.
Trade and other payables has increased from 25 April 2021
largely due to the increase in inventory supplier payables in the
run up towards the Christmas period.
Lease liabilities relate to the present value of property lease
payments expected to be made over the remaining life of the lease
under IFRS 16. The lease liability has decreased largely due to
repayments made in the period.
Borrowings have decreased from 26 April 2021. Continued positive
net cash inflow from operating activities in the current period
have allowed for reductions in the RCF drawn balance.
RELATED PARTY TRANSACTIONS
Related party transactions are disclosed in note 16. There have
been no material changes in the related party transactions
described in the last annual report.
GOING CONCERN
Having thoroughly reviewed the performance of the Group and
having made suitable enquiries, the Directors are confident that
the Group have adequate resources to remain in operational
existence for the foreseeable future which is at least 12 months
from the date of approval of these Unaudited Interim Financial
Statements. Full details of this assessment can be found in note
1.
DIRECTORS' RESPONSIBILITY STATEMENT
Each of the directors confirm that to the best of their
knowledge:
-- The condensed set of financial statements has been prepared
in accordance with UK-adopted IAS 34 'Interim Financial
Reporting';
-- The interim management report includes a fair review of the information required by:
a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules,
being an indication of important events during the first 26 weeks
of the financial year and their impact on the condensed set of
financial statements; and a description of the principal risks and
uncertainties for the remaining 26 weeks of the year; and
b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules,
being related party transactions that have taken place in the first
26 weeks of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
The summary of results for the 52 weeks ended 25 April 2021 is
an extract from the published Annual Report and Financial
Statements which have been reported on by the Group's auditors at
the time and delivered to the Registrar of Companies. The audit
report was unqualified, did not draw attention to any matters by
way of emphasis and did not contain a statement under s498 (2) or
s498 (3) of the Companies Act 2006.
Mike Ashley
Chief Executive
9 December 2021
CONSOLIDATED INCOME STATEMENT
FOR THE 26 WEEKSED 24 OCTOBER 2021
26 weeks 26 weeks 52 weeks
ended ended ended
24 October 25 October 25 April
2021 2020 2021
Note (unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Revenue 2,339.8 1,893.3 3,625.3
------------------------------ ----- ------------------------------------------- ----------------- ---------------
Cost of sales (1,293.9) (1,059.5) (2,094.5)
------------------------------ ----- ------------------------------------------- ----------------- ---------------
Gross profit 1,045.9 833.8 1,530.8
------------------------------ ----- ------------------------------------------- ----------------- ---------------
Selling, distribution and
administrative
expenses(1) (729.6) (599.4) (1,319.0)
------------------------------ ----- ------------------------------------------- ----------------- ---------------
Other operating income 18.7 15.1 36.8
------------------------------ ----- ------------------------------------------- ----------------- ---------------
Property and other related
impairments(1) (135.3) (128.9) (317.0)
------------------------------ ----- ------------------------------------------- ----------------- ---------------
Exceptional items 4 - 3.7 (1.6)
------------------------------ ----- ------------------------------------------- ----------------- ---------------
Profit on sale of properties - - 9.7
------------------------------ ----- ------------------------------------------- ----------------- ---------------
Operating profit / (loss) 199.7 124.3 (60.3)
------------------------------ ----- ------------------------------------------- ----------------- ---------------
Investment income 5 28.8 40.0 103.7
------------------------------ ----- ------------------------------------------- ----------------- ---------------
Investment costs 6 (38.8) (37.1) (7.7)
------------------------------ ----- ------------------------------------------- ----------------- ---------------
Finance income 7 12.6 2.2 9.0
------------------------------ ----- ------------------------------------------- ----------------- ---------------
Finance costs 8 (16.3) (23.3) (36.2)
------------------------------ ----- ------------------------------------------- ----------------- ---------------
Profit before taxation 186.0 106.1 8.5
------------------------------ ----- ------------------------------------------- ----------------- ---------------
Taxation (42.3) (21.7) (86.5)
------------------------------ ----- ------------------------------------------- ----------------- ---------------
Profit / (loss) for the
period 143.7 84.4 (78.0)
------------------------------ ----- ------------------------------------------- ----------------- ---------------
ATTRIBUTABLE TO:
------------------------------ ----- ------------------------------------------- ----------------- ---------------
Equity holders of the Group 138.2 80.4 (83.0)
------------------------------ ----- ------------------------------------------- ----------------- ---------------
Non-controlling interests 5.5 4.0 5.0
------------------------------ ----- ------------------------------------------- ----------------- ---------------
Profit / (loss) for the
period 143.7 84.4 (78.0)
------------------------------ ----- ------------------------------------------- ----------------- ---------------
EARNINGS PER SHARE
ATTRIBUTABLE TO THE
EQUITY SHAREHOLDERS
------------------------------ ----- ------------------------------------------- ----------------- ---------------
Pence per Pence per Pence per
share share share
------------------------------ ----- ------------------------------------------- ----------------- ---------------
Basic earnings per share 9 28.2 16.0 (16.5)
------------------------------ ----- ------------------------------------------- ----------------- ---------------
Diluted earnings per share 9 28.2 16.0 (16.5)
------------------------------ ----- ------------------------------------------- ----------------- ---------------
(1) Property and other related impairments have been separately
presented for the period ended 24 October 2021 and further details
can be found in Note 2. The prior year comparative was previously
included within Selling, distribution and administrative expenses
in the FY20 H1 Report and has been represented to be
comparable.
The Unaudited Consolidated Income Statement has been prepared on
the basis that all operations are continuing.
The accompanying accounting policies and notes form part of
these Interim Financial Statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE 26 WEEKSED 24 OCTOBER 2021
26 weeks 26 weeks 52 weeks
ended ended ended
24 October 25 October 25 April
2021 2020 2021
Note (unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Profit / (loss) for the period 143.7 84.4 (78.0)
-------------------------------------------------- ----- ----------------- ----------------- ---------------
OTHER COMPREHENSIVE INCOME
-------------------------------------------------- ----- ----------------- ----------------- ---------------
ITEMS THAT WILL NOT BE RECLASSIFIED SUBSEQUENTLY
TO PROFIT OR LOSS
-------------------------------------------------- ----- ----------------- ----------------- ---------------
Fair value movement on long-term financial
assets 80.5 (0.5) 77.3
-------------------------------------------------- ----- ----------------- ----------------- ---------------
ITEMS THAT WILL BE RECLASSIFIED SUBSEQUENTLY
TO PROFIT OR LOSS
-------------------------------------------------- ----- ----------------- ----------------- ---------------
Exchange differences on translation of
foreign operations (11.4) (9.9) (49.1)
-------------------------------------------------- ----- ----------------- ----------------- ---------------
Fair value movement on hedged contracts
- recognised in the period 11 21.6 (15.3) 0.4
-------------------------------------------------- ----- ----------------- ----------------- ---------------
Fair value movement on hedged contracts
- reclassified and reported in sales 11 - (1.3) (2.8)
-------------------------------------------------- ----- ----------------- ----------------- ---------------
Fair value movement on hedged contracts
- reclassified and reported in cost of
sales 11 3.6 (8.7) (17.1)
-------------------------------------------------- ----- ----------------- ----------------- ---------------
Fair value movement on hedged contracts
- taxation taken to reserves 11 (7.2) 4.3 3.0
-------------------------------------------------- ----- ----------------- ----------------- ---------------
OTHER COMPREHENSIVE INCOME / (LOSS) FOR
THE PERIOD, NET OF TAX 87.1 (31.4) 11.7
-------------------------------------------------- ----- ----------------- ----------------- ---------------
TOTAL COMPREHENSIVE INCOME / (LOSS) FOR
THE PERIOD 230.8 53.0 (66.3)
-------------------------------------------------- ----- ----------------- ----------------- ---------------
ATTRIBUTABLE TO:
-------------------------------------------------- ----- ----------------- ----------------- ---------------
Equity holders of the Group 225.3 49.0 (71.3)
-------------------------------------------------- ----- ----------------- ----------------- ---------------
Non-controlling interest 5.5 4.0 5.0
-------------------------------------------------- ----- ----------------- ----------------- ---------------
230.8 53.0 (66.3)
-------------------------------------------------- ----- ----------------- ----------------- ---------------
The accompanying accounting policies and notes form part of
these Interim Financial Statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 24 OCTOBER 2021
24 October 25 October 25 April
2021 2020 2021
Note (unaudited) (unaudited) (audited)
GBPm GBPm GBPm
ASSETS - NON
CURRENT
------------------------------------------ ------------------------------------------------------------
Property, plant and equipment 1,012.7 1,308.6 1,164.9
------------------------------------------- ------------------ ------------------ ---------------
Investment properties 52.7 18.2 14.1
------------------------------------------- ------------------ ------------------ ---------------
Intangible assets 113.5 131.7 120.5
------------------------------------------- ------------------ ------------------ ---------------
Long-term financial assets 352.4 127.2 263.3
------------------------------------------- ------------------ ------------------ ---------------
Deferred tax assets 103.7 59.3 66.8
------------------------------------------- ------------------ ------------------ ---------------
1,635.0 1,645.0 1,629.6
------------------------------------------- ------------------ ------------------ ---------------
ASSETS - CURRENT
------------------------------------------ ------------------------------------------------------------
Inventories 1,201.5 1,110.3 1,096.6
------------------------------------------- ------------------ ------------------ ---------------
Trade and other receivables 490.7 578.8 546.5
------------------------------------------- ------------------ ------------------ ---------------
Derivative financial assets 11 61.4 64.9 55.4
------------------------------------------- ------------------ ------------------ ---------------
Cash and cash equivalents 350.7 371.3 457.0
------------------------------------------- ------------------ ------------------ ---------------
2,104.3 2,125.3 2,155.5
------------------------------------------- ------------------ ------------------ ---------------
TOTAL ASSETS 3,739.3 3,770.3 3,785.1
------------------------------------------- ------------------ ------------------ ---------------
Share capital 64.1 64.1 64.1
------------------------------------------- ------------------ ------------------ ---------------
Share premium 874.3 874.3 874.3
------------------------------------------- ------------------ ------------------ ---------------
Treasury shares reserve (374.2) (295.7) (295.7)
------------------------------------------- ------------------ ------------------ ---------------
Permanent contribution to capital 0.1 0.1 0.1
------------------------------------------- ------------------ ------------------ ---------------
Capital redemption reserve 8.0 8.0 8.0
------------------------------------------- ------------------ ------------------ ---------------
Foreign currency translation reserve 17.4 68.0 28.8
------------------------------------------- ------------------ ------------------ ---------------
Reverse combination reserve (987.3) (987.3) (987.3)
------------------------------------------- ------------------ ------------------ ---------------
Own share reserve (66.7) (67.0) (66.7)
------------------------------------------- ------------------ ------------------ ---------------
Hedging reserve 11 29.5 7.0 11.5
------------------------------------------- ------------------ ------------------ ---------------
Share based payment reserve 5.2 - 1.3
------------------------------------------- ------------------ ------------------ ---------------
Retained earnings 1,775.1 1,644.8 1,554.5
------------------------------------------- ------------------ ------------------ ---------------
Issued capital and reserves attributable
to owners of the parent 1,345.5 1,316.3 1,192.9
------------------------------------------- ------------------ ------------------ ---------------
Non-controlling interests 21.7 17.0 18.1
------------------------------------------- ------------------ ------------------ ---------------
TOTAL EQUITY 1,367.2 1,333.3 1,211.0
------------------------------------------- ------------------ ------------------ ---------------
LIABILITIES -
NON CURRENT
------------------------------------------ ------------------------------------------------------------
Borrowings 375.0 621.4 705.9
------------------------------------------- ------------------ ------------------ ---------------
Lease liabilities 505.2 585.9 534.2
------------------------------------------- ------------------ ------------------ ---------------
Retirement benefit obligations 1.7 2.0 1.9
------------------------------------------- ------------------ ------------------ ---------------
Deferred tax liabilities 30.0 19.6 27.0
------------------------------------------- ------------------ ------------------ ---------------
Provisions 10 351.9 331.8 361.2
------------------------------------------- ------------------ ------------------ ---------------
1,263.8 1,560.7 1,630.2
------------------------------------------- ------------------ ------------------ ---------------
LIABILITIES -
CURRENT
------------------------------------------ ------------------------------------------------------------
Derivative financial liabilities 11 28.4 88.4 19.2
------------------------------------------- ------------------ ------------------ ---------------
Trade and other payables 789.4 626.0 646.3
------------------------------------------- ------------------ ------------------ ---------------
Lease liabilities 179.5 129.7 188.5
------------------------------------------- ------------------ ------------------ ---------------
Current tax liabilities 111.0 32.2 89.9
------------------------------------------- ------------------ ------------------ ---------------
1,108.3 876.3 943.9
------------------------------------------- ------------------ ------------------ ---------------
TOTAL LIABILITIES 2,372.1 2,437.0 2,574.1
------------------------------------------- ------------------ ------------------ ---------------
TOTAL EQUITY AND LIABILITIES 3,739.3 3,770.3 3,785.1
The accompanying accounting policies and notes form part of
these Interim Financial Statements.
CONSOLIDATED CASH FLOW STATEMENT
FOR THE 26 WEEKSED 24 OCTOBER 2021
26 weeks 26 weeks 52 weeks
ended ended ended
24 October 25 October 25 April
2021 2020 2021
Note (unaudited) (unaudited) (audited)
GBPm GBPm GBPm
CASH INFLOW FROM OPERATING ACTIVITIES 12 559.8 330.5 578.3
------------------------------------------------ ----- ----------------- ----------------- ---------------
Income taxes paid (62.6) (54.3) (59.3)
------------------------------------------------ ----- ----------------- ----------------- ---------------
NET CASH INFLOW FROM OPERATING ACTIVITIES 497.2 276.2 519.0
------------------------------------------------ ----- ----------------- ----------------- ---------------
Proceeds on disposal of property, plant
and equipment 0.7 2.7 20.6
------------------------------------------------ ----- ----------------- ----------------- ---------------
Proceeds on disposal of intangible assets - 4.6 7.5
------------------------------------------------ ----- ----------------- ----------------- ---------------
Proceeds on disposal of listed investments
and derivatives 96.6 4.2 55.1
------------------------------------------------ ----- ----------------- ----------------- ---------------
Proceeds on disposal of subsidiary undertaking 1.0 - -
------------------------------------------------ ----- ----------------- ----------------- ---------------
Purchase of subsidiaries, net of cash
acquired - (37.0) (39.4)
------------------------------------------------ ----- ----------------- ----------------- ---------------
Purchase of property, plant and equipment (112.7) (57.0) (219.4)
------------------------------------------------ ----- ----------------- ----------------- ---------------
Purchase of intangible assets - - (1.0)
------------------------------------------------ ----- ----------------- ----------------- ---------------
Purchase of listed investments (107.1) (49.9) (113.3)
------------------------------------------------ ----- ----------------- ----------------- ---------------
Investment income received 5.6 0.3 0.5
------------------------------------------------ ----- ----------------- ----------------- ---------------
Finance income received 0.1 2.2 9.0
------------------------------------------------ ----- ----------------- ----------------- ---------------
NET CASH OUTFLOW FROM INVESTING ACTIVITIES (115.8) (129.9) (280.4)
------------------------------------------------ ----- ----------------- ----------------- ---------------
Lease payments (61.9) (17.1) (78.0)
------------------------------------------------ ----- ----------------- ----------------- ---------------
Finance costs paid (14.5) (14.7) (31.6)
------------------------------------------------ ----- ----------------- ----------------- ---------------
Borrowings drawn down 409.0 1,551.4 1,128.1
------------------------------------------------ ----- ----------------- ----------------- ---------------
Borrowings repaid (739.9) (1,830.0) (1,323.6)
------------------------------------------------ ----- ----------------- ----------------- ---------------
Dividends paid to non-controlling interests - - (0.9)
------------------------------------------------ ----- ----------------- ----------------- ---------------
Purchase of own shares 15 (78.5) - (4.3)
------------------------------------------------ ----- ----------------- ----------------- ---------------
NET CASH OUTFLOW FROM FINANCING ACTIVITIES (485.8) (310.4) (310.3)
------------------------------------------------ ----- ----------------- ----------------- ---------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (104.4) (164.1) (71.7)
------------------------------------------------ ----- ----------------- ----------------- ---------------
Exchange movement on cash balances (1.9) 1.4 (5.3)
------------------------------------------------ ----- ----------------- ----------------- ---------------
CASH AND CASH EQUIVALENTS INCLUDING OVERDRAFTS
AT BEGINNING OF PERIOD 457.0 534.0 534.0
------------------------------------------------ ----- ----------------- ----------------- ---------------
CASH AND CASH EQUIVALENTS INCLUDING OVERDRAFTS
AT THE PERIOD 350.7 371.3 457.0
The accompanying accounting policies and notes form part of
these Interim Financial Statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE 26 WEEKSED 24 OCTOBER 2021 (UNAUDITED)
Share Foreign Total Non-controlling
Share Share Treasury scheme currency Own Retained Other(2) attributable interests Total
capital premium(1) shares reserve translation share earnings to owners
reserve of
parent
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
At 25 April
2021 64.1 874.3 (295.7) 1.3 28.8 (66.7) 1,554.5 (967.7) 1,192.9 18.1 1,211.0
---------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Acquisitions - - - - - - 1.9 - 1.9 (1.9) -
---------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Purchase of
own shares - - (78.5) - - - - - (78.5) - (78.5)
---------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Share scheme - - - 3.9 - - - - 3.9 - 3.9
---------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
TRANSACTIONS
WITH OWNERS
IN THEIR
CAPACITY
AS OWNERS - - (78.5) 3.9 - - 1.9 - (72.7) (1.9) (74.6)
---------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Profit for the
financial
period - - - - - - 138.2 - 138.2 5.5 143.7
---------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
OTHER COMPREHENSIVE INCOME
-----------------------------------------------------------------------------------------------------------------------------------------------------------------
Cash flow
hedges
- recognised
in the period - - - - - - - 21.6 21.6 - 21.6
---------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Cash flow
hedges
- reclassified
and reported
in cost of
sales - - - - - - - 3.6 3.6 - 3.6
---------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Cash flow
hedges
- taxation - - - - - - - (7.2) (7.2) - (7.2)
---------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Fair value
adjustment
in respect of
long term
financial
assets -
recognised - - - - - - 80.5 - 80.5 - 80.5
---------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Translation
differences
- Group - - - - (11.4) - - - (11.4) - (11.4)
---------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Total
comprehensive
income for the
period - - - - (11.4) - 218.7 18.0 225.3 5.5 230.8
---------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
At 24 October
2021 64.1 874.3 (374.2) 5.2 17.4 (66.7) 1,775.1 (949.7) 1,345.5 21.7 1,367.2
---------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
FOR THE 26 WEEKSED 25 OCTOBER 2020 (UNAUDITED)
Share Foreign Total Non-controlling
Share Share Treasury scheme currency Own Retained Other(2) attributable interests Total
capital premium(1) shares reserve translation share earnings to owners
reserve of
parent
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
At 26 April
2020 64.1 874.3 (295.7) - 77.9 (67.0) 1,564.9 (951.2) 1,267.3 13.0 1,280.3
--------
Profit for the
financial
period - - - - - - 80.4 - 80.4 4.0 84.4
---------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
OTHER COMPREHENSIVE INCOME
-----------------------------------------------------------------------------------------------------------------------------------------------------------------
Cash flow
hedges
- recognised
in the period - - - - - - - (15.3) (15.3) - (15.3)
---------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Cash flow
hedges
- reclassified
and reported
in sales - - - - - - - (1.3) (1.3) - (1.3)
---------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Cash flow
hedges
- reclassified
and reported
in cost of
sales - - - - - - - (8.7) (8.7) - (8.7)
---------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Cash flow
hedges
- taxation - - - - - - - 4.3 4.3 - 4.3
---------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Fair value
adjustment
in respect of
long term
financial
assets -
recognised - - - - - - (0.5) - (0.5) - (0.5)
---------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Translation
differences
- Group - - - - (9.9) - - - (9.9) - (9.9)
---------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Total
comprehensive
income for the
period - - - - (9.9) - 79.9 (21.0) 49.0 4.0 53.0
---------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
At 25 October
2020 64.1 874.3 (295.7) - 68.0 (67.0) 1,644.8 (972.2) 1,316.3 17.0 1,333.3
---------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
FOR THE 52 WEEKSED 25 APRIL 2021 (AUDITED)
Share Foreign Total Non-controlling
Share Share Treasury scheme currency Own Retained Other(2) attributable interests Total
capital premium(1) shares reserve translation share earnings to owners
reserve of
parent
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
At 26 April
2020 64.1 874.3 (295.7) - 77.9 (67.0) 1,564.9 (951.2) 1,267.3 13.0 1,280.3
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Acquisitions - - - - - - - - - 1.0 1.0
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Share scheme - - - 1.3 - 0.3 (4.7) - (3.1) - (3.1)
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Dividends paid
to
non-controlling
interests - - - - - - - - - (0.9) (0.9)
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
TRANSACTIONS
WITH OWNERS
IN THEIR
CAPACITY
AS OWNERS - - - 1.3 - 0.3 (4.7) - (3.1) 0.1 (3.0)
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
(Loss)/profit
for the
financial
period - - - - - - (83.0) - (83.0) 5.0 (78.0)
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
OTHER COMPREHENSIVE INCOME
-------------------------------------------------------------------------------------------------------------------------------------------------------------------
Cash flow hedges
- recognised
in the period - - - - - - - 0.4 0.4 - 0.4
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Cash flow hedges
- reclassified
and reported
in sales - - - - - - - (2.8) (2.8) - (2.8)
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Cash flow hedges
- reclassified
and reported
in cost of sales - - - - - - - (17.1) (17.1) - (17.1)
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Cash flow hedges
- taxation - - - - - - - 3.0 3.0 - 3.0
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Fair value
adjustment
in respect of
long term
financial
assets -
recognised - - - - - - 77.3 - 77.3 - 77.3
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Translation
differences
- Group - - - - (49.1) - - - (49.1) - (49.1)
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Total
comprehensive
(loss) for the
period - - - - (49.1) - (5.7) (16.5) (71.3) 5.0 (66.3)
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
At 25 April
2021 64.1 874.3 (295.7) 1.3 28.8 (66.7) 1,554.5 (967.7) 1,192.9 18.1 1,211.0
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
(1) The share premium account is used to record the excess
proceeds over nominal value on the issue of shares.
(2) Other reserves comprise permanent contribution to capital,
capital redemption reserve, reverse combination reserve and the
hedging reserve. All movements in the period related to the hedging
reserve.
The accompanying accounting policies and notes form part of
these Interim Financial Statements.
NOTES TO THE FINANCIAL INFORMATION
FOR THE 26 WEEKSED 24 OCTOBER 2021
1. BASIS OF PREPARATION
Non-Statutory
The results for the first half of the financial year have not
been audited or reviewed by external auditors. The financial
information in the Group's Annual Report and Financial Statements
for the 52 week period ended 25 April 2021 is prepared in
accordance with International Financial Reporting Standards in
conformity with the requirements of the Companies Act 2006 and in
accordance with International Financial Reporting Standards adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union. The Interim Results have been prepared on the basis
of the policies set out in the 2021 Annual Report and in accordance
with International Accounting Standard (IAS) 34 'Interim Financial
Reporting' as adopted by the UK and the Disclosure Guidance and
Transparency Rules of the UK's Financial Conduct Authority (DTR).
The Interim Results do not include all of the information required
for full annual statements and should be read in conjunction with
the 2021 Annual Report. In the year to 24 April 2022 the annual
financial statements will be prepared in accordance with IFRS as
adopted by the UK Endorsement Board. This change in the basis of
preparation is required by UK company law for financial reporting
as a result of the UK's exit from the European Union on 31 January
2020 and the cessation of the transition period on 31 December
2020. This change does not constitute a change in accounting
policy, rather a change in framework which is required to group the
use of IFRS in company law. There is no impact on the recognition,
measurement or disclosure between the two frameworks in the period
reported.
The summary of results for the 52 weeks ended 25 April 2021 is
an extract from the published Annual Report and Financial
Statements which have been reported on by the Group's auditors at
the time and delivered to the Registrar of Companies. The audit
report was unqualified, did not draw attention to any matters by
way of emphasis and did not contain a statement under s498 (2) or
s498 (3) of the Companies Act 2006.
Going Concern
The Group is still operating in the shadow of uncertainty cast
by the ongoing Covid-19 pandemic, with restrictions including
lockdowns returning to parts of Europe and with the emergence of
new variants . There are also supply chain risks which to date we
have proven resilient to but which must be factored into our future
forecasting given these could continue for some time. On top of
this there are the well-publicised macroeconomic factors
contributing to a likely cost of living squeeze which could impinge
on consumers spending plans heading into the new year. The
Directors have reviewed the current financial performance and
liquidity of the business, including modelling a number of downside
scenarios. The Group is still profitable, highly cash generative
and has considerable financial resources. The Group is able to
operate within its new banking facilities and covenants, which run
until at least November 2024, and is well placed to take advantage
of strategic opportunities as they arise. As a consequence, the
Directors believe that the Group is well placed to manage its
business risks successfully despite the continued uncertain
economic outlook.
Management have, for the purpose of Viability and Going Concern
Reporting, forecast and projected a conservative base case scenario
and also a number of even more conservative scenarios taking into
account assumptions impacting gross profit margins, consumer shift
from physical stores to web, impact of direct to consumer, foreign
exchange exposure and increases to direct costs. These forecasts
and projections show that the Group will be able to operate within
the current facility and its covenant requirements (being interest
cover and net debt to EBITDA ratios). Management also have a number
of mitigating actions which could be taken if required such as
putting on hold discretionary spend, liquidating certain assets on
the balance sheet and paying down the banking facility.
Having thoroughly reviewed the Group's performance and having
made suitable enquiries, the Directors are confident that the Group
has adequate resources to remain in operational existence for at
least 12 months from the date of approval of these financial
statements. Trading would need to fall significantly below levels
observed during the pandemic, including during the various
lockdowns already experienced, to require mitigating actions or a
relaxation of covenants. On this basis, the Directors continue to
adopt the going concern basis for the preparation of these
Unaudited Interim Financial Statements which is a period of at
least twelve months from the date of approval of these Unaudited
Interim Financial Statements.
New accounting standards, interpretations and amendments adopted
by the Group
The principal accounting policies have remained unchanged from
the prior financial information for the 52 weeks ended 25 April
2021. The Group continues to monitor the potential impact of new
standards and interpretations which have been or may be endorsed
and required adoption by the Group in future reporting period. The
Group does not consider that any standards, amendments or
interpretation issued by the UK Endorsement Board, but not yet
applicable, will have a significant impact on the financial
statements.
The Group has received government support in the period relating
to business rates relief as a result of the Covid-19 pandemic. The
amount of business rates relief received by the Group in the period
(or equivalent where received in non-UK territories) was approx.
GBP23m (52 weeks to 25 April 2020: approx. GBP97.5m). Government
grants that compensate the Group for expenses incurred are
recognised in profit or loss, as a deduction against the related
expense, over the periods necessary to match them with the related
costs. The amounts quoted have been recognised in Selling,
distribution and administrative expenses in the period.
Risks and uncertainties
The Board has considered the risks and uncertainties for the
remaining half of the financial year and determined that the risks
presented in the FY21 Annual Report, noted below, also remain
relevant for the rest of the financial year:
-- Strategy
-- Third-party brand relationships, key suppliers and supply chain management
-- Brexit or global macro-economic conditions, events (pandemic) or political factors
-- Treasury, liquidity and credit risks
-- Customer
-- Legal and regulatory compliance
-- Technology capability and infrastructure renewal
-- Cyber risks, data loss and data privacy
-- Business continuity management and incident response
-- Group entities and extended enterprise
-- People, talent management and succession
-- Environmental, social & governance (ESG)
-- Property
Detailed explanations of the principal risks and uncertainties
can be found in the Principal Risks and Uncertainties section of
the FY21 Annual Report.
2. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
The critical accounting estimates and judgements made by the
Group regarding the future or other key sources of estimation,
uncertainty and judgement that may have a significant risk of
giving rise to a material adjustment to the carrying values of
assets and liabilities within the next financial period are:
Key Judgements
Determining Related Party Relationships
Management determines whether a related party relationship
exists by assessing the nature of the relationship by reference to
the requirements of IAS 24, Related Party Disclosures. This is in
order to determine whether significant influence exists as a result
of control, shared directors or parent companies, or close family
relationships. The level at which one party may be expected to
influence the other is also considered for transactions involving
close family relationships .
Control And Significant Influence Over Certain Entities
Under IAS 28 Investments in Associates and Joint Ventures, if an
entity holds 20% or more of the voting power of the investee, it is
presumed that the entity has significant influence, unless it can
clearly demonstrate that this is not the case. The Group holds
greater than 20% of the voting rights of Studio Retail Group Plc
and Mulberry Group Plc, whereby management consider that the Group
does not have significant influence over these entities for
combinations of the following reasons:
-- The Group does not have any representation on the board of
directors of the investee other than a Frasers Group representative
having an observer role on the board of Studio Retail Group Plc.
Management have reviewed the terms of the observer arrangement and
have concluded that this does not give them the right to
participate in or influence the financial or operating decisions of
Studio Retail Group Plc. Studio Retail Group Plc can terminate this
arrangement at any time, and can determine which parts of the board
meetings the representative can be present at and what information
they are given access to. It should also be noted that the Frasers
Group representative did not attend any board meetings in full or
part during the reporting period;
-- There is no participation in decision making and strategic
processes, including participation in decisions about dividends or
other distributions;
-- There have been no material transactions between the entity and its investee companies;
-- There has been no interchange of managerial personnel;
-- No non-public essential technical management information is provided to the investee.
In assessing the level of control that management have over
certain entities, management will consider the various aspects that
allow management to influence decision making. This includes the
level of share ownership, board membership, the level of investment
and funding and the ability of the Group to influence operational
and strategic decisions and effect its returns through the exercise
of such influence. If management were to consider that the Group
does have significant influence over these entities then the equity
method of accounting would be used and the percentage shareholding
multiplied by the results of the investee in the period would be
recognised in profit or loss.
The Group holds 49% of the share capital of Four (Holdings)
Limited which is accounted for using the equity method. The Group
does not have any representation on the board of directors and no
participation in decisions about relevant activities such as
establishing operating and capital decisions, including budgets,
appointing or remunerating key management personnel or service
providers and terminating their services or employment. However, in
prior periods the Group has provided Four (Holdings) Limited with a
significant loan. At the reporting date, the amount owed by Four
(Holdings) Limited totalled GBP60.0m (GBP21.5m net of amounts
recognised in respect of expected credit losses). The Group is
satisfied that the existence of these transactions provides
evidence that the entity has significant influence over the
investee but in the absence of any other rights, in isolation it is
insufficient to meet the control criteria of IFRS 10, as the Group
does not have power over Four (Holdings) Limited and therefore Four
(Holdings) Limited is not equity accounted.
Cash Flow Hedging
The Group uses a range of forward and option contracts that are
entered into at the same time, they are in contemplation with one
another and have the same counterparty. A judgement is made in
determining whether there is an economic need or substantive
business purpose for structuring the transactions separately that
could not also have been accomplished in a single transaction.
Management are of the view that there is a substantive distinct
business purpose for entering into the options and a strategy for
managing the options independently of the forward contracts. The
forward and options contracts are therefore not viewed as one
instrument and hedge accounting for the forwards is permitted.
Under IFRS 9 in order to achieve cash flow hedge accounting,
forecast transactions (primarily Euro denominated sales and USD
denominated purchases) must be considered to be highly probable.
The hedge must be expected to be highly effective in achieving
offsetting changes in cash flows attributable to the hedged risk.
The forecast transaction that is the subject of the hedge must be
highly probable and must present an exposure to variations in cash
flows that could ultimately affect profit or loss. Management have
reviewed the detailed forecasts and growth assumptions within them,
and are satisfied that forecasts in which the cash flow hedge
accounting has been based meet the criteria per IFRS 9 as being
highly probable forecast transactions. Should the forecast levels
not pass the highly probable test, any cumulative fair value gains
and losses in relation to either the entire or the ineffective
portion of the hedged instrument would be taken to the Income
Statement.
Management considers various factors when determining whether a
forecast transaction is highly probable. These factors include
detailed sales forecasts by channel, geographical area and
seasonality, conditions in target markets and the impact of
expansion in new areas. Management also consider any change in
alternative customer sales channels that could impact on the hedged
transaction.
If the forecast transactions were determined to be not highly
probable and all hedge accounting was discontinued, the Hedging
reserve of GBP29.5m (excluding deferred tax) would be shown in
Finance Income.
Key Estimates
Provision For Obsolete, Slow Moving or Defective Inventories
The Directors have applied their knowledge and experience of the
retail industry in determining the level and rates of provisioning
required in calculating the appropriate inventory carrying values.
Specific estimates and judgements applied in relation to assessing
the level of inventory provisions required are considered in
relation to the following areas:
a) Continuity inventory
b) Seasonal inventory lines - specifically seasons that have now finished
c) Third party versus own brand inventory
d) Ageing of inventory
e) Sports Retail or Premium Lifestyle
f) Local economic conditions
g) Divisional specific factors
h) Increased cost of inventory and lower margins with the devaluation of the Pound
i) Over-stock and out of season inventory as a result of Covid-19
Provision estimates are forward looking and are formed using a
combination of factors including historical experience,
management's knowledge of the industry, group discounting, sales
pricing protocols and the overall assessment made by management of
the risks in relation to inventory. Management use a number of
internally generated reports to monitor and continually re-assess
the adequacy and accuracy of the inventory provision. The
additional cost of repricing inventory and handling charges in
relation to relocating inventory (tunnelling) are considered in
arriving at the appropriate percentage provision. The assessment
involves significant estimation uncertainty, therefore in order to
check that the assumptions applied remain valid, management
produces a range of outcomes and the provision is set within this
range.
Key assumptions used to create the estimates are:
-- Discounting - Based on historical experience and managements
anticipated future discounting including the impact of Covid-19
-- Tunnelling - Cost of handling stock for reworking, repacking and repricing
-- Repricing - Labour cost associated with repricing units of stock
-- Shrinkage - Stock lost through damage and theft
Total Group inventory provision at 24 October 2021 is 16.1% (25
October 2020: 15.9%, 25 April 2021: 16.6%). A 1% change in the
total provision would impact adjusted and reported PBT by approx.
GBP14.3m (25 October 2020: GBP13.6m, 25 April 2021: GBP13.2m).
Management do not consider it appropriate to disclose sensitivities
for key assumptions in isolation as in practice changes in one
assumption would lead to an offset in another.
Property Related Provisions
Property related estimates and judgements are continually
evaluated and are based on historical experience, external advice
and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
Dilapidations
The Group provides for its legal responsibility for dilapidation
costs following advice from chartered surveyors and previous
experience of exit costs (including strip out costs and
professional fees). Management use a reference estimate of
GBP100,000 (FY21: GBP100,000) for large leasehold stores, GBP50,000
(FY21: GBP50,000) for smaller leasehold stores (GBP25,000 per store
for Game UK and Game Spain stores) and $/EUR50,000 (FY21:
$/EUR50,000) for non-UK stores. Management do not consider these
costs to be capital in nature and therefore dilapidations are not
capitalised, except for in relation to the sale and leaseback of
Shirebrook in FY20 in which a material dilapidations provision was
recognised.
A 10% increase per store would result in an approx. GBP8.0m
charge to the income statement.
Other Provisions
Provisions are made for items where the Group has identified a
present legal or constructive obligation arising as a result of a
past event, it is probable that an outflow of resources will be
required to settle the obligation and a reliable estimate can be
made of the amount of the obligation.
Legal and regulatory provisions relate to management's best
estimates of provisions required for legal and regulatory claims
and ongoing non-UK tax enquiries. Other provisions relate to
management's best estimates of provisions required for
restructuring, employment and commercial. Where applicable these
are inclusive of any estimated penalties, interest and legal
costs.
In relation to the non-UK tax enquiries during H1 FY22
management have made a judgement to consider all claims
collectively, applying the following key estimates to the gross
amounts (excluding re-imbursement assets):
-- 10% penalty (FY21: 10%). A 5% increase would result in
approx. GBP6.5m increase in the provision.
-- 3% interest on the liability (FY21: 3%). A 1% increase would
result in approx. GBP11.5m increase in the provision.
Management are satisfied that the judgement to consider all
claims collectively is the only reasonable approach because they
are all dependant on the outcome of a court ruling on the
interpretation of the non-UK tax enquiries. Management are
satisfied that with regard to timing a reasonable range of outcomes
are all greater than one year and so are satisfied with including
the provisions as non-current.
Other Receivables And Amounts Owed By Related Parties
Other receivables and amounts owed by related parties are stated
net of provision for any impairment. Management have applied
estimates in assessing the recoverability of working capital and
loan advances made to investee companies. Matters considered
include the relevant financial strength of the underlying investee
company to repay the loans, the repayment period and underlying
terms of the monies advanced, forecast performance of the
underlying borrower, and where relevant, the Group's intentions for
the companies to which monies have been advanced.
IFRS 16
The key areas of judgement in relation to property leases
recognised under IFRS 16 are below:
-- IFRS 16 defines the lease term as the non-cancellable period
of a lease together with the options to extend or terminate a
lease, if the lessee were reasonably certain to exercise that
option. The Group will assess the likelihood of extending lease
contracts beyond the break date by taking into account current
economic and market conditions, current trading performance,
forecast profitability and the level of capital investment in the
property.
-- IFRS 16 states that the lease payments shall be discounted
using the lessee's incremental borrowing rate where the rate
implicit in the lease cannot be readily determined. Accordingly,
all lease payments have been discounted using the incremental
borrowing rate (IBR). The IBR has been determined by using a
synthetic credit rating for the Group which is used to obtain
market data on debt instruments for companies with the same credit
rating, this is split by currency to represent each of the
geographical areas the Group operates within and adjusted for the
lease term.
The weighted average discount rates based on incremental
borrowing rates used throughout the period across the Group's lease
portfolio are shown below. The discount rate for each lease is
dependent on lease start date, term and location.
Lease Term UK Europe Rest of World
Up to 5 years 1.4% - 1.8% 0.3% - 0.8% 1.5% - 3.3%
----------------------------------------- ------------- ------------- -------------
Greater than 5 years and up to 10 years 2.0% - 2.2% 0.5% - 1.2% 2.5% - 3.5%
----------------------------------------- ------------- ------------- -------------
Greater than 10 years and up to 20 years 2.2% - 2.5% 0.8% - 1.4% 2.9% - 3.7%
----------------------------------------- ------------- ------------- -------------
Greater than 20 years 2.5% - 2.8% 1.1% - 1.7% 3.5% - 3.8%
----------------------------------------- ------------- ------------- -------------
-- The right of use asset will be reviewed for impairment at
each reporting period in line with IAS 36 impairment to review
whether the carrying amount exceeds its recoverable amount. For
impairment testing purposes the Group has determined that each
store is a separate CGU. The recoverable amount is calculated based
on the Group's latest forecast cash flows which are then
extrapolated to cover the period to the break date of the lease
taking into account historic performance and knowledge of the
current market, together with the Group's views on future
profitability of each CGU. The key assumptions in the calculations
are the sales growth rates, gross margin rates, changes in the
operating cost base and the pre-tax discount rate derived from the
Group's weighted average cost of capital using the capital asset
pricing model, the inputs of which include a risk-free rate, equity
risk premium and a risk adjustment (Beta). Given the number of
assumptions used the assessment involves significant estimation
uncertainty. The assumptions used are consistent with those
disclosed in the Freehold Land and Buildings and Long-term
leasehold section below. Impairments in the period have been
recognised for the amount of GBP55.2m, being GBP29.5m against the
right-of-use asset (GBP25.0m UK Sports Retail segment, GBP2.7m
Premium Lifestyle segment, GBP1.0m European Retail segment, and
GBP0.8m Rest of the World Retail segment) and GBP25.7m against
plant & equipment and short-term leasehold improvements
(GBP23.2m UK Sports Retail segment, GBP2.0 Premium Lifestyle
segment, GBP0.5m European Retail segment). The impairments were due
to the ongoing impact of Covid-19 and the challenges in the retail
sector on the forecast cash flows of the CGU, including supply
chain issues and the anticipated cost of living squeeze on
consumers.
The key assumptions, which are equally applicable to each CGU,
in the cash flow projections used to support the carrying amount of
the right of use asset are consistent with the cashflow projections
for the Freehold land and Buildings impairment assessment.
Management have reviewed whether there is any indication that an
impairment loss recognised in prior periods relating to IFRS 16 may
no longer exist or may have decreased. Management have performed an
assessment taking into account the uncertainty cast by the ongoing
Covid-19 pandemic, supply chain risks, and macroeconomic factors
and are satisfied that there is no indication of impairment loss
reversals, and therefore GBPnil has been recognised in the
Consolidated Income Statement (FY21: GBPnil).
A sensitivity analysis has been performed in respect of sales
and margin as these are considered to be the most sensitive of the
key assumptions. With regard to the sales and gross margin
assumptions, below we have performed a sensitivity for both an
improvement and a decline against the existing assumptions
used:
Forecast: Impact of change Impairment increase
in assumption: / (decrease)
GBPm
Sales year 1 5% - improvement (4.9)
----------------------------------- --------------------- -------------------
Sales year 1 5% - reduction 9.5
----------------------------------- --------------------- -------------------
Existing Gross Margin year 1 >40% 100bps - improvement (0.6)
----------------------------------- --------------------- -------------------
Existing Gross Margin year 1 >40% 100bps - reduction 1.4
----------------------------------- --------------------- -------------------
Freehold Land and Buildings and Long-term leasehold
Freehold land and buildings and long-term leasehold assets are
assessed at each reporting period for whether there is any
indication of impairment in line with IAS 36 impairment.
An asset is impaired when the carrying amount exceeds its
recoverable amount. IAS 36 defines recoverable amount as the higher
of an asset's or cash-generating unit's fair value less costs of
disposal and its value in use, the Group has determined that each
store is a separate CGU. Impairments in the period have been
recognised in the amount of GBP80.1m due to the ongoing impact of
Covid-19 and the challenges in the retail sector on the forecast
cash flows of the CGU. This is split GBP79.9m against freehold land
and buildings (GBP2.8m UK Sports Retail segment, GBP74.5m Premium
Lifestyle segment, GBP1.4m European Retail segment, GBP1.2m Rest of
World segment) and GBP0.2m plant and equipment.
Value in use (VIU)
The value in use is calculated based on five year cash flow
projections. These are formulated by using the Group's forecast
cash flows of each individual CGU excluding any Covid-19 impact,
taking into account historic performance of the CGU, and then
adjusting for the Group's current views on future profitability of
each CGU as a result of Covid-19 and knowledge of the current
market. The key assumptions in the calculations are the sales
growth rates, gross margin rates, changes in the operating cost
base and the pre-tax discount rate derived from the Group's
weighted average cost of capital using the capital asset pricing
model, the inputs of which include a risk-free rate, equity risk
premium and a risk adjustment (Beta). Given the number of
assumptions used the assessment involves significant estimation
uncertainty.
The key assumptions, which are equally applicable to each CGU,
in the cash flow projections used to support the carrying amount of
the freehold land and buildings were as follows:
Key assumptions Year 1 Year 2 Year 3 Year 4 Year 5
Sales decline -5% -4% -3% -2% -2%
------------------------------ ------- ------- ------- ------- ------
Existing gross margin > 40% -175bps -150bps -125bps -100bps -75bps
------------------------------ ------- ------- ------- ------- ------
Operating costs increase per
annum 3% 3% 3% 3% 3%
------------------------------ ------- ------- ------- ------- ------
Discount rate (post tax) 6% 6% 6% 6% 6%
------------------------------ ------- ------- ------- ------- ------
Terminal growth rate of 2%
--------------------------------------------------------------------------
A sensitivity analysis has been performed in respect of sales
and margin as these are considered to be the most sensitive of the
key assumptions. With regard to the sales and gross margin
assumptions, below we have performed a sensitivity for both an
improvement and a decline against the existing assumptions
used:
Forecast: Impact of: Impairment increase
/ (decrease)
GBPm
Sales year 1 5% - improvement (1.0)
------------------------------------ --------------------- -------------------
Sales year 1 5% - reduction 0.6
------------------------------------ --------------------- -------------------
Existing Gross Margin year 1 > 40% 100bps - improvement (0.3)
------------------------------------ --------------------- -------------------
Existing Gross Margin year 1 > 40% 100bps - reduction 0.4
------------------------------------ --------------------- -------------------
Fair value less cost of disposal
For those CGUs where the value in use is less than the carrying
value of the asset, the fair value less costs of disposal has been
determined using both external and internal market valuations. This
fair value is deemed to fall in to Level 3 of the fair value
hierarchy as per IFRS 13. The property portfolio consists of
vacant, Frasers Group occupied and third party tenanted units, one
property can include all three types. The following valuation
methodology has been adopted for each:
Scenario Valuation methodology Key assumptions
Vacant units Estimated Rental Value (ERV) and suitable Void period and rent
reversionary yield applied to reflect free band - two bands
the market to generate a net capital applied depending on
value. A deduction to the capital circumstances:
value generated is then made based * 1 year void, 2 years rent free; or
on the void period with applicable
rates payable for the unit and rent
free incentive. * 2 years void, 3 years rent free.
Yield bands - ranging
from 7% - 15%
-------------------- -------------------------------------------- -----------------------------------------------
Frasers Group Will be assumed the unit is vacant Void period and rent
occupied given there is no legally binding free band - two bands
Inter-company agreement in place. applied depending on
Therefore, a void and rent free incentive circumstances:
period assumed, the cost amount then * 1 year void, 2 years rent free; or
deducted from the capital value generated
by the ERV and reversionary yield.
Although we consider the commercial * 2 years void, 3 years rent free.
reality is that fair value less costs
to sell will be higher than vacant
possession this very conservative Yield bands - ranging
assumption is in line with both technical from 7% - 15%
accounting rules and that of our management
experts.
-------------------- -------------------------------------------- -----------------------------------------------
Third party tenanted An ERV is applied using a percentage ERV bands applied to
band on the passing rent. An appropriate passing rent -50%
reversionary yield is applied reflecting Yield bands - ranging
the risk of tenant and renewal to from 6.5% - 15%
generate a capital value. This will
also provide a net initial yield based
off the current passing rent.
-------------------- -------------------------------------------- -----------------------------------------------
A 10% increase in the market valuation amounts used in the
impairment calculations would result in a decrease in impairment of
GBP4.3m.
The total recoverable amount of the assets that were impaired at
the period end was GBP60.3m, with GBP40.3m of this being based on
their fair value less costs of disposal and GBP20.0m being based on
their value in use.
Management have reviewed whether there is any indication that an
impairment loss recognised in prior periods relating to freehold
land & buildings and Long-term leasehold assets may no longer
exist or may have decreased. Management have performed an
assessment taking into account the uncertainty cast by the ongoing
Covid-19 pandemic, supply chain risks, and macroeconomic factors
and are satisfied that there is no indication of impairment loss
reversals, and therefore GBPnil has been recognised in the
Consolidated Income Statement (FY21: GBPnil).
3. SEGMENTAL ANALYSIS
Management has determined to present its segmental disclosures
consistently with the presentation in the 2021 Annual Report.
Management considers operationally that the UK Retail divisions (UK
Sports Retail and Premium Lifestyle) are run as one business unit
in terms of allocating resources, inventory management and
assessing performance. Under IFRS 8 we have not at this reporting
date met the required criteria with enough certainty to aggregate
these operating segments. We will continually keep this under
review at subsequent reporting dates. We continue to monitor the
impacts of Covid-19, Brexit, and the continued uncertainties this
has brought relating to the political and economic environments,
and market and currency volatility in the countries we operate in.
European countries have been identified as operating segments and
have been aggregated into a single operating segment as permitted
under IFRS 8. The decision to aggregate these segments was based on
the fact that they each have similar economic characteristics,
similar long-term financial performance expectations, and are
similar in each of the following respects:
-- The nature of the products;
-- The type or class of customer for the products; and
-- The methods used to distribute the products.
In accordance with paragraph 12 of IFRS 8 the Group's operating
segments have been aggregated into the following reportable
segments:
1) UK Retail:
i) UK Sports Retail - includes core sports retail store
operations in the UK, plus all the Group's sports retail online
business (excluding Bob's Stores, Eastern Mountain Sports, Malaysia
and Baltics), the gyms, the Group's Shirebrook campus operations,
freehold property owning companies excluding Premium Lifestyle
fascia properties, GAME UK stores and online operations, and retail
store operations in Northern Ireland .
ii) Premium Lifestyle - includes the results of the premium
retail businesses Flannels, Cruise, van mildert, Jack Wills, House
of Fraser and Sofa.com along with the related websites, and
freehold property owning companies where trading is purely from
Premium Lifestyle fascias.
2) European Retail - includes all the Group's sports retail
stores, management and operations in Europe including the Group's
European Distribution Centres in Belgium and Austria, European
freehold property owning companies, as well as GAME Spain stores
and Baltics online.
3) Rest of World Retail - includes the results of US based
retail activities, Asia based retail activities along with their
e-commerce offerings.
4) Wholesale & Licensing - includes the results of the
Group's portfolio of internationally recognised brands such as
Everlast, Karrimor, and Slazenger.
It is management's current intention to run the Group as four
operating segments being UK Retail (including UK Sports Retail and
Premium Lifestyle), European Retail, Rest of World Retail and
Wholesale & Licensing. Management is satisfied that the UK
Sports Retail and Premium Lifestyle segments will meet the criteria
permitted under IFRS 8 to aggregate as one segment in due
course.
The FY21 numbers have been re-categorised due to changes in the
reporting segments, with freehold property owning companies where
trading is purely from Premium Lifestyle fascias being moved from
UK Sports Retail to Premium Lifestyle.
Segmental information for the 26 weeks ended 24 October 2021
(unaudited):
UK Sports Premium UK Retail European Rest Total Wholesale Eliminations Group
Retail Lifestyle Total Retail of Retail & Total
World Licensing
Retail
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
--------- --------- --------- -------- ------- --------- --------- ------------
Sales to
external
customers 1,367.1 427.9 1,795.0 399.8 65.6 2,260.4 79.4 - 2,339.8
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Sales to
other
segments - - - - - - 45.0 (45.0) -
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Revenue 1,367.1 427.9 1,795.0 399.8 65.6 2,260.4 124.4 (45.0) 2,339.8
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Gross profit 599.0 204.3 803.3 174.8 34.8 1,012.9 33.0 - 1,045.9
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Operating
profit
before
foreign
exchange,
exceptional
items
and property
and other
related
impairments 174.5 70.2 244.7 65.1 16.6 326.4 4.1 - 330.5
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Realised
foreign
exchange
gain /
(loss) 0.7 (0.5) 0.2 1.5 (0.4) 1.3 3.2 - 4.5
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Property and
other
related
impairments (51.0) (79.3) (130.3) (3.1) (1.9) (135.3) - - (135.3)
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Operating
profit 124.2 (9.6) 114.6 63.5 14.3 192.4 7.3 - 199.7
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Investment
income 28.8 - 28.8 - - 28.8 - - 28.8
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Investment
costs (38.8) - (38.8) - - (38.8) - - (38.8)
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Finance
income 12.6 - 12.6 - - 12.6 - - 12.6
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Finance costs (14.0) (0.6) (14.6) (1.1) (0.4) (16.1) (0.2) - (16.3)
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Profit before
taxation 112.8 (10.2) 102.6 62.4 13.9 178.9 7.1 - 186.0
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Taxation (42.3)
-------------- -------------------------------------------------------------------------------------- ---------
Profit for
the period 143.7
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Total assets 3,470.90 565.6 4,036.5 470.4 79.7 4,586.6 341.7 (1,189.0) 3,739.3
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Total
liabilities (2,138.6) (692.5) (2,831.1) (604.9) (4.6) (3,440.6) (120.5) 1,189.0 (2,372.1)
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Tangible
asset
additions 65.0 40.7 105.7 6.0 0.4 112.1 0.6 - 112.7
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Right-of-use
asset
additions 5.0 15.3 20.3 14.7 0.8 35.8 - - 35.8
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Segmental information for the 26 weeks ended 25 October 2020(1)
(unaudited):
UK Sports Premium UK Retail European Rest Total Wholesale Eliminations Group
Retail Lifestyle Total Retail of Retail & Total
World Licensing
Retail
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
--------- --------- --------- -------- ------- --------- --------- ------------
Sales to
external
customers 1,071.6 320.4 1,392.0 352.0 77.1 1,821.1 72.2 - 1,893.3
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Sales to
other
segments - - - - - - 30.6 (30.6) -
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Revenue 1,071.6 320.4 1,392.0 352.0 77.1 1,821.1 102.8 (30.6) 1,893.3
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Gross profit 476.2 150.5 626.7 146.7 30.5 803.9 29.9 - 833.8
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Operating
profit
before
foreign
exchange,
exceptional
items
and property
and other
related
impairments 171.5 33.7 205.2 34.0 10.6 249.8 7.1 - 256.9
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Exceptional 3.7 - 3.7 - - 3.7 - - 3.7
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Realised
foreign
exchange
(loss)/gain (13.7) (0.6) (14.3) 7.6 (0.1) (6.8) (0.6) - (7.4)
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Property and
other
related
impairments (107.1) (6.6) (113.7) (14.8) (0.4) (128.9) - - (128.9)
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Operating
profit 54.4 26.5 80.9 26.8 10.1 117.8 6.5 - 124.3
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Investment
income 40.0 - 40.0 - - 40.0 - - 40.0
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Investment
costs (37.1) - (37.1) - - (37.1) - - (37.1)
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Finance
income 2.1 - 2.1 0.1 - 2.2 - - 2.2
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Finance costs (19.4) (0.8) (20.2) (0.4) (2.5) (23.1) (0.2) - (23.3)
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Profit before
taxation 40.0 25.7 65.7 26.5 7.6 99.8 6.3 - 106.1
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Taxation (21.7)
-------------- -------------------------------------------------------------------------------------- ---------
Profit for
the period 84.4
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Total assets 2,866.9 510.1 3,377.0 459.1 125.9 3,962.0 340.6 (532.3) 3,770.3
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Total
liabilities (1,751.5) (329.0) (2,080.5) (615.9) (185.8) (2,882.2) (87.1) 532.3 (2,437.0)
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Tangible
asset
additions 31.5 8.3 39.8 12.5 4.7 57.0 - - 57.0
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
Right-of-use
asset
additions 26.9 13.3 40.2 9.7 - 49.9 - - 49.9
-------------- --------- --------- --------- -------- ------- --------- --------- ------------ ---------
(1) The FY21 numbers have been re-categorised due to changes in
the reporting segments, with freehold property owning companies
where trading is purely from Premium Lifestyle fascias being moved
from UK Sports Retail to Premium Lifestyle.
Sales to other segments are priced at cost plus a 10%
mark-up.
Segmental information for the 52 weeks ended 25 April 2021(1)
(audited):
UK Sports Premium UK Retail European Rest Total Wholesale Eliminations Group
Retail Lifestyle Total Retail of Retail & Total
World Licensing
Retail
-------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
--------- --------- --------- -------- ------ --------- --------- ------------
Sales to
external
customers 1,968.5 735.6 2,704.1 615.2 152.7 3,472.0 153.3 - 3,625.3
-------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Sales to
other
segments - - - - - - 95.4 (95.4) -
-------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Revenue 1,968.5 735.6 2,704.1 615.2 152.7 3,472.0 248.7 (95.4) 3,625.3
-------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Gross profit 829.3 330.3 1,159.6 239.7 64.0 1,463.3 67.5 - 1,530.8
-------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Operating
profit
before
foreign
exchange,
exceptional
items
and property
and other
related
impairments 191.0 34.3 225.3 20.5 18.6 264.4 20.2 - 284.6
-------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Exceptional 3.1 (1.6) 1.5 (3.1) - (1.6) - - (1.6)
-------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Realised
foreign
exchange
(loss) /
gain (20.2) (0.2) (20.4) 0.8 (1.4) (21.0) (5.3) - (26.3)
-------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Property and
other
related
impairments (201.9) (40.9) (242.8) (71.6) (2.6) (317.0) - - (317.0)
-------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Operating
(loss) /
profit (28.0) (8.4) (36.4) (53.4) 14.6 (75.2) 14.9 - (60.3)
-------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Investment
income 103.7 - 103.7 - - 103.7 - - 103.7
-------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Investment
costs (7.7) - (7.7) - - (7.7) - - (7.7)
-------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Finance
income 6.5 - 6.5 2.5 - 9.0 - - 9.0
-------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Finance costs (28.1) (1.2) (29.3) (2.7) (3.8) (35.8) (0.4) - (36.2)
-------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Profit before
taxation 46.4 (9.6) 36.8 (53.6) 10.8 (6.0) 14.5 - 8.5
-------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Taxation (86.5)
-------------- ------------------------------------------------------------------------------------- ---------
Loss for the
period (78.0)
-------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Total assets 3,305.9 668.0 3,973.9 670.8 158.6 4,803.3 344.7 (1,362.9) 3,785.1
-------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Total
liabilities (2,357.8) (499.6) (2,857.4) (857.0) (95.1) (3,809.5) (127.5) 1,362.9 (2,574.1)
-------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Tangible
asset
additions 163.4 33.1 196.5 17.4 3.0 216.9 2.5 - 219.4
-------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Right-of-use
asset
additions 77.5 14.1 91.6 24.3 2.4 118.3 0.5 - 118.8
-------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
(1) The FY21 numbers have been re-categorised due to changes in
the reporting segments, with freehold property owning companies
where trading is purely from Premium Lifestyle fascias being moved
from UK Sports Retail to Premium Lifestyle.
The following table reconciles the reported profit before tax to
the Adjusted PBT as it is one of the main measures used by the
Chief Operating Decision Maker when reviewing performance:
Reconciliation of Reported PBT to Adjusted PBT for the 26 week
period ended 24 October 2021 (unaudited):
UK Sports Premium UK Retail European Rest Of Total Wholesale Group
Retail Lifestyle Total Retail World Retail Retail & Licensing Total
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
Reported PBT 112.8 (10.2) 102.6 62.4 13.9 178.9 7.1 186.0
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
Fair value adjustment
to derivative
financial
instruments (10.7) - (10.7) - - (10.7) - (10.7)
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
Net investment costs
/ (income) 10.0 - 10.0 - - 10.0 - 10.0
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
Realised FX (gain)
/ loss (0.7) 0.5 (0.2) (1.5) 0.4 (1.3) (3.2) (4.5)
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
Share scheme 6.0 - 6.0 - - 6.0 - 6.0
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
Adjusted PBT 117.4 (9.7) 107.7 60.9 14.3 182.9 3.9 186.8
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
Reconciliation of Reported PBT to Adjusted PBT for the 26 week
period ended 25 October 2020(1) (unaudited):
UK Sports Premium UK Retail European Rest Of Total Wholesale Group
Retail Lifestyle Total Retail World Retail Retail & Licensing Total
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
Reported PBT 40.0 25.7 65.7 26.5 7.6 99.8 6.3 106.1
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
Exceptional items (3.7) - (3.7) - - (3.7) - (3.7)
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
Fair value adjustment
to derivative
financial
instruments 8.6 - 8.6 - - 8.6 - 8.6
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
Net investment
(income)
/ costs (2.9) - (2.9) - - (2.9) - (2.9)
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
Realised FX loss /
(gain) 13.6 0.6 14.2 (7.5) 0.1 6.8 0.6 7.4
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
Adjusted PBT 55.6 26.3 81.9 19.0 7.7 108.6 6.9 115.5
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
(1) The FY21 numbers have been re-categorised due to changes in
the reporting segments, with freehold property owning companies
where trading is purely from Premium Lifestyle fascias being moved
from UK Sports Retail to Premium Lifestyle.
Reconciliation of Reported PBT to Adjusted PBT for the 52 week
period ended 25 April 2021(1) (audited):
UK Sports Premium UK Retail European Rest Of Total Wholesale Group
Retail Lifestyle Total Retail World Retail Retail & Licensing Total
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
Reported PBT 46.4 (9.6) 36.8 (53.6) 10.8 (6.0) 14.5 8.5
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
Exceptional items (3.1) 1.6 (1.5) 3.1 - 1.6 - 1.6
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
Fair value adjustment
to derivative
financial
instruments 4.6 - 4.6 - - 4.6 - 4.6
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
Net investment
(income)
/ costs (96.0) - (96.0) - - (96.0) - (96.0)
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
Realised FX loss /
(gain) 20.2 0.2 20.4 (0.8) 1.4 21.0 5.3 26.3
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
Share scheme 1.3 - 1.3 - - 1.3 - 1.3
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
Adjusted PBT (26.6) (7.8) (34.4) (51.3) 12.2 (73.5) 19.8 (53.7)
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
(1) The FY21 numbers have been re-categorised due to changes in
the reporting segments, with freehold property owning companies
where trading is purely from Premium Lifestyle fascias being moved
from UK Sports Retail to Premium Lifestyle.
4. EXCEPTIONAL ITEMS
26 weeks ended 26 weeks 52 weeks
ended ended
24 October 25 October 25 April
2021 2020 2021
(unaudited) (unaudited) (audited)
(GBPm) (GBPm) (GBPm)
Impairments - 3.7 9.1
----------------------------------------- -------------- ------------ ----------
Profit on disposal of intangible assets - (7.4) (7.5)
----------------------------------------- -------------- ------------ ----------
- (3.7) 1.6
The prior period impairment relates to goodwill, whereby the
discounted present value of future cash flows do not support the
full value of the assets. The prior period profit on disposal of
intangible assets in the prior period relates to the sale of
certain IP relating to the BELONG business.
5. INVESTMENT INCOME
26 weeks ended 26 weeks 52 weeks
ended ended
24 October 25 October 25 April
2021 2020 2021
(unaudited) (unaudited) (audited)
(GBPm) (GBPm) (GBPm)
Profit on disposal of financial assets
and equity derivative financial instruments 23.2 4.0 27.4
---------------------------------------------- -------------- ------------ ----------
Premium received on derivative financial
instruments 5.4 16.9 20.6
---------------------------------------------- -------------- ------------ ----------
Fair value gain on derivative financial
instruments - 18.8 55.2
---------------------------------------------- -------------- ------------ ----------
Dividend income 0.2 0.3 0.5
---------------------------------------------- -------------- ------------ ----------
28.8 40.0 103.7
The profit on disposal of financial assets and equity derivative
financial instruments largely relates to Hugo Boss contracts for
difference. The premium received on derivative financial
instruments largely relates to Hugo Boss options. The fair value
gain on derivative financial instruments in the prior period
largely relates to Hugo Boss options.
6. INVESTMENT COSTS
26 weeks ended 26 weeks 52 weeks
ended ended
24 October 25 October 25 April
2021 2020 2021
(unaudited) (unaudited) (audited)
(GBPm) (GBPm) (GBPm)
Fair value loss on derivative financial
instruments 38.8 37.1 7.7
----------------------------------------- -------------- ------------ ----------
38.8 37.1 7.7
The fair value loss on derivative financial instruments largely
relates to Hugo Boss options and contracts for difference.
7. FINANCE INCOME
26 weeks ended 26 weeks 52 weeks
ended ended
24 October 25 October 25 April
2021 2020 2021
(unaudited) (unaudited) (audited)
(GBPm) (GBPm) (GBPm)
Bank interest receivable 0.1 - 3.5
------------------------------------- -------------- ------------ ----------
Other finance income - 2.2 5.5
------------------------------------- -------------- ------------ ----------
Fair value adjustment to derivative
financial instruments 12.5 - -
------------------------------------- -------------- ------------ ----------
12.6 2.2 9.0
The fair value adjustment to derivative financial instruments
relates to differences between the fair value of forward foreign
currency contracts and written options that were not designated for
hedge accounting from one period end to the next. Other finance
income largely relates to premiums received on option
contracts.
8. FINANCE COSTS
26 weeks ended 26 weeks 52 weeks
ended ended
24 October 25 October 25 April
2021 2020 2021
(unaudited) (unaudited) (audited)
(GBPm) (GBPm) (GBPm)
Interest on bank loans and overdrafts 4.8 5.6 11.1
--------------------------------------------- -------------- ------------ ----------
Other interest 4.0 2.6 8.6
--------------------------------------------- -------------- ------------ ----------
Interest on retirement benefit obligations - - 0.1
--------------------------------------------- -------------- ------------ ----------
IFRS 16 lease interest 5.7 6.5 11.8
--------------------------------------------- -------------- ------------ ----------
Fair value adjustment to derivate financial
instruments 1.8 8.6 4.6
16.3 23.3 36.2
The fair value adjustment to derivative financial instruments
relates to differences between the fair value of forward foreign
currency contracts and written options that were not designated for
hedge accounting from one period end to the next.
9. EARNINGS PER SHARE ATTRIBUTABLE TO THE EQUITY SHAREHOLDERS
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders of the parent by the weighted
average number of ordinary shares outstanding during the year.
For diluted earnings per share, the weighted average number of
shares, 489,203,650 (25 October 2020: 501,953,439, 25 April 2021:
501,955,281), is adjusted to assume conversion of all dilutive
potential ordinary shares under the Group's share schemes, being
10,125 (25 October 2020: 1,239,075, 25 April 2021: 88,605), to give
the diluted weighted average number of shares of 489,213,775 (25
October 2020: 503,192,514, 25 April 2021: 502,043,886). For the 52
weeks ended 25 April 2021, as there was a loss for the period the
effect of potentially dilutive ordinary shares was anti-dilutive,
and therefore the weighted average number of shares for the Diluted
EPS calculation was kept the same as for the Basic EPS calculation
for that period.
BASIC AND DILUTED EARNINGS PER SHARE
26 weeks 26 weeks 26 weeks 26 weeks 52 weeks 52 weeks
ended ended ended ended ended ended
24 October 24 October 25 October 25 October 25 April 25 April
2021 2021 2020 2020 2021 2021
(unaudited) (unaudited) (unaudited) (unaudited) (audited) (audited)
Basic Diluted Basic Diluted Basic Diluted
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- ------------ ------------ ---------- ----------
Profit / (loss) for
the period 138.2 138.2 80.4 80.4 (83.0) (83.0)
------------------------- ------------ ------------ ------------ ------------ ---------- ----------
Number in millions Number in millions Number in millions
------------------------- -------------------------- -------------------------- ----------------------
Weighted average number
of shares 489.2 489.2 502.0 503.2 502.0 502.0
------------------------- ------------ ------------ ------------ ------------ ---------- ----------
Pence per share Pence per share Pence per share
------------------------- -------------------------- -------------------------- ----------------------
Earnings per share 28.2 28.2 16.0 16.0 (16.5) (16.5)
ADJUSTED EARNINGS PER SHARE
The adjusted earnings per share reflects the underlying
performance of the business compared with the prior period and is
calculated by dividing adjusted earnings by the weighted average
number of shares for the period. Adjusted earnings is used by
management as a measure of profitability within the Group. Adjusted
earnings is defined as profit/(loss) for the period attributable to
equity holders of the parent for each financial period but
excluding the post-tax effect of certain non-trading items. Tax has
been calculated with reference to the effective rate of tax for the
Group.
The Directors believe that the adjusted earnings and adjusted
earnings per share measures provide additional useful information
for shareholders on the underlying performance of the business and
are consistent with how business performance is measured
internally. Adjusted earnings is not a recognised profit measure
under IFRS and may not be directly comparable with adjusted profit
measures used by other companies.
26 weeks 26 weeks 26 weeks 26 weeks 52 weeks 52 weeks
ended ended ended ended ended ended
24 October 24 October 25 October 25 October 25 April 25 April
2021 2021 2020 2020 2021 2021
(unaudited) (unaudited) (unaudited) (unaudited) (audited) (audited)
Basic Diluted Basic Diluted Basic Diluted
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------- ------------ ------------ ---------- ----------
Profit / (loss) for
the period 138.2 138.2 80.4 80.4 (83.0) (83.0)
------------------------------- ------------ ------------ ------------ ------------ ---------- ----------
Pre-tax adjustments
to profit / (loss) for
the period for the following
items:
------------------------------- ------------ ------------ ------------ ------------ ---------- ----------
Exceptional items - - (3.7) (3.7) 1.6 1.6
------------------------------- ------------ ------------ ------------ ------------ ---------- ----------
Fair value adjustment
to derivative financial
instruments (10.7) (10.7) 8.6 8.6 4.6 4.6
------------------------------- ------------ ------------ ------------ ------------ ---------- ----------
Net investment costs
/ (income) 10.0 10.0 (2.9) (2.9) (96.0) (96.0)
------------------------------- ------------ ------------ ------------ ------------ ---------- ----------
Realised FX (gain) /
loss (4.5) (4.5) 7.4 7.4 26.3 26.3
------------------------------- ------------ ------------ ------------ ------------ ---------- ----------
Share scheme 6.0 6.0 - - 1.3 1.3
------------------------------- ------------ ------------ ------------ ------------ ---------- ----------
Tax adjustments on the
above items 3.8 3.8 (2.2) (2.2) (5.9) (5.9)
------------------------------- ------------ ------------ ------------ ------------ ---------- ----------
Adjusted profit / (loss)
for the period 142.8 142.8 87.6 87.6 (151.1) (151.1)
------------------------------- ------------ ------------ ------------ ------------ ---------- ----------
Number in millions Number in millions Number in millions
------------------------------- -------------------------- -------------------------- ----------------------
Weighted average number
of shares 489.2 489.2 502.0 503.2 502.0 502.0
------------------------------- ------------ ------------ ------------ ------------ ---------- ----------
Pence per share Pence per share Pence per share
------------------------------- -------------------------- -------------------------- ----------------------
Adjusted earnings per
share 29.2 29.2 17.5 17.4 (30.1) (30.1)
10. PROVISIONS
26 weeks ended 24 October 2021 (unaudited)
Legal and Property Other Total
regulatory related (GBPm) (GBPm)
(GBPm) (GBPm)
At 25 April 2021 215.8 144.1 1.3 361.2
----------------------------- -------- ------- -------
Amounts provided 3.8 18.7 - 22.5
----------------------------- ----------- -------- ------- -------
Amounts utilised / reversed (1.4) (29.9) (0.5) (31.8)
----------------------------- ----------- -------- ------- -------
At 24 October 2021 218.2 132.9 0.8 351.9
----------------------------- ----------- -------- ------- -------
26 weeks ended 25 October 2020 (unaudited)
Legal and Property Other Total
regulatory related (GBPm) (GBPm)
(GBPm) (GBPm)
At 26 April 2020 225.4 107.9 2.7 336.0
----------------------------- -------- ------- -------
Amounts provided 1.5 18.1 - 19.6
----------------------------- ----------- -------- ------- -------
Amounts utilised / reversed (1.4) (21.8) (0.6) (23.8)
----------------------------- ----------- -------- ------- -------
At 25 October 2020 225.5 104.2 2.1 331.8
----------------------------- ----------- -------- ------- -------
52 weeks ended 25 April 2021 (audited)
Legal and Property Other Total
regulatory related (GBPm) (GBPm)
(GBPm) (GBPm)
At 26 April 2020 225.4 107.9 2.7 336.0
----------------------------- -------- ------- -------
Amounts provided 7.3 41.5 - 48.8
----------------------------- ----------- -------- ------- -------
Amounts utilised / reversed (16.9) (5.3) (1.4) (23.6)
----------------------------- ----------- -------- ------- -------
At 25 April 2021 215.8 144.1 1.3 361.2
----------------------------- ----------- -------- ------- -------
Legal and regulatory provisions relate to management's best
estimate of the potential impact of claims including legal,
commercial, regulatory and ongoing non-UK tax enquiries. The timing
of the outcome of non-UK tax enquiries and legal claims made
against the Group is dependent on factors outside the Group's
control and therefore the timing of settlement is uncertain. After
taking appropriate legal advice, the outcomes of these claims are
not expected to give rise to material loss in excess of the amounts
provided.
A reimbursement asset of GBP118.3m (25 April 2021 and 25 October
2020: GBP118.3m) has been recognised separately within debtors
relating to ongoing non-UK tax enquiries.
Included within property related provisions are provisions for
dilapidations in respect of the Group's retail stores and
warehouses. Further details of managements' estimates are included
in Note 2.
Other provisions relate to provisions for restructuring and
employment (non-retirement related).
11. FINANCIAL INSTRUMENTS
(a) Financial assets and liabilities by category and fair value
hierarchy
The fair value hierarchy for financial assets and liabilities,
which are principally denominated in Sterling or US Dollars, were
as follows:
(Unaudited) Level Level Level Other Total
1 2 3
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
FINANCIAL ASSETS - 24 October 2021
------------------------------------------------- ------- ------- -------
Amortised cost:
------------------------------------------------- ------- ------- ------- ------- -------
Trade and other receivables* - - - 390.1 390.1
------------------------------------------------- ------- ------- ------- ------- -------
Cash and cash equivalents - - - 350.7 350.7
------------------------------------------------- ------- ------- ------- ------- -------
Amounts owed by related parties - - - 24.0 24.0
------------------------------------------------- ------- ------- ------- ------- -------
FVOCI:
------------------------------------------------- ------- ------- ------- ------- -------
Long Term Financial Assets (Equity Instruments)
- designated 352.4 - - - 352.4
------------------------------------------------- ------- ------- ------- ------- -------
Derivative financial assets (FV):
------------------------------------------------- ------- ------- ------- ------- -------
Foreign forward purchase and sale contracts - 61.4 - - 61.4
------------------------------------------------- ------- ------- ------- ------- -------
- 61.4 - - 61.4
------------------------------------------------- ------- ------- ------- ------- -------
FINANCIAL LIABILITIES - 24 October 2021
------------------------------------------------- ------- ------- ------- ------- -------
Amortised cost:
------------------------------------------------- ------- ------- ------- ------- -------
Non-current borrowings - - - (375.0) (375.0)
------------------------------------------------- ------- ------- ------- ------- -------
Trade and other payables** - - - (719.7) (719.7)
------------------------------------------------- ------- ------- ------- ------- -------
IFRS 16 lease liabilities - - - (684.7) (684.7)
------------------------------------------------- ------- ------- ------- ------- -------
Derivative financial liabilities (FV):
------------------------------------------------- ------- ------- ------- ------- -------
Foreign forward and written options purchase
and sales contracts - unhedged - (7.6) - - (7.6)
------------------------------------------------- ------- ------- ------- ------- -------
Derivative financial liabilities - contracts
for difference & equity options - (20.8) - - (20.8)
------------------------------------------------- ------- ------- ------- ------- -------
- (28.4) - - (28.4)
*Prepayments of GBP76.6m are not included as a financial
asset.
**Other taxes including social security costs of GBP69.7m are
not included as a financial liability.
(Unaudited) Level Level Level Other Total
1 2 3
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
FINANCIAL ASSETS - 25 October 2020
------------------------------------------------- ------- ------- -------
Amortised cost:
------------------------------------------------- ------- ------- ------- ------- -------
Trade and other receivables* - - - 473.5 473.5
------------------------------------------------- ------- ------- ------- ------- -------
Cash and cash equivalents - - - 371.3 371.3
------------------------------------------------- ------- ------- ------- ------- -------
Amounts owed by related parties - - - 35.2 35.2
------------------------------------------------- ------- ------- ------- ------- -------
FVOCI:
------------------------------------------------- ------- ------- ------- ------- -------
Long Term Financial Assets (Equity Instruments)
- designated 127.2 - - - 127.2
------------------------------------------------- ------- ------- ------- ------- -------
Derivative financial assets (FV):
------------------------------------------------- ------- ------- ------- ------- -------
Foreign forward purchase and sale contracts - 28.4 - - 28.4
------------------------------------------------- ------- ------- ------- ------- -------
Derivative financial assets - contracts
for difference & equity options - 36.5 - - 36.5
------------------------------------------------- ------- ------- ------- ------- -------
- 64.9 - - 64.9
------------------------------------------------- ------- ------- ------- ------- -------
FINANCIAL LIABILITIES - 25 October 2020
------------------------------------------------- ------- ------- ------- ------- -------
Amortised cost:
------------------------------------------------- ------- ------- ------- ------- -------
Non-current borrowings - - - (621.4) (621.4)
------------------------------------------------- ------- ------- ------- ------- -------
Trade and other payables** - - - (568.1) (568.1)
------------------------------------------------- ------- ------- ------- ------- -------
IFRS 16 lease liabilities - - - (715.6) (715.6)
------------------------------------------------- ------- ------- ------- ------- -------
Derivative financial liabilities (FV):
------------------------------------------------- ------- ------- ------- ------- -------
Foreign forward and written options purchase
and sales contracts - unhedged - (6.6) - - (6.6)
------------------------------------------------- ------- ------- ------- ------- -------
Derivative financial liabilities - contracts
for difference & equity options - (81.8) - - (81.8)
------------------------------------------------- ------- ------- ------- ------- -------
- (88.4) - - (88.4)
------------------------------------------------- ------- ------- ------- ------- -------
*Prepayments of GBP70.1m are not included as a financial
asset.
**Other taxes including social security costs of GBP57.9m are
not included as a financial liability.
(Audited) Level Level Level Other Total
1 2 3
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
FINANCIAL ASSETS - 25 April 2021
------------------------------------------------- ------- ------- -------
Amortised cost:
------------------------------------------------- ------- ------- ------- ------- -------
Trade and other receivables* - - - 435.1 435.1
------------------------------------------------- ------- ------- ------- ------- -------
Cash and cash equivalents - - - 457.0 457.0
------------------------------------------------- ------- ------- ------- ------- -------
Amounts owed by related parties - - - 26.8 26.8
------------------------------------------------- ------- ------- ------- ------- -------
FVOCI:
------------------------------------------------- ------- ------- ------- ------- -------
Long Term Financial Assets (Equity Instruments)
- designated 263.3 - - - 263.3
------------------------------------------------- ------- ------- ------- ------- -------
Derivative financial assets (FV):
------------------------------------------------- ------- ------- ------- ------- -------
Foreign forward purchase and sale contracts - 35.3 - - 35.3
------------------------------------------------- ------- ------- ------- ------- -------
Derivative financial assets - contracts
for difference & equity options - 20.1 - - 20.1
------------------------------------------------- ------- ------- ------- ------- -------
- 55.4 - - 55.4
------------------------------------------------- ------- ------- ------- ------- -------
FINANCIAL LIABILITIES - 25 April 2021
------------------------------------------------- ------- ------- ------- ------- -------
Amortised cost:
------------------------------------------------- ------- ------- ------- ------- -------
Non-current borrowings - - - (705.9) (705.9)
------------------------------------------------- ------- ------- ------- ------- -------
Trade and other payables** - - - (620.1) (620.1)
------------------------------------------------- ------- ------- ------- ------- -------
IFRS 16 lease liabilities - - - (722.7) (722.7)
------------------------------------------------- ------- ------- ------- ------- -------
Derivative financial liabilities (FV):
------------------------------------------------- ------- ------- ------- ------- -------
Foreign forward and written options purchase
and sales contracts - unhedged - (17.5) - - (17.5)
------------------------------------------------- ------- ------- ------- ------- -------
Derivative financial liabilities - contracts
for difference & equity options - (1.7) - - (1.7)
------------------------------------------------- ------- ------- ------- ------- -------
- (19.2) - - (19.2)
------------------------------------------------- ------- ------- ------- ------- -------
*Prepayments of 84.6m are not included as a financial asset.
**Other taxes including social security costs of GBP26.2m are
not included as a financial liability.
(b) Financial assets and liabilities
Fair value hierarchy
The Group uses the following hierarchy for determining and
disclosing the fair value of financial instruments by valuation
technique:
-- Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
-- Level 2: other techniques for which all inputs which have a
significant effect on the recorded fair value are observable,
either directly or indirectly; and
-- Level 3: techniques which use inputs which have a significant
effect on the recorded fair value that are not based on observable
market data.
Contracts for difference are classified as Level 2 as the fair
value is calculated using quoted prices for listed shares and
commodities at contract inception and the period end.
Foreign forward purchase and sales contracts and options are
classified as Level 2, the Group enters into these derivative
financial instruments with various counterparties, principally
financial institutions with investment grade credit ratings.
Foreign exchange forward contracts and options are valued using
valuation techniques, which employ the use of market observable
inputs. The most frequently applied valuation techniques include
forward pricing and swap models using present value calculations.
The models incorporate various inputs including the credit quality
of counterparties, foreign exchange spot and forward rates, and
yield curves of the respective currencies.
Long-term financial assets such as equity instruments are
classified as Level 1 as the fair value is calculated using quoted
prices.
The fair value of equity derivative agreements are included
within the derivative financial assets balance of GBPnil (25
October 2020: GBP36.5m, 25 April 2021: GBP20.1m) and derivative
financial liabilities balance of GBP20.8m (25 October 2020:
GBP81.8m, 25 April 2021: GBP1.7m). The derivative financial assets
and derivative financial liabilities as at 24 October 2021 relate
to strategic investments held of between 0.02% and 0.05% of
investee share capital.
Sold options are classified as Level 2 as the fair value is
calculated using other techniques, where inputs are observable.
Trade receivables / payables, amounts owed from related parties,
other receivables / payables, cash and cash equivalents and current
/ non-current borrowings are held at amortised cost.
The maximum exposure to credit risk as at 24 October 2021 is the
carrying value of each class of asset in the Balance Sheet, except
for amounts owed from related parties which is the gross carrying
amount of GBP62.4m (25 October 2020: GBP68.8m, 25 April 2021:
GBP65.2m).
(c) Derivatives: Foreign currency forward contracts
(c)(i) Hedged currency instruments
The most significant exposure to foreign exchange fluctuations
relates to purchases made in foreign currencies, principally the US
Dollar, and online sales in Euros. The Group's policy is to reduce
substantially the risk associated with foreign currency spot rates
by using forward fixed rate currency purchase contracts, taking
into account any foreign currency cash flows. The Group does not
hold or issue derivative financial instruments for trading
purposes, however if derivatives, including both forwards and
written options, do not qualify for hedge accounting they are
accounted for as such and accordingly any gain or loss is
recognised immediately in the Income Statement. Management are of
the view that there is a substantive distinct business purpose for
entering into the written options and a strategy for managing the
written options independently of the forward contracts. The forward
and written options contracts are therefore not viewed as one
contract and hedge accounting for the forwards is permitted under
IFRS 9.
Hedge effectiveness is determined at inception of the hedge
relationship and at every reporting period end through the
assessment of the hedged items and hedging instrument to determine
whether there is still an economic relationship between the
two.
The critical terms of the foreign currency forwards entered into
exactly match the terms of the hedged item. As such the economic
relationship and hedge effectiveness are based on the qualitative
factors and the use of a hypothetical derivative where appropriate.
Hedge ineffectiveness may arise where the critical terms of the
forecast transaction no longer meet those of the hedging
instrument, for example if there was a change in the timing of the
forecast sales transactions from what was initially estimated or if
the volume of currency in the hedged item was below expectations
leading to over-hedging. Differences can arise when the initial
value on the hedging instrument is not zero .
The hedged items and the hedging instrument are denominated in
the same currency and as a result the hedging ratio is always one
to one.
All derivative financial instruments used for hedge accounting
are recognised initially at fair value and reported subsequently at
fair value in the statement of financial position. To the extent
that the hedge is effective, changes in the fair value of
derivatives designated as hedging instruments in cash flow hedges
are recognised in other comprehensive income and included within
the cash flow hedge reserve in equity. Any ineffectiveness in the
hedge relationship is recognised immediately in profit or loss.
At the time the hedged item affects profit or loss, any gain or
loss previously recognised in other comprehensive income is
reclassified from equity to profit or loss and presented as a
reclassification adjustment within other comprehensive income. If a
forecast transaction is no longer expected to occur, any related
gain or loss recognised in other comprehensive income is
transferred immediately to profit or loss. If the hedging
relationship ceases to meet the effectiveness conditions, hedge
accounting is discontinued, and the related gain or loss is held in
the equity reserve until the forecast transaction occurs.
The fair value of hedged contracts as at 24 October 2021
was:
24 October 2021 25 October 25 April 2021
2020
(unaudited) (unaudited) (audited)
(GBPm) (GBPm) (GBPm)
Assets
--------------------------- --------------- ------------- -------------
US Dollar purchases - GBP 9.6 0.4 2.4
--------------------------- --------------- ------------- -------------
US Dollar purchases - EUR 7.6 4.6 2.3
--------------------------- --------------- ------------- -------------
Euro sales 41.1 23.3 30.7
--------------------------- --------------- ------------- -------------
Total 58.3 28.3 35.4
--------------------------- --------------- ------------- -------------
Liabilities
--------------------------- --------------- ------------- -------------
US Dollar purchases - GBP 2.0 - 7.3
--------------------------- --------------- ------------- -------------
US Dollar purchases - EUR - - 0.1
--------------------------- --------------- ------------- -------------
Total 2.0 - 7.4
The details of hedged forward foreign currency purchase
contracts and contracted forward rates were as follows:
24 October 2021 (unaudited) 25 October 2020 (unaudited) 25 April 2021 (audited)
Currency GBP Rates Currency GBP Rates Currency GBP Rates
(millions) (millions) (millions) (millions) (millions) (millions)
------------- ------ ----------- ------------ ------- ----------- ----------- -------
US Dollar
purchases 1.36 - 1.36
(USD / GBP) 720.0 516.8 1.41 160.0 122.1 1.31 720.0 523.1 - 1.41
------------- ----------- ----------- ------ ----------- ------------ ------- ----------- ----------- -------
US Dollar
purchases 1.21 - 1.21
(USD / EUR) 150.0 104.0 1.31 60.0 40.0 1.32 120.0 83.9 - 1.31
------------- ----------- ----------- ------ ----------- ------------ ------- ----------- ----------- -------
Euro sales
(EUR 0.99 - 0.99
/ GBP) (360.0) (353.1) 1.08 (390.0) (381.1) - 1.09 (240.0) (242.4) 0.99
------------- ----------- ----------- ------ ----------- ------------ ------- ----------- ----------- -------
The timing of the contracts is as follows:
Currency Hedging against Currency value Timing Rates
USD / GBP USD inventory USD 720m FY22 - FY23 1.36 - 1.41
purchases
---------- ---------------- --------------- ------------ -------------
USD / EUR USD inventory USD 150m FY22 - FY24 1.21 - 1.31
purchases
---------- ---------------- --------------- ------------ -------------
EUR / GBP Euro sales EUR 360m FY23, FY25 0.99 - 1.08
---------- ---------------- --------------- ------------ -------------
Hedge ineffectiveness may arise where the critical terms of the
forecast transaction no longer meet those of the hedging
instrument, for example if there was a change in the timing of the
forecast sales transactions from what was initially estimated or if
the volume of currency in the hedged item was below expectations
leading to over-hedging.
24 October 2021 25 October 2020 25 April 2021
(unaudited) (unaudited) (audited)
(GBPm) (GBPm) (GBPm)
Change in Change in Change in Change in Change in Change in
the fair the fair the fair the fair the fair the fair
value of value of value of value of value of value of
the currency the hedged the currency the hedged the currency the hedged
forward item forward item forward item
--------------------- ------------- ----------- ------------- -----------
US Dollar purchases
- GBP 9.0 (9.0) (0.4) 0.4 (4.8) 4.8
--------------------- ------------- ----------- ------------- ----------- ------------- -----------
US Dollar purchases
- EUR 5.4 (5.4) (3.9) 3.9 2.1 (2.1)
--------------------- ------------- ----------- ------------- ----------- ------------- -----------
Euro sales 7.2 (7.2) (11) 11 3.1 (3.1)
--------------------- ------------- ----------- ------------- ----------- ------------- -----------
At 24 October 2021 GBP620.8m of purchase contracts (25 October
2020: GBP167.6m, 25 April 2021: GBP607.0m) and GBP353.1m of forward
sales contracts (25 October 2020: GBP381.1m, 25 April 2021:
GBP242.4m) qualified for hedge accounting and the gain on fair
valuation of these contracts of GBP21.6m (25 October 2020:
GBP15.3m, 25 April 2021: GBP0.4m) has therefore been recognised in
other comprehensive income.
At 24 October 2021, GBP231.5m hedged purchase contracts had a
maturity of greater than 12 months (25 October 2020: GBPnil, 25
April 2021: GBP210.5m) and GBP231.9m of hedged sales had a maturity
of greater than 12 months (25 October 2020: GBP242.0m, 25 April
2021: GBP242.4m).
The movements through the Hedging reserve are:
USD/GBP EUR/GBP USD/EUR Total Hedge Deferred Total Hedging
Movement Tax Reserve
As at 26 April 2020 (audited) - 16.6 17.2 33.8 (5.8) 28.0
------------------------------- ------- ----------- -------- -------------
Recognised (0.4) (11.0) (3.9) (15.3) - (15.3)
------------------------------- ------- ------- ------- ----------- -------- -------------
Reclassified in sales - (1.3) - (1.3) - (1.3)
------------------------------- ------- ------- ------- ----------- -------- -------------
Reclassified in inventory
/ cost of sales - - (8.7) (8.7) - (8.7)
------------------------------- ------- ------- ------- ----------- -------- -------------
Deferred tax - - - - 4.3 4.3
------------------------------- ------- ------- ------- ----------- -------- -------------
As at 25 October 2020
(unaudited) (0.4) 4.3 4.6 8.5 (1.5) 7.0
------------------------------- ------- ------- ------- ----------- -------- -------------
Recognised (4.5) 14.2 6.0 15.7 - 15.7
------------------------------- ------- ------- ------- ----------- -------- -------------
Reclassified in sales - (1.5) - (1.5) - (1.5)
------------------------------- ------- ------- ------- ----------- -------- -------------
Reclassified in inventory
/ cost of sales - - (8.4) (8.4) - (8.4)
------------------------------- ------- ------- ------- ----------- -------- -------------
Deferred tax - - - - (1.3) (1.3)
------------------------------- ------- ------- ------- ----------- -------- -------------
As at 25 April 2021 (audited) (4.9) 17.0 2.2 14.3 (2.8) 11.5
------------------------------- ------- ------- ------- ----------- -------- -------------
Recognised 9.0 7.2 5.4 21.6 - 21.6
------------------------------- ------- ------- ------- ----------- -------- -------------
Reclassified in inventory/
cost of sales 3.6 - - 3.6 - 3.6
------------------------------- ------- ------- ------- ----------- -------- -------------
Deferred tax - - - - (7.2) (7.2)
------------------------------- ------- ------- ------- ----------- -------- -------------
As at 24 October 2021
(unaudited) 7.7 24.2 7.6 39.5 (10.0) 29.5
------------------------------- ------- ------- ------- ----------- -------- -------------
(c)(ii) Unhedged currency instruments
The sterling principal amounts of unhedged written currency
option contracts and swaps and the contracted rates were as
follows:
24 October 25 October 25 April 2021
2021 2020
(unaudited) (unaudited) (audited)
(GBPm) (GBPm) (GBPm)
US Dollar swaps - GBP 72.3 - -
---------------------------- ------------- -------------
Contracted rates USD / GBP 1.37-1.42 - -
---------------------------- ------------ ------------- -------------
US Dollar purchases - EUR 82.2 - 40.3
---------------------------- ------------ ------------- -------------
Contracted rates USD / EUR 1.26-1.31 - 1.31
---------------------------- ------------ ------------- -------------
Euro sales (494.5) (457.5) (383.8)
---------------------------- ------------ ------------- -------------
Contracted rates EUR / GBP 0.99-1.08 0.99-1.09 0.99
---------------------------- ------------ ------------- -------------
The loss on fair value of the written options and swaps of
GBP1.8m has been included within finance costs (25 October 2020:
GBP8.6m, 25 April 2021: GBP4.6m).
At 24 October 2021, GBP61.3m of unhedged purchase contracts had
a maturity at inception of greater than 12 months (25 October 2020:
GBPnil, 25 April 2021: GBPnil) and GBP231.9m of unhedged sales
contracts had a maturity at inception of greater than 12 months (25
October 2020: GBP242.0m, 25 April 2021: GBP335.4m).
These contracts form part of the Treasury management activities,
which incorporates the risk management strategy for areas that are
not reliable enough in timing and amount to qualify for hedge
accounting. This includes acquisitions, disposals of overseas
subsidiaries, related working capital requirements, dividends and
loan repayments from overseas subsidiaries and purchase and sale of
overseas property. Written options carry additional risk as the
exercise of the option lies with the purchaser. The options involve
the group receiving a premium on inception in exchange for
accepting that risk and the outcome is that the bank may require
the group to sell Euros or buy USD. However, the Group is satisfied
that the use of options as a Treasury management tool is
appropriate.
The FY22 H1 value excludes short term swaps of GBP/USD of USD
100m which are required for Treasury management purposes only (25
October 2020: EUR/USD of EUR 100.0m, 25 April 2021: GBPnil short
term swaps).
Capital Management
The capital structure of the Group consists of equity
attributable to the equity holders of the parent company,
comprising issued share capital (less treasury shares), share
premium, retained earnings and cash and borrowings.
It is the Group's policy to maintain a strong capital base so as
to maintain investor, creditor and market confidence and to sustain
the development of the business.
In respect of equity, the Board has decided that, in order to
maximise flexibility in the near term with regards to a number of
inorganic growth opportunities under review, not to return any cash
by way of a dividend at this time.
The Board is committed to keeping this policy under review and
to evaluating alternative methods of returning cash to shareholders
when appropriate.
The objective of Group Share Schemes is to encourage employee
share ownership and to link employee's remuneration to the
performance of the Company. It is not designed as a means of
managing capital.
In respect of cash and borrowings, the Board regularly monitors
the ratio of net debt to LTM Reported EBITDA(1) , as part of
covenant compliance (the objective is to keep this figure below
3.0), the working capital requirements and forecasted cash flows,
however no minimum or maximum ratios are set outside of covenant
compliance.
(1) LTM EBITDA is the last twelve months historic Reported EBITDA excluding IFRS 16.
Based on this analysis, the Board determines the appropriate
return to equity holders whilst ensuring sufficient capital is
retained within the Group to meet its strategic objectives,
including but not limited to, acquisition opportunities.
These capital management policies have remained unchanged from
the prior year.
12. CASH INFLOW FROM OPERATING ACTIVITIES
26 weeks ended 26 weeks 52 weeks
ended ended
24 October 25 October 25 April
2021 2020 2021
(unaudited) (unaudited) (audited)
(GBPm) (GBPm) (GBPm)
Profit before taxation 186.0 106.1 8.5
---------------------------------------- -------------- ------------ ----------
Net finance costs 3.7 21.1 27.2
---------------------------------------- -------------- ------------ ----------
Net investment costs / (income) 10.0 (2.9) (96.0)
---------------------------------------- -------------- ------------ ----------
Operating profit 199.7 124.3 (60.3)
Depreciation & impairment of property,
plant and equipment 251.8 247.3 615.5
Depreciation on investment properties 1.3 0.7 1.9
Gain on disposal of lease liabilities (5.9) (19.3) (27.7)
Amortisation of intangible assets 3.4 4.1 7.1
Impairment of intangible assets 4.4 3.7 9.1
Profit on disposal of property, plant
and equipment (0.6) - (9.7)
Profit on disposal of intangibles - (7.4) (7.5)
Gain on bargain purchase - - (3.1)
Operating cash inflow before changes
in working capital 454.1 353.4 525.3
Decrease / (increase) in receivables 79.6 (141.7) (136.6)
(Increase) / decrease in inventories (109.7) 92.0 99.3
Increase in payables 143.5 31.0 64.9
(Decrease) / increase in provisions (7.7) (4.2) 25.4
Cash inflows from operating activities 559.8 330.5 578.3
13. POST BALANCE SHEET EVENTS
On 30 November 2021 the Group refinanced its existing borrowings
and entered into a combined term loan and revolving credit facility
of GBP930.0m for a period of 3 years, with the possibility to
extend this by a further 2 years.
On 4 October 2021 the Group commenced a share buyback programme
with the purpose to reduce the share capital of the Company. Up to
24 October 2021, 2,522,661 ordinary shares of 10p each were
acquired for consideration of GBP15.8m. The programme became
irrevocable on 5 November 2021. The programme has a maximum number
of ordinary shares of 10,000,000 and the aggregate purchase price
of all shares acquired will be no greater than GBP70.0m. In total
6,564,523 ordinary shares of 10p each for consideration of GBP43.1m
have been acquired through this programme.
14. CAPITAL COMMITMENTS
At the period end, the Group had capital commitments of GBPnil
relating to property purchases (25 October 2020: GBP10.6m, 25 April
2021: GBPnil) and GBP68.5m relating to warehouse development (25
October 2020: GBP48.0m, 25 April 2021: GBP87.1m).
15. PURCHASE OF OWN SHARES
On 4 May 2021 the Group commenced a share buyback programme with
the purpose to reduce the share capital of the Company. 3,895,385
ordinary shares of 10p each for consideration of GBP22.4m were
acquired through this programme.
On 21 June 2021 the Group commenced an irrevocable
non-discretionary share buyback programme to purchase the Group's
shares with the purpose to reduce the share capital of the Company.
2,024,127 ordinary shares of 10p each for consideration of GBP12.0m
were acquired through this programme.
On 6 August 2021 the Group commenced a share buyback programme
with the purpose to reduce the share capital of the Company.
4,309,458 ordinary shares of 10p each for consideration of GBP28.3m
were acquired through this programme.
On 4 October 2021 the Group commenced a share buyback programme
with the purpose to reduce the share capital of the Company. Up to
24 October 2021, 2,522,661 ordinary shares of 10p each were
acquired for consideration of GBP15.8m.
16. RELATED PARTY TRANSACTIONS
The Group has taken advantage of the exemptions contained within
IAS 24 - "Related Party Disclosures" from the requirement to
disclose transactions between Group companies as these have been
eliminated on consolidation.
The Group entered into the following material transactions with
related parties:
26 weeks ended 24 October 2021 (unaudited):
Related party Relationship Trade and Trade and
Sales Purchases other receivables other payables
(GBPm) (GBPm) (GBPm) (GBPm)
Four (Holdings) Limited
& subsidiaries(1) Associate 0.3 32.1 23.7 -
--------------------------- ------------------ ---------------
Mash Holdings Limited Parent company - - 0.2 -
--------------------------- --------------- ------- ---------- ------------------ ---------------
Mike Ashley(2) Plc Director 0.7 - - -
--------------------------- --------------- ------- ---------- ------------------ ---------------
Connected
N M Design London Limited persons - 0.2 - -
--------------------------- --------------- ------- ---------- ------------------ ---------------
Rangers Retail Limited Associate - - - 0.1
--------------------------- --------------- ------- ---------- ------------------ ---------------
(1) The outstanding balance with Four (Holdings) Limited
reflects the funding related to Agent Provocateur. Management
consider that the underlying results of Four (Holdings) Limited
supports the recoverability of the receivables balance.
(2) Use of the Company jet and helicopter are charged at commercial rates.
26 weeks ended 25 October 2020 (unaudited):
Related party Relationship Trade and Trade and
Sales Purchases other receivables other payables
(GBPm) (GBPm) (GBPm) (GBPm)
Four (Holdings) Limited
& subsidiaries(1) Associate 1.0 22.6 34.8 1.2
--------------------------- ------------------ ---------------
Mash Holdings Limited Parent company - - 0.2 -
--------------------------- --------------- ------- ---------- ------------------ ---------------
Mike Ashley(2) Plc Director 0.4 - - -
--------------------------- --------------- ------- ---------- ------------------ ---------------
Connected
N M Design London Limited persons - 0.1 - -
--------------------------- --------------- ------- ---------- ------------------ ---------------
Rangers Retail Limited Associate - - - 0.1
--------------------------- --------------- ------- ---------- ------------------ ---------------
Newcastle United Football
Club & St James Holdings Connected
Limited(3) persons 0.1 - 0.2 2.0
--------------------------- --------------- ------- ---------- ------------------ ---------------
(1) The outstanding balance with Four (Holdings) Limited
reflects the funding related to Agent Provocateur. Management
consider that the underlying results of Four (Holdings) Limited
supports the recoverability of the receivables balance
(2) Use of the Company jet and helicopter are charged at commercial rates.
(3) The sales relate to inventory.
52 weeks ended 25 April 2021 (audited):
Related party Relationship Trade and Trade and
Sales Purchases other receivables other payables
(GBPm) (GBPm) (GBPm) (GBPm)
Four (Holdings) Limited
& subsidiaries(1) Associate 2.2 41.1 26.5 0.1
----------------------------- ------------------ ---------------
Mash Holdings Limited Parent company - - 0.2 -
----------------------------- --------------- ------- ---------- ------------------ ---------------
Mike Ashley(2) Plc Director 1.3 - - -
----------------------------- --------------- ------- ---------- ------------------ ---------------
Connected
N M Design London Limited persons - 0.1 - -
----------------------------- --------------- ------- ---------- ------------------ ---------------
Connected
MM Prop Consultancy Limited persons - 2.5 - 2.5
----------------------------- --------------- ------- ---------- ------------------ ---------------
Newcastle United Football
Club & St James Holdings Connected
Limited(3) persons 0.2 (1.9) 0.1 -
----------------------------- --------------- ------- ---------- ------------------ ---------------
Rangers Retail Limited Associate - - - 0.1
----------------------------- --------------- ------- ---------- ------------------ ---------------
(1) The outstanding balance with Four (Holdings) Limited
reflects the funding related to Agent Provocateur. Management
consider that the underlying results of Four (Holdings) Limited
supports the recoverability of the receivables balance.
(2) Use of the Company jet and helicopter are charged at commercial rates.
(3) The sales relate to inventory and purchases include the
reversal of the FY20 advertising charge.
An agreement has been entered into with Double Take Limited, a
company owned by Mash Holdings Limited and in which Matilda Ashley,
Mike Ashley's daughter, is a director. Under the agreement, Double
Take Limited licenses the Group the exclusive rights to the
cosmetic brand SPORT FX. During the period a review has been
undertaken and no royalties or other fees are expected to be
payable to Double Take Limited for these rights until at least
September 2022, the fee arrangement will continue to be reviewed on
an ongoing basis, no provision is required in the financial
statements. It should be noted that the Group (rather than Double
Take Limited) owns the rights to SPORT FX for clothing, footwear
and sports equipment.
N M Design London Limited is a company in which Nicola Murray,
Michael Murray's mother, is a director. N M Design London Limited
perform design work for the Group in relation to some of the
Group's sites.
The trade and other receivables balance with Four (Holdings)
Limited includes a loan balance of GBP60.0m (gross of amounts
recognised in respect of loss allowance) which attracts interest at
a rate of 3% within current assets (25 October 2020: GBP67.5m, 25
April 2021: GBP60.0m). This has been accounted for at amortised
cost in accordance with IFRS 9. The carrying value has been
determined by assessing the recoverability of the receivable
balance, discounted at an appropriate market rate of interest .
GBPnil was recognised in the period in respect of doubtful debts.
The sales amounts in relation to Four (Holdings) Limited relates to
the interest charge on the loan and the purchases relate to the
purchase of clothing products.
The sales amount in relation to Four (Holdings) Limited relates
to the interest charge on the loan and the purchases relate to the
purchase of clothing products.
At the period end the Group does not have significant influence
over, but holds greater than 20% of the voting rights of Studio
Retail Group plc and Mulberry Group plc. Studio Retail Group plc
have disclosed transactions with the Group as a related party
within their most recent Financial Statements. Transactions between
Studio Retail Group plc and the Group related to normal commercial
trading arrangements and are not considered material to the results
of the Group. The latest equity amounts and results are shown
below:
Mulberry Studio Retail
Group plc Group plc
---------- -------------
26 weeks 26 weeks
ended 25 ended 24
September September
2021 2021
(GBPm) (GBPm)
------------------------- ---------- -------------
Share Capital 3.0 48.7
------------------------- ---------- -------------
Share Premium 12.2 -
------------------------- ---------- -------------
Other Reserves 0.1 1.0
------------------------- ---------- -------------
Retained Earnings 14.5 49.6
------------------------- ---------- -------------
Total equity 29.8 99.3
------------------------- ---------- -------------
Profit for the period 7.3 15.4
------------------------- ---------- -------------
The Group does not consider it has the power to participate in
the financial and operating policy decisions of the entities and so
management do not consider the Group to be able to exert
significant influence over these entities as per IAS 28 Investments
in Associates and Joint Ventures and IAS 24 Related Party
Disclosures.
MM Prop Consultancy Limited, a company owned and controlled by
Michael Murray, who is a member of key management personnel as per
IAS 24, continues to provide property consultancy services to the
Group. MM Prop Consultancy Limited is primarily tasked with finding
and negotiating the acquisition of new sites, and implementing
developments, and disposals, in the UK, Europe and Rest of the
World for both our larger format stores and our combined retail and
gym units but it also provides advice to the Company's in-house
property team in relation to existing sites in the UK, Europe and
Rest of the World.
During the reporting period all properties are assessed and
those that are considered by the Group's independent non-executive
directors to be eligible, and which have completed development
and/or been disposed of at the period-end, are assessed and if
required valued by an independent valuer who confirms the value
created by MM Prop Consultancy Limited. The Group's independent
non-executive directors then review and agree the value created and
have full discretion to approve a payment to MM Prop Consultancy
Limited of up to 25% of the value created. There is a continuous
pipeline of properties that may be eligible to be assessed both
positively and negatively by the Group's Non-executive directors in
future.
At period end GBPnil has been accrued (25 April 2021: GBP2.5m
accrued based on crystalised gains and subsequently paid in FY22,
25 October 2020: GBPnil) as payable to MM Prop Consultancy. In the
26 weeks to 24 October 2021 there were no property disposals within
scope to be assessed. Due to the resurgent market uncertainty,
including but not limited to risks associated with Covid-19
including the return of restrictions, the independent non-executive
directors consider any potential value created at period end to be
unreliable at this time and hence no accrual has currently been
recognised.
During FY21 the Group entered into an agreement with M.P.M
Elevation Limited, a company owned and controlled by Michael Murray
in relation to elevation strategy services. M.P.M Elevation Limited
will be paid an annual fee of GBP0.1m in relation to the provision
of elevation strategy services.
GLOSSARY
ALTERNATIVE PERFORMANCE MEASURES
Excluding acquisitions and currency neutral performance measure
reconciliation:
UK Sports Premium European Rest Of Wholesale Group
Retail Lifestyle Retail World & Licensing Total
Retail
Revenue
-------------------------------- ---------------------------------------------------------------
FY22 H1 Reported 1,367.1 427.9 399.8 65.6 79.4 2,339.8
-------------------------------- --------- ---------- -------- ------- -------
Adjustments for acquisitions
and currency neutral (12.4) - - - - (12.4)
-------------------------------- --------- ---------- -------- ------- -------
FY22 H1 Excluding acquisitions
and currency neutral 1,354.7 427.9 399.8 65.6 79.4 2,327.4
-------------------------------- --------- ---------- -------- ------- -------
FY21 H1 Reported 1,071.6 320.4 352.0 77.1 72.2 1,893.3
-------------------------------- --------- ---------- -------- ------- -------
Adjustments for acquisitions
and currency neutral (4.7) - (14.2) (6.0) - (24.9)
-------------------------------- --------- ---------- -------- ------- -------
FY21 H1 Excluding acquisitions
and currency neutral 1,066.9 320.4 337.8 71.1 72.2 1,868.4
-------------------------------- --------- ---------- -------- ------- -------
% Variance 27.0% 33.6% 18.4% (7.7%) 10.0% 24.6%
-------------------------------- --------- ---------- -------- ------- -------
Adjusted PBT
-------------------------------- ---------------------------------------------------------------
FY22 H1 Reported 117.4 (9.7) 60.9 14.3 3.9 186.8
-------------------------------- --------- ---------- -------- ------- -------
Adjustments for acquisitions
and currency neutral 29.1 - - - - 29.1
-------------------------------- --------- ---------- -------- ------- -------
FY22 H1 Excluding acquisitions
and currency neutral 146.5 (9.7) 60.9 14.3 3.9 215.9
-------------------------------- --------- ---------- -------- ------- -------
FY21 H1 Reported(1) 55.6 26.3 19.0 7.7 6.9 115.5
-------------------------------- --------- ---------- -------- ------- -------
Adjustments for acquisitions
and currency neutral 0.6 - (0.8) (0.6) (0.1) (0.9)
-------------------------------- --------- ---------- -------- ------- -------
FY21 H1 Excluding acquisitions
and currency neutral 56.2 26.3 18.2 7.1 6.8 114.6
-------------------------------- --------- ---------- -------- ------- -------
% Variance 160.7% (136.9%) 234.6% 101.4% (42.6%) 88.4%
-------------------------------- --------- ---------- -------- ------- -------
(1) The FY21 numbers have been re-categorised due to changes in
the reporting segments, with freehold property owning companies
where trading is purely from Premium Lifestyle fascias being moved
from UK Sports Retail to Premium Lifestyle.
Reconciliation of Adjusted PBT performance measure, 5 year
record:
26 weeks 26 weeks 26 weeks 26 weeks 26 weeks
ended ended ended 27 ended 28 ended 29
24 October 25 October October October 2018 October
2021 2020 2019 2017
----------------------------------- ----------- ----------- ----------- ------------- -----------
PBT (GBP'm) PBT (GBP'm) PBT (GBP'm) PBT (GBP'm) PBT (GBP'm)
----------------------------------- ----------- ----------- ----------- ------------- -----------
REPORTED 186.0 106.1 90.2 74.4 45.8
----------------------------------- ----------- ----------- ----------- ------------- -----------
Exceptional items - (3.7) 3.3 - 5.0
----------------------------------- ----------- ----------- ----------- ------------- -----------
Fair value adjustment to
derivative financial instruments (10.7) 8.6 3.2 5.9 36.3
----------------------------------- ----------- ----------- ----------- ------------- -----------
Net investment costs / (income) 10.0 (2.9) (3.0) 1.8 32.5
----------------------------------- ----------- ----------- ----------- ------------- -----------
Realised FX (gain) / loss (4.5) 7.4 (4.8) (17.6) (15.1)
----------------------------------- ----------- ----------- ----------- ------------- -----------
Share scheme 6.0 - - - -
----------------------------------- ----------- ----------- ----------- ------------- -----------
ADJUSTED 186.8 115.5 88.9 64.5 104.5
----------------------------------- ----------- ----------- ----------- ------------- -----------
KEY PERFORMANCE INDICATORS
Performance Measure Closest equivalent Reconciling Definition and purpose
statutory items to statutory
measure measure
--------------------------- ------------------ ------------------- --------------------------------
Group revenue - - Total revenue for the Group.
The Board considers that
this measure is a key indicator
of the Group's growth
--------------------------- ------------------ ------------------- --------------------------------
Adjusted PBT Profit before Adjusting items Adjusted PBT shows how
taxation (see Glossary well the Group is managing
reconciliation its trading and operational
above) efficiency, and its investment
in its elevation strategy,
and therefore the overall
performance of the Group
--------------------------- ------------------ ------------------- --------------------------------
Group gross margin - - The Board considers that
this measure is a key indicator
of the Group's trading
profitability
--------------------------- ------------------ ------------------- --------------------------------
Underlying basis earnings Earnings per Adjusting items Underlying basis EPS is
per share (EPS) share (see note 9) a measure of adjusted total
shareholder return and
ultimately an indicator
to our shareholders of
the success of our elevation
strategy
--------------------------- ------------------ ------------------- --------------------------------
Cash inflow from operating - - Cash inflow from operating
activities activities is considered
an important indicator
for the business of the
cash generated from the
trading business for further
investment in the elevation
strategy
--------------------------- ------------------ ------------------- --------------------------------
Net debt None Lease liabilities Net debt is borrowings
excluding IFRS 16 lease
liabilities less cash and
cash equivalents. Net debt
is an indicator of both
the Group's investment
in the elevation strategy
and its covenant headroom
which is a key component
of the Group's going concern
considerations
--------------------------- ------------------ ------------------- --------------------------------
Number of retail stores - - The Board considers that
this measure is an indicator
of the Group's growth.
The Group's elevation strategy
is replacing older stores
and often this can result
in the closure of two or
three stores to be replace
by one larger new generation
store
--------------------------- ------------------ ------------------- --------------------------------
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END
IR DKFBQCBDDOBK
(END) Dow Jones Newswires
December 09, 2021 02:00 ET (07:00 GMT)
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