TIDMFRAS
RNS Number : 9865I
Frasers Group PLC
08 December 2022
8 December 2022
Unaudited Interim Results for the 26 weeks to 23 October 2022
("FY23 H1")
Change
(%)
FY23 H1 FY22 H1
(unaudited) (unaudited)
----------------------------------------- -------------- -------------- -------
GBPm GBPm
Group revenue 2,638.0 2,339.8 12.7
UK Sports Retail 1,526.1 1,367.1 11.6
Premium Lifestyle 533.5 427.9 24.7
International Retail (4) 492.2 465.4 5.8
Wholesale & licensing 86.2 79.4 8.6
Group gross margin (%) 42.0% 44.7%
Reported profit before tax 284.6 186.0 53.0
Adjusted profit before tax (PBT) (3) 267.1 192.4 38.8
Adjusted profit before tax (PBT) as
a percentage of revenue (%) 10.1% 8.2%
Reported profit after tax 219.6 143.7 52.8
Reported basic earnings per share 46.1p 28.2p 63.5
Adjusted basic earnings per share (EPS)
(1) 44.8p 30.3p 47.9
Cash inflow from operating activities
before working capital 389.9 454.1 (14.1)
Net assets 1,382.3 1,367.2 1.1
Number of retail stores (number) 1,596 1,561 2.2
Outlook: Whilst the macroeconomic environment is clearly
challenging and the backdrop for the coming year is hard to predict
with any certainty, we have strong strategic and trading momentum
behind us and we remain confident in our guidance for Adjusted PBT
of between GBP450m to GBP500m for this financial year.
* Group revenue increased by 12.7%, largely due to
acquisitions
* Excluding acquisitions, disposals and on a currency
neutral basis, revenue increased by 3.9% (2)
* UK Sports Retail revenue increased by 11.6%, largely
due to the acquisition of Studio Retail Limited
('SRL') on 24 February 2022
* Excluding acquisitions, revenue decreased by 3.1% (2)
largely due to a reduction within Game UK and the
very strong reopening of stores after the last
lockdown in March 2021 in the prior period
* Premium Lifestyle revenue increased by 24.7%, largely
due to new FLANNELS stores and continued growth in
online
* Excluding acquisitions, revenue increased by 22.2%
(2)
* International Retail revenue increased by 5.8%,
largely due to the acquisition of Sportmaster on 16
May 2022 and an increase in the Malaysian business,
offset by the reduction in revenue following the
disposal of the US retail businesses on 25 May 2022
* Excluding acquisitions, disposals and on a currency
neutral basis, revenue increased by 9.2% (2) largely
due to increases in the Malaysian business due to the
prior period being impacted by Covid
* Group gross margin decreased to 42.0% from 44.7% in
line with our guidance given above, which reflects
mix effects (from the acquisition of Studio Retail,
the disposal of the US retail businesses and House of
Fraser store closures), a strong prior year
comparative of full price trading, cost of goods
inflation, and a maintained inventory provision
percentage in the current period
* Reported profit before tax was GBP284.6m, up 53.0%
reflecting:
* Continually improving product choice in the core UK
business
* FLANNELS growth through store roll out and online
* Profit on disposal of assets (property at GBP91.2m,
US retail businesses at GBP26.3m) with mitigations
including impairments of property of GBP50.2m (FY22
H1: GBP135.3m) and intangibles of GBP27.5m (FY22 H1:
GBP4.4m), non-recurring profit before tax in the
prior period from the disposed of US retail
businesses (FY22 H1: GBP17.9m), an increased
inventory provision amount, and the prior period in
FY22 benefitting from business rates relief
* Adjusted PBT was GBP267.1m, up 38.8%. As a percentage
of revenue, Adjusted PBT is 10.1%, up from 8.2%
* Excluding acquisitions, disposals and on a currency
neutral basis, adjusted PBT increased by 53.8% (2)
* Cash inflow from operating activities before working
capital decreased to GBP389.9m compared to GBP454.1m
largely due to increased operating costs, new
acquisitions, and the business rates relief in the
prior period
* Net assets have increased to GBP1,382.3m from
GBP1,308.6m at 24 April 2022 (FY22 H1: GBP1,367.2m),
largely due to the increased profitability of the
Group offset by significant share buybacks
* Reported basic earnings per share grew by 63.5% to
46.1p, from 28.2p
* Adjusted basic earnings per share increased by 47.9%
to 44.8p from 30.3p (1)
* Reported profit after tax was GBP219.6m up 52.8% from
GBP143.7m
(1) Adjusted basic EPS is reported basic EPS less the effects of
exceptional items, realised foreign exchange, fair value
adjustments to derivative financial instruments included within
Finance income/costs, fair value gains/losses and profit on
disposal of equity derivatives, share schemes and the tax impact of
these items. Further detail on this calculation can be found in
note 9.
(2) A reconciliation excluding acquisitions, disposals and
currency neutral performance measures can be found in the
Glossary.
(3) Adjusted profit before tax (PBT) is reported profit before
less the effects of exceptional items, realised foreign exchange,
fair value adjustments to derivative financial instruments included
within Finance income/costs, fair value gains/losses and profit on
disposal of equity derivatives, and share schemes. Further detail
on this calculation can be found in the Glossary.
(4) Following the disposal of the US retail businesses in the
period, the reporting segments have been re-categorised with the
previous Rest of World Retail segment and European Retail segment
now being reported under an International Retail segment. This
change is deemed to fall in line with the aggregation criteria and
quantitative thresholds outlined in IFRS 8 Operating Segments.
Frasers Group plc T: 0344 245 9200
Chris Wootton, Chief Financial Officer
Robert Palmer, Company Secretary
CHAIR'S STATEMENT
BUSINESS PERFORMANCE
We have delivered a strong performance during the period,
despite the challenging backdrop of heightened economic uncertainty
in the UK, soaring energy costs, rapidly rising inflation, a
widespread cost of living crisis and continued geopolitical
instability. Whilst post pandemic issues with the global supply
chain remain, there are signs that these are beginning to ease
.
We once again remind our stakeholders of our key accounting
principles, namely being conservative, consistent, and simple, and
this will always factor into our forecasting, including
provisioning and impairment reviews. Despite the above potential
headwinds and in this context, Frasers has delivered a robust set
of first half results which demonstrate the resilience of our
business and the continued success of our Elevation Strategy.
Financial Highlights
* Revenue increased to GBP2,638.0m (FY22 H1:
GBP2,339.8m)
* Reported PBT increased to GBP284.6m (FY22 H1:
GBP186.0m)
* Adjusted PBT increased to GBP267.1m (FY22 H1:
GBP192.4m)
* Net assets of GBP1,382.3m (FY22 H1: GBP1,367.2m)
* Cash inflow from operating activities before working
capital of GBP389.9m (FY22 H1: GBP454.1m)
Strategic Highlights
* Continued progress of the Elevation Strategy,
including further growth of our key brand partner
relationships
* Strengthened relationship with strategic brand
partner Hugo Boss AG, with increased investment
reflecting our confidence in the brand's future
* Strategic acquisitions, including Missguided, I Saw
It First and Gieves & Hawkes (post period-end),
unlocking new capabilities and customer bases
* Recently launched flagship stores proving very
popular, including FLANNELS Liverpool which has
recently won Drapers award for Best Store Design
I'd like to thank Michael Murray for his leadership during his
first six months as CEO and commend him and his team on a strong
performance in the first half of the year.
OUTLOOK
Whilst the macroeconomic environment is clearly challenging and
the backdrop for the coming year is hard to predict with any
certainty, we have strong strategic and trading momentum behind us
and we remain confident in our guidance for adjusted PBT of between
GBP450m to GBP500m for this financial year.
GROWTH STRATEGY
Under Michael Murray's leadership the Elevation Strategy is
working.
Our relationships with our brand partners are stronger than ever
and consequently, we can now offer our consumers an even wider
choice of brands and even better choices of product. We have a
clear vision to build the planet's most admired and compelling
brand ecosystem. Over the past six months, our brand relationships
have continued to go from strength to strength, and today we
partner with 19 of the 20 hottest brands in the World as ranked by
the Lyst index.
We will continue to elevate our stores and business in 2023,
both organically and through disciplined acquisitions. A new
FLANNELS flagship store is planned for Leeds, and a Sports Direct
flagship store in Manchester. The FLANNELS store roll out strategy
to offer our consumers a luxury retail experience in key locations
around the country also continues with approximately 6 stores to
open in 2023. With the support of our brand partners, our European
expansion strategy will continue with a number of opportunities
currently being assessed.
Acquisitions and strategic investments are a core part of our
Elevation Strategy:
* Earlier in 2022 we acquired the leading Danish
sporting goods retailer Sportsmaster into our
International Retail operations.
* The Studio Retail acquisition supports the strategy
for bringing a credit offering to our customers.
Taking this skillset and capability, we have just
launched our Frasers 'Plus' product in our Cruise and
House of Fraser fascias and associated websites. This
will roll out across the majority of the Group,
including Sports Direct and FLANNELS, in 2023.
* In Premium Lifestyle the acquisitions of Missguided,
I Saw it First and Mysale in the half expands our
digital offering and brings short lead time sourcing
and further social media marketing expertise to that
segment and the Frasers Group.
* Since the period end we have acquired Gieves and
Hawkes, including the leasehold of 1 Saville Row.
This iconic premium luxury menswear brand is a great
fit for our Elevated offering.
* Luxury homewares brand Amara Living was also acquired
after the period end. Once integrated, the business
will support in building FLANNELS as a credible
luxury homeware destination
* We now hold interests of up to approximately 34% of
Hugo Boss (through a combination of direct and
indirect financial instruments) as at 4 November
2022.
* Looking further forward to support our continued
growth and ambition, we are intending on investing
approx. GBP600m in a new distribution centre and
offices in Coventry over the next ten years subject
to planning, and we recently purchased the site for
this exciting development for Frasers and the
Coventry area. As part of this strategy we have also
purchased the CBS Arena in the city which strengthens
our investment in the area and supports our future
plans for the region.
At the same time we continue to release capital and realise
profits from our assets as appropriate:
* Bob's Stores and Eastern Mountain Sports fascias and
their corresponding e-commerce offerings were
disposed of for $70m. The Bobs and EMS store estate
did not include any of the new elevated stores which
are core to the Frasers Group Elevation strategy. The
disposal of these non-core businesses allows an even
greater focus on delivering the Elevation Strategy by
focusing on store experience, digital and product.
* A number of freehold and long leasehold retail parks
were sold for a total of GBP205m, realising a profit
on disposal of GBP84.7m. We buy and sell properties
in the ordinary course of business from time to time,
to secure attractive sites for our retail operations,
and Frasers Group fascias will operate from leases
within a number of these properties.
EXTERNAL RECOGNITION
The team's hard work and success over many years has rightly
received recognition from the retail industry with recent awards
including Drapers' Lifetime Achievement Award for Mike Ashley,
recognising his achievement in growing the Group from a single
store in Maidenhead in 1982, to over 1,500 stores today. Our
FLANNELS store in Liverpool, the most recent and best iteration of
the FLANNELS concept, won the Drapers award for Best Store
Design.
Sports Direct's "Just a Game" advert from the UEFA Men's 2020
European Championships won the Clio Sports Awards Gold winner for
Best Integrated Campaign. This ad was the focal point of an
integrated campaign that reached thousands of young footballers
during the tournament.
PEOPLE
I would like to thank our hard working staff for their continued
passion, energy and commitment. We have made extraordinary progress
over the past six months, which has delivered an impressive set of
half year results.
We have just welcomed our third intake of highly talented, high
potential people into the Frasers Group Elevation Programme. This
helps us to build a pipeline of high calibre individuals that we
believe will become the leaders of our business in the future.
In line with our rewards-based culture, we are continuing to
work collectively towards our Fearless 1000 share scheme, which
will reward colleagues who live and breathe our values. Despite the
challenging economic backdrop, we remain laser focused, and it has
been pleasing to see the impressive progress we have made in a
short space of time.
In addition, each month we recognise the performance and
achievements of our employees through the Frasers Champions
programme. This enables us to acknowledge and recognise those
employees who have made significant contributions to the business
and are helping the business to prosper. We also hosted Frasers
Festival in September, which brought together our top performing
colleagues for a day of assault courses, interactive brand pop-ups
and live entertainment.
BUSINESS RATES
It is pleasing to see that the Government has finally decided to
address the outdated business rates issue in April 2023 including
addressing the detrimental transitional relief regime. The whole
retail industry, including ourselves, have been asking for this
recalibration for several years and this review is strongly
welcomed by Frasers Group.
SUSTAINABILITY
Sustainability continues to be a key focus for the Group and the
Board. We have built a Sustainability Team structure which reports
directly into the Board and its appropriate sub-committees.
We have a number of continuing strategic priorities including
energy usage reduction, achieved through education programmes to
staff, the roll out of LED lighting across our store estate,
building management systems installation, and container
optimisation working hand in glove with our brand partners to
ensure fewer containers, with their inherent carbon emissions
during transportation, are required.
During 2022 we delivered our Taskforce on Climate-related
Financial Disclosures (TCFD) within the Annual Report and we are
continuing to work through our targets, and to look for
improvements in our reporting.
GROUP FINANCING AND LIQUIDITY
We have recently enacted the one year extension to our Group
facility and now have a combined term loan and revolving credit
facility (RCF) of GBP980.0m until November 2024 and GBP930.0m until
November 2025, with the possibility to extend this by a further
year.
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 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.
During the half year we repurchased GBP80.4m of Frasers Group
shares, or 2.5% of the outstanding share capital, as part of our
share buyback programme. This programme has continued into the
second half, which is a demonstration of our commitment to
shareholder returns, our confidence in the Group and the strategy
for future growth.
David Daly
Non-Executive Chair
8 December 2022
CHIEF EXECUTIVE'S REPORT AND BUSINESS REVIEW
SUMMARY OF RESULTS
26 weeks ended 26 weeks ended
23 October 24 October
2022 2021
(Unaudited) (Unaudited)
Group revenue GBP2,638.0m GBP2,339.8m
Adjusted PBT (1) GBP267.1m GBP192.4m
--------------------------------------- -------------- --------------
Group gross margin 42.0% 44.7%
--------------------------------------- -------------- --------------
Adjusted basic earnings per share (2) 44.8p 30.3p
--------------------------------------- -------------- --------------
Cash inflow from operating activities GBP389.9m GBP454.1m
before working capital (4)
--------------------------------------- -------------- --------------
Net Assets GBP1,382.3m GBP1,367.2m
--------------------------------------- -------------- --------------
Number of retail stores (3) 1,596 1,561
--------------------------------------- -------------- --------------
(1) Adjusted profit before tax (PBT) is reported profit before
less the effects of exceptional items, realised foreign exchange,
fair value adjustments to derivative financial instruments included
within Finance income/costs, fair value gains/losses and profit on
disposal of equity derivatives, share schemes and the tax impact of
these items. 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, realised foreign exchange, fair value
adjustments to derivative financial instruments included within
Finance income/costs, fair value gains/losses and profit on
disposal of equity derivatives, 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.
(4) Details of Key Performance Indicators can be found in the Glossary
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
.
PERFORMANCE OVERVIEW
Group revenue was up 12.7% to GBP2,638.0m, largely due to
acquisitions, new FLANNELS stores and continued growth in
online.
Group gross m argin decreased to 42.0% from 44.7% in line with
our guidance given above, which reflects mix effects (from the
acquisition of Studio Retail, the disposal of the US retail
businesses and House of Fraser store closures), a strong prior year
comparative of full price trading, cost of goods inflation, and a
maintained inventory provision percentage in the current period
.
Adjusted PBT is up 38.8%, reflecting:
* Continually improving product choice in the core UK
business
* FLANNELS growth through store roll out and online
* Profit on disposal of assets (property at GBP91.2m,
US retail businesses at GBP26.3m) with mitigations
including impairments of property of GBP50.2m (FY22
H1: GBP135.3m) and intangibles of GBP27.5m (FY22 H1:
GBP4.4m), non-recurring profit before tax in the
prior period from the disposed of US retail
businesses (FY22 H1: GBP17.9m), an increased
inventory provision amount, and the prior period in
FY22 benefitting from business rates relief
Excluding acquisitions, disposals and on a currency neutral
basis adjusted PBT is up 53.8%.
In FY23 H1, property related impairments of GBP50.2m (FY22 H1:
GBP135.3m) have been recognised following a reassessment of future
expected cash flows, largely driven by the increased cost of
living, the change in consumer behaviour in moving from physical to
online shopping, and the impact of direct-to-consumer and
increasing product costs. Further details including sensitivity
analysis are included within note 2.
Adjusted basic earnings per share increased by 47.9% to 44.8p
(FY22 H1: 30.3p).
Reported Profit Before Tax increased by 53.0% to GBP284.6m (FY22
H1: GBP186.0m).
Cash inflow from operating activities before working capital
decreased to GBP389.9m compared to GBP454.1m largely due to
increased operating costs, new acquisitions, and the business rates
relief in the prior period.
Total net assets as at the period end totalled GBP1,382.3m
compared to GBP1,308.6m as at 24 April 2022, largely due to the
profitability of the Group mitigated by significant share
buybacks.
REVIEW BY BUSINESS SEGMENT
UK SPORTS RETAIL
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 which were
disposed of during the period, 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, Studio Retail Limited, and retail
store operations in Northern Ireland . UK Sports Retail is the main
driver of the Group and accounts for 57.9% (FY22 H1: 58.4%) of
Group revenue.
26 weeks ended 26 weeks ended
23 October 2022 24 October 2021
(unaudited) (unaudited)
Revenue GBP1,526.1m GBP1,367.1m
----------------
Cost of Sales GBP(883.8)m GBP(768.1)m
---------------- ---------------- ----------------
Gross Profit GBP642.3m GBP599.0m
---------------- ---------------- ----------------
Gross Margin % 42.1% 43.8%
---------------- ---------------- ----------------
Adjusted PBT GBP184.1m GBP123.0m
---------------- ---------------- ----------------
Revenue increased 11.6%. Excluding acquisitions revenue
decreased 3.1%. This was largely due to a reduction within Game UK
and the very strong reopening of stores after the last lockdown in
March 2021 in the prior period.
Gross margin decreased to 42.1%, largely due to the acquisition
of Studio Retail, in which the online trading business operates at
a lower average margin than the rest of the Group, a strong prior
year comparative of full price trading, cost of goods inflation,
and a maintained inventory provision percentage in the current
period.
Adjusted PBT for UK Sports Retail was GBP184.1m, an increase of
49.7% for the period, largely due to significant profit on disposal
of properties and a reduction in property related impairments,
mitigated to some extent by an increased inventory provision amount
and intangible asset write-offs in Studio Retail Limited. It should
also be noted that the prior period benefitted from business rates
relief.
UK SPORTS RETAIL STORE PORTFOLIO (3)
23 October 24 October 24 April 2022
2022 2021
------------------ ----------- ----------- -------------
England 387 390 387
------------------ ----------- ----------- -------------
Scotland 37 39 37
------------------ ----------- ----------- -------------
Wales 29 31 30
------------------ ----------- ----------- -------------
Northern Ireland 19 20 19
------------------ ----------- ----------- -------------
Isle of Man 1 1 1
------------------ ----------- ----------- -------------
GAME UK (1) 276 258 259
------------------ ----------- ----------- -------------
Evans Cycles (2) 60 53 57
------------------ ----------- ----------- -------------
USC 17 23 18
------------------ ----------- ----------- -------------
Total 826 815 808
------------------ ----------- ----------- -------------
Opened 60 58 90
------------------ ----------- ----------- -------------
Closed (42) (49) (88)
------------------ ----------- ----------- -------------
Acquired - - -
------------------ ----------- ----------- -------------
Area (sq.ft.) approx 6.8m approx 6.9m approx. 6.7m
------------------ ----------- ----------- -------------
(1) The GAME UK store numbers include 169 concessions operating
within Sports Direct fascia stores (24 April 2022: 125) and does
not include BELONG arenas.
(2) The Evans Cycles store numbers include 2 concessions
operating within House of Fraser fascia stores (24 April 2022:
2).
(3) Table excludes the Group's standalone gyms.
PREMIUM LIFESTYLE
Premium Lifestyle includes the results of the premium and luxury
retail businesses FLANNELS, Cruise, van mildert, Jack Wills, House
of Fraser and Sofa.com along with the related websites, the
Missguided and I Saw it First websites, and freehold property
owning companies where trading is purely from Premium Lifestyle
fascias .
26 weeks ended 26 weeks ended
23 October 2022 24 October 2021
(unaudited) (unaudited)
Gross Transaction Value (GTV)(1) GBP557.5m GBP468.0m
----------------
Revenue GBP533.5m GBP427.9m
---------------------------------- ---------------- ----------------
Cost of Sales GBP(310.3)m GBP(223.6)m
---------------------------------- ---------------- ----------------
Gross Profit GBP223.2m GBP204.3m
---------------------------------- ---------------- ----------------
Gross Margin % 41.8% 47.7%
---------------------------------- ---------------- ----------------
Adjusted PBT / (LBT) GBP11.3m GBP(9.7)m
---------------------------------- ---------------- ----------------
(1) GTV being gross sales net of VAT, discounts and returns and
gross sales where the Group acts as agent.
Revenue grew 24.7%. This was largely due to new FLANNELS stores
and continued growth in online.
Gross margin decreased to 41.8% largely due to House of Fraser
store closures, a strong prior year comparative of full price
trading and cost of goods inflation.
The House of Fraser business has shown a year on year trading
improvement. The business rates changes announced in the November
2022 Government budget should proportionally benefit the House of
Fraser business given the significant and disproportionate current
cost to House of Fraser.
Adjusted PBT for Premium Lifestyle increased from a loss of
GBP9.7m in FY22 H1 to a profit of GBP11.3m for the period, largely
due to a reduction in property and other related impairments,
growth in the FLANNELS business and improvements in House of Fraser
performance, mitigated by impairments to intangible assets within
recent acquisitions. It should also be noted that the prior period
benefitted from business rates relief, especially within House of
Fraser.
PREMIUM LIFESTYLE STORE PORTFOLIO
23 October 24 October 24 April 2022
2022 2021
Jack Wills (2) 48 56 52
-------------
FLANNELS 56 44 53
--------------------------- ------------ ------------ -------------
House of Fraser / Frasers
(2) 34 43 39
--------------------------- ------------ ------------ -------------
Sofa.com (1) 23 25 23
--------------------------- ------------ ------------ -------------
Cruise 5 6 5
--------------------------- ------------ ------------ -------------
18 Montrose 3 4 4
--------------------------- ------------ ------------ -------------
Garment Quarter 1 1 1
--------------------------- ------------ ------------ -------------
Psyche - 1 1
--------------------------- ------------ ------------ -------------
Van Mildert - 1 1
--------------------------- ------------ ------------ -------------
Total 170 181 179
--------------------------- ------------ ------------ -------------
Opened 7 11 21
--------------------------- ------------ ------------ -------------
Acquired - - -
--------------------------- ------------ ------------ -------------
Closed (16) (9) (21)
--------------------------- ------------ ------------ -------------
Area (sq.ft.) approx. 3.8m approx. 4.3m approx. 4.0m
--------------------------- ------------ ------------ -------------
(1) Sofa.com store numbers include 16 concessions operating
within House of Fraser fascia stores (24 April 2022: 17).
(2) Jack Wills and Frasers stores in Republic of Ireland are
shown in the International store numbers as opposed to the Premium
Lifestyle store numbers.
INTERNATIONAL RETAIL (1)
26 weeks ended 26 weeks ended
23 October 2022 24 October 2021
(unaudited) (unaudited)
Revenue GBP492.2m GBP465.4m
----------------
Cost of Sales GBP(287.3)m GBP(255.8)m
---------------- ---------------- ----------------
Gross Profit GBP204.9m GBP209.6m
---------------- ---------------- ----------------
Gross Margin % 41.6% 45.0%
---------------- ---------------- ----------------
Adjusted PBT GBP62.5m GBP75.2m
---------------- ---------------- ----------------
(1) Following the disposal of the US retail businesses in the
period, the reporting segments have been re-categorised with the
previous Rest of World Retail segment and European Retail segment
now being reported under an International Retail segment. This
change is deemed to fall in line with the aggregation criteria and
quantitative thresholds outlined in IFRS 8 Operating Segments.
Revenue increased 5.8%. This is largely due to the acquisition
of Sportmaster on 16 May 2022 and an increase in the Malaysian
business, offset by the reduction in revenue following the disposal
of the US retail businesses on 25 May 2022.
Gross margin decreased to 41.6%, largely due to acquisition
revaluation impacts in relation to Sportmaster and the prior period
including inventory holding efficiencies in relation to the US
retail businesses not recurring in the current period.
Adjusted PBT for International Retail was GBP62.5m, a decrease
of 16.9% for the period, largely due to the disposal of the US
retail businesses.
23 October 24 October 24 April 2022
2022 2021
GAME Spain 234 236 235
------------------------- ------------ ------------ -------------
Sportmaster - Denmark 75 - -
------------------------- ------------ ------------ -------------
Republic of Ireland (2) 44 41 43
------------------------- ------------ ------------ -------------
Belgium 34 34 34
------------------------- ------------ ------------ -------------
Estonia (1) 22 21 20
------------------------- ------------ ------------ -------------
Portugal 21 20 21
------------------------- ------------ ------------ -------------
Austria 19 20 19
------------------------- ------------ ------------ -------------
Lithuania (1) 19 18 19
------------------------- ------------ ------------ -------------
Latvia (1) 18 17 18
------------------------- ------------ ------------ -------------
Poland 13 14 13
------------------------- ------------ ------------ -------------
Slovenia 12 13 13
------------------------- ------------ ------------ -------------
Czech Republic 12 12 12
------------------------- ------------ ------------ -------------
Spain 12 10 10
------------------------- ------------ ------------ -------------
Hungary 7 8 8
------------------------- ------------ ------------ -------------
Cyprus 6 6 6
------------------------- ------------ ------------ -------------
Holland 5 5 5
------------------------- ------------ ------------ -------------
Slovakia 5 5 5
------------------------- ------------ ------------ -------------
France 4 4 4
------------------------- ------------ ------------ -------------
Luxembourg 2 2 2
------------------------- ------------ ------------ -------------
Iceland 2 1 1
------------------------- ------------ ------------ -------------
Germany 1 2 1
------------------------- ------------ ------------ -------------
Malaysia 33 34 34
------------------------- ------------ ------------ -------------
Bob's Stores - 21 21
------------------------- ------------ ------------ -------------
Eastern Mountain Sports - 21 21
------------------------- ------------ ------------ -------------
Total 600 565 565
------------------------- ------------ ------------ -------------
Opened 8 6 12
------------------------- ------------ ------------ -------------
Acquired 75 - -
------------------------- ------------ ------------ -------------
Closed (6) (3) (9)
------------------------- ------------ ------------ -------------
Disposed (42) - -
------------------------- ------------ ------------ -------------
Area (sq.ft.) approx. 4.3m approx. 5.0m approx. 5.0m
------------------------- ------------ ------------ -------------
(1) Includes only stores with SPORTSDIRECT.com and SPORTLAND fascias.
(2) Excluding Heatons fascia stores.
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
23 October 2022 24 October 2021
(unaudited) (unaudited)
Wholesale GBP74.6m GBP68.7m
----------------
Licensing GBP11.6m GBP10.7m
---------------- ---------------- ----------------
Total Revenue GBP86.2m GBP79.4m
---------------- ---------------- ----------------
Cost of Sales GBP(48.9)m GBP(46.4)m
---------------- ---------------- ----------------
Gross Profit GBP37.3m GBP33.0m
---------------- ---------------- ----------------
Gross Margin % 43.3% 41.6%
---------------- ---------------- ----------------
Adjusted PBT GBP9.2m GBP3.9m
---------------- ---------------- ----------------
Revenue increased by 8.6%. Wholesale revenues are up 8.6% and
Licensing revenues increased 8.4%, largely due an increase in
Everlast revenue.
Total gross margin increased to 43.3% (FY22 H1: 41.6%) largely
due to improved product mix in Everlast.
Adjusted PBT increased 135.9% to GBP9.2m (FY22 H1: GBP3.9m)
largely due to impairment of Goodwill in the prior period.
STRATEGIC INVESTMENTS
Included within long-term financial assets at the period ended
23 October 2022 are the following direct interests held by the
Group:
23 October 2022 24 October 2021 24 April 2022
(unaudited) (unaudited) (audited)
% % %
Mulberry Group plc 36.9 36.8 36.9
-------------
Hugo Boss AG 4.3 6.8 2.2
-------------------- --------------- --------------- -------------
In addition to those listed, there are various other interests
held, none of which represent more than 5% of the voting power of
the investee. The movements in fair value of these long-term
financial assets are recognised within Other Comprehensive Income.
Subsequent to the period end the Group acquired over 5% of the
voting rights of ASOS plc.
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 23 October 2022, 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 696m FY23 - FY26 0.98-1.08
----------- ---------------- --------------- ------------ ---------
USD inventory
USD / GBP purchases USD 240m FY23 1.41
----------- ---------------- --------------- ------------ ---------
USD / EUR USD inventory USD 90m FY23 - FY24 1.26-1.31
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 696m FY23 - FY27 0.98-1.08
---------- ------------- -------------- ----------- ---------
USD / EUR USD inventory USD 90m 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 EUR 70m FY23 1.15
-----
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 increased by GBP8.0m from GBP491.1m at 24 April 2022 to
GBP499.1m at 23 October 2022. Net debt includes GBP104.6m of net
debt relating to the Studio Retail Limited securitisation facility
(24 April 2022: GBP107.3m). N et interest on bank loans and
overdrafts increased to GBP16.8m (FY22 H1: GBP4.8m) largely due to
increased usage of the Revolving Credit Facility ("RCF"), increased
interest rates in the period, and the addition of Studio Retail
Limited and its securitisation facility to the Group.
Analysis of net debt:
23 October 2022 24 October 2021 24 April 2022
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Cash and cash equivalents 314.8 350.7 336.8
--------------------------- --------------- --------------- -------------
Borrowings (813.9) (375.0) (827.9)
--------------------------- --------------- --------------- -------------
Total (499.1) (24.3) (491.1)
--------------------------- --------------- --------------- -------------
Cash flow:
26 weeks ended 26 weeks ended 52 weeks ended
23 October 2022 24 October 2021 24 April 2022
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Cash inflow from operating activities 171.8 559.8 628.9
----------------
Income taxes paid (58.4) (62.6) (121.0)
-------------------------------------------- ---------------- ---------------- --------------
Invested in:
-------------------------------------------- ---------------- ---------------- --------------
Purchase of subsidiaries, net of
cash acquired (40.9) - (0.2)
-------------------------------------------- ---------------- ---------------- --------------
Purchase of listed investments (113.5) (107.1) (198.4)
-------------------------------------------- ---------------- ---------------- --------------
Proceeds on disposal of listed investments 17.4 96.6 238.4
-------------------------------------------- ---------------- ---------------- --------------
Proceeds on disposal of subsidiary
undertaking 51.4 1.0 1.0
-------------------------------------------- ---------------- ---------------- --------------
Premiums in relation to equity derivatives 48.6 - 117.4
-------------------------------------------- ---------------- ---------------- --------------
Net capital income/(expenditure) 103.6 (112.0) (280.2)
-------------------------------------------- ---------------- ---------------- --------------
Exchange movement on cash balances 5.3 (1.9) 0.1
-------------------------------------------- ---------------- ---------------- --------------
Investment income received 1.4 5.6 1.0
-------------------------------------------- ---------------- ---------------- --------------
Finance income received less finance
costs paid (23.9) (14.4) (26.5)
-------------------------------------------- ---------------- ---------------- --------------
Lease payments (71.5) (61.9) (176.2)
-------------------------------------------- ---------------- ---------------- --------------
Purchase of own shares (80.4) (78.5) (193.2)
-------------------------------------------- ---------------- ---------------- --------------
Purchase of associated undertakings (11.9) - -
-------------------------------------------- ---------------- ---------------- --------------
Borrowings acquired through business
combinations (7.0) - (232.0)
-------------------------------------------- ---------------- ---------------- --------------
Dividend paid to non-controlling
interest - - (1.3)
-------------------------------------------- ---------------- ---------------- --------------
(Increase) / decrease in net debt (8.0) 224.6 (242.2)
-------------------------------------------- ---------------- ---------------- --------------
SUMMARY CONSOLIDATED BALANCE SHEET (EXTRACT)
23 October 2022 24 October 2021 24 April 2022
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Property, plant and equipment 787.5 800.8 816.3
-------------
Right of use assets 203.1 211.9 194.7
------------------------------- --------------- --------------- -------------
Investment properties 49.6 52.7 89.2
------------------------------- --------------- --------------- -------------
Long-term financial assets 241.4 352.4 206.6
------------------------------- --------------- --------------- -------------
Deferred tax assets 93.7 103.7 100.8
------------------------------- --------------- --------------- -------------
Inventory 1,466.5 1,201.5 1,277.6
------------------------------- --------------- --------------- -------------
Trade and other receivables 942.0 490.7 841.4
------------------------------- --------------- --------------- -------------
Provisions (426.1) (351.9) (433.0)
------------------------------- --------------- --------------- -------------
Trade and other payables (838.9) (789.4) (729.8)
------------------------------- --------------- --------------- -------------
Lease liabilities (659.9) (684.7) (620.6)
------------------------------- --------------- --------------- -------------
Borrowings (813.9) (375.0) (827.9)
------------------------------- --------------- --------------- -------------
The decrease within property, plant and equipment from 24 April
2022 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 have increased from 24 April 2022
largely due to acquisition and additions in the period, offset by
impairments of GBP23.6m.
The decrease in investment properties from 24 April 2022 relates
to the sale and leaseback of the Robin Retail Park, Wigan in the
period.
Long-term financial assets have increased during the period from
24 April 2022 due to the additions of Hugo Boss AG offset by
decrease in fair value of the Hugo Boss AG and Mulberry Group plc
investments.
Inventory has increased from 24 April 2022 as holdings are
increased in the build up to the Christmas period and also due to
acquisitions. Inventory has increased from 24 October 2021 largely
due to acquisitions. Inventory provision as a percentage has
decreased from 15.2% at 24 April 2022 to 14.9% at period end.
Trade and other receivables includes a GBPnil reimbursement
asset in relation to the Group's ongoing non-UK tax enquiries (24
April 2022: GBP88.3m), GBP389.7m relating to deposits in respect of
derivative financial instruments (24 April 2022: GBP243.9m), and
the Studio Retail net credit customer receivables of GBP240.3m (24
April 2022: GBP234.2m, 24 October 2021: GBPnil).
See note 11 for further details in relation to provisions.
Trade and other payables have increased from 24 April 2022
largely due to the increase in inventory supplier payables in the
run up towards the Christmas period and acquisitions in the
period.
The lease liability has increased largely due to acquisitions
and additions, offset by repayments made in the period.
Borrowings have decreased slightly from 24 April 2022 largely
due to positive cashflow inflows mitigated by significant
investment in acquisitions, strategic investments and the share
buybacks.
RELATED PARTY TRANSACTIONS
Related party transactions are disclosed in note 19. 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 24 April 2022 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.
Michael Murray
Chief Executive
8 December 2022
CONSOLIDATED INCOME STATEMENT
FOR THE 26 WEEKSED 23 OCTOBER 2022
26 weeks 26 weeks 26 weeks 26 weeks 26 weeks 26 weeks 52 weeks 52 weeks 52 weeks
ended ended ended ended ended ended ended ended ended
23 October 23 October 23 October 24 October 24 October 24 October 24 April 24 April 24 April
2022 2022 2022 2021 2021 2021 2022 2022 2022
Note (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (audited) (audited) (audited)
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Continuing Discontinued Total Continuing Discontinued Total Continuing Discontinued Total
operations operations operations operations operations operations
Revenue 2,573.3 8.5 2,581.8 2,284.1 55.7 2,339.8 4,672.9 114.2 4,787.1
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
Credit account
interest 56.2 - 56.2 - - - 18.2 - 18.2
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
Total revenue
(including credit
account interest) 2,629.5 8.5 2,638.0 2,284.1 55.7 2,339.8 4,691.1 114.2 4,805.3
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
Cost of sales (1,529.7) (4.4) (1,534.1) (1,267.8) (26.1) (1,293.9) (2,647.2) (56.1) (2,703.3)
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
Impairment
reversals/(losses)
on
credit customer
receivables 3.8 - 3.8 - - - (13.3) - (13.3)
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
Gross profit 1,103.6 4.1 1,107.7 1,016.3 29.6 1,045.9 2,030.6 58.1 2,088.7
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
Selling,
distribution and
administrative
expenses (877.8) (4.0) (881.8) (717.0) (12.6) (729.6) (1,557.3) (31.5) (1,588.8)
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
Other operating
income 16.0 0.1 16.1 17.6 1.1 18.7 45.4 2.6 48.0
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
Property related
impairments (50.2) - (50.2) (135.3) - (135.3) (227.0) - (227.0)
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
Exceptional items 4 - - - - - - (1.3) - (1.3)
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
Profit on sale of
properties 3 91.2 - 91.2 - - - 10.8 - 10.8
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
Gain on sale of
discontinued
operation 18 - 26.3 26.3 - - - - - -
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
Operating profit 282.8 26.5 309.3 181.6 18.1 199.7 301.2 29.2 330.4
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
Investment income 5 27.2 - 27.2 28.8 - 28.8 43.8 - 43.8
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
Investment costs 6 (40.4) - (40.4) (38.8) - (38.8) (19.7) - (19.7)
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
Finance income 7 24.7 - 24.7 12.6 - 12.6 30.3 - 30.3
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
Finance costs 8 (36.1) (0.1) (36.2) (16.1) (0.2) (16.3) (48.9) (0.3) (49.2)
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
Profit before
taxation 258.2 26.4 284.6 168.1 17.9 186.0 306.7 28.9 335.6
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
Taxation (64.9) (0.1) (65.0) (39.9) (2.4) (42.3) (75.5) (3.2) (78.7)
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
Profit for the
period 193.3 26.3 219.6 128.2 15.5 143.7 231.2 25.7 256.9
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
ATTRIBUTABLE TO:
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
Equity holders of
the Group 186.1 26.3 212.4 122.7 15.5 138.2 224.1 25.7 249.8
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
Non-controlling
interests 7.2 - 7.2 5.5 - 5.5 7.1 - 7.1
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
Profit for the
period 193.3 26.3 219.6 128.2 15.5 143.7 231.2 25.7 256.9
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
EARNINGS PER SHARE
ATTRIBUTABLE
TO THE EQUITY
SHAREHOLDERS
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
Pence per Pence per Pence per Pence per Pence per Pence per Pence per Pence per Pence per
share share share share share share share share share
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
Basic earnings per
share 9 40.4 5.7 46.1 25.0 3.2 28.2 47.5 5.4 52.9
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
Diluted earnings
per share 9 40.4 5.7 46.1 25.0 3.2 28.2 47.5 5.4 52.9
-------------------- ------ ----------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ----------------
The accompanying accounting policies and notes form part of
these Interim Financial Statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE 26 WEEKSED 23 OCTOBER 2022
26 weeks 26 weeks 52 weeks
ended ended ended
23 October 24 October 24 April
2022 2021 2022
Note (unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Profit for the period 219.6 143.7 256.9
-------------------------------------------------- ------ ------------------ ------------------ ----------------
OTHER COMPREHENSIVE INCOME
-------------------------------------------------- ------ ------------------ ------------------ ----------------
ITEMS THAT WILL NOT BE RECLASSIFIED SUBSEQUENTLY
TO PROFIT OR LOSS
-------------------------------------------------- ------ ------------------ ------------------ ----------------
Fair value movement on long-term financial
assets (69.7) 80.5 (8.1)
-------------------------------------------------- ------ ------------------ ------------------ ----------------
Remeasurements of defined benefit pension
scheme (1.2) - (26.8)
-------------------------------------------------- ------ ------------------ ------------------ ----------------
Deferred tax on remeasurements of defined
benefit pension scheme 0.3 - 6.7
-------------------------------------------------- ------ ------------------ ------------------ ----------------
ITEMS THAT WILL BE RECLASSIFIED SUBSEQUENTLY
TO PROFIT OR LOSS
-------------------------------------------------- ------ ------------------ ------------------ ----------------
Exchange differences on translation of
foreign operations (2.4) (11.4) 6.8
-------------------------------------------------- ------ ------------------ ------------------ ----------------
Fair value movement on hedged contracts
- recognised in the period 12 24.6 21.6 52.1
-------------------------------------------------- ------ ------------------ ------------------ ----------------
Fair value movement on hedged contracts
- reclassified and reported in sales 12 (12.6) - -
-------------------------------------------------- ------ ------------------ ------------------ ----------------
Fair value movement on hedged contracts
- reclassified and reported in inventory/cost
of sales 12 (19.6) 3.6 7.5
-------------------------------------------------- ------ ------------------ ------------------ ----------------
Fair value movement on hedged contracts
- taxation taken to reserves 12 2.2 (7.2) (15.8)
-------------------------------------------------- ------ ------------------ ------------------ ----------------
OTHER COMPREHENSIVE (LOSS) / INCOME FOR
THE PERIOD, NET OF TAX (78.4) 87.1 22.4
-------------------------------------------------- ------ ------------------ ------------------ ----------------
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 141.2 230.8 279.3
-------------------------------------------------- ------ ------------------ ------------------ ----------------
ATTRIBUTABLE TO:
-------------------------------------------------- ------ ------------------ ------------------ ----------------
Equity holders of the Group 134.0 225.3 272.2
-------------------------------------------------- ------ ------------------ ------------------ ----------------
Non-controlling interest 7.2 5.5 7.1
-------------------------------------------------- ------ ------------------ ------------------ ----------------
141.2 230.8 279.3
-------------------------------------------------- ------ ------------------ ------------------ ----------------
The accompanying accounting policies and notes form part of
these Interim Financial Statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 23 OCTOBER 2022
23 October 24 October 24 April
2022 2021 2022
Note (unaudited) (unaudited) (audited)
GBPm GBPm GBPm
ASSETS - NON
CURRENT
------------------ ----------------------------------------------------------------------------------------
Property, plant and equipment 990.6 1,012.7 1,011.0
---------------------------------------------- ------------------ ------------------ ----------------
Investment properties 49.6 52.7 89.2
---------------------------------------------- ------------------ ------------------ ----------------
Intangible assets 152.0 113.5 120.6
---------------------------------------------- ------------------ ------------------ ----------------
Investment in associated undertakings 11.9 - -
---------------------------------------------- ------------------ ------------------ ----------------
Long-term financial assets 241.4 352.4 206.6
---------------------------------------------- ------------------ ------------------ ----------------
Retirement benefit surplus 0.6 - 2.2
---------------------------------------------- ------------------ ------------------ ----------------
Deferred tax assets 93.7 103.7 100.8
---------------------------------------------- ------------------ ------------------ ----------------
1,539.8 1,635.0 1,530.4
---------------------------------------------- ------------------ ------------------ ----------------
ASSETS - CURRENT
------------------ ----------------------------------------------------------------------------------------
Inventories 1,466.5 1,201.5 1,277.6
---------------------------------------------- ------------------ ------------------ ----------------
Trade and other receivables 10 942.0 490.7 841.4
---------------------------------------------- ------------------ ------------------ ----------------
Derivative financial assets 12 131.6 61.4 116.5
---------------------------------------------- ------------------ ------------------ ----------------
Cash and cash equivalents 314.8 350.7 336.8
---------------------------------------------- ------------------ ------------------ ----------------
2,854.9 2,104.3 2,572.3
---------------------------------------------- ------------------ ------------------ ----------------
Assets in disposal groups classified
as held for sale - - 40.0
---------------------------------------------- ------------------ ------------------ ----------------
TOTAL ASSETS 4,394.7 3,739.3 4,142.7
---------------------------------------------- ------------------ ------------------ ----------------
Share capital 64.1 64.1 64.1
---------------------------------------------- ------------------ ------------------ ----------------
Share premium 874.3 874.3 874.3
---------------------------------------------- ------------------ ------------------ ----------------
Treasury shares reserve (569.3) (374.2) (488.9)
---------------------------------------------- ------------------ ------------------ ----------------
Permanent contribution to capital 0.1 0.1 0.1
---------------------------------------------- ------------------ ------------------ ----------------
Capital redemption reserve 8.0 8.0 8.0
---------------------------------------------- ------------------ ------------------ ----------------
Foreign currency translation reserve 33.2 17.4 35.6
---------------------------------------------- ------------------ ------------------ ----------------
Reverse combination reserve (987.3) (987.3) (987.3)
---------------------------------------------- ------------------ ------------------ ----------------
Own share reserve (66.8) (66.7) (66.8)
---------------------------------------------- ------------------ ------------------ ----------------
Hedging reserve 12 49.9 29.5 55.3
---------------------------------------------- ------------------ ------------------ ----------------
Share based payment reserve 20.0 5.2 14.1
---------------------------------------------- ------------------ ------------------ ----------------
Retained earnings 1,919.9 1,775.1 1,778.1
---------------------------------------------- ------------------ ------------------ ----------------
Issued capital and reserves attributable
to owners of the parent 1,346.1 1,345.5 1,286.6
---------------------------------------------- ------------------ ------------------ ----------------
Non-controlling interests 36.2 21.7 22.0
---------------------------------------------- ------------------ ------------------ ----------------
TOTAL EQUITY 1,382.3 1,367.2 1,308.6
---------------------------------------------- ------------------ ------------------ ----------------
LIABILITIES
- NON CURRENT
------------------ ----------------------------------------------------------------------------------------
Borrowings 813.9 375.0 827.9
---------------------------------------------- ------------------ ------------------ ----------------
Lease liabilities 516.6 505.2 503.6
---------------------------------------------- ------------------ ------------------ ----------------
Retirement benefit obligations 1.7 1.7 1.6
---------------------------------------------- ------------------ ------------------ ----------------
Deferred tax liabilities 44.7 30.0 40.4
---------------------------------------------- ------------------ ------------------ ----------------
Provisions 11 426.1 351.9 433.0
---------------------------------------------- ------------------ ------------------ ----------------
1,803.0 1,263.8 1,806.5
---------------------------------------------- ------------------ ------------------ ----------------
LIABILITIES
- CURRENT
------------------ ----------------------------------------------------------------------------------------
Derivative financial liabilities 12 180.8 28.4 107.2
---------------------------------------------- ------------------ ------------------ ----------------
Trade and other payables 838.9 789.4 729.8
---------------------------------------------- ------------------ ------------------ ----------------
Lease liabilities 143.3 179.5 117.0
---------------------------------------------- ------------------ ------------------ ----------------
Current tax liabilities 46.4 111.0 50.9
---------------------------------------------- ------------------ ------------------ ----------------
1,209.4 1,108.3 1,004.9
---------------------------------------------- ------------------ ------------------ ----------------
Liabilities in disposal groups classified
as held for sale - - 22.7
---------------------------------------------- ------------------ ------------------ ----------------
TOTAL LIABILITIES 3,012.4 2,372.1 2,834.1
---------------------------------------------- ------------------ ------------------ ----------------
TOTAL EQUITY AND LIABILITIES 4,394.7 3,739.3 4,142.7
The accompanying accounting policies and notes form part of
these Interim Financial Statements.
CONSOLIDATED CASH FLOW STATEMENT
FOR THE 26 WEEKSED 23 OCTOBER 2022
26 weeks 26 weeks 52 weeks
ended ended ended
23 October 24 October 24 April
2022 2021 2022
Note (unaudited) (unaudited) (audited)
GBPm GBPm GBPm
CASH INFLOW FROM OPERATING ACTIVITIES 14 171.8 559.8 628.9
--------------------------------------- ------ ------------------------------------ ------------------ ----------------
Income taxes paid (58.4) (62.6) (121.0)
--------------------------------------- ------ ------------------------------------ ------------------ ----------------
NET CASH INFLOW FROM OPERATING
ACTIVITIES 113.4 497.2 507.9
--------------------------------------- ------ ------------------------------------ ------------------ ----------------
Proceeds on disposal of property,
plant
and equipment and investment property 3 0.1 0.7 32.0
--------------------------------------- ------ ------------------------------------ ------------------ ----------------
Proceeds from sale and leaseback
transactions 3 171.5 - 9.5
--------------------------------------- ------ ------------------------------------ ------------------ ----------------
Premiums in relation to equity
derivatives 48.6 5.4 117.4
--------------------------------------- ------ ------------------------------------ ------------------ ----------------
Proceeds on disposal of listed
investments 17.4 96.6 238.4
--------------------------------------- ------ ------------------------------------ ------------------ ----------------
Proceeds on disposal of subsidiary
undertaking 18 51.4 1.0 1.0
--------------------------------------- ------ ------------------------------------ ------------------ ----------------
Purchase of subsidiaries, net of cash
acquired 13 (40.9) - (0.2)
--------------------------------------- ------ ------------------------------------ ------------------ ----------------
Purchase of property, plant and
equipment
and investment property (118.8) (112.7) (323.2)
--------------------------------------- ------ ------------------------------------ ------------------ ----------------
Purchase of listed investments (113.5) (107.1) (198.4)
--------------------------------------- ------ ------------------------------------ ------------------ ----------------
Purchase of associated undertakings (11.9) - -
--------------------------------------- ------ ------------------------------------ ------------------ ----------------
Investment income received 1.4 0.2 1.0
--------------------------------------- ------ ------------------------------------ ------------------ ----------------
Finance income received 3.7 0.1 6.3
--------------------------------------- ------ ------------------------------------ ------------------ ----------------
NET CASH INFLOW / (OUTFLOW) FROM
INVESTING
ACTIVITIES 9.0 (115.8) (116.2)
--------------------------------------- ------ ------------------------------------ ------------------ ----------------
Lease payments (71.5) (61.9) (176.2)
--------------------------------------- ------ ------------------------------------ ------------------ ----------------
Finance costs paid (27.6) (14.5) (32.8)
--------------------------------------- ------ ------------------------------------ ------------------ ----------------
Borrowings drawn down 466.3 409.0 1,374.4
--------------------------------------- ------ ------------------------------------ ------------------ ----------------
Borrowings repaid (487.3) (739.9) (1,484.4)
--------------------------------------- ------ ------------------------------------ ------------------ ----------------
Proceeds from sale and leaseback
transactions 3 50.8 - 1.5
--------------------------------------- ------ ------------------------------------ ------------------ ----------------
Dividends paid to non-controlling
interests - - (1.3)
--------------------------------------- ------ ------------------------------------ ------------------ ----------------
Purchase of own shares 17 (80.4) (78.5) (193.2)
--------------------------------------- ------ ------------------------------------ ------------------ ----------------
NET CASH OUTFLOW FROM FINANCING
ACTIVITIES (149.7) (485.8) (512.0)
--------------------------------------- ------ ------------------------------------ ------------------ ----------------
NET DECREASE IN CASH AND CASH
EQUIVALENTS (27.3) (104.4) (120.3)
--------------------------------------- ------ ------------------------------------ ------------------ ----------------
Exchange movement on cash balances 5.3 (1.9) 0.1
--------------------------------------- ------ ------------------------------------ ------------------ ----------------
CASH AND CASH EQUIVALENTS INCLUDING
OVERDRAFTS
AT BEGINNING OF PERIOD 336.8 457.0 457.0
--------------------------------------- ------ ------------------------------------ ------------------ ----------------
CASH AND CASH EQUIVALENTS INCLUDING
OVERDRAFTS
AT THE PERIOD 314.8 350.7 336.8
The accompanying accounting policies and notes form part of
these Interim Financial Statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE 26 WEEKSED 23 OCTOBER 2022 (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 24 April
2022 64.1 874.3 (488.9) 14.1 35.6 (66.8) 1,778.1 (923.9) 1,286.6 22.0 1,308.6
----------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Acquisitions - - - - - - - - 7.0 7.0
----------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Purchase of
own shares - - (80.4) - - - - - (80.4) - (80.4)
----------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Share scheme - - - 5.9 - - - - 5.9 - 5.9
----------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
TRANSACTIONS
WITH OWNERS
IN THEIR
CAPACITY
AS OWNERS - - (80.4) 5.9 - - - - (74.5) 7.0 (67.5)
----------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Profit for the
financial
period - - - - - - 212.4 - 212.4 7.2 219.6
----------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
OTHER COMPREHENSIVE INCOME
------------------------------------------------------------------------------------------------------------------------------------------------------------------
Cash flow hedges
- recognised
in the period - - - - - - - 24.6 24.6 - 24.6
----------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Cash flow hedges
- reclassified
and reported
in sales - - - - - - - (12.6) (12.6) - (12.6)
----------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Cash flow hedges
- reclassified
and reported
in
inventory/cost
of sales - - - - - - - (19.6) (19.6) - (19.6)
----------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Cash flow hedges
- taxation - - - - - - - 2.2 2.2 - 2.2
----------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Fair value
adjustment
in respect of
long term
financial
assets -
recognised - - - - - - (69.7) - (69.7) - (69.7)
----------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Remeasurements
of defined
benefit
pension scheme - - - - - - (1.2) - (1.2) - (1.2)
----------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Deferred tax
on
remeasurements
of defined
benefit
pension scheme - - - - - - 0.3 - 0.3 - 0.3
----------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Translation
differences
- Group - - - - (2.4) - - - (2.4) - (2.4)
----------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Total
comprehensive
income for the
period - - - - (2.4) - 141.8 (5.4) 134.0 7.2 141.2
----------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
At 23 October
2022 64.1 874.3 (569.3) 20.0 33.2 (66.8) 1,919.9 (929.3) 1,346.1 36.2 1,382.3
----------------- ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
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
inventory/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 52 WEEKSED 24 APRIL 2022 (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 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) -
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Share scheme - - - 12.8 - (0.1) 0.1 - 12.8 - 12.8
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Dividends paid
to
non-controlling
interests - - - - - - - - - (1.3) (1.3)
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
TRANSACTIONS
WITH OWNERS
IN THEIR
CAPACITY
AS OWNERS - - - 12.8 - (0.1) 2.0 - 14.7 (3.2) 11.5
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Profit for the
financial period - - - - - - 249.8 - 249.8 7.1 256.9
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
OTHER COMPREHENSIVE INCOME
-------------------------------------------------------------------------------------------------------------------------------------------------------------------
Purchase of
own shares - - (193.2) - - - - - (193.2) - (193.2)
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Cash flow hedges
- recognised
in the period - - - - - - - 52.1 52.1 - 52.1
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Cash flow hedges
- reclassified
and reported
in
inventory/cost
of sales - - - - - - - 7.5 7.5 - 7.5
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Cash flow hedges
- taxation - - - - - - - (15.8) (15.8) - (15.8)
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Fair value
adjustment
in respect of
long term
financial
assets -
recognised - - - - - - (8.1) - (8.1) - (8.1)
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Remeasurements
of defined
benefit
pension scheme - - - - - - (26.8) - (26.8) - (26.8)
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Deferred tax
on
remeasurements
of defined
benefit
pension scheme - - - - - - 6.7 - 6.7 - 6.7
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Translation
differences
- Group - - - - 6.8 - - - 6.8 - 6.8
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
Total
comprehensive
income for the
period - - (193.2) - 6.8 - 221.6 43.8 79.0 7.1 86.1
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
At 24 April
2022 64.1 874.3 (488.9) 14.1 35.6 (66.8) 1,778.1 (923.9) 1,286.6 22.0 1,308.6
------------------ ----------- -------------- --------- ----------- --------------- --------- --------- --------- ------------ --------------- --------
(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 23 OCTOBER 2022
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 24 April 2022 is prepared in
accordance with UK-adopted International Accounting Standards in
conformity with the requirements of the Companies Act 2006 and
which have been delivered to the Registrar of Companies. The
Interim Results have been prepared on the basis of the policies set
out in the 2022 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 2022
Annual Report.
The summary of results for the 52 weeks ended 24 April 2022 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 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 banking facilities and covenants of
GBP980.0m until November 2024 and GBP930.0m until November 2025,
with the possibility to extend this by a further year 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 assessed the level of trading and have forecast
and projected a conservative base case scenario and also a number
of even more conservative scenarios taking into account the Group's
open positions in relation to Hugo Boss options. 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 Revolving Credit
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 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 24 April
2022. Several amendments apply for the first time during the period
but have not resulted in any changes to the Group's accounting
policies or have any other material impact on the financial
position or performance of the Group. The Group continues to
monitor the potential impact of new standards and interpretations
which have been or may be endorsed and require adoption by the
Group in future reporting periods. 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.
Risks and uncertainties
The Board has considered the risks and uncertainties for the
remaining half of the financial year and determined that the risks
and the level of risks presented in the FY22 Annual Report, noted
below, also remain relevant for the rest of the financial year and
that there aren't any further risks or uncertainties to add at this
stage:
* Strategy
* Third-party brand relationships, key suppliers and
supply chain management
* 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 FY22 Annual Report.
2. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
Climate Change
We have considered the potential impact of climate change in
preparing these financial statements. Tackling climate change is a
global imperative and measures which support climate change
initiatives and our wider ESG agenda continue to be key components
of our strategic direction, supporting sustainability, the broader
social agenda and consumer choice. The risks associated with
climate change have been deemed to be arising in the medium to long
term and we are working to mitigate these risks as detailed within
the TCFD section of the FY22 Annual Report.
We have considered climate change as part of our cash flow
projections within going concern, impairment assessments and
viability, and the impact of climate change is not deemed to have a
significant impact on these assessments currently and therefore
they are not deemed to be a key source of estimation uncertainty.
The Group will continue to monitor the impacts of climate change
over the coming years.
Critical Accounting Judgements and Key Sources of Estimation
Uncertainty
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:
Critical Accounting Judgements
The following are the critical judgements made in applying the
accounting policies of the group that have the most significant
effect on the amounts recognised in the financial statements:
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. During the period
the Group has held greater than 20% of the voting rights of
Mulberry Group Plc, whereby management consider that the Group does
not have significant influence over this entity for combinations of
the following reasons:
* The Group does not have any representation on the
board of directors of the investee;
* 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 the investee company;
* 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 the entity 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 as an associate using the equity
method. The Group does not have any representation on the board of
directors and no participation in decision making 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 gross amount owed by Four (Holdings) Limited for this loan
totalled GBP60.0m (GBP21.6m net of amounts recognised in respect of
loss allowance). 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.
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 recognised in the
Consolidated Income Statement.
Management considers various factors when determining whether a
forecast transaction is highly probable. These factors include
detailed sales and purchase 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, amounts in the
Hedging reserve of up to GBP49.9m (24 April 22: GBP55.3m) would be
shown in Finance Income.
Key Sources of Estimation Uncertainty
The critical estimates and assumptions that have a significant
risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are addressed
below:
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:
* Continuity inventory
* Seasonal inventory lines - specifically seasons that
have now finished
* Third party versus own brand inventory
* Ageing of inventory
* Sports Retail or Premium Lifestyle
* Local economic conditions
* Divisional specific factors
* Increased cost of inventory and lower margins with
the devaluation of the Pound
* Over-stock and out of season inventory as a result of
macro-economic factors
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 continuing impact of the pandemic, Brexit, global
supply chain challenges and macro-economic factors
* Tunnelling - Cost of handling stock for reworking and
repacking
* Repricing - Labour cost associated with repricing
units of stock
* Shrinkage - Stock lost
Total Group inventory provision at 23 October 2022 is 14.9% (24
April 2022: 15.2%) of gross inventory. A 1% change in the provision
as a percentage of gross inventory would impact profit before tax
by approx. GBP17.2m (24 April 2022: GBP15.5m). 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 (FY22: GBP100,000) for large leasehold stores, GBP50,000
(FY22: GBP50,000) for smaller leasehold stores (GBP25,000 per store
for Game UK and Game Spain stores) and $/EUR50,000 (FY22:
$/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 for which a material dilapidations provision was
capitalised in FY20.
A 10% increase in dilapidation cost per store would result in an
approx. GBP8.3m (FY22: GBP8.5m) reduction in profit before tax.
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 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 (FY22: 10%). A 5% increase to 15% would
result in approx. GBP6.5m increase in the provision
(FY22: approx. GBP6.5m increase).
* 3% interest on the liability (FY22: 3%). A 1%
increase to 4% would result in approx. GBP14.0m
increase in the provision (FY22: approx. GBP14.0m
increase).
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. Management have
applied a weighted probability to certain potential repayment
scenarios, with the strongest weighting given to expected default
after two years.
Impairment of Assets
a) IFRS 16 right-of-use assets and associated plant and equipment
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 2.6% - 4.9% 1.0% - 3.0% 2.9% - 5.2%
----------------------------------------- ------------- ------------- -------------
Greater than 5 years and up to 10 years 3.2% - 5.4% 1.9% - 3.6% 4.1% - 5.6%
----------------------------------------- ------------- ------------- -------------
Greater than 10 years and up to 20 years 3.4% - 5.4% 2.2% - 3.8% 4.3% - 5.6%
----------------------------------------- ------------- ------------- -------------
Greater than 20 years 3.5% - 5.4% 2.5% - 4.1% 4.6% - 5.8%
----------------------------------------- ------------- ------------- -------------
The right of use assets are assessed for impairment at each
reporting period in line with IAS 36 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.
Impairments in the period have been recognised for the amount of
GBP38.7m (FY22 H1: GBP55.2m) due to the ongoing challenges in the
retail sector on the forecast cash flows of the CGU, including
price increases and the cost-of-living squeeze on customers. This
is broken down as follows:
* GBP23.6m (FY22 H1: GBP29.5m) against the right-of-use
asset (GBP6.4m UK Sports Retail segment, GBP14.2m
Premium Lifestyle segment, and GBP3.0m International
Retail segment); and
* GBP15.1m (FY22 H1: GBP25.7m) against plant and
equipment (GBP3.1m UK Sports Retail segment, GBP8.9m
Premium Lifestyle segment, GBP3.1m International
Retail segment).
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 (see
below).
In line with IAS 36 Impairment of Assets, management have
considered whether any amounts should be recognised for the
reversal of prior period impairment losses with GBPnil (FY22:
GBPnil) being recognised in the period.
A sensitivity analysis has been performed in respect of sales,
margin and the new store exemption as these are considered to be
the most sensitive of the key assumptions:
Forecast: Impact of change Impairment increase
in assumption: / (decrease) GBPm
Sales year 1 5% - improvement (10.0)
----------------------------------- --------------------- -------------------
Sales year 1 5% - reduction 7.8
----------------------------------- --------------------- -------------------
Existing Gross Margin year 1 >40% 100bps - improvement (5.6)
----------------------------------- --------------------- -------------------
Existing Gross Margin year 1 >40% 100bps - reduction 2.9
----------------------------------- --------------------- -------------------
Change from 1 to
New store exemption (1) 2 years (32.2)
----------------------------------- --------------------- -------------------
Change from 3% to
Operating costs increase year 1 6% 3.2
----------------------------------- --------------------- -------------------
(1) Stores which have been open for less than one year are not reviewed for impairment.
b) Freehold land and buildings, long-term leasehold, investment
property and associated plant and equipment
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.
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
GBP11.5m (FY22 H1: GBP80.1m) due to the ongoing challenges in the
retail sector on the forecast cash flows of the CGU. This is broken
down as follows:
* GBP6.4m (FY22 H1: GBP79.9m) against freehold land and
buildings (GBP4.2m UK Sports Retail segment, GBP2.2m
Premium Lifestyle segment)
* GBP3.5m (FY22 H1: GBPnil) against long-term leasehold
(GBP3.5m Premium Lifestyle segment); and
* GBP1.6m (FY22 H1: GBP0.2m) plant and equipment
(GBP0.7m UK Sports Retail segment, GBP0.9m Premium
Lifestyle segment).
In line with IAS 36 Impairment of Assets, management have
considered whether any amounts should be recognised for the
reversal of prior period impairment losses with GBPnil (FY21:
GBPnil) being recognised in the period.
Value In Use (VIU)
The value in use is calculated based on a five year cash flow
projections. These are formulated by using the Group's forecast
cash flows of each individual CGU, taking into account historic
performance of the CGU, and then adjusting for the Group's current
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 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) of 8.7%
------------------------------------------------------------------------------
Terminal growth rate of 2%
------------------------------------------------------------------------------
Properties purchased within a year, or stores which have been open
for less than one year, are not reviewed for impairment
------------------------------------------------------------------------------
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.
Forecast: Impact of: Impairment
increase / (decrease)
GBPm
5% improvement
Sales year 1 to 0% (1.6)
------------------------------------ --------------------- ----------------------
5% reduction
Sales year 1 to 10% 4.3
------------------------------------ --------------------- ----------------------
Existing Gross Margin year 1 > 40% 100bps - improvement (0.6)
------------------------------------ --------------------- ----------------------
Existing Gross Margin year 1 > 40% 100bps - reduction 1.4
------------------------------------ --------------------- ----------------------
Change from
Operating costs increase year 1 3% to 6% 1.6
------------------------------------ --------------------- ----------------------
Fair value less costs 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
on the void period with applicable rent free; or
rates payable for the unit and rent-free -- 2 years void, 3
incentive. years rent free.
Yield bands - ranging
from 5.5% - 14.0%
-------------------- ============================================ ========================
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
deducted from the capital value generated rent free; or
by the ERV and reversionary yield. -- 2 years void, 3
Although we consider the commercial years rent free.
reality is that fair value less costs Yield bands - ranging
to sell will be higher than vacant from 5.5% - 14.0%
possession this very conservative
assumption is in line with both technical
accounting rules and that of our management
experts.
-------------------- ============================================ ========================
Third party tenanted ERV is applied reflecting the market Yields bands - ranging
for the applicable unit. An appropriate from 6.0% to 11.0%
reversionary yield is applied reflecting
the risk of tenant and renewal to
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
GBP1.3m (FY22 H1: GBP4.3m).
The total recoverable amount of the assets that were impaired at
the period end was GBP29.5m (FY22 H1: GBP60.3m), with GBP21.6m
(FY22 H1: GBP40.3m) of this being based on their fair value less
costs of disposal and GBP7.9m (FY22 H1: GBP20.0m) being based on
their value in use.
Credit Customer Receivables
The Group's credit customer receivables are recognised on
balance sheet at amortised cost (i.e. net of provision for expected
credit loss). At 23 October 2022, trade receivables with a gross
value of GBP355.3m (FY22 H1: GBPnil) were recorded on the balance
sheet, less a provision for impairment of GBP115.0m (FY22 H1:
GBPnil). Further details are provided in Note 10.
Expected credit loss
An appropriate allowance for expected credit loss in respect of
trade receivables is derived from estimates and underlying
assumptions such as the Probability of Default and the Loss Given
Default, taking into consideration forward looking macro-economic
assumptions. The assessment involves significant estimation
uncertainty. Changes in the assumptions applied such as the value
and frequency of future debt sales in calculating the Loss Given
Default, and the estimation of customer repayments and Probability
of Default rates, as well as the weighting of the macro-economic
scenarios applied to the impairment model could have a significant
impact on the carrying value of trade receivables. These
assumptions are continually assessed for relevance and adjusted
appropriately. Revisions to estimates are recognised
prospectively.
Post model adjustment
The impairment model was not designed to take into account
changes to customer payment and default performance arising as a
result of the current cost of living crisis where levels of price
inflation greatly exceed income growth, as the existing model uses
unemployment rates as the principal determinant in considering
forward looking macro-economic assumptions.
It is our expectation that SRL's customer base has seen and will
continue to see a significant reduction in real earnings as a
result of the current cost of living crisis and, whilst the adverse
impact payment and arrears performance has been less severe than
anticipated to date, it will continue to be felt in the future.
Judgement has therefore been exercised in applying a post model
adjustment of GBP20.0m (24 April 2022: GBP40.0m) to the output of
the impairment model in arriving at the provision. This reflects
management's best estimate based on the information available to
them and has been calculated using broadly the same methodology as
that used at 24 April 2022, although the probability weightings
applied to the relevant scenarios have been modified to reflect
management's latest view of the risks to customer payment and
default performance posed by the current macro-economic outlook. We
note that the unprecedented level of uncertainty around the cost of
living and the UK economy as a whole, and the impact this will have
on Studio's customer base, will continue to cause challenges in
assessing bad debt on a forward-looking basis.
3. SEGMENTAL ANALYSIS
Management has determined to present its segmental disclosures
consistently with the presentation in the 2022 Annual Report with
the exception of merging the European Retail and Rest of World
Retail segments in to a new International Retail segment. The prior
period numbers have been re-categorised for this change. 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 and
other international 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 market
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
which were disposed of during the period, 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, Studio Retail
Limited, and retail store operations in Northern Ireland .
ii) Premium Lifestyle - includes the results of the premium and
luxury retail businesses FLANNELS, Cruise, van mildert, Jack Wills,
House of Fraser and Sofa.com along with the related websites, the
Missguided and I Saw it First websites, and freehold property
owning companies where trading is purely from Premium Lifestyle
fascias.
2) International Retail - includes all of the Group's sports
retail stores, management and operating in Europe and Asia,
including the Group's European Distribution Centres in Belgium and
Austria, European freehold property owning companies, GAME Spain
stores, and Baltics & Asia e-commerce offerings. The Mysale
acquisition will be reported in this segment. International Retail
also includes the results of the US based retail activities until
the disposal in May 2022.
3) 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 three
operating segments being UK Retail (including UK Sports Retail and
Premium Lifestyle), International 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.
Segmental information for the 26 weeks ended 23 October 2022
(unaudited):
UK Sports Premium UK Retail International Total Wholesale Eliminations Group
Retail Lifestyle Total Retail Retail & Licensing Total
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
--------- ---------- --------- ------------- --------- ------------ ------------
Sales to external
customers 1,526.1 533.5 2,059.6 492.2 2,551.8 86.2 - 2,638.0
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Sales to other
segments - - - - - 40.9 (40.9) -
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Revenue 1,526.1 533.5 2,059.6 492.2 2,551.8 127.1 (40.9) 2,638.0
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Gross profit 642.3 223.2 865.5 204.9 1,070.4 37.3 - 1,107.7
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Operating profit
before
foreign exchange,
exceptional
items, property
and
other related
impairments,
profit on sale of
properties,
and gain on sale
of
discontinued
operation 111.6 41.9 153.5 37.3 190.8 7.4 - 198.2
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Realised foreign
exchange
gain / (loss) 47.7 (0.1) 47.6 (5.5) 42.1 1.7 - 43.8
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Property and other
related
impairments (14.4) (29.7) (44.1) (6.1) (50.2) - - (50.2)
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Profit on sale of
properties 84.5 - 84.5 6.7 91.2 - - 91.2
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Gain on sale of
discontinued
operation - - - 26.3 26.3 - - 26.3
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Operating profit 229.4 12.1 241.5 58.7 300.2 9.1 - 309.3
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Investment income 27.2 - 27.2 - 27.2 - - 27.2
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Investment costs (40.4) - (40.4) - (40.4) - - (40.4)
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Finance income 24.2 - 24.2 0.5 24.7 - - 24.7
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Finance costs (33.1) (0.9) (34.0) (2.2) (36.2) - - (36.2)
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Profit before
taxation 207.3 11.2 218.5 57.0 275.5 9.1 - 284.6
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Taxation (65.0)
------------------- -------------------------------------------------------------------------------------- ---------
Profit for the
period 219.6
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Total assets 4,880.9 1,319.0 6,199.9 671.1 6,871.0 382.3 (2,858.6) 4,394.7
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Total liabilities (3,647.2) (1,400.9) (5,048.1) (748.1) (5,796.2) (74.8) 2,858.6 (3,012.4)
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Property, Plant &
Equipment
asset additions 85.6 20.0 105.6 12.9 118.5 0.3 - 118.8
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Right-of-use asset
additions 23.8 2.3 26.1 17.1 43.2 - - 43.2
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
During the period a number of freehold and long leasehold retail
parks & properties were sold. Total proceeds received were
GBP222.4m (GBP199.5m UK Sports Retail, GBP23.0m International
Retail) resulting in a profit on disposal of GBP91.2m (GBP84.5m UK
Sports Retail, GBP6.7m International Retail) being recognised in
the Income Statement.
Sales to other segments are priced at cost plus a 10%
mark-up.
Segmental information for the 26 weeks ended 24 October 2021
(unaudited)
UK Sports Premium UK Retail International Total Wholesale Eliminations Group
Retail Lifestyle Total Retail Retail & Licensing Total
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
--------- ---------- --------- ------------- --------- ------------ ------------
Sales to external
customers 1,367.1 427.9 1,795.0 465.4 2,260.4 79.4 - 2,339.8
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Sales to other
segments - - - - - 45.0 (45.0) -
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Revenue 1,367.1 427.9 1,795.0 465.4 2,260.4 124.4 (45.0) 2,339.8
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Gross profit 599.0 204.3 803.3 209.6 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 81.7 326.4 4.1 - 330.5
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Realised foreign
exchange
gain / (loss) 0.7 (0.5) 0.2 1.1 1.3 3.2 - 4.5
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Property and other
related
impairments (51.0) (79.3) (130.3) (5.0) (135.3) - - (135.3)
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Operating profit /
(loss) 124.2 (9.6) 114.6 77.8 192.4 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) (1.5) (16.1) (0.2) - (16.3)
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Profit / (loss)
before
taxation 112.8 (10.2) 102.6 76.3 178.9 7.1 - 186.0
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Taxation (42.3)
------------------- -------------------------------------------------------------------------------------- ---------
Profit for the
period 143.7
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Total assets 3,470.90 565.6 4,036.5 550.1 4,586.6 341.7 (1,189.0) 3,739.3
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Total liabilities (2,138.6) (692.5) (2,831.1) (609.5) (3,440.6) (120.5) 1,189.0 (2,372.1)
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Property, Plant &
Equipment
asset additions 65.0 40.7 105.7 6.4 112.1 0.6 - 112.7
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Right-of-use asset
additions 5.0 15.3 20.3 15.5 35.8 - - 35.8
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Sales to other segments are priced at cost plus a 10%
mark-up.
Segmental information for the 52 weeks ended 24 April 2022
(audited):
UK Sports Premium UK Retail International Total Wholesale Eliminations Group
Retail Lifestyle Total Retail Retail & Licensing Total
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
--------- ---------- --------- ------------- --------- ------------ ------------
Sales to external
customers 2,640.1 1,056.6 3,696.7 940.5 4,637.2 168.1 - 4,805.3
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Sales to other
segments - - - - - 80.1 (80.1) -
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Revenue 2,640.1 1,056.6 3,696.7 940.5 4,637.2 248.2 (80.1) 4,805.3
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Gross profit 1,136.8 474.8 1,611.6 414.0 2,025.6 63.1 - 2,088.7
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Operating profit
before
foreign exchange,
exceptional
items and
property and
other related
impairments 289.4 124.0 413.4 144.2 557.6 6.9 - 564.5
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Exceptional (1.3) - (1.3) - (1.3) - - (1.3)
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Realised foreign
exchange
gain / (loss) (1.1) (0.1) (1.2) (3.7) (4.9) (0.9) - (5.8)
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Property and other
related
impairments (103.4) (103.5) (206.9) (20.1) (227.0) - - (227.0)
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Operating profit 183.6 20.4 204.0 120.4 324.4 6.0 - 330.4
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Investment income 43.8 - 43.8 - 43.8 - - 43.8
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Investment costs (19.7) - (19.7) - (19.7) - - (19.7)
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Finance income (1) 36.8 - 36.8 2.0 38.8 - (8.5) 30.3
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Finance costs (1) (42.8) (10.0) (52.8) (4.9) (57.7) - 8.5 (49.2)
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Profit before
taxation 201.7 10.4 212.1 117.5 329.6 6.0 - 335.6
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Taxation (78.7)
------------------- -------------------------------------------------------------------------------------- ---------
Profit for the
period 256.9
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Total assets 4,161.9 1,002.1 5,164.0 569.9 5,733.9 349.7 (1,940.9) 4,142.7
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Total liabilities (2,908.9) (1,098.9) (4,007.8) (673.8) (4,681.6) (93.4) 1,940.9 (2,834.1)
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Property, Plant &
Equipment
asset additions 228.1 63.6 291.7 30.7 322.4 0.8 - 323.2
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Right-of-use asset
additions 27.8 25.0 52.8 47.7 100.5 0.4 - 100.9
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
Intangible assets
acquired 7.0 - 7.0 - 7.0 - - 7.0
------------------- --------- ---------- --------- ------------- --------- ------------ ------------ ---------
(1) Includes inter-company related finance income in UK Sports
Retail and the equivalent finance cost in Premium Lifestyle that
eliminates on consolidation.
Sales to other segments are priced at cost plus a 10%
mark-up.
Other segment items included in the income statement for the 26
weeks ended 23 October 2022:
UK Sports Premium UK Retail International Total Wholesale Group
Retail Lifestyle Total Retail Retail & Licensing Total
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
Property, plant & equipment
depreciation 52.3 15.1 67.4 7.8 75.2 0.7 75.9
---------------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Property, plant & equipment
impairment 8.0 15.5 23.5 3.1 26.6 - 26.6
---------------------------------- --------- ---------- --------- ------------- -------- ------------ --------
IFRS 16 ROU depreciation 20.0 2.4 22.4 14.6 37.0 - 37.0
---------------------------------- --------- ---------- --------- ------------- -------- ------------ --------
IFRS 16 ROU impairment 6.4 14.2 20.6 3.0 23.6 - 23.6
---------------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Investment property depreciation 2.6 - 2.6 - 2.6 - 2.6
---------------------------------- --------- ---------- --------- ------------- -------- ------------ --------
IFRS 16 disposal and
modification/remeasurement
of lease liabilities (1.5) (0.7) (2.2) (1.2) (3.4) - (3.4)
---------------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Intangible amortisation - - - - - 3.3 3.3
---------------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Intangible impairment 4.7 20.5 25.2 2.3 27.5 - 27.5
---------------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Other segment items included in the income statement for the 26
weeks ended 24 October 2021:
UK Sports Premium UK Retail International Total Wholesale Group
Retail Lifestyle Total Retail Retail & Licensing Total
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
Property, plant & equipment
depreciation 62.2 11.7 73.9 3.4 77.3 0.6 77.9
---------------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Property, plant & equipment
impairment 26.2 76.5 102.7 3.1 105.8 105.8
---------------------------------- --------- ---------- --------- ------------- -------- ------------ --------
IFRS 16 ROU depreciation 24.9 3.0 27.9 10.7 38.6 - 38.6
---------------------------------- --------- ---------- --------- ------------- -------- ------------ --------
IFRS 16 ROU impairment 25.0 2.7 27.7 1.8 29.5 - 29.5
---------------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Investment property depreciation 1.3 - 1.3 - 1.3 - 1.3
---------------------------------- --------- ---------- --------- ------------- -------- ------------ --------
IFRS 16 disposal and
modification/remeasurement
of lease liabilities (4.8) (0.9) (5.7) (0.2) (5.9) - (5.9)
---------------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Intangible amortisation - - - - - 3.4 3.4
---------------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Intangible impairment - - - - - 4.4 4.4
---------------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Other segment items included in the income statement for the 52
weeks ended 24 April 2022:
UK Sports Premium UK Retail International Total Wholesale Group
Retail Lifestyle Total Retail Retail & Licensing Total
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
Property, plant & equipment
depreciation 122.2 22.9 145.1 22.6 167.7 1.3 169.0
---------------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Property, plant & equipment
impairment 51.7 94.0 145.7 3.5 149.2 - 149.2
---------------------------------- --------- ---------- --------- ------------- -------- ------------ --------
IFRS 16 ROU depreciation 47.8 6.4 54.2 23.0 77.2 0.4 77.6
---------------------------------- --------- ---------- --------- ------------- -------- ------------ --------
IFRS 16 ROU impairment 50.7 9.5 60.2 16.6 76.8 - 76.8
---------------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Investment property depreciation 5.9 - 5.9 - 5.9 - 5.9
---------------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Investment property impairment 1.0 - 1.0 - 1.0 - 1.0
---------------------------------- --------- ---------- --------- ------------- -------- ------------ --------
IFRS 16 disposal and
modification/remeasurement
of lease liabilities (14.2) (3.9) (18.1) (10.2) (28.3) - (28.3)
---------------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Intangible amortisation 1.0 - 1.0 - 1.0 6.5 7.5
---------------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Intangible impairment 1.3 - 1.3 - 1.3 4.4 5.7
---------------------------------- --------- ---------- --------- ------------- -------- ------------ --------
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 23 October 2022 (unaudited):
UK Sports Premium UK Retail International Total Wholesale Group
Retail Lifestyle Total Retail Retail & Licensing Total
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
Reported PBT 207.3 11.2 218.5 57.0 275.5 9.1 284.6
--------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Fair value adjustment
to derivatives included
within Finance (income)
/ costs (12.4) - (12.4) - (12.4) - (12.4)
--------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Fair value (gains)/losses
and profit on disposal
of equity derivatives 32.0 - 32.0 - 32.0 - 32.0
--------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Realised FX (gain) /
loss (47.7) 0.1 (47.6) 5.5 (42.1) (1.7) (43.8)
--------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Share scheme 4.9 - 4.9 - 4.9 1.8 6.7
--------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Adjusted PBT 184.1 11.3 195.4 62.5 257.9 9.2 267.1
--------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Reconciliation of Reported PBT to Adjusted PBT for the 26 week
period ended 24 October 2021 (unaudited):
UK Sports Premium UK Retail International Total Wholesale Group
Retail Lifestyle Total Retail Retail & Licensing Total
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
Reported PBT 112.8 (10.2) 102.6 76.3 178.9 7.1 186.0
--------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Fair value adjustment
to derivatives included
within Finance (income)
/ costs (10.7) - (10.7) - (10.7) - (10.7)
--------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Fair value (gains)/losses
and profit on disposal
of equity derivatives 15.6 - 15.6 - 15.6 - 15.6
--------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Realised FX (gain) /
loss (0.7) 0.5 (0.2) (1.1) (1.3) (3.2) (4.5)
--------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Share scheme 6.0 - 6.0 - 6.0 - 6.0
--------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Adjusted PBT 123.0 (9.7) 113.3 75.2 188.5 3.9 192.4
--------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Reconciliation of Reported PBT to Adjusted PBT for the 52 week
period ended 24 April 2022 (audited):
UK Sports Premium UK Retail International Total Wholesale Group
Retail Lifestyle Total Retail Retail & Licensing Total
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
Reported PBT 201.6 10.4 212.0 117.6 329.6 6.0 335.6
--------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Exceptional items 1.3 - 1.3 - 1.3 - 1.3
--------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Fair value adjustment
to derivatives included
within Finance (income)
/ costs (7.6) - (7.6) - (7.6) - (7.6)
--------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Fair value (gains)/losses
and profit on disposal
of equity derivatives (9.9) - (9.9) - (9.9) - (9.9)
--------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Realised FX loss / (gain) 1.1 0.1 1.2 3.7 4.9 0.9 5.8
--------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Share scheme 10.4 - 10.4 - 10.4 4.2 14.6
--------------------------- --------- ---------- --------- ------------- -------- ------------ --------
Adjusted PBT 196.9 10.5 207.4 121.3 328.7 11.1 339.8
--------------------------- --------- ---------- --------- ------------- -------- ------------ --------
4. EXCEPTIONAL ITEMS
26 weeks ended 26 weeks 52 weeks
ended ended
23 October 24 October 24 April
2022 2021 2022
(unaudited) (unaudited) (audited)
(GBPm) (GBPm) (GBPm)
Impairments - - 1.3
------------- --------------- ------------- -----------
- - 1.3
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. Given the recurring nature of goodwill
impairments being recognised by the Group, the current period
goodwill impairments of GBP11.6m have been included in
administrative expenses.
5. INVESTMENT INCOME
26 weeks ended 26 weeks 52 weeks
ended ended
23 October 24 October 24 April
2022 2021 2022
(unaudited) (unaudited) (audited)
(GBPm) (GBPm) (GBPm)
Profit on disposal of equity derivatives - 23.2 23.2
------------------------------------------ --------------- ------------- -----------
Premium received on equity derivatives 17.4 5.4 13.2
------------------------------------------ --------------- ------------- -----------
Fair value gain on equity derivatives 8.4 - 6.4
------------------------------------------ --------------- ------------- -----------
Dividend income 1.4 0.2 1.0
------------------------------------------ --------------- ------------- -----------
27.2 28.8 43.8
The prior period profit on disposal of 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 largely relates to
options.
6. INVESTMENT COSTS
26 weeks ended 26 weeks 52 weeks
ended ended
23 October 24 October 24 April
2022 2021 2022
(unaudited) (unaudited) (audited)
(GBPm) (GBPm) (GBPm)
Fair value loss on equity derivatives 38.4 38.8 19.7
---------------------------------------- --------------- ------------- -----------
Loss on disposal of equity derivatives 2.0 - -
---------------------------------------- --------------- ------------- -----------
40.4 38.8 19.7
The fair value loss on derivative financial instruments largely
relates to Hugo Boss options.
7. FINANCE INCOME
26 weeks ended 26 weeks 52 weeks
ended ended
23 October 24 October 24 April
2022 2021 2022
(unaudited) (unaudited) (audited)
(GBPm) (GBPm) (GBPm)
Bank interest receivable 3.3 0.1 4.5
-------------------------------------------- --------------- ------------- -----------
Interest on retirement benefit obligations - - 0.1
-------------------------------------------- --------------- ------------- -----------
Other finance income 0.4 - 1.7
-------------------------------------------- --------------- ------------- -----------
Fair value adjustment to derivatives 21.0 12.5 24.0
-------------------------------------------- --------------- ------------- -----------
24.7 12.6 30.3
The fair value adjustment to derivatives largely relates to
movement in the fair value of interest rate swaps.
8. FINANCE COSTS
26 weeks ended 26 weeks 52 weeks
ended ended
23 October 24 October 24 April
2022 2021 2022
(unaudited) (unaudited) (audited)
(GBPm) (GBPm) (GBPm)
Interest on bank loans and overdrafts 16.8 4.8 13.6
--------------------------------------- --------------- ------------- -----------
Other interest 3.7 4.0 7.0
--------------------------------------- --------------- ------------- -----------
IFRS 16 lease interest 7.1 5.7 12.2
--------------------------------------- --------------- ------------- -----------
Fair value adjustment to derivatives 8.6 1.8 16.4
36.2 16.3 49.2
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, 460,090,844 (24 October 2021: 489,203,650, 24 April 2022:
471,975,282), is adjusted to assume conversion of all dilutive
potential ordinary shares under the Group's share schemes, being
nil (24 October 2021: 10,125, 24 April 2022: nil), to give the
diluted weighted average number of shares of 460,090,844 (24
October 2021: 489,213,775, 24 April 2022: 471,975,282).
BASIC AND DILUTED EARNINGS PER SHARE
26 weeks 26 weeks 26 weeks 26 weeks 26 weeks 26 weeks 26 weeks 26 weeks 26 weeks
ended ended ended ended ended ended ended ended ended
23 October 23 October 23 October 24 October 24 October 24 October 24 April 24 April 24 April
2022 2022 2022 2021 2021 2021 2022 2022 2022
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (audited) (audited) (audited)
Basic Basic Basic Basic Basic Basic Basic Basic Basic
and and diluted, and and and diluted, and and and diluted, and
diluted, discontinued diluted, diluted, discontinued diluted, diluted, discontinued diluted,
continuing operations total continuing operations total continuing operations total
operations operations operations
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------- ----------- ----------- ------------ ----------- ---------- ------------ ---------
Profit
for the
period 186.1 26.3 212.4 122.7 15.5 138.2 224.1 25.7 249.8
---------- ----------- ------------ ----------- ----------- ------------ ----------- ---------- ------------ ---------
Number in millions Number in millions Number in millions
---------- -------------------------------------- -------------------------------------- -----------------------------------
Weighted
average
number
of
shares 460.1 460.1 460.1 489.2 489.2 489.2 472.0 472.0 472.0
---------- ----------- ------------ ----------- ----------- ------------ ----------- ---------- ------------ ---------
Pence Pence Pence Pence Pence Pence Pence Pence Pence
per share per share per share per share per share per share per share per share per share
---------- ----------- ------------ ----------- ----------- ------------ ----------- ---------- ------------ ---------
Earnings
per
share 40.4 5.7 46.1 25.0 3.2 28.2 47.5 5.4 52.9
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 profitfor 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
23 October 23 October 24 October 24 October 24 April 24 April
2022 2022 2021 2021 2022 2022
(unaudited) (unaudited) (unaudited) (unaudited) (audited) (audited)
Basic Diluted Basic Diluted Basic Diluted
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------- ------------- ------------- ----------- -----------
Profit for the period 212.4 212.4 138.2 138.2 249.8 249.8
-------------------------------- ------------- ------------- ------------- ------------- ----------- -----------
Pre-tax adjustments to
profit / (loss) for the
period for the following
items:
-------------------------------- ------------- ------------- ------------- ------------- ----------- -----------
Exceptional items - - - - 1.3 1.3
-------------------------------- ------------- ------------- ------------- ------------- ----------- -----------
Fair value adjustment
to derivatives included
within Finance (income)
/ costs (12.4) (12.4) (10.7) (10.7) (7.6) (7.6)
-------------------------------- ------------- ------------- ------------- ------------- ----------- -----------
Fair value (gains) / losses
and (profit) / loss on
disposal of equity derivatives 32.0 32.0 15.6 15.6 (9.9) (9.9)
-------------------------------- ------------- ------------- ------------- ------------- ----------- -----------
Realised foreign exchange
(gain) / loss (43.8) (43.8) (4.5) (4.5) 5.8 5.8
-------------------------------- ------------- ------------- ------------- ------------- ----------- -----------
Share scheme 6.7 6.7 6.0 6.0 14.6 14.6
-------------------------------- ------------- ------------- ------------- ------------- ----------- -----------
Tax adjustments on the
above items 11.0 11.0 3.8 3.8 0.3 0.3
-------------------------------- ------------- ------------- ------------- ------------- ----------- -----------
Adjusted profit for the
period 205.9 205.9 148.4 148.4 254.3 254.3
-------------------------------- ------------- ------------- ------------- ------------- ----------- -----------
Number in millions Number in millions Number in millions
-------------------------------- ---------------------------- ---------------------------- ------------------------
Weighted average number
of shares 460.1 460.1 489.2 489.2 472.0 472.0
-------------------------------- ------------- ------------- ------------- ------------- ----------- -----------
Pence per share Pence per share Pence per share
-------------------------------- ---------------------------- ---------------------------- ------------------------
Adjusted earnings per
share 44.8 44.8 30.3 30.3 53.9 53.9
10. TRADE AND OTHER RECEIVABLES
26 weeks ended 26 weeks ended 52 weeks ended
23 October 24 October 24 April 2022
2022 2021
(unaudited) (unaudited) (audited)
(GBPm) (GBPm) (GBPm)
Gross credit customer receivables 355.3 - 372.7
------------------------------------ ---------------
Allowance for expected credit loss
on credit customer receivables (115.0) - (138.5)
------------------------------------ --------------- --------------- ---------------
Net credit customer receivables 240.3 - 234.2
------------------------------------ --------------- --------------- ---------------
Trade receivables 70.4 53.6 56.4
------------------------------------ --------------- --------------- ---------------
Deposits in respect of derivative
financial instruments 389.7 117.3 243.9
------------------------------------ --------------- --------------- ---------------
Amounts owed by related parties 26.8 27.3 24.2
------------------------------------ --------------- --------------- ---------------
Other receivables 126.4 215.9 170.2
------------------------------------ --------------- --------------- ---------------
Prepayments 88.4 76.6 112.5
------------------------------------ --------------- --------------- ---------------
942.0 490.7 841.4
------------------------------------ --------------- --------------- ---------------
The Directors consider that the carrying amount of trade and
other receivables approximates to their fair value. The maximum
exposure to credit risk at the reporting date is the carrying value
of each class of asset above, plus any cash balances. Other
receivables also include unremitted sales receipts.
Deposits in respect of derivative financial instruments are
collateral to cover margin requirements for derivative transactions
held with counterparties. The collateral requirement changes with
the market (which is dependent on share price, interest rates and
volatility) and further purchases / sales of underlying investments
held.
Included within other receivables is the reimbursement asset
totalling GBPnil (24 October 2021: GBP118.3m, 24 April 2022:
GBP88.3m). Other receivables also includes rent deposits and
deposits on fixed asset additions.
Credit Customer Receivables
Certain of the Group's trade receivables are funded through a
securitisation facility that is secured against those receivables.
The finance provider will seek repayment of the finance, as to both
principal and interest, only to the extent that collections from
the trade receivables financed allows and the benefit of additional
collections remains with the Group. At the period end, receivables
of GBP269.1m (24 April 2022: GBP287.2m) were eligible to be funded
via the securitisation facility, and the facilities utilised were
GBP134.5m (24 April 2022: GBP143.6m).
Other information
The average credit period taken on sales of goods is 254 days
(24 April 2022: 219 days). On average, interest is charged at 3.5%
per month on the outstanding balance.
The Group will undertake a reasonable assessment of the
creditworthiness of a customer before opening a new credit account
or significantly increasing the credit limit on that credit
account. The Group will only offer credit limit increases for those
customers that can reasonably be expected to be able to afford and
sustain the increased repayments in line with the affordability and
creditworthiness assessment. There are no customers who represent
more than 1% of the total balance of the Group's trade
receivables.
Where appropriate, the Group will offer forbearance to allow
customers reasonable time to repay the debt. Studio will ensure
that the forbearance option deployed is suitable in light of the
customer's circumstances (paying due regard to current and future
personal and financial circumstances). Where repayment plans are
agreed, the Group will ensure that these are affordable to the
customer and that unreasonable or unsustainable amounts are not
requested. At the balance sheet date there were 24,159 accounts
with total gross balances of GBP15.6m (24 April 2022: 24,711 with
total gross balances of GBP16.2m) on repayment plans. Provisions
are assessed as detailed above.
During the current period, overdue receivables with a gross
value of GBP27.2m were sold to third party debt collection
agencies. As a result of the sales, the contractual rights to
receive the cash flows from these assets were transferred to the
purchasers. Any gain or loss between actual recovery and expected
recovery is reflected within the impairment charge.
Allowance for expected credit loss
The following tables provide information about the exposure to
credit risk and ECLs for trade receivables from individual
customers as at 23 October 2022:
(Unaudited) 23 October (Audited) 24 April 2022 24 February 2022 (acquisition
2022 date)
Trade Trade Total Trade Trade Total Trade Trade Total
receivables receivables (GBPm) receivables receivables (GBPm) receivables receivables (GBPm)
(GBPm) on (GBPm) on (GBPm) on
forbearance forbearance forbearance
arrangements arrangements arrangements
(GBPm) (GBPm) (GBPm)
Ageing of
trade
receivables
------------- -------
Not past
due 257.2 14.2 271.4 272.1 14.3 286.4 298.4 13.6 312.0
------------- ----------- ------------ ------- ----------- ------------ ------- ----------- ------------ -------
Past due
------------- ----------- ------------ ------- ----------- ------------ ------- ----------- ------------ -------
0 - 60 days 22.9 1.4 24.3 36.7 1.8 38.5 36.8 1.5 38.3
------------- ----------- ------------ ------- ----------- ------------ ------- ----------- ------------ -------
60 - 120
days 8.9 - 8.9 20.0 0.1 20.1 14.9 - 14.9
------------- ----------- ------------ ------- ----------- ------------ ------- ----------- ------------ -------
120+ days 50.7 - 50.7 27.7 - 27.7 17.8 - 17.8
------------- ----------- ------------ ------- ----------- ------------ ------- ----------- ------------ -------
Gross trade
receivables 339.7 15.6 355.3 356.5 16.2 372.7 367.9 15.1 383.0
------------- ----------- ------------ ------- ----------- ------------ ------- ----------- ------------ -------
Allowance
for
expected
credit loss (104.2) (10.8) (115.0) (127.3) (11.2) (138.5) (118.5) (10.5) (129.0)
------------- ----------- ------------ ------- ----------- ------------ ------- ----------- ------------ -------
Carrying
value 235.5 4.8 240.3 229.2 5.0 234.2 249.4 4.6 254.0
------------- ----------- ------------ ------- ----------- ------------ ------- ----------- ------------ -------
24 April 2022 to 23 October 2022
Stage Stage Stage Total
1 2 3
(GBPm) (GBPm) (GBPm) (unaudited)
(GBPm)
Gross trade receivables 238.5 45.0 71.8 355.3
-------------------------------
Allowance for doubtful debts:
------------------------------- -------- -------- -------- -------------
24 April 2022 (60.4) (25.7) (52.4) (138.5)
------------------------------- -------- -------- -------- -------------
Impairment credit/(charge) 21.3 1.1 (22.4) -
------------------------------- -------- -------- -------- -------------
Utilisation in period 1.1 7.6 14.8 23.5
------------------------------- -------- -------- -------- -------------
Closing balance (38.0) (17.0) (60.0) (115.0)
------------------------------- -------- -------- -------- -------------
Carrying value 200.5 28.0 11.8 240.3
------------------------------- -------- -------- -------- -------------
24 April 2022
to 23 October 2022
(unaudited)
(GBPm)
Impairment charge impacting on provision -
------------------------------------------
Recoveries 5.0
------------------------------------------ -------------------
Other (1.2)
------------------------------------------ -------------------
Impairment credit (3.8)
------------------------------------------ -------------------
Sensitivity analysis
Management judgement is required in setting assumptions around
probabilities of default, cash recoveries and the weighting of
macro-economic scenarios applied to the impairment model, which
have a material impact on the results indicated by the model.
A 1% increase/decrease in the probability of default would
increase/decrease the provision amount by approximately GBP2.6m
(FY22: GBP2.2m).
A 1% increase/decrease in the assumed recoveries rate would
result in the impairment provision decreasing/increasing by
approximately GBP1.0m (FY22: GBP1.1m).
These sensitivities reflect management's assessment of
reasonably possible changes to key assumptions which could result
in a material adjustment to the level of provision within the next
financial year.
11. PROVISIONS
26 weeks ended 23 October 2022 (unaudited)
Legal and Property Financial Total
regulatory related services (GBPm)
(GBPm) (GBPm) related
(GBPm)
At 24 April 2022 230.2 161.2 41.6 433.0
---------------------------------------- -------- --------- -------
Acquired through business combinations - 2.3 - 2.3
---------------------------------------- ----------- -------- --------- -------
Amounts provided 0.5 30.8 - 31.3
---------------------------------------- ----------- -------- --------- -------
Amounts utilised / reversed - (30.1) (10.4) (40.5)
---------------------------------------- ----------- -------- --------- -------
At 23 October 2022 230.7 164.2 31.2 426.1
---------------------------------------- ----------- -------- --------- -------
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
----------------------------- ----------- -------- ------- -------
52 weeks ended 24 April 2022 (audited)
Legal and Property Financial Other Total
regulatory related services (GBPm) (GBPm)
(GBPm) (GBPm) related
(GBPm)
At 25 April 2021 215.8 144.1 - 1.3 361.2
----------------------------- -------- --------- ------- -------
Acquired through business
combinations 7.1 2.7 42.4 - 52.2
----------------------------- ----------- -------- --------- ------- -------
Amounts provided 17.7 53.7 - - 71.4
----------------------------- ----------- -------- --------- ------- -------
Amounts utilised / reversed (10.4) (39.3) (0.8) (1.3) (51.8)
----------------------------- ----------- -------- --------- ------- -------
At 24 April 2022 230.2 161.2 41.6 - 433.0
----------------------------- ----------- -------- --------- ------- -------
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 inquiries 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. Included within Legal and regulatory provisions, are
amounts relating to the Group's ongoing discussions with HMRC with
regard to agreeing a new Partial Exemption Special Method (the
means by which the recovery of input VAT on costs relating to the
company's financial services activities is restricted). As at 23
October 2022, the company held a provision of GBP6.8m (24 April
2022: GBP6.9m) which represents management's best estimate of the
likely increase in the level of restriction on the recovery of
input VAT over and above that which has already been restricted in
the company's quarterly VAT returns. We note that management's best
estimate is one of a number of different outcomes so the amounts
provided may differ to the final costs incurred by the company in
respect of this matter.
A reimbursement asset of GBPnil (24 April 2022: GBP88.3 and 24
October 2021: 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.
Included above is a provision of GBP31.2m (24 April 2022:
GBP41.6m) for probable outflows in respect of the financial
services business.
As a regulated business, one of the group's subsidiaries Studio
Retail Limited has an obligation to proactively review its business
to ensure that appropriate outcomes were delivered to customers.
Based on work undertaken as at the balance sheet date it is
considered likely that some level of remediation will be required
to fully satisfy this obligation.
The provision recognises the inherent uncertainties in any such
remediation including a number of customers who might have been
impacted, the proportion of those who were adversely affected by
the legacy decisions, the possible remediation payable, and
overlays these uncertainties with a risk-based consideration of the
proportion of the population identified above that suffered adverse
outcomes, and the period over which such adverse outcomes may have
been suffered. Assumptions have been overlaid in respect of the
timing and mechanism for undertaking any remediation.
At this stage a detailed analysis of the relevant customer
cohorts has not yet been completed and as such there are a range of
outcomes which could result in a settlement which is significantly
lower or higher than the amount estimated. This variation could be
significant and therefore highly material for a user of these
accounts. This range of outcomes is expected to narrow as the work
to substantiate each of the uncertainties set out above is
completed. It is anticipated this work will be completed within the
12 month fair value measurement period in line with IFRS3.
The timing of any potential outflows is also uncertain, but we
have assumed that these take place within two years.
The recognition of a provision by the Group is not an admission
of liability for the payment of this amount, but rather to comply
with the directors' obligations to prepare financial statements
that give a true and fair view of the performance and financial
position of the Group in accordance with IFRS.
12. 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 - 23 October 2022
------------------------------------------------- -------- -------- --------
Amortised cost:
------------------------------------------------- -------- -------- -------- -------- --------
Trade and other receivables* - - - 826.8 826.8
------------------------------------------------- -------- -------- -------- -------- --------
Cash and cash equivalents - - - 314.8 314.8
------------------------------------------------- -------- -------- -------- -------- --------
Amounts owed by related parties - - - 26.8 26.8
------------------------------------------------- -------- -------- -------- -------- --------
FVOCI:
------------------------------------------------- -------- -------- -------- -------- --------
Long Term Financial Assets (Equity Instruments)
- designated 241.4 - - - 241.4
------------------------------------------------- -------- -------- -------- -------- --------
Derivative financial assets (FV):
------------------------------------------------- -------- -------- -------- -------- --------
Foreign forward purchase and sales contracts,
and interest rate swaps - 130.3 - - 130.3
------------------------------------------------- -------- -------- -------- -------- --------
Derivative financial assets - contracts
for difference & equity options - 1.3 - - 1.3
------------------------------------------------- -------- -------- -------- -------- --------
- 131.6 - - 131.6
------------------------------------------------- -------- -------- -------- -------- --------
FINANCIAL LIABILITIES - 23 October 2022
------------------------------------------------- -------- -------- -------- -------- --------
Amortised cost:
------------------------------------------------- -------- -------- -------- -------- --------
Non-current borrowings - - - (813.9) (813.9)
------------------------------------------------- -------- -------- -------- -------- --------
Trade and other payables** - - - (801.8) (801.8)
------------------------------------------------- -------- -------- -------- -------- --------
IFRS 16 lease liabilities - - - (659.9) (659.9)
------------------------------------------------- -------- -------- -------- -------- --------
Derivative financial liabilities (FV):
------------------------------------------------- -------- -------- -------- -------- --------
Foreign forward and written options purchase
and sales contracts - unhedged - (40.4) - - (40.4)
------------------------------------------------- -------- -------- -------- -------- --------
Derivative financial liabilities - contracts
for difference & equity options - (140.4) - - (140.4)
------------------------------------------------- -------- -------- -------- -------- --------
- (180.8) - - (180.8)
*Prepayments of GBP88.4m are not included as a financial
asset.
**Other taxes including social security costs of GBP37.1m are
not included as a financial liability.
(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* - - - 386.8 386.8
------------------------------------------------- -------- -------- -------- -------- --------
Cash and cash equivalents - - - 350.7 350.7
------------------------------------------------- -------- -------- -------- -------- --------
Amounts owed by related parties - - - 27.3 27.3
------------------------------------------------- -------- -------- -------- -------- --------
FVOCI:
------------------------------------------------- -------- -------- -------- -------- --------
Long Term Financial Assets (Equity Instruments)
- designated 352.4 - - - 352.4
------------------------------------------------- -------- -------- -------- -------- --------
Derivative financial assets (FV):
------------------------------------------------- -------- -------- -------- -------- --------
Foreign forward purchase and sales contracts,
and interest rate swaps - 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.
(Audited) Level Level Level Other Total
1 2 3
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
FINANCIAL ASSETS - 24 April 2022
------------------------------------------------- -------- -------- --------
Amortised cost:
------------------------------------------------- -------- -------- -------- -------- --------
Trade and other receivables* - - - 704.7 704.7
------------------------------------------------- -------- -------- -------- -------- --------
Cash and cash equivalents - - - 336.8 336.8
------------------------------------------------- -------- -------- -------- -------- --------
Amounts owed by related parties - - - 24.2 24.2
------------------------------------------------- -------- -------- -------- -------- --------
FVOCI:
------------------------------------------------- -------- -------- -------- -------- --------
Long Term Financial Assets (Equity Instruments)
- designated 206.6 - - - 206.6
------------------------------------------------- -------- -------- -------- -------- --------
Derivative financial assets (FV):
------------------------------------------------- -------- -------- -------- -------- --------
Foreign forward purchase and sales contracts,
and interest rate swaps - 116.5 - - 116.5
------------------------------------------------- -------- -------- -------- -------- --------
- 116.5 - - 116.5
------------------------------------------------- -------- -------- -------- -------- --------
FINANCIAL LIABILITIES - 24 April 2022
------------------------------------------------- -------- -------- -------- -------- --------
Amortised cost:
------------------------------------------------- -------- -------- -------- -------- --------
Non-current borrowings - - - (827.9) (827.9)
------------------------------------------------- -------- -------- -------- -------- --------
Trade and other payables** - - - (721.7) (721.7)
------------------------------------------------- -------- -------- -------- -------- --------
IFRS 16 lease liabilities - - - (620.6) (620.6)
------------------------------------------------- -------- -------- -------- -------- --------
Derivative financial liabilities (FV):
------------------------------------------------- -------- -------- -------- -------- --------
Foreign forward and written options purchase
and sales contracts - unhedged - (31.3) - - (31.3)
------------------------------------------------- -------- -------- -------- -------- --------
Derivative financial liabilities - contracts
for difference & equity options - (75.9) - - (75.9)
------------------------------------------------- -------- -------- -------- -------- --------
- (107.2) - - (107.2)
------------------------------------------------- -------- -------- -------- -------- --------
*Prepayments of GBP112.5m are not included as a financial
asset.
**Other taxes including social security costs of GBP8.1m 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 GBP1.3m (24
October 2021: GBPnil, 24 April 2022: GBPnil) and derivative
financial liabilities balance of GBP140.4m (24 October 2021:
GBP20.8m, 24 April 2022: GBP75.9m). The derivative financial assets
and derivative financial liabilities as at 23 October 2022 relate
to strategic investments held of between 0.9% and 24.7% 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 23 October 2022 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 GBP62.6m (24 October 2021: GBP62.4m, 24 April 2022:
GBP62.6m).
(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 23 October 2022
was:
23 October 2022 24 October 24 April 2022
2021
(unaudited) (unaudited) (audited)
(GBPm) (GBPm) (GBPm)
Assets
--------------------------- ---------------- ------------- --------------
US Dollar purchases - GBP 41.3 9.6 32.9
--------------------------- ---------------- ------------- --------------
US Dollar purchases - EUR 17.0 7.6 12.8
--------------------------- ---------------- ------------- --------------
Euro sales 34.4 41.1 54.2
--------------------------- ---------------- ------------- --------------
Total 92.7 58.3 99.9
--------------------------- ---------------- ------------- --------------
Liabilities
--------------------------- ---------------- ------------- --------------
US Dollar purchases - GBP - 2.0 -
--------------------------- ---------------- ------------- --------------
Total - 2.0 -
The details of hedged forward foreign currency purchase
contracts and contracted forward rates were as follows:
23 October 2022 24 October 2021 (unaudited) 24 April 2022 (audited)
(unaudited)
Currency GBP Rates Currency GBP Rates Currency GBP Rates
(millions) (millions) (millions) (millions) (millions) (millions)
------------- ------- ------------ ----------- ------ ----------- ------------ ------
US Dollar
purchases 1.36 -
(USD / GBP) 240.0 170.2 1.41 720.0 516.8 1.41 480.0 340.4 1.41
------------- ----------- ----------- ------- ------------ ----------- ------ ----------- ------------ ------
US Dollar
purchases 1.26 1.21 - 1.26 -
(USD / EUR) 90.0 60.8 - 1.31 150.0 104.0 1.31 120.0 78.6 1.31
------------- ----------- ----------- ------- ------------ ----------- ------ ----------- ------------ ------
Euro sales
(EUR 0.98 0.99 - 0.99 -
/ GBP) (696.0) (672.0) - 1.08 (360.0) (353.1) 1.08 (600.0) (574.5) 1.08
------------- ----------- ----------- ------- ------------ ----------- ------ ----------- ------------ ------
The timing of the contracts is as follows:
Currency Hedging against Currency value Timing Rates
USD inventory
USD / GBP purchases USD 240m FY23 1.41
----------- ----------------- ---------------- ----------- ----------
USD / EUR USD inventory USD 90m FY23-FY24 1.26-1.31
purchases
----------- ----------------- ---------------- ----------- ----------
EUR / GBP Euro sales EUR 696m FY23-FY26 0.98-1.08
----------- ----------------- ---------------- ----------- ----------
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.
Fair value movement on hedged contracts - recognised in the
period:
23 October 2022 24 October 2021 24 April 2022
(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 25.1 (25.1) 9.0 (9.0) 30.6 (30.6)
--------------------- ------------- ----------- ------------- ----------- ------------- -----------
US Dollar purchases
- EUR 7.6 (7.6) 5.4 (5.4) 9.6 (9.6)
--------------------- ------------- ----------- ------------- ----------- ------------- -----------
Euro sales (8.1) 8.1 7.2 (7.2) 11.9 11.9
--------------------- ------------- ----------- ------------- ----------- ------------- -----------
Total recognised 24.6 (24.6) 21.6 (21.6) 52.1 (52.1)
--------------------- ------------- ----------- ------------- ----------- ------------- -----------
At 23 October 2022 GBP231.0m of purchase contracts (24 October
2021: GBP620.8m, 24 April 2022: GBP419.0m) and GBP672.0m of forward
sales contracts (24 October 2021: GBP353.1m, 24 April 2022:
GBP574.5m) qualified for hedge accounting and the gain on fair
valuation of these contracts of GBP24.6m (24 October 2021:
GBP21.6m, 24 April 2022: GBP52.1m) has therefore been recognised in
other comprehensive income.
At 23 October 2022, GBP20.0m hedged purchase contracts had a
maturity of greater than 12 months (24 October 2021: GBP231.5m, 24
April 2022: GBP38.6m) and GBP550.8m of hedged sales had a maturity
of greater than 12 months (24 October 2021: GBP231.9m, 24 April
2022: GBP332.1m).
The movements through the Hedging reserve are:
USD/GBP EUR/GBP USD/EUR Total Deferred Total
Hedge Movement Tax Hedging
Reserve
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
---------------------------- ------- ------- ------- --------------- -------- --------
Recognised 21.6 4.7 4.2 30.5 - 30.5
---------------------------- ------- ------- ------- --------------- -------- --------
Reclassified in inventory
/ cost of sales 3.7 - 0.2 3.9 - 3.9
---------------------------- ------- ------- ------- --------------- -------- --------
Deferred tax - - - - (8.6) (8.6)
---------------------------- ------- ------- ------- --------------- -------- --------
As at 24 April 2022
(audited) 33.0 28.9 12.0 73.9 (18.6) 55.3
---------------------------- ------- ------- ------- --------------- -------- --------
Recognised 25.1 (8.1) 7.6 24.6 - 24.6
---------------------------- ------- ------- ------- --------------- -------- --------
Reclassified in sales - (12.6) - (12.6) - (12.6)
---------------------------- ------- ------- ------- --------------- -------- --------
Reclassified in inventory
/ cost of sales (16.8) - (2.8) (19.6) - (19.6)
---------------------------- ------- ------- ------- --------------- -------- --------
Deferred tax - - - - 2.2 2.2
---------------------------- ------- ------- ------- --------------- -------- --------
As at 23 October 2022
(unaudited) 41.3 8.2 16.8 66.3 (16.4) 49.9
---------------------------- ------- ------- ------- --------------- -------- --------
(c)(ii) Unhedged currency instruments
The sterling principal amounts of unhedged written currency
option contracts and the contracted rates were as follows:
23 October 24 October 24 April 2022
2022 2021
(unaudited) (unaudited) (audited)
(GBPm) (GBPm) (GBPm)
US Dollar swaps - GBP - 72.3 -
---------------------------- ------------- --------------
Contracted rates USD / GBP - 1.37-1.42 -
---------------------------- ------------- ------------- --------------
US Dollar purchases - EUR 60.8 82.2 78.6
---------------------------- ------------- ------------- --------------
Contracted rates USD / EUR 1.26-1.31 1.26-1.31 1.26-1.31
---------------------------- ------------- ------------- --------------
Euro sales (672.0) (494.5) (715.9)
---------------------------- ------------- ------------- --------------
Contracted rates EUR / GBP 0.98-1.08 0.99-1.08 0.99-1.08
---------------------------- ------------- ------------- --------------
The loss on fair value of the written options and swaps of
GBP9.1m has been included within finance costs (24 October 2021:
GBP1.8m, 24 April 2022: GBP28.9m).
At 23 October 2022, GBP40.0m of unhedged purchase contracts had
a maturity at inception of greater than 12 months (24 October 2021:
GBP61.3m, 24 April 2022: GBP78.6m) and GBP550.8m of unhedged sales
contracts had a maturity at inception of greater than 12 months (24
October 2021: GBP231.9m, 24 April 2022: GBP715.9m).
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 FY23 H1 values above excludes short term swaps of GBP/EUR of
Euro 70m which are required for Treasury management purposes only
(24 October 2021: GBP/USD of USD 100.0m, 24 April 2022: USD/GBP of
USD 40m and EUR/USD of EUR 40m short term swaps).
(d) Interest rate swaps
The Group uses interest rate swaps to manage its exposure to
interest rate movements on its bank borrowings. The Group has two
contracts in place that fix interest payments on variable rate
debt. The first contract covers notional amount of GBP250.0m and
fixes the interest rate at 0.985% per annum until 29 May 2026. The
second contract covers a notional amount of GBP100.0m and fixes the
interest rate at 0.45% per annum until 2 September 2024. The fair
value of these interest rate swaps is an asset of GBP37.6m (24
April 2022: GBP16.6m, 24 October 2021: GBP1.8m). The fair value
gain of GBP21.0m has been recognised in finance income classified
as fair value adjustments to derivatives.
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.
13. ACQUISITIONS
i. On 16 May 2022 the Group acquired the entire share capital of
leading Danish sport retailer Sportmaster Danmark ApS
('Sportmaster') for cash consideration of GBP0.9m which is deemed
to be the fair value of the consideration. The acquisition will
help to grow the Group's retail presence in Denmark. At the date of
acquisition, included within Borrowings was GBP15.3m owed by
Sportmaster Danmark ApS to its parent company Sportmaster
Operations PTE. Ltd. As part of the transaction, a debt transfer
took place which transferred this loan to the Group which becomes
the new lender and the fair value adjustment against borrowings
relates to this. The fair value adjustment to intangible assets,
property, plant & equipment assets, and inventory relates to
management's assessment of the price that would be paid for the
acquired assets in an orderly transaction between market
participants at the acquisition date. The asset and liability
values at acquisition are detailed below. Due to the recent timings
of the acquisition and the availability of information, the fair
values attributable to the assets and liabilities acquired are
provisional. The acquisition accounting will be finalised as part
of the FY23 Annual Report.
Sportmaster Book Value Fair Value Provisional
adjustment fair values
(GBPm) (GBPm) (unaudited)
(GBPm)
Property, plant and equipment 23.2 (5.0) 18.2
------------------------------------- ----------- -------------
Intangible assets 2.4 (2.4) -
------------------------------------- ----------- ----------- -------------
Inventories 19.8 3.1 22.9
------------------------------------- ----------- ----------- -------------
Cash and cash equivalents 2.1 - 2.1
------------------------------------- ----------- ----------- -------------
Trade and other receivables 9.2 - 9.2
------------------------------------- ----------- ----------- -------------
Trade and other payables (22.9) - (22.9)
------------------------------------- ----------- ----------- -------------
Borrowings (22.3) 15.3 (7.0)
------------------------------------- ----------- ----------- -------------
Lease liability (21.6) - (21.6)
------------------------------------- ----------- ----------- -------------
Provisions (2.3) - (2.3)
------------------------------------- ----------- ----------- -------------
Goodwill - 2.3 2.3
------------------------------------- ----------- ----------- -------------
Net (liabilities) / assets acquired (12.4) 13.3 0.9
------------------------------------- ----------- ----------- -------------
ii. On 1 June 2022 the Group acquired certain intellectual
property, freehold property and inventory of the online women's
fashion retailer Missguided Limited (in administration), Mennace
Limited (in administration) and Missguided (IP) Limited for
GBP30.8m which is deemed to be the fair value of the consideration.
The acquisition will add additional expertise to the Group's
digital women's fashion offering. The fair value adjustments to
intangible assets, property, plant & equipment, and inventory
relates to management's assessment of the price that would be paid
for the acquired assets in an orderly transaction between market
participants at the acquisition date. The asset and liability
values at acquisition are detailed below. The intangible assets
acquired relate to the IP/Brand. Due to the recent timings of the
acquisition and the availability of information, the fair values
attributable to the assets and liabilities acquired are
provisional. The acquisition accounting will be finalised as part
of the FY23 Annual Report.
Missguided Book Value Fair Value Provisional
adjustment fair values
(GBPm) (GBPm) (unaudited)
(GBPm)
Property, plant and equipment 4.4 1.6 6.0
------------------------------- ----------- ------------
Intangible assets - 11.7 11.7
------------------------------- ----------- ----------- ------------
Inventories 17.0 (12.2) 4.8
------------------------------- ----------- ----------- ------------
Goodwill - 8.3 8.3
------------------------------- ----------- ----------- ------------
Net assets acquired 21.4 9.4 30.8
------------------------------- ----------- ----------- ------------
iii. On 28 July 2022 the Group acquired the entire share capital
of online fashion retailer I Saw It First Limited for cash
consideration of GBP1. At the date of acquisition, I Saw It First
Limited owed GBP13.0m to its shareholders. As part of the
transaction, a debt transfer took place which transferred this loan
to the Group which becomes the new lender and the fair value
adjustment against borrowings relates to this. The asset and
liability values at acquisition are detailed below. Due to the
recent timings of the acquisition and the availability of
information, the fair values attributable to the assets and
liabilities acquired are provisional. The acquisition accounting
will be finalised as part of the FY23 Annual Report.
I Saw It First Book Value Fair Value Provisional
adjustment fair values
(GBPm) (GBPm) (unaudited)
(GBPm)
Property, plant and equipment 0.7 - 0.7
------------------------------- ----------- ------------
Inventories 5.0 - 5.0
------------------------------- ----------- ----------- ------------
Cash and cash equivalents 1.8 - 1.8
------------------------------- ----------- ----------- ------------
Trade and other receivables 1.2 - 1.2
------------------------------- ----------- ----------- ------------
Trade and other payables (9.2) - (9.2)
------------------------------- ----------- ----------- ------------
Borrowings (13.0) 13.0 -
------------------------------- ----------- ----------- ------------
Goodwill - 0.5 0.5
------------------------------- ----------- ----------- ------------
Net assets acquired (13.5) 13.5 -
------------------------------- ----------- ----------- ------------
iv. On 17 August 2022 the Group made a cash offer to acquire the
entire issued and to be issued ordinary share capital of Mysale
Group plc ('Mysale') not already held by Frasers Group at a price
of 2 pence per MySale share. On 26 September 2022 the Group
announced that the offer had become a mandatory cash offer and on
18 October 2022 the mandatory offer became unconditional. The
deadline for acceptance of the offer was 1 November 2022 and at
that date the Group owned or had received valid acceptances in
respect of 95.35% of Mysale's issued share capital. The
shareholding passed 50% on 13 October 2022 and at the period end,
the Group held 66.48% of Mysale's issued share capital and
therefore it has been treated as a subsidiary and consolidated in
the results of Frasers Group Plc with the acquisition date
provisionally being treated as 13 October 2022. The acquisition
will accelerate the Group's global growth strategy, enhance its
operational capabilities and its offering to consumers and provide
a platform from which to explore further opportunities for
investment in retail opportunities in Australia and the surrounding
regions. The fair value adjustment to intangible assets relates to
management's assessment of the price that would be paid for the
acquired assets in an orderly transaction between market
participants at the acquisition date. The asset and liability
values at acquisition are detailed below. Due to the recent timings
of the acquisition and the availability of information, the fair
values attributable to the assets and liabilities acquired are
provisional. The acquisition accounting will be finalised as part
of the FY23 Annual Report.
Mysale Book Value Fair Value Provisional
adjustment fair values
(GBPm) (GBPm) (unaudited)
(GBPm)
Property, plant and equipment 2.3 - 2.3
------------------------------- ----------- ------------
Intangible assets 12.9 (12.9) -
------------------------------- ----------- ----------- ------------
Inventories 2.3 - 2.3
------------------------------- ----------- ----------- ------------
Cash and cash equivalents 1.7 - 1.7
------------------------------- ----------- ----------- ------------
Trade and other receivables 1.7 - 1.7
------------------------------- ----------- ----------- ------------
Trade and other payables (10.1) - (10.1)
------------------------------- ----------- ----------- ------------
Lease liability (2.2) - (2.2)
------------------------------- ----------- ----------- ------------
Non-controlling interests - (7.0) (7.0)
------------------------------- ----------- ----------- ------------
Goodwill - 25.1 25.1
------------------------------- ----------- ----------- ------------
Net assets acquired 8.6 5.2 13.8
------------------------------- ----------- ----------- ------------
v. On 23 September 2022 the Group acquired the trade and assets
of Sneakerboy PTY Limited for GBP1.0m. The asset and liability
values at acquisition are detailed below. Due to the recent timings
of the acquisition and the availability of information, the fair
values attributable to the assets and liabilities acquired are
provisional. The acquisition accounting will be finalised as part
of the FY23 Annual Report.
Sneakerboy Book Value Fair Value Provisional
adjustment fair values
(GBPm) (GBPm) (unaudited)
(GBPm)
Inventories 1.0 - 1.0
--------------------- ----------- ------------
Net assets acquired 1.0 - 1.0
--------------------- ----------- ----------- ------------
Summary of FY23 acquisitions
The following table summarises the fair values of consideration
paid:
Sportmaster Missguided I Saw Mysale Sneakerboy Total
It First
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (unaudited)
(GBPm)
Cash consideration 0.9 30.8 - 13.8 1.0 46.5
-------------------- ------------ ----------- --------- -------- ----------- -------------
The asset and liability values of all the acquisitions are
summarised below.
Total acquisitions Provisional fair
values
(unaudited)
(GBPm)
Property, plant and equipment 27.2
------------------------------- -----------------
Intangible assets 11.7
------------------------------- -----------------
Inventories 36.0
------------------------------- -----------------
Cash and cash equivalents 5.6
------------------------------- -----------------
Trade and other receivables 12.1
------------------------------- -----------------
Trade and other payables (42.2)
------------------------------- -----------------
Borrowings (7.0)
------------------------------- -----------------
Lease liability (23.8)
------------------------------- -----------------
Provisions (2.3)
------------------------------- -----------------
Non-controlling interests (7.0)
------------------------------- -----------------
Goodwill 36.2
------------------------------- -----------------
Net assets acquired 46.5
------------------------------- -----------------
Since the date of control, the following amounts have been
included within the Group's Financial Statements for the
period:
Sportmaster Missguided I Saw Mysale Sneakerboy Total
It First
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (unaudited)
(GBPm)
Revenue 36.3 5.2 5.6 - - 47.1
----------------- ------------ ----------- --------- -------- ----------- -------------
Operating loss (6.6) (1.2) (5.8) - - (13.6)
----------------- ------------ ----------- --------- -------- ----------- -------------
Loss before tax (7.0) (1.2) (5.8) - - (14.0)
----------------- ------------ ----------- --------- -------- ----------- -------------
Had the acquisitions been included from the start of the period
the following amounts would have been included within the Group's
Financial Statements for the period:
Sportmaster Missguided I Saw Mysale Sneakerboy Total
It First
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (unaudited)
(GBPm)
Revenue 43.3 5.2 17.1 18.8 3.6 88.0
----------------- ------------ ----------- --------- -------- ----------- -------------
Operating loss (7.9) (1.2) (8.4) (2.1) (0.2) (19.8)
----------------- ------------ ----------- --------- -------- ----------- -------------
Loss before tax (8.2) (1.2) (8.4) (2.4) (0.3) (20.5)
----------------- ------------ ----------- --------- -------- ----------- -------------
There were no contingent liabilities acquired as a result of the
above transactions.
Reconciliation of net cash outflow from investing
activities:
Sportmaster Missguided I Saw Mysale Sneakerboy Total
It First
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (unaudited)
(GBPm)
Cash consideration (0.9) (30.8) - (13.8) (1.0) (46.5)
----------------------------- ------------ ----------- --------- -------- ----------- -------------
Fair value of cash and cash
equivalents acquired 2.1 - 1.8 1.7 - 5.6
----------------------------- ------------ ----------- --------- -------- ----------- -------------
Purchase of subsidiaries,
net of cash acquired 1.2 (30.8) 1.8 (12.1) (1.0) (40.9)
----------------------------- ------------ ----------- --------- -------- ----------- -------------
14. CASH INFLOW FROM OPERATING ACTIVITIES
26 weeks 26 weeks 52 weeks
ended ended ended
23 October 24 October 24 April
2022 2021 2022
(unaudited) (unaudited) (audited)
(GBPm) (GBPm) (GBPm)
Profit before taxation 284.6 186.0 335.6
------------------------------------------------- ------------- ------------- -----------
Net finance costs 11.5 3.7 18.9
------------------------------------------------- ------------- ------------- -----------
Net investment costs / (income) 13.2 10.0 (24.1)
------------------------------------------------- ------------- ------------- -----------
Operating profit 309.3 199.7 330.4
Depreciation of property, plant and equipment 112.9 116.5 246.6
Depreciation on investment properties 2.6 1.3 5.9
Gain on disposal and modification/remeasurement
of lease liabilities (3.4) (5.9) (28.3)
Amortisation of intangible assets 3.3 3.4 7.5
Impairment of tangible and intangible assets
and investment properties 77.7 139.7 232.7
Profit on disposal of property, plant and
equipment (91.2) (0.6) (10.8)
Gain on bargain purchase - - (4.8)
Profit on disposal of discontinued operation (26.3) - -
Share based payment charge in equity (excluding
deferred tax) 4.6 - 9.2
Pension contributions less income statement
charge 0.4 - (1.6)
Operating cash inflow before changes in
working capital 389.9 454.1 786.8
(Increase) / decrease in receivables (99.3) 79.6 (33.3)
Increase in inventories (152.3) (109.7) (155.0)
Increase in payables 43.3 143.5 7.5
(Decrease) / increase in provisions (9.8) (7.7) 22.9
Cash inflows from operating activities 171.8 559.8 628.9
15. POST BALANCE SHEET EVENTS
On 4 November 2022, the Group increased its investment in Hugo
Boss resulting in the total interests as follows:
* 3,025,000 shares of common stock, representing 4.3%
of Hugo Boss's total share capital
* 21,139,000 shares of common stock via the sale of put
options, representing 30.03% of Hugo Boss's total
share capital
On 7 November 2022, the Group commenced a share buyback
programme with the aggregate purchase price of shares acquired
under the programme of no greater than GBP70.0m and the maximum
number of shares that may be purchased under the programme of 10m
ordinary shares with a nominal value of 10p each. The purpose of
the programme is to reduce the share capital of the Company. To the
date of this report, 2,413 ordinary shares of 10p each for
consideration of less than GBP0.1m have been acquired through the
programme.
On 17 November 2022 the Group acquired the trade and assets of
CBS Arena for cash consideration of GBP15.8m. Due to the proximity
of the acquisition date to the date these financial statements are
authorised for issue, the initial accounting for the business
combination is incomplete and so the disclosures required by IFRS 3
Business Combinations cannot be made at this stage.
16. CAPITAL COMMITMENTS
The Group had capital commitments of GBP111.5m as at 23 October
2022 (24 October 2022: GBP68.5m, 24 April 2022 GBP145.0m) relating
to warehouse automation, aircraft, other plant and machinery, and
property purchases.
17. PURCHASE OF OWN SHARES
On 25 April 2022 and 20 June 2022 the Group commenced share
buyback programmes with the aggregate purchase price of all shares
acquired under these programmes of no greater than GBP105.0m and
the maximum number of shares that may be purchased under the
programmes of 15m ordinary shares with a nominal value of 10p each.
The purposes of the programmes was to reduce the share capital of
the Company. 11,884,438 ordinary shares of 10p each for
consideration of GBP80.4m were acquired through these
programmes.
18. SALE OF DISCONTINUED OPERATION
On 25 May 2022 the Group disposed of its US retail businesses
trading as Bobs Stores ("Bobs") and Eastern Mountain Sports
("EMS"). The disposal took place through sale of 100% of the share
capital of Roberts 50 USA LLC and its subsidiaries. As per IFRS 5
Non-current Assets Held for Sale and Discontinued Operations, this
disposal group was classified as a discontinued operation in the
current and prior period, and held for sale in the 25 April 2022
Consolidated Statement of Financial Position. Proceeds of GBP51.4m
were received and a profit on disposal of GBP26.3m has been
recognised in the Consolidated Income Statement. Given the
proximity of the disposal to the FY22 year-end, the amounts
included in the Cash Flow Statement in the period relating to this
discontinued operation are not considered to be material.
19. 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 23 October 2022 (unaudited):
Related party Relationship Sales Purchases Trade and Trade and
other receivables other payables
(GBPm) (GBPm) (GBPm) (GBPm)
Four (Holdings) Limited
& subsidiaries(1) Associate 0.1 36.3 23.0 -
------------------------- -------------------------- ---------------
Mash Holdings Limited Parent company - - 0.2 -
------------------------- --------------- ------- --------- -------------------------- ---------------
Majority
Mike Ashley(2) shareholder 1.1 - - -
------------------------- --------------- ------- --------- -------------------------- ---------------
Rangers Retail Limited Associate - - - 0.1
------------------------- --------------- ------- --------- -------------------------- ---------------
Tymit Limited Associate - - 3.6 -
------------------------- --------------- ------- --------- -------------------------- ---------------
(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. The results
of Four (Holdings) Limited are not material on the basis of net
assets and profit before tax, subsequently detailed disclosures
have not been presented under IFRS 12.
(2) Use of the Company jet and helicopter are charged at commercial rates.
26 weeks ended 24 October 2021 (unaudited):
Related party Relationship Sales Purchases Trade and Trade and
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. The results
of Four (Holdings) Limited are not material on the basis of net
assets and profit before tax, subsequently detailed disclosures
have not been presented under IFRS 12.
(2) Use of the Company jet and helicopter are charged at commercial rates.
52 weeks ended 24 April 2022 (audited):
Related party Relationship Sales Purchases Trade and Trade and
other receivables other payables
(GBPm) (GBPm) (GBPm) (GBPm)
Four (Holdings) Limited
& subsidiaries(1) Associate 2.6 63.7 24.0 -
----------------------------- ------------------ ---------------
Mash Holdings Limited Parent company - - 0.2 -
----------------------------- --------------- ------- --------- ------------------ ---------------
Mike Ashley(2) Plc Director 1.5 - - -
----------------------------- --------------- ------- --------- ------------------ ---------------
Connected
N M Design London Limited persons - 0.2 - -
----------------------------- --------------- ------- --------- ------------------ ---------------
Rangers Retail Limited Associate - - - 0.1
----------------------------- --------------- ------- --------- ------------------ ---------------
MM Prop Consultancy Limited Connected
& M.P.M Elevation Limited persons - 21.0 - -
----------------------------- --------------- ------- --------- ------------------ ---------------
(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. The results
of Four (Holdings) Limited are not material on the basis of net
assets and profit before tax, subsequently detailed disclosures
have not been presented under IFRS 12.
(2) Use of the Company jet and helicopter are charged at commercial rates.
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 (FY22 H1: GBP60.0m, FY22:
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.
At the period end the Group does not have significant influence
over, but holds greater than 20% of the voting rights of Mulberry
Group plc. The latest equity amounts and results are shown
below:
Mulberry
Group plc
----------------
26 weeks
ended 1 October
2022
(GBPm)
-------------------------------------- ----------------
Share Capital 3.0
-------------------------------------- ----------------
Share Premium 12.2
-------------------------------------- ----------------
Retained Earnings & other reserves 24.7
-------------------------------------- ----------------
Total equity 39.9
-------------------------------------- ----------------
(Loss) for the period (4.0)
-------------------------------------- ----------------
The Group does not consider it has the power to participate in
the financial and operating policy decisions of the entity and so
management do not consider the Group to be able to exert
significant influence over this entity as per IAS 28 Investments in
Associates and Joint Ventures and IAS 24 Related Party
Disclosures.
On 1 May 2022 Michael Murray was appointed as CEO. Prior to his
appointment MM Prop Consultancy Limited and the Group finalised the
terms on which any relevant prior consultancy services agreements
terminated. The Board has now completed its assessment of the
unsettled value created by MM Prop Consultancy Limited to the
Group, with the assistance of independent third party experts.
GLOSSARY
ALTERNATIVE PERFORMANCE MEASURES
Excluding acquisitions, disposals and currency neutral
performance measure reconciliation:
UK Sports Premium International Wholesale Group
Retail Lifestyle Retail & Licensing Total
(1)
Revenue
----------------------------------------- -----------------------------------------------------------
FY23 H1 Reported 1,526.1 533.5 492.2 86.2 2,638.0
----------------------------------------- --------- ---------- ------------- ------------ -------
Adjustments for acquisitions, disposals
and currency neutral (200.7) (10.8) (44.8) - (256.3)
----------------------------------------- --------- ---------- ------------- ------------ -------
FY23 H1 Excluding acquisitions,
disposals and currency neutral 1,325.4 522.7 447.4 86.2 2,381.7
----------------------------------------- --------- ---------- ------------- ------------ -------
FY22 H1 Reported 1,367.1 427.9 465.4 79.4 2,339.8
----------------------------------------- --------- ---------- ------------- ------------ -------
Adjustments for acquisitions, disposals
and currency neutral - - (55.8) 7.9 (47.9)
----------------------------------------- --------- ---------- ------------- ------------ -------
FY22 H1 Excluding acquisitions,
disposals and currency neutral 1,367.1 427.9 409.6 87.3 2,291.9
----------------------------------------- --------- ---------- ------------- ------------ -------
% Variance (3.1%) 22.2% 9.2% (1.3%) 3.9%
----------------------------------------- --------- ---------- ------------- ------------ -------
Adjusted PBT
----------------------------------------- -----------------------------------------------------------
FY23 H1 Reported 184.1 11.3 62.5 9.2 267.1
----------------------------------------- --------- ---------- ------------- ------------ -------
Adjustments for acquisitions, disposals
and currency neutral (12.8) 27.1 (12.5) - 1.8
----------------------------------------- --------- ---------- ------------- ------------ -------
FY23 H1 Excluding acquisitions,
disposals and currency neutral 171.3 38.4 50.0 9.2 268.9
----------------------------------------- --------- ---------- ------------- ------------ -------
FY22 H1 Reported 123.0 (9.7) 75.2 3.9 192.4
----------------------------------------- --------- ---------- ------------- ------------ -------
Adjustments for acquisitions, disposals
and currency neutral - - (18.4) 0.8 (17.6)
----------------------------------------- --------- ---------- ------------- ------------ -------
FY22 H1 Excluding acquisitions,
disposals and currency neutral 123.0 (9.7) 56.8 4.7 174.8
----------------------------------------- --------- ---------- ------------- ------------ -------
% Variance 39.3% 495.9% (12.0%) 95.7% 53.8%
----------------------------------------- --------- ---------- ------------- ------------ -------
(1) Following the disposal of the US retail businesses in the
period, the reporting segments have been re-categorised with the
previous Rest of World Retail segment and European Retail segment
now being reported under an International Retail segment.
Reconciliation of Adjusted PBT performance measure, 5 year
record:
26 weeks 26 weeks 26 weeks 26 weeks 26 weeks
ended ended ended ended 27 ended 28
23 October 24 October 25 October October 2019 October
2022 2021 2020 2018
------------------------------ ----------- ----------- ----------- ------------- -----------
PBT (GBP'm) PBT (GBP'm) PBT (GBP'm) PBT (GBP'm) PBT (GBP'm)
------------------------------ ----------- ----------- ----------- ------------- -----------
REPORTED PBT 284.6 186.0 106.1 90.2 74.4
------------------------------ ----------- ----------- ----------- ------------- -----------
Exceptional items - - (3.7) 3.3 -
------------------------------ ----------- ----------- ----------- ------------- -----------
Fair value adjustments to
derivatives included within
Finance (income) / costs (12.4) (10.7) 8.6 3.2 5.9
------------------------------ ----------- ----------- ----------- ------------- -----------
Fair value (gains) / losses
and profit on disposal of
equity derivatives 32.0 15.6 (2.9) (3.0) 1.8
------------------------------ ----------- ----------- ----------- ------------- -----------
Realised foreign exchange
(gain) / loss (43.8) (4.5) 7.4 (4.8) (17.6)
------------------------------ ----------- ----------- ----------- ------------- -----------
Share scheme 6.7 6.0 - - -
------------------------------ ----------- ----------- ----------- ------------- -----------
ADJUSTED PBT 267.1 192.4 115.5 88.9 64.5
------------------------------ ----------- ----------- ----------- ------------- -----------
KEY PERFORMANCE INDICATORS
Performance Measure Closest equivalent Reconciling Definition and purpose
statutory items to statutory
measure measure
-------------------------- ------------------ ------------------- --------------------------------
Group revenue - - The Board considers that
this measure is a key indicator
of the Group's growth
-------------------------- ------------------ ------------------- --------------------------------
Reported PBT - - Reported PBT shows both
the Group's trading and
operational efficiency,
as well as the effects
on the Group of external
factors as shown in the
fair value movements in
strategic investments and
foreign exchange.
-------------------------- ------------------ ------------------- --------------------------------
Adjusted PBT Profit before Adjusting items Adjusted PBT shows how
taxation (see Glossary well the Group is managing
reconciliation its ongoing trading performance
above). The and controllable costs
adjusting items and therefore the overall
are those deemed performance of the Group.
by the Board
to be volatile
and therefore
difficult to
forecast.
-------------------------- ------------------ ------------------- --------------------------------
Cash inflow from operating - - Cash inflow from operating
activities before working activities before workings
capital capital is considered an
important indicator for
the business of the cash
available for investment
in the Elevation strategy.
The change to this KPI
from cash inflow from operating
activities is due to the
acquisition of SRL and
the distortion in working
capital caused by the consumer
credit business.
-------------------------- ------------------ ------------------- --------------------------------
Net assets - - The Board considers that
this measurement is a key
indicator of the Group's
health.
-------------------------- ------------------ ------------------- --------------------------------
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 replaced
by one larger new generation
store.
-------------------------- ------------------ ------------------- --------------------------------
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END
IR BKOBKDBDBFBK
(END) Dow Jones Newswires
December 08, 2022 02:00 ET (07:00 GMT)
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