20/8/2020
07:26 | Frasers Group PLC Preliminary Results - period ending 26 April 2020Source: UK Regulatory (RNS & others)TIDMFRASRNS Number : 6516WFrasers Group PLC20 August 202020 August 2020Preliminary Results for the period ended 26 April 202052 weeks 52 weeks Change ended ended (%) 26 April 28 April 2020 2019 Restated(6) ----------------------------------- ---------- ------------- ------- GBPm GBPm Group revenue 3,957.4 3,701.9 6.9 UK Sports Retail 2,203.3 2,187.3 0.7 Premium Lifestyle 722.0 535.4 34.9 European Retail 697.7 599.8 16.3 Rest of World Retail 174.2 215.9 (19.3) Wholesale & licensing 160.2 163.5 (2.0) Group gross margin (%) 42.0 42.8 Reported EBITDA 551.0 277.3 98.7 Underlying EBITDA (2) 302.1 287.8 5.0 Reported profit before tax 143.5 179.2 (19.9) Underlying profit before tax (PBT) (2) 117.4 143.3 (18.1) Reported profit after tax 101.0 116.0 (12.9) Reported basic earnings per share 18.5p 21.6p (14.4) Underlying basic earnings per share (EPS) (2) 16.2p 17.6p (8.0) Underlying free cash flow (3) 263.1 273.3 (3.7) Net debt (4) 366.0 378.5 3.3 -- Group revenue increased by 6.9 % -- Excluding acquisitions and on a currency neutral basis, revenue decreased by 12.6%(5)-- UK Sports Retail revenue increased by 0.7% , largely due to the GAME acquisition in the period-- Excluding acquisitions, revenue decreased by 14.6% (5) , largely caused by temporary store closures due to Covid-19-- UK Sports Retail like-for-like gross contribution was down 6.6% (1)-- Premium Lifestyle revenue increased by 34.9%, largely due to new stores and acquisitions of Jack Wills & Sofa.com-- Excluding acquisitions, revenue increased by 18.6% (5)-- Premium Lifestyle like-for-like gross contribution was up 21.8%-- European Retail revenue increased by 16.3%, largely due to the GAME acquisition in the period -- Excluding acquisitions and on a currency neutral basis, revenue decreased by 15.6% (5) , largely caused by temporary store closures due to Covid-19-- European Retail like-for-like gross contribution was down 12.7% (1)-- Group gross margin decreased to 42.0% from 42.8% , largely due to the GAME acquisition changing the product mix-- Group reported EBITDA increased by 98.7% to GBP551.0m compared to GBP277.3m in the prior period, largely due to the change in reporting as a result of implementing IFRS 16-- Group underlying EBITDA (2) increased by 5.0% to GBP302.1m compared to GBP287.8m in the prior period-- Excluding acquisitions and on a currency neutral basis, underlying EBITDA was in line with the prior period (5)-- Underlying free cash flow (pre-capex) (3) decreased to GBP263.1m compared to GBP273.3m in the prior period-- Reported profit before tax was GBP143.5m, down 19.9% from GBP179.2m -- Excluding IFRS 16, reported profit before tax was GBP262.3m up 46.4% largely due to the gain on the sale and leaseback of the Shirebrook Distribution Centre totalling GBP84.9m.-- Underlying profit before tax (2) decreased by 18.1% to GBP117.4m from GBP143.3m -- Reported basic earnings per share fell by 14.4% to 18.5p, from 21.6p -- Underlying basic earnings (2) per share decreased by 8.0% to 16.2p from 17.6p (2) -- Reported profit after tax(2) was GBP101.0m down 12.9% from GBP116.0m -- Net debt decreased to GBP366.0m (GBP378.5m at 28 April 2019)(4) (1) Figure is on a 52 week currency neutral basis and with a consistent year on year inventory provision used(2) Underlying EBITDA, underlying profit before taxation and underlying EPS exclude the effects of IFRS 16, realised foreign exchange gains / losses in selling and administration costs, exceptional costs, and the profit / loss on disposal of subsidiaries, strategic investments and properties. Further detail on this calculation can be found in the financial review, in note 2 and the glossary at the back of this announcement(3) Underlying free cash flow is defined as operating cash flow after working capital and pre IFRS 16, made up of underlying EBITDA plus realised foreign exchange gains and losses, less corporation tax paid. Further detail on this calculation can be found in the financial review(4) Net debt is borrowings (excluding IFRS 16 lease liabilities) less cash and cash equivalents held. Further detail can be found in note 10(5) A reconciliation of excluding acquisitions and currency neutral performance measures can be found in the glossary(6) The House of Fraser fascia has been included within the Premium Lifestyle segmentMISSION STATEMENT' TO BECOME EUROPE'S LEADING ELEVATED SPORTING GOODS RETAILER .'OUTLOOKThe Group now intends to invest in excess of GBP100 million in its digital elevation strategy. With a particular focus on Flannels and an enhanced customer experience, this investment will be integral in supporting the continued growth of our online channels. This commitment will support the Group's wider ongoing elevation strategy. With digital transformation now at the forefront, the successful reopening of our stores after the Covid-19 lockdown and continuing strong web performance, we are confident in achieving between a 10% and 30% improvement in underlying EBITDA(1) during FY21.(1) Underlying EBITDA excludes the effects of IFRS 16, realised foreign exchange gains / losses in selling and administration costs, exceptional costs, and the profit / loss on disposal of subsidiaries, strategic investments and properties.Frasers Group plc T: 0344 245 9200 Mike Ashley, Chief Executive SDPR@sportsdirect.com STRATEGIC REPORTCHAIR'S STATEMENTINTRODUCTIONDear Valued ShareholderFY20 will likely be remembered as the most challenging year in the history of the Company. The political uncertainty around Brexit had been with us for far too long and, just as we were feeling more confident of getting some clarity and stability, the Covid-19 crisis arrived which will continue to have an impact on the economy and our business beyond FY20.Notwithstanding the above, we have handled the challenges successfully and we have also dealt with the shadow of the significant Belgian tax enquiry for an amount of EUR674m which we were notified of in July 2019. We always maintained it was less than probable that material VAT and penalties would be due and thankfully, through the sterling efforts of our internal team, alongside our external advisors, this amount was commercially settled for an immaterial amount.As of the end of February we were on track to hit our underlying EBITDA growth target of between 5-15% (pre IFRS 16 adjustments) for the period ending 26 April 2020. The Covid-19 situation had a significant impact on our business performance across the Group in March and April (and continued to do so in the post year end period) due to the shutdown of retail stores.Thankfully, as at the date of release of these financial statements, there is a semblance of normality returning with virtually all retail stores now fully open across the Group, albeit subject to strict social distancing measures. However the future, at least in the near term, is unclear as we and indeed the world come to terms with living under the threat of Covid-19 and what its short, medium and long term effects may be. There is currently a risk of a second wave which could lead to reinstatement of lockdown restrictions and there will be economic consequences which we do not yet fully understand.The key financial metrics for the period ended 26 April 2020 when compared with period ended 28 April 2019 are:-- Group revenue has increased from GBP3,701.9m to GBP3,957.4m; -- Group profit before tax has decreased from GBP179.2m to GBP143.5m; -- Group underlying EBITDA has increased from GBP287.8m to GBP302.1m; and -- Group net debt has decreased from GBP378.5m to GBP366.0m. OVERVIEWDuring FY20 we made the strategic decision to rename of the Group holding company from Sports Direct International plc to Frasers Group plc. The new name better reflects the multi-brand and multi-fascia retail business we have become and I would like thank everyone who worked so hard to ensure this change was implemented smoothly and successfully.Following a robust external audit tender process, which did not require any Government involvement, we had great pleasure in appointing RSM UK Audit LLP (RSM) as our new external auditor. We look forward to a productive working relationship with RSM over the coming years and I would like to thank the Financial Reporting Council (FRC) for the help and support that was extended to us as we conducted this process.We continued to follow the further demise of Debenhams during the year with much frustration and disappointment as it entered administration for a second time. We raised our concerns and gave numerous warnings about what we were seeing there, much of which has materialised. Our offers of help were repeatedly disregarded and it is scandalous that this business has now been in administration twice. To date and to our knowledge, there seems to be a lack of political or regulatory interest in investigating the impact on shareholders in the initial administration, and now in the second administration we expect that further stakeholders will suffer. It has been widely reported that we are seeking the appointment of a provisional liquidator to Debenhams plc, or a winding up order, so that an independent investigation can be carried out into the actions and parties involved in the company's administration. We are opposed, however, by certain entities which placed Debenhams plc into administration. If their opposition is successful, Debenhams plc will be dissolved, meaning that no investigation can be carried out.The uncertainty over Brexit, followed by the Covid-19 crisis has undoubtedly resulted in unprecedented times for businesses and the consequences will be felt for the foreseeable future. We will commit ourselves to working collaboratively with all our key stakeholders to protect the future of our business and the health and livelihood of our 30,000 staff who work within the Frasers Group. During the time our stores were closed, our online business performed extremely well and I commend our staff, particularly those based at Shirebrook, for their hard work and dedication in ensuring our web operations continued and remained effective.ELEVATION STRATEGYThe biggest strategic priority for the Frasers Group is, and will continue to be, elevation. This drives our behaviours and our ways of working. We are committed to providing our customers with a multi-brand offering in a premium environment across our sport, fashion and lifestyle fascias.FY20 saw the opening of more of our new generation stores. The new stores in Leicester and Watford are fine examples of how we are taking the elevation strategy to the next level. We also opened the Flannels flagship store on Oxford Street in September 2019 which has been an outstanding success in showcasing our elevated model to luxury brands, and the Flannels store in Newcastle was voted "Best Store Design | 
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