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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Sports Direct International Plc | LSE:SPD | London | Ordinary Share | GB00B1QH8P22 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 470.00 | 469.20 | 469.80 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2022 to Apr 2024
TIDMFRAS
RNS Number : 2165T
Frasers Group PLC
21 July 2022
21 July 2022
Unaudited Full Year Trading Update for the 52 weeks to 24 April 2022 ("FY22") (excluding Studio Retail Limited(3) )
Robust trading and strong strategic progress on the Elevation Strategy
Michael Murray, Chief Executive of Frasers Group: "I am really proud of the record performance we've announced today. It's clear that our elevation strategy is working and we are building incredible momentum with new store openings, digital capabilities and deeper brand partnerships across all of our divisions. We've got the right strategy, team and determination to keep driving our business from strength to strength."
Outlook
We are delighted to report a record-breaking year for Frasers Group with adjusted profit before tax of GBP344.8m, despite the significant economic headwinds and well-chronicled challenges across the sector.
Our elevation strategy has remained laser focused, and we have re-structured our team to execute it with conviction. It is underpinned by our core strengths and rock-solid foundations. Although the backdrop remains challenging, this momentum gives us the confidence of achieving adjusted profit before tax of between GBP450m and GBP500m for the next financial year.
Financial highlights
This Full Year Trading Update has been prepared in line with the Group's existing accounting policies and excludes the SRL trade and assets acquired during the year and does not include the presentation of Bob's Stores and Eastern Mountain Sports as a discontinued operation. This Full Year Trading Update is unaudited and does not constitute preliminary, final or audited results for the Group. While the Board does not expect to report audited results for the Group (including SRL) that are materially different to the figures set out in this Full Year Trading Update, there can be no assurance or certainty as to the extent or materiality of any such changes to these figures pending the completion of the audit process and adoption by the Board.
The year on year commentary below excludes the effect on the Income Statement and Balance Sheet of SRL(3)
-- Strong financial performance as we recover from Covid-19, with Group revenue (excluding SRL) up by 30.9%
-- Excluding acquisitions and on a currency neutral basis, revenue increased by 31.2%(1)
-- UK Sports Retail revenue increased by 31.2% , largely due to the strong reopening of stores after the last lockdown in March 2021 and the comparative period being impacted by lockdowns as a result of Covid-19
-- Excluding acquisitions, revenue increased by 30.1% (1)
-- Premium Lifestyle revenue increased by 43.6%, largely due to new FLANNELS stores, continued growth in online, and the strong reopening of stores after the last lockdown in March 2021
-- Excluding acquisitions, revenue increased by 43.3% (1)
-- European Retail revenue increased by 28.4%, largely due to strong growth in Ireland and the lockdowns experienced in the prior year
-- Excluding acquisitions and on a currency neutral basis, revenue increased by 33.4% (1)
-- Profit Before Tax was GBP366.1m, up from GBP8.5m driven by the strong reopening of stores after lockdown, new FLANNELS stores, continued growth in online in the premium lifestyle segment, continued operating efficiencies, and the FY21 comparative including Covid-19 related lockdowns, mitigated to some extent by property related impairments of GBP227.0m
-- Adjusted PBT was GBP344.8m compared to a loss of GBP39.9m in FY21(2)
-- Excluding acquisitions and on a currency neutral basis, Adjusted PBT increased by GBP394.0m(1)
-- Net assets increased to GBP1,369.1m from GBP1,211.0m at 25 April 2021
Strategic and operational highlights
-- Further growth of our key brand partner relationships, alongside establishing new and innovative brand partners
-- Supported our strategic brand partner Hugo Boss AG, with an increased investment reflecting our growing relationship and confidence in the brand's future
-- Our Elevation Strategy has come to life through the new store development including the creation of flagship stores, leading to recent openings including Sports Direct Birmingham and FLANNELS Liverpool
-- Strategic acquisitions, including Missguided (post year end) and SRL, enable the Group to unlock new e-commerce capabilities and access a wider customer base
-- Significantly improved the digital consumer experience across all touchpoints within the Group
Hot Features
Premium
-- Returned GBP193.2m to shareholders through a significant share buy back program
-- Successfully refinanced our Group facility which now stands at GBP980m
Financial Summary Unaudited Audited Change
Group Group (%)
(excl. SRL(3) FY21
)
FY22
------------------------ --------------- -------- -------
GBPm GBPm
Group revenue 4,746.9 3,625.3 30.9
UK Sports Retail 2,581.7 1,968.5 31.2
Premium Lifestyle 1,056.6 735.6 43.6
European Retail 790.2 615.2 28.4
Rest of World Retail 150.3 152.7 (1.6)
Wholesale & licensing 168.1 153.3 9.7
Profit Before Tax 366.1 8.5
Adjusted PBT (PBT)(2) 344.8 (39.9)
Net assets 1,369.1 1,211.0
The current year numbers exclude the effects on the income statement of SRL since its acquisition on 25 February 2022 to the year end 24 April 2022. The current anticipated Loss Before Tax for the two months post acquisition period is expected to be between GBP5m and GBP10m.
(1) A reconciliation excluding acquisitions and currency neutral performance measures can be found in the Glossary.
(2) Adjusted PBT (PBT) is profit before tax 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.
(3) On 25 February 2022 the Group acquired the digital retailer, Studio Retail Limited and certain other assets of Studio Retail Group plc (in administration) (SRL).
Enquiries
Ronnie Laffar
Head of PR Communications
E. fgpr@frasers.group
T. 07585 886189
Rosie Oddy
Brunswick Group, PR Advisors
E. frasersgroup@brunswick.com
T. 07734 861279
CEO STATEMENT
Clear vision
We are accelerating our strategy to provide consumers with access to the world's best sports, premium and luxury brands by providing a world-leading retail ecosystem. Aligned with this vision, we have defined the Group's purpose: To elevate the lives of the many by giving them access to the world's best brands and experiences.
To deliver on this mission and purpose, and to maintain the momentum created by the elevation strategy, we will continue to work closely with our key brand partners such as Nike, BOSS and Stone Island, to align plans. Our brand partnerships are deeper and stronger than they have ever been in the Group's history. These relationships will allow us to continue improving our product offering and customer experience by creating the best platforms to enable our brands to succeed. We are also redeveloping our sustainability strategy to ensure we set ambitious targets and meet them in the coming years.
Strategic delivery
Our focus has been on executing our elevation strategy with investments across our store portfolio, brand partnerships and further innovations across our operations. The strategic investments we made during the year offer exciting new opportunities for Frasers Group, whilst also supporting the long-term future of the existing retail businesses, saving the jobs and livelihoods of many.
Our recent acquisition of Studio Retail Limited provides expertise and synergies which will enable us to deliver flexible payment models in the future. Our post year end acquisition of the digital-first fashion brand Missguided allows us to unlock the latest trends in women's fashion and e-commerce. To strengthen our European expansion strategy, subsequent to the year end we acquired the leading Danish sport retailer SportMaster.
We will also continue to divest non-core assets that fall outside our vison and key focus segments, such as our post year end disposal of Bob's Stores and Eastern Mountain Sports in America.
Increased PBT guidance
We are alive to the challenging economic conditions at present, with inflationary pressures and supply chain disruption causing challenges for many businesses operating in the retail sector. As well as the significant increase in general running costs, we are fighting against a fundamentally flawed business rates system which is yet to be addressed. Linked to these are the cost-of-living pressures facing many of our consumers.
As a result, we have been conservative in our forecasting for the next financial year. However, with our proven strategy and strong operational backbone, we are confident of achieving a healthy growth to GBP450m and GBP500m adjusted PBT.
Store openings
Our elevation strategy keeps exceeding our expectations. Its strength is demonstrated by our recent store openings of FLANNELS Liverpool and Sports Direct Birmingham.
FLANNELS Liverpool is one of the largest luxury retail investments in the UK to date. This revolutionary seven floor, 120,000 sq. ft store in a historic building brings a ground-breaking fashion, beauty, wellness and restaurant experience to the North of England. It boasts a leading collection of experiences including boutique fitness phenomenon Barry's Bootcamp, the first ever of its kind in a retail environment. Our regional flagships don't only benefit the physical environment, but also allow us to bring in new categories and brands that our consumers can access online through our omnichannel platforms.
Sports Direct Birmingham follows our Oxford Street, London opening last summer. Both stores demonstrate the pinnacle of our journey and showcase the strength of our elevation strategy. The consumer experience has been enhanced at every stage including digital touchpoints, activations and integrations of other group brands such as Evans, USC & Game, giving access to a wider variety of products and experiences.
Big believers in physical retail
We have consistently criticised the archaic business rates regime and the need for reform. Unfortunately, these issues remain unaddressed and are now coupled with soaring construction and store fit out costs, making for an extremely challenging environment to open and operate physical stores. While others have shied away from committing to physical retail in these difficult times, we are convinced that consumers will still flock to stores for great brands and experiences. This belief has allowed us to build remarkable momentum, bucking market trends. We will continue to invest in new store openings, refurbishments and flagship opportunities to bring the world's best brands and experiences to untapped markets.
Digital and operational transformation
As part of our growth strategy, we are continually innovating across our supply chain and logistics to drive further efficiencies. At our Shirebrook site, home to our distribution centre, we have invested over GBP200m in automation. This makes us the biggest auto-store in Europe and vastly improves our digital capabilities.
This has provided us with significant operational efficiencies and supported the smooth integration of acquisitions into the Frasers Group platform, enabling both our owned brands and brand partners to benefit from our world-leading operations and logistics capabilities. At Shirebrook, we now have approximately 2 million sq. ft of warehousing which enables us to process up to 4 million units per week. This still leaves capacity for further growth.
We have continued to iterate and improve across the entirety of our Frasers Group Platform. Most notably we have trialled a new headless e-commerce platform on our Malaysian site, with a view to roll-out across the group. This will be a transformative step for the Group allowing us to be more agile when entering new territories or deploying changes to our technology stack.
Global growth
We also have extensive ambitions to grow the business outside of the UK and will be exploring the potential for further international expansion through acquisitions, joint ventures and organic openings. We have already begun to expand our operational capabilities in Europe, with a new development site in Bitburg, Germany set to open in the coming years. This space will have up to 2.4million sq. ft of warehouse and distribution space, handling approximately 300 million units annually. This will support growth across continental Europe.
Talent and partners
To support the Group in executing our ambitious strategy, I am proud to have built an excellent senior team made up of outstanding talent. They are the driving force behind the Group's ambitious culture, bringing together dynamic, talented and motivated teams to drive growth across the business. I have made it a priority to strengthen Frasers Group's management team by creating several new roles. Alongside the management team, we will look to support the business by adding relevant talent and expertise to the Board when appropriate.
Finally, thank you to our people and partners for your continued support, I am proud of the steps we have taken this year in transforming the trajectory of Frasers Group and look forward to another exciting year of innovation, impact and growth.
Michael Murray
Chief Executive Officer
CHAIR'S STATEMENT
CEO Appointment
Earlier this year, Michael Murray transitioned into the role of Chief Executive of Frasers Group. With Michael's leadership, we remain laser-focused on the growth of the business, through keeping up the momentum of our Elevation strategy, investing in our people and building out the proposition for brands.
Michael has set out a clear vision for the business; to provide consumers with access to the world's best sports, premium and luxury brands by providing a world-leading retail ecosystem - and through that, he has significantly improved our relationships with our key brand partners and grown our presence across the UK and Europe through the development of our store portfolio.
With the Group's new leadership, and a clear direction, Michael continues to redefine the culture, employee value proposition and strategy of Frasers Group - which all contribute to the efficiency of the business and our strong performance.
Business Performance and Financial Highlights
We are pleased that our business has performed above expectations since stores re-opened in March 2021, following the final period of closure due to the Covid-19 pandemic. We are a cash generative business which enables us to continue to invest in our strategies and withstand some of the pressures and impact of the pandemic, Brexit, global supply chain challenges and political and economic uncertainty at home and abroad. Notwithstanding our business resilience, these macro-economic factors however have contributed to our conservative judgements and estimates leading to some significant non-cash accounting impairments to our asset base.
-- Revenue increased to GBP4,746.9m (FY21: GBP3,625.3m) -- Profit Before Tax increased to GBP366.1m (FY21: GBP8.5m) -- Adjusted PBT increased to a profit of GBP344.8m (FY21: loss GBP39.9m) -- Net assets at FY22 GBP1,369.1m (FY21: GBP1,211.0m)
Looking forward, we will continue to invest in the high street alongside our online and digital capabilities. Following the success of the businesses' first Sports Direct flagship on London's Oxford Street, which opened to great acclaim last June, we recently opened our second Sports Direct flagship store in Birmingham - further demonstrating the strength of our elevated consumer experience, and the direction of the Sports Direct brand.
The FLANNELS business continues to perform exceptionally well, and we are excited about the recent opening of our 120,000 sq. ft. FLANNELS flagship store in Liverpool. The store is our largest store opening to date and saw an impressive investment of approx. GBP30m from the business. Our expansion plans for FLANNELS are crucial to the on-going success of the luxury side of the business, and through our new brand vision; to become the leading destination for new luxury, we're delighted to be expanding into new markets, and new locations throughout the UK and Europe, including the expansion into Ireland with openings planned for Dublin, Blanchardstown and Cork.
Acquisitions
We continue to see opportunities that strengthen Frasers Group's brand proposition and our recent acquisitions of Studio Retail Limited (with its significant knowledge and experience in consumer credit) and Missguided (with its focus on Womenswear and its digital platforms) are examples of our drive to expand and acquire businesses and brands that can strengthen the Group, and connection to our consumers.
Operations
We are continually developing our automation capabilities in our Shirebrook distribution facility, including the launch of a Dematic Shuttle machine which covers a floor plate of 200,000 sq. ft and increasing the size of our Auto store facility which was already the biggest in Europe. In the second half of the financial year, we completed the purchase of land in Bitburg, Germany where we have plans for a significant distribution centre which will service mainland Europe from both a store and digital perspective.
Our People
Our people are the key asset to the business.
Under Michael Murray's leadership, the management team has been strengthened. The business has created several new roles including the additions of a Managing Director of Sports, Ger Wright (formerly a Nike Executive) and a Managing Director of Luxury and Premium, David Epstein. Alongside the management team, we will look to support the business by adding relevant talent and expertise to the Board when appropriate.
This year the Group will receive its third annual intake of highly talented individuals into the Elevation Programme. The programme is aimed at high potential graduates seeking a career in commercial management, and we have twenty-seven young, ambitious new joiners will start in September. Over the past three years, we have been monitoring the success and benefits of the Elevation Programme and are pleased to confirm that we will be rolling out the scheme across our finance department, also starting this September.
Refinancing
In our Half Year reporting we noted the successful refinance of our Group facility whereby we have access to a combined term loan and revolving credit facility (RCF) of GBP930.0m for a period of 3 years, with the possibility to extend this by a further 2 years. This facility has increased in size to GBP980.0m since then. We believe this is a great endorsement for the business and our Elevation strategy and I want to say thank you to our banking partners for their support.
Outlook
Under Michael Murray's direction and leadership, we are confident the Group is well positioned for a successful year ahead.
Relationships with our key brand partners are better than they have ever been, and we will continue to invest into supporting and growing these relationships.
The business cannot overlook the many significant economic factors which are headwinds on the business, including challenges with supply chain and the increased cost of living - these factors could have an impact on business potential.
However, we look forward to growing the business both organically and through acquisitions to ensure we remain a market leader globally. We believe the growth factors will mitigate these headwinds and we will be looking to grow our Adjusted PBT to between GBP450m and GBP500m in FY23.
Dividend and Share Buybacks
No final dividend will be payable in relation to FY22.
Our share buyback programme has continued which is a demonstration of our commitment to shareholder returns, our confidence in the Company and the strategy for future growth.
David Daly
Non-Executive Chair of the Board
REVIEW BY BUSINESS SEGMENT (excluding Studio Retail Limited)
UK SPORTS RETAIL
UK Sports Retail includes all of the Group's sports retail and USC store operations in the UK (including Northern Ireland), all of the Group's sports online businesses (excluding Bob's Stores, Eastern Mountain Sports, Baltics and Malaysia), the Group's gyms, Evans Cycles, GAME UK stores and online operations and the Group's Shirebrook campus operations. UK Sports Retail is the main driver of the Group and accounts for 54.4% of Group revenue.
52 weeks ended 52 weeks ended
24 April 2022 25 April 2021
(unaudited) (audited)
Revenue 2,581.7 1,968.5
--------------
Cost of Sales (1,459.2) (1,139.2)
---------------- -------------- --------------
Gross Profit 1,122.5 829.3
---------------- -------------- --------------
Gross Margin % 43.5 42.1
---------------- -------------- --------------
Adjusted PBT 201.8 (12.8)
---------------- -------------- --------------
Revenue increased 31.2% to GBP2,581.7m. Excluding acquisitions revenue grew 30.1%. This was largely due to the strong reopening of stores after the last lockdown in March 2021, and the prior period comparative including Covid-19 related lockdowns.
Gross margin increased to 43.5%, largely due to the year on year growth within Sports Direct which has a higher gross margin compared to other fascias (Game UK) within the segment.
Adjusted PBT for UK Sports Retail increased from a loss of GBP12.8m in FY21 to a profit of GBP201.8m for the period, largely due the strong reopening of stores after lockdown, the comparative period being impacted by lockdowns as a result of Covid-19 and more significant property related impairments in the comparative period (FY22: GBP103.4m compared to FY21: GBP201.9m) .
UK SPORTS RETAIL STORE PORTFOLIO (3)
24 April 2022 25 April 2021
------------------ ------------- -------------
England 387 394
------------------ ------------- -------------
Scotland 37 39
------------------ ------------- -------------
Wales 30 31
------------------ ------------- -------------
Northern Ireland 19 21
------------------ ------------- -------------
Isle of Man 1 1
------------------ ------------- -------------
GAME UK (1) 259 247
------------------ ------------- -------------
Evans Cycles (2) 57 48
------------------ ------------- -------------
USC 18 25
------------------ ------------- -------------
Total 808 806
------------------ ------------- -------------
Opened 90 93
------------------ ------------- -------------
Closed (88) (98)
------------------ ------------- -------------
Acquired - 42
------------------ ------------- -------------
Area (sq.ft.) approx. 6.7m approx. 6.8m
------------------ ------------- -------------
(1) The GAME UK store numbers include 125 concessions operating within Sports Direct fascia stores (FY21: 71) and does not include BELONG arenas.
(2) The Evans Cycles store numbers include 2 concessions operating within House of Fraser fascia stores (FY21: 1).
(3) Table excludes the Group's standalone gyms.
PREMIUM LIFESTYLE
Premium Lifestyle consists of FLANNELS, Cruise, van mildert, House of Fraser, Jack Wills and Sofa.com fascia stores and corresponding web sales.
52 weeks ended 52 weeks ended
24 April 2022 25 April 2021
(unaudited) (audited)
Gross Transaction Value (GTV) (1) 1,133.8 788.1
--------------
Revenue 1,056.6 735.6
----------------------------------- -------------- --------------
Cost of Sales (581.8) (405.3)
----------------------------------- -------------- --------------
Gross Profit 474.8 330.3
----------------------------------- -------------- --------------
Gross Margin % 44.9 44.9
----------------------------------- -------------- --------------
Adjusted PBT 10.5 (7.8)
----------------------------------- -------------- --------------
(1) GTV being gross sales net of VAT, discounts and returns, and gross sales where the Group acts as agent.
Revenue grew 43.6% to GBP1,056.6m. This was largely due to new FLANNELS stores, continued growth in online, growth in House of Fraser, and the impact of Covid-19 related lockdowns on the prior period comparative.
Gross margin was 44.9% consistent with the prior year as product margins were maintained over the period.
It should be noted that despite year on year trading improvements in the House of Fraser business, business rates in their current form continue to be a significant and disproportionate cost to House of Fraser.
Adjusted PBT for Premium Lifestyle increased from a loss of GBP7.8m in FY21 to a profit of GBP10.5m for the period, largely due to new FLANNELS stores, continued growth in online, the strong reopening of stores after the last lockdown in March 2021, mitigated by more significant property related impairments in the current period (FY22: GBP103.5m compared to FY21: GBP40.9m).
PREMIUM LIFESTYLE STORE PORTFOLIO
24 April 2022 25 April 2021
------------- -------------
FLANNELS 53 41
------------- -------------
Jack Wills 52 60
--------------------------- ------------- -------------
House of Fraser / Frasers 39 43
--------------------------- ------------- -------------
Sofa.com (1) 23 24
--------------------------- ------------- -------------
Cruise 5 5
--------------------------- ------------- -------------
18 Montrose 4 3
--------------------------- ------------- -------------
Van Mildert 1 1
--------------------------- ------------- -------------
Garment Quarter 1 1
--------------------------- ------------- -------------
Psyche 1 1
--------------------------- ------------- -------------
Total 179 179
--------------------------- ------------- -------------
Opened 21 12
--------------------------- ------------- -------------
Closed (21) (17)
--------------------------- ------------- -------------
Acquired - 5
--------------------------- ------------- -------------
Area (sq.ft.) approx. 4.0m approx. 4.2m
--------------------------- ------------- -------------
(1) Sofa.com store numbers include 17 concessions operating within House Of Fraser fascia stores (FY21: 17).
(2) Jack Wills and Frasers stores in Republic of Ireland are shown in the European store numbers opposed to the Premium Lifestyle store numbers.
EUROPEAN RETAIL
The European Retail division includes the Group's sports retail store management and operations in Europe, including the Group's European distribution centres in Belgium and Austria, stores and corresponding web business in the Baltic regions and GAME Spain stores and corresponding web business.
52 weeks ended 52 weeks ended
24 April 2022 25 April 2021
(unaudited) (audited)
Revenue 790.2 615.2
--------------
Cost of Sales (452.9) (375.5)
---------------- -------------- --------------
Gross Profit 337.3 239.7
---------------- -------------- --------------
Gross Margin % 42.7 39.0
---------------- -------------- --------------
Adjusted PBT 88.6 (51.3)
---------------- -------------- --------------
Revenue increased 28.4% to GBP790.2m. On a currency neutral basis and excluding acquisitions, European Retail revenue increased by 33.4% largely due to temporary store closures as a result of Covid-19 in the prior period comparative.
Gross margin increased to 42.7% largely due to continually improving product mix in the core business.
Adjusted PBT for European Retail improved from a loss of GBP51.3m in FY21 to a profit of GBP88.6m for the period, largely due the strong reopening of stores after lockdown and the comparative period being impacted by lockdowns as a result of Covid-19, especially in Ireland.
All of the following stores are operated by companies wholly owned by the Group, except Estonia, Latvia and Lithuania where the Group owns 60.0%.
EUROPEAN RETAIL STORE PORTFOLIO (1)
24 April 2022 25 April 2021
GAME Spain 235 236
------------------------ ------------- -------------
Republic of Ireland(2) 43 39
------------------------ ------------- -------------
Belgium 34 34
------------------------ ------------- -------------
Portugal 21 20
------------------------ ------------- -------------
Estonia(1) 20 21
------------------------ ------------- -------------
Austria 19 20
------------------------ ------------- -------------
Lithuania(1) 19 18
------------------------ ------------- -------------
Latvia(1) 18 17
------------------------ ------------- -------------
Poland 13 14
------------------------ ------------- -------------
Slovenia 13 13
------------------------ ------------- -------------
Czech Republic 12 12
------------------------ ------------- -------------
Spain 10 9
------------------------ ------------- -------------
Hungary 8 8
------------------------ ------------- -------------
Cyprus 6 6
------------------------ ------------- -------------
Holland 5 5
------------------------ ------------- -------------
Slovakia 5 5
------------------------ ------------- -------------
France 4 4
------------------------ ------------- -------------
Luxembourg 2 2
------------------------ ------------- -------------
Germany 1 2
------------------------ ------------- -------------
Iceland 1 1
------------------------ ------------- -------------
Total 489 486
------------------------ ------------- -------------
Opened 12 13
------------------------ ------------- -------------
Closed (9) (38)
------------------------ ------------- -------------
Acquired - -
------------------------ ------------- -------------
Area (sq.ft.) approx. 3.7m approx. 3.6m
------------------------ ------------- -------------
(1) Includes only stores with SPORTSDIRECT.com and SPORTLAND fascias.
(2) Excluding Heatons fascia stores.
REST OF WORLD RETAIL
Rest of World Retail includes sports stores in Malaysia trading under the Sports Direct fascia, retail stores in the US trading under Bob's Stores and Eastern Mountain Sports and their online businesses. In Malaysia the stores are 51.0% owned by the Group.
52 weeks ended 52 weeks ended
24 April 2022 25 April 2021
(unaudited) (audited)
Revenue 150.3 152.7
--------------
Cost of Sales (73.6) (88.7)
---------------- -------------- --------------
Gross Profit 76.7 64.0
---------------- -------------- --------------
Gross Margin % 51.0 41.9
---------------- -------------- --------------
Adjusted PBT 32.7 12.2
---------------- -------------- --------------
Revenue decreased 1.6% to GBP150.3m mostly due to the US businesses offset by an increase in Malaysia. Gross margin increased to 51.0% from 41.9%, largely due to decreased inventory provisions within the US businesses as inventory management was significantly improved. Adjusted PBT was GBP32.7m, compared to GBP12.2m in FY21, largely due to overall operating efficiencies in the US businesses.
REST OF WORLD RETAIL STORE PORTFOLIO
24 April 2022 25 April 2021
Malaysia 34 33
------------------------- ------------- -------------
Bob's Stores 21 22
------------------------- ------------- -------------
Eastern Mountain Sports 21 21
------------------------- ------------- -------------
Total 76 76
------------------------- ------------- -------------
Area (sq.ft.) approx. 1.3m approx. 1.3m
------------------------- ------------- -------------
WHOLESALE & LICENSING
The portfolio of Group brands includes a wide variety of world-famous sport and lifestyle brands. The Group's Sports Retail division sells products under these brands in its stores, and the Wholesale & Licensing division sells the brands through its wholesale and licensing activities. The Wholesale & Licensing division continues to sponsor a variety of prestigious events and retains a variety of globally recognised celebrities and sporting professionals as brand ambassadors.
52 weeks ended 52 weeks ended
24 April 2022 25 April 2021
(unaudited) (audited)
Wholesale 145.3 131.5
--------------
Licensing 22.8 21.8
---------------- -------------- --------------
Total Revenue 168.1 153.3
---------------- -------------- --------------
Cost of Sales (105.0) (85.8)
---------------- -------------- --------------
Gross Profit 63.1 67.5
---------------- -------------- --------------
Gross Margin % 37.5 44.0
---------------- -------------- --------------
Adjusted PBT 11.2 19.8
---------------- -------------- --------------
Revenue increased by 9.7% to GBP168.1m. Wholesale revenues are up 10.5% to GBP145.3m and Licensing revenues increased 4.6% to GBP22.8m, largely due to the prior period comparative being impacted by Covid-19.
Total gross margin decreased to 37.5% (FY21: 44.0%) largely due to product mix within the US wholesale division.
Adjusted PBT decreased 43.4% to GBP11.2m (FY21: GBP19.8m) largely due to impairment of Goodwill in the period.
PROPERTY REVIEW
The beginning of the financial year welcomed the opening of the refurbished Sports Direct on Oxford Street, London showcasing the elevated store model in one of Europe's most iconic retailing destinations. Further Sports Direct flagship locations in the pipeline include Birmingham which opened shortly after the financial year end and Manchester due to open late FY23. Opportunities to deliver this flagship concept are also being considered in various European capital cities. In addition, a refurbishment model has been trialled and is under development to elevate appropriate stores which are currently trading.
FLANNELS experienced significant new store activity over the period with 15 new openings. The most notable opening was delivering the first FLANNELS flagship store in Sheffield incorporating beauty and food & beverage elements across 55k sqft; the outcome has delivered a world-class luxury offering receiving industry recognition. A second FLANNELS Flagship store was also opened in Leicester, Fosse Park over the period. Further flagship sites have been secured in Liverpool which is now trading along with Cardiff and Leeds which are both due to open during FY24. Flannels will also be expanding its store network into Ireland over the coming financial period. These will be the first store openings outside of the U.K. for the brand having secured sites in Dublin, Blanchardstown and Cork.
The Group continues to identify large sites, which working with collaborative Landlords can be configured to provide a multi fascia offering. Over the period sites have been secured at Derby, Cork and Newbridge in Ireland to develop into Frasers and Sports Direct stores.
The main objective for the Group's estate remains to be the move to turnover based rents. There has been significant investment into new store concepts across all the Group's brands, including more recently the new Everlast Gym concept as well as enhancements to existing brand concepts such as the Sports Direct and Flannels Flagship concepts. Where Landlords are prepared to co-invest in new stores the Group is prepared to enter into long leases.
The Group remains acquisitive across fascias and territories with an exciting pipeline of new stores due to open in the coming financial year; the number of new store openings are expected to be comparable to FY22. However, caution is being applied over shop fit costs which are being monitored closely and could influence the store opening pipeline. In the usual manner freehold investment activity will continue to be used as an option to secure space for the Group.
The business rates regime continues to be a challenging landscape to navigate, particularly on large stores and former department stores. With further clarity required on the new regime effective April 23 and the uncertainty around transitional relief arrangements, the Group is taking a cautious view on future rates liabilities.
INCOME STATEMENT
For the 52 weeks ended 24 April 2022
Unaudited Group Audited Group
(excl. SRL) 52 weeks ended
52 weeks ended
Note 24 April 2022 25 April 2021
(GBP'm) (GBP'm)
Revenue 4,746.9 3,625.3
Cost of sales (2,672.5) (2,094.5)
----------------- -----------------
Gross profit 2,074.4 1,530.8
----------------- -----------------
Selling, distribution and administrative expenses (1,569.8) (1,319.0)
Other operating income 47.6 36.8
Property related impairments 1,7 (227.0) (317.0)
Exceptional items (1.3) (1.6)
Profit on sale of properties 10.8 9.7
----------------- -----------------
Operating profit/(loss) 334.7 (60.3)
----------------- -----------------
Investment income 3 69.2 103.7
Investment costs 4 (19.7) (7.7)
Finance income 5 30.3 9.0
Finance cost 6 (48.4) (36.2)
----------------- -----------------
Profit before taxation 366.1 8.5
----------------- -----------------
Taxation (68.8) (86.5)
----------------- -----------------
Profit/(loss) for the period 297.3 (78.0)
----------------- -----------------
ATTRIBUTABLE TO:
Equity holders of the Group 290.2 (83.0)
Non-controlling interests 7.1 5.0
----------------- -----------------
Profit/(loss) for the period 297.3 (78.0)
----------------- -----------------
The Current Period Income Statement is unaudited and has been prepared in line with our unchanged historic accounting policies and excludes the operations of SRL which was acquired during the period and does not present the Bob's Stores and Eastern Mountains Sports disposal as a discontinued operation.
BALANCE SHEET
At 24 April 2022
Unaudited Group
(excl. SRL) Audited Group
Note 24 April 2022 25 April 2021
(GBP'm) (GBP'm)
ASSETS - NON-CURRENT
Property, plant and equipment 7 991.9 1,164.9
Investment properties 89.2 14.1
Intangible assets 115.8 120.5
Long-term financial assets 206.6 263.3
Deferred tax assets 76.3 66.8
1,479.8 1,629.6
ASSETS - CURRENT
Inventories 1,254.1 1,096.6
Trade and other receivables 773.1 546.5
Derivative financial assets 116.5 55.4
Cash and cash equivalents 292.7 457.0
2,436.4 2,155.5
TOTAL ASSETS 3,916.2 3,785.1
EQUITY
Share capital 64.1 64.1
Share premium 874.3 874.3
Treasury shares reserve (488.9) (295.7)
Permanent contribution to capital 0.1 0.1
Capital redemption reserve 8.0 8.0
Foreign currency translation reserve 35.6 28.8
Reverse combination reserve (987.3) (987.3)
Own share reserve (66.8) (66.7)
Hedging reserve 55.3 11.5
Share based payment reserve 14.1 1.3
Retained earnings 1,838.6 1,554.5
Issued capital and reserves attributable to owners of the parent 1,347.1 1,192.9
Non-controlling interests 22.0 18.1
TOTAL EQUITY 1,369.1 1,211.0
LIABILITIES - NON-CURRENT
Lease liabilities 8 492.3 534.2
Borrowings 8 684.3 705.9
Retirement benefit obligations 1.6 1.9
Deferred tax liabilities 37.2 27.0
Provisions 385.1 361.2
1,600.5 1,630.2
LIABILITIES - CURRENT
Derivative financial liabilities 81.8 19.2
Trade and other payables 693.0 646.3
Lease liabilities 8 119.3 188.5
Current tax liabilities 52.5 89.9
946.6 943.9
TOTAL LIABILITIES 2,547.1 2,574.1
TOTAL EQUITY AND LIABILITIES 3,916.2 3,785.1
The Current Period Balance Sheet is unaudited and has been prepared in line with our unchanged historic accounting policies and excludes the operations of SRL which was acquired during the period and does not present the Bob's Stores and Eastern Mountain Sports disposal as a discontinued operation.
CASH FLOW STATEMENT
For the 52 weeks ended 24 April 2022
Unaudited Group Audited Group
(excl. SRL) 52 weeks ended
52 weeks ended
Note 24 April 2022 25 April 2021
(GBP'm) (GBP'm)
Cash inflows from operating activities 9 497.7 528.0
Income taxes paid (120.9) (59.3)
Net cash inflows from operating activities 376.8 468.7
Proceeds on disposal of property, plant and equipment and investment
property 43.0 20.6
Proceeds on disposal of intangibles assets - 7.5
Proceeds on disposal of listed investments 238.4 55.1
Proceeds in relation to equity derivatives (3) 117.4 50.3
Disposal of subsidiary undertaking 1.0 -
Purchase of subsidiaries, net of cash acquired (1) (2.5) (39.4)
Purchase of property, plant and equipment (2) (323.1) (219.4)
Purchase of intangible assets - (1.0)
Purchase of listed investments (198.4) (113.3)
Investment income received 1.0 0.5
Finance income received 6.3 9.0
Net cash outflows from investing activities (116.9) (230.1)
Lease payments (176.0) (78.0)
Finance costs paid (32.1) (31.6)
Borrowings drawn down 8 1,374.4 1,128.1
Borrowings repaid 8 (1,396.1) (1,323.6)
Dividends paid to non-controlling interests (1.3) (0.9)
Purchase of own shares (193.2) (4.3)
Net cash outflows from financing activities (424.3) (310.3)
Net (decrease) in cash and cash equivalents including overdrafts (164.4) (71.7)
Exchange movement on cash balances 0.1 (5.3)
Cash and cash equivalents including overdrafts at beginning of period 457.0 534.0
Cash and cash equivalents including overdrafts at the period end 292.7 457.0
(1) Excluding SRL.
(2) Includes purchase of investment property.
(3) GBP50.3m has been recategorised from the 25 April 2021 increase in payables (which is shown in the cash flow from operating activities note 9) to proceeds in relation to equity derivatives. This has no impact on net cash.
The Cash Flow is unaudited and has been prepared in line with our unchanged historic accounting policies, it excludes the operations of Studio Retail Limited which was acquired during the period and does not present the Bob's Stores and Eastern Mountain Sports disposal as a discontinued operation.
1. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The critical accounting estimates and judgements made by the Group in preparing this unaudited trading statement regarding the future or other key sources of estimation uncertainty and judgement that may have a significant risk of giving rise to a material adjustment to the carrying values of assets and liabilities within the next financial period are:
Key Judgements
Determining Related Party Relationships
Management determines whether a related party relationship exists by assessing the nature of the relationship by reference to the requirements of IAS 24, Related Party Disclosures. This is in order to determine whether significant influence exists as a result of control, shared directors or parent companies, or close family relationships. The level at which one party may be expected to influence the other is also considered for transactions involving close family relationships.
Control And Significant Influence Over Certain Entities
Under IAS 28 Investments in Associates and Joint Ventures if an entity holds 20% or more of the voting power of the investee, it is presumed that the entity has significant influence, unless it can clearly demonstrate that this is not the case. During the period the Group has held greater than 20% of the voting rights of Studio Retail Group Plc (Studio Retail Limited and certain assets of Studio Retail Group Plc were acquired out of administration during the period) and Mulberry Group Plc, whereby management consider that the Group does not have significant influence over these entities for combinations of the following reasons:
-- The Group does not have any representation on the board of directors of the investee other than a Frasers Group representative having an observer role on the board of Studio Retail Group Plc before it was acquired. Management have reviewed the terms of the observer arrangement and have concluded that this does not give them the right to participate in or influence the financial or operating decisions of Studio Retail Group Plc. Studio Retail Group Plc could terminate this arrangement at any time, and could determine which parts of the Board meetings the representative could be present at and what information they were given access to. It should be noted the Frasers Group representative did not attend any board meetings in full or part during the reporting period;
-- There is no participation in decision making and strategic processes, including participation in decisions about dividends or other distributions;
-- There have been no material transactions between the entity and these investee companies; -- There has been no interchange of managerial personnel; -- No non-public essential technical management information is provided to the investee
In assessing the level of control that management have over certain entities, management will consider the various aspects that allow management to influence decision making. This includes the level of share ownership, board membership, the level of investment and funding and the ability of the Group to influence operational and strategic decisions and effect its returns through the exercise of such influence. If management were to consider that the Group does have significant influence over these entities then the equity method of accounting would be used and the percentage shareholding multiplied by the results of the investee in the period would be recognised in profit or loss.
The Group holds 49% of the share capital of Four (Holdings) Limited which is accounted for 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 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 taken to the 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, the Hedging reserve of GBP55.4m (FY21: GBP11.5m) would be shown in Finance Income.
Key Estimates
Provision For Obsolete, Slow Moving Or Defective Inventories
The Directors have applied their knowledge and experience of the retail industry in determining the level and rates of provisioning required in calculating the appropriate inventory carrying values. Specific estimates and judgements applied in relation to assessing the level of inventory provisions required are considered in relation to the following areas:
a. Continuity inventory b. Seasonal inventory lines - specifically seasons that have now finished c. Third party versus own brand inventory d. Ageing of inventory e. Sports Retail or Premium Lifestyle f. Local economic conditions g. Divisional specific factors h. Increased cost of inventory and lower margins with the devaluation of the Pound i. Over-stock and out of season inventory as a result of 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 through damage and theft
Total Group inventory provision at 24 April 2022 is 15.1% (FY21: 16.6%). A 1% change in the total provision would impact Adjusted PBT by approx. GBP14.8m (FY21: GBP13.2m). Management do not consider it appropriate to disclose sensitivities for key assumptions in isolation as in practice changes in one assumption would lead to an offset in another.
Property Related Provisions
Property related estimates and judgements are continually evaluated and are based on historical experience, external advice and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Dilapidations
The Group provides for its legal responsibility for dilapidation costs following advice from chartered surveyors and previous experience of exit costs (including strip out costs and professional fees). Management use a reference estimate of GBP100,000 (FY21: GBP100,000) for large leasehold stores, GBP50,000 (FY21: GBP50,000) for smaller leasehold stores (GBP25,000 per store for Game UK and Game Spain stores) and $/EUR50,000 (FY21: $/EUR50,000) for non-UK stores. Management do not consider these costs to be capital in nature and therefore dilapidations are not capitalised, except for in relation to the sale and leaseback of Shirebrook for which a material dilapidations provision was capitalised in FY20.
A 10% increase in dilapidation cost per store would result in an approx. GBP8.5m (FY21: GBP8.0m) reduction in Adjusted PBT.
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 (FY21: 10%). A 5% increase to 15% would result in approx. GBP6.5m increase in the provision (FY21: approx. GBP6.5m).
-- 3% interest on the liability (FY21: 3%). A 1% increase to 4% would result in approx. GBP14m increase in the provision (FY21: approx. GBP11.5m).
Management are satisfied that the judgement to consider all claims collectively is the only reasonable approach because they are all dependant on the outcome of a court ruling on the interpretation of the non-UK tax enquiries. Management are satisfied that with regard to timing a reasonable range of outcomes are all greater than one year and so are satisfied with including the provisions as non-current.
Other Receivables And Amounts Owed By Related Parties
Other receivables and amounts owed by related parties are stated net of provision for any impairment. Management have applied estimates in assessing the recoverability of working capital and loan advances made to investee companies. Matters considered include the relevant financial strength of the underlying investee company to repay the loans, the repayment period and underlying terms of the monies advanced, forecast performance of the underlying borrower, and where relevant, the Group's intentions for the companies to which monies have been advanced.
IFRS 16
The key areas of judgement in relation to property leases recognised under IFRS 16 are below:
-- IFRS 16 defines the lease term as the non-cancellable period of a lease together with the options to extend or terminate a lease, if the lessee were reasonably certain to exercise that option. The Group will assess the likelihood of extending lease contracts beyond the break date by taking into account current economic and market conditions, current trading performance, forecast profitability and the level of capital investment in the property.
-- IFRS 16 states that the lease payments shall be discounted using the lessee's incremental borrowing rate where the rate implicit in the lease cannot be readily determined. Accordingly, all lease payments have been discounted using the incremental borrowing rate (IBR). The IBR has been determined by using a synthetic credit rating for the Group which is used to obtain market data on debt instruments for companies with the same credit rating, this is split by currency to represent each of the geographical areas the Group operates within and adjusted for the lease term.
The weighted average discount rates based on incremental borrowing rates used throughout the period across the Group's lease portfolio are shown below. The discount rate for each lease is dependent on lease start date, term and location.
Lease Term UK Europe Rest of
World
Up to 5 years 1.4% - 2.6% 0.8% - 1.0% 1.5% -
2.9%
------------ ------------ --------
Greater than 5 years and up to 10 2.2% - 3.2% 1.2% - 1.9% 2.4% -
years 4.1%
------------ ------------ --------
Greater than 10 years and up to 2.5% - 3.4% 1.4% - 2.2% 2.9% -
20 years 4.3%
------------ ------------ --------
Greater than 20 years 2.8% - 3.5% 1.7% - 2.5% 3.5% -
4.6%
------------ ------------ --------
-- 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 GBP115.9m (FY21: GBP174.9m), being GBP76.8m (FY21: GBP168.2m) against the right-of-use asset (GBP50.7m UK Sports Retail segment, GBP9.5m Premium Lifestyle segment, GBP15.6m European Retail segment, and GBP1.0m Rest of the World Retail segment) and GBP39.1m (FY21: GBP6.7m) against plant and equipment (GBP28.7m UK Sports Retail segment, GBP10.4m Premium Lifestyle segment). The impairments were due to the ongoing challenges in the retail sector on the forecast cash flows of the CGU, including supply chain issues and the anticipated cost of living squeeze on customers.
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.
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 in Impairment increase
assumption: / (decrease) GBPm
10% improvement to
Sales decline year 1 0% (21.8)
---------------------- --------------------
Sales decline year 1 10% reduction to 20% 17.9
---------------------- --------------------
Existing Gross Margin year
1 >40% 100bps - improvement (4.2)
---------------------- --------------------
Existing Gross Margin year
1 >40% 100bps - reduction 2.7
---------------------- --------------------
Change from 1 to 2
New store exemption (1) years (27.2)
---------------------- --------------------
(1) Stores which have been open for less than one year are not reviewed for impairment.
Freehold Land and Buildings and Long-term leasehold
Freehold land and buildings and long-term leasehold assets are assessed at each reporting period for whether there is any indication of impairment in line with IAS 36.
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 GBP111.1m (FY21: GBP117.9m) due to the ongoing challenges in the retail sector on the forecast cash flows of the CGU. This is split GBP106.5m against freehold land and buildings (GBP19.8m UK Sports Retail segment, GBP83.4m Premium Lifestyle segment, GBP2.1m European Retail segment, and GBP1.2m Rest of World Retail segment), GBP2.0m against long-term leasehold (GBP2.0m UK Sports Retail segment), GBP1.6m plant & equipment (GBP1.2m UK Sports Retail segment, GBP0.2m Premium Lifestyle segment, GBP0.2m European Retail segment), and GBP1.0m investment property (all UK Sports Retail segment).
Value In Use (VIU)
The value in use is calculated based on five year cash flow projections. These are formulated by using the Group ' s forecast cash flows of each individual CGU, 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 Year Year Year Year
1 2 3 4 5
--------------------------- --------- --------- --------- --------- ---------
Sales decline -10% -5% -4% -3% -2%
--------- --------- --------- --------- ---------
Existing gross margin -200bps -175bps -150bps -125bps -100bps
> 40%
--------- --------- --------- --------- ---------
Operating costs increase
per annum 6% 3% 3% 3% 3%
--------- --------- --------- --------- ---------
Discount rate 7.5% 7.5% 7.5% 7.5% 7.5%
--------- --------- --------- --------- ---------
Terminal growth rate
of 2%
-----------------------------------------------------
A sensitivity analysis has been performed in respect of sales and margin as these are considered to be the most sensitive of the key assumptions.
Forecast: Impact of: Impairment increase
/ (decrease) GBPm
10% improvement to
Sales year 1 0% (16.8)
---------------------- --------------------
Sales year 1 10% reduction to 20% 25.5
---------------------- --------------------
Existing Gross Margin year
1 >40% 100bps - improvement (5.2)
---------------------- --------------------
Existing Gross Margin year
1 >40% 100bps - reduction 6.7
---------------------- --------------------
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 Void period and rent free band
suitable reversionary yield applied - two bands applied depending
to reflect the market to generate on circumstances:
a net capital value. A deduction * 1 year void, 2 years rent free; or
to the capital value generated
is then made based on the void
period with applicable rates payable * 2 years void, 3 years rent free.
for the unit and rent-free incentive
.
Yield bands - ranging from 5.5%
- 14%
--------------- ------------------------------------------- -------------------------------------------
Frasers Group Will be assumed the unit is vacant Void period and rent free band
occupied given there is no legally binding - two bands applied depending
Inter-company agreement in place. on circumstances:
Therefore, a void and rent free * 1 year void, 2 years rent free; or
incentive period assumed, the cost
amount then deducted from the capital
value generated by the ERV and * 2 years void, 3 years rent free.
reversionary yield. Although we
consider the commercial reality
is that fair value less costs to Yield bands - ranging from 5.5%
sell will be higher than vacant - 14%
possession this very conservative
assumption is in line with both
technical accounting rules and
that of our management experts.
--------------- ------------------------------------------- -------------------------------------------
Third party An ERV is applied using a percentage ERV is applied reflecting the
tenanted band on the passing rent. An appropriate market for the applicable unit.
reversionary yield is applied reflecting An appropriate reversionary yield
the risk of tenant and renewal is applied reflecting the risk
to generate a capital value. This of tenant and renewal to generate
will also provide a net initial a capital value. This will also
yield based off the current passing provide a net initial yield based
rent. 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 GBP5.0m (FY21: GBP7.5m).
The total recoverable amount of the assets that were impaired at the period end was GBP105.9m, with GBP47.3m of this being based on their fair value less costs of disposal and GBP58.6m being based on their value in use.
2. SEGMENTAL ANALYSIS
The below segmental information excludes SRL. Management has determined to present its segmental disclosures consistently with the presentation in the 2021 Annual Report.
The Group's operating segments have been aggregated into the following reportable segments:
1) UK Retail:
i) UK Sports Retail - includes core sports retail store operations in the UK, plus all the Group's sports retail online business (excluding Bob's Stores, Eastern Mountain Sports, Malaysia and Baltics), the gyms, the Group's Shirebrook campus operations, freehold property owning companies excluding Premium Lifestyle fascia properties, GAME UK stores and online operations, and retail store operations in Northern Ireland .
ii) Premium Lifestyle - includes the results of the premium retail businesses FLANNELS, Cruise, van mildert, Jack Wills, House of Fraser and Sofa.com along with the related websites, and freehold property owning companies where trading is purely from Premium Lifestyle fascias.
2) European Retail - includes all the Group's sports retail stores, management and operations in Europe including the Group's European Distribution Centres in Belgium and Austria, European freehold property owning companies, as well as GAME Spain stores and Baltics online.
3) Rest of World Retail - includes the results of US based retail activities, Asia based retail activities along with their e-commerce offerings.
4) Wholesale & Licensing - includes the results of the Group's portfolio of internationally recognised brands such as Everlast, Karrimor, and Slazenger.
The FY21 numbers have been re-categorised due to changes in the reporting segments, with freehold property owning companies where trading is purely from Premium Lifestyle fascias being moved from UK Sports Retail to Premium Lifestyle.
Segmental information for the 52 weeks ended 24 April 2022 (unaudited):
UK Sports Premium UK European Rest Total Wholesale Eliminations Group
Retail Lifestyle Retail Retail of Retail & Total
Total World Licensing
Retail
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
--------- --------- --------- -------- ------ --------- --------- ------------
Sales to external
customers 2,581.7 1,056.6 3,638.3 790.2 150.3 4,578.8 168.1 - 4,746.9
-------------------
Sales to other
segments - - - - - - 80.1 (80.1) -
-------------------
Revenue 2,581.7 1,056.6 3,638.3 790.2 150.3 4,578.8 248.2 (80.1) 4,746.9
-------------------
Gross profit 1,122.5 474.8 1,597.3 337.3 76.7 2,011.3 63.1 - 2,074.4
-------------------
Operating profit
before foreign
exchange,
exceptional items
and property and
other
related
impairments 293.5 124.1 417.6 109.8 34.4 561.8 6.9 - 568.7
------------------- ---------
Exceptional items (1.3) - (1.3) - - (1.3) - - (1.3)
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Property related
impairments (103.4) (103.5) (206.9) (17.9) (2.2) (227.0) - - (227.0)
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Realised foreign
exchange
loss (1.0) (0.1) (1.1) (2.9) (0.8) (4.8) (0.9) - (5.7)
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Operating profit 187.8 20.5 208.3 89.0 31.4 328.7 6.0 - 334.7
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Investment income 69.2 - 69.2 - - 69.2 - - 69.2
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Investment costs (19.7) - (19.7) - - (19.7) - - (19.7)
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Finance income (1) 36.8 (8.5) 28.3 1.0 1.0 30.3 - - 30.3
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Finance costs (42.0) (1.5) (43.5) (4.4) (0.5) (48.4) - - (48.4)
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Profit before
taxation 232.1 10.5 242.6 85.6 31.9 360.1 6.0 - 366.1
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Taxation (68.8)
------------------- --------- ---------
Profit for the
period 297.3
------------------- ------------------------------------------------------------------------------------- ---------
Total assets 3,768.6 1,003.5 4,772.1 497.3 86.3 5,355.7 330.9 (1,770.4) 3,916.2
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Total liabilities (2,451.6) (1,098.9) (3,550.5) (681.4) 7.6 (4,224.3) (93.4) 1,770.6 (2,547.1)
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Tangible asset
additions 228.1 63.6 291.7 29.4 1.3 322.4 0.8 - 323.2
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Right-of-use asset
additions 27.8 25.0 52.8 43.0 4.7 100.5 0.4 - 100.9
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Intangible assets
acquired 1.3 - 1.3 - - 1.3 - - 1.3
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
(1) Includes inter-company related finance income in UK Sports Retail and the equivalent finance cost in Premium Lifestyle that eliminates on consolidation.
Other segment items included in the income statement for the 52 weeks ended 24 April 2022 (unaudited):
(2)
UK Rest of Wholesale
UK Premium Retail European World Total & Group
Sports Lifestyle Total Retail Retail Retail Licensing Total
(GBP'm) (GBP'm) (GBP'm) (GBP'm) (GBP'm) (GBP'm) (GBP'm) (GBP'm)
Property, plant & equipment
depreciation 121.9 22.9 144.8 20.2 2.4 167.4 1.3 168.7
Property, plant & equipment
impairment 51.7 94.0 145.7 2.3 1.2 149.2 - 149.2
IFRS 16 ROU depreciation 47.7 6.4 54.1 19.9 3.1 77.1 0.4 77.5
IFRS 16 ROU impairment 50.7 9.5 60.2 15.6 1.0 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) (9.2) (1.0) (28.3) - (28.3) Intangible amortisation - - - - - - 6.5 6.5 Intangible impairment 1.3 - 1.3 - - 1.3 4.4 5.7
Segmental information for the 52 weeks ended 25 April 2021(1) (audited):
UK Sports Premium UK Retail European Rest Total Wholesale Eliminations Group
Retail Lifestyle Total Retail of Retail & Total
World Licensing
Retail
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
--------- --------- --------- -------- ------ --------- --------- ------------
Sales to external
customers 1,968.5 735.6 2,704.1 615.2 152.7 3,472.0 153.3 - 3,625.3
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Sales to other
segments - - - - - - 95.4 (95.4) -
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Revenue 1,968.5 735.6 2,704.1 615.2 152.7 3,472.0 248.7 (95.4) 3,625.3
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Gross profit 829.3 330.3 1,159.6 239.7 64.0 1,463.3 67.5 - 1,530.8
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Operating profit
before foreign
exchange,
exceptional items
and property and
other
related
impairments 191.0 34.3 225.3 20.5 18.6 264.4 20.2 - 284.6
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Exceptional items 3.1 (1.6) 1.5 (3.1) - (1.6) - - (1.6)
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Realised foreign
exchange
(loss) / gain (20.2) (0.2) (20.4) 0.8 (1.4) (21.0) (5.3) - (26.3)
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Property related
impairments (201.9) (40.9) (242.8) (71.6) (2.6) (317.0) - - (317.0)
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Operating (loss)
/ profit (28.0) (8.4) (36.4) (53.4) 14.6 (75.2) 14.9 - (60.3)
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Investment income 103.7 - 103.7 - - 103.7 - - 103.7
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Investment costs (7.7) - (7.7) - - (7.7) - - (7.7)
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Finance income 6.5 - 6.5 2.5 - 9.0 - - 9.0
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Finance costs (28.1) (1.2) (29.3) (2.7) (3.8) (35.8) (0.4) - (36.2)
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Profit before
taxation 46.4 (9.6) 36.8 (53.6) 10.8 (6.0) 14.5 - 8.5
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Taxation (86.5)
------------------- ------------------------------------------------------------------------------------- ---------
Loss for the
period (78.0)
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Total assets 3,305.9 668.0 3,973.9 670.8 158.6 4,803.3 344.7 (1,362.9) 3,785.1
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Total liabilities (2,357.8) (499.6) (2,857.4) (857.0) (95.1) (3,809.5) (127.5) 1,362.9 (2,574.1)
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Tangible asset
additions 163.4 33.1 196.5 17.4 3.0 216.9 2.5 - 219.4
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Right-of-use asset
additions 77.5 14.1 91.6 24.3 2.4 118.3 0.5 - 118.8
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
Intangible assets
acquired 3.7 2.3 6.0 - - 6.0 1.0 - 7.0
------------------- --------- --------- --------- -------- ------ --------- --------- ------------ ---------
(3) The FY21 numbers have been re-categorised due to changes in the reporting segments, with freehold property owning companies where trading is purely from Premium Lifestyle fascias being moved from UK Sports Retail to Premium Lifestyle.
Other segment items included in the income statement for the 52 weeks ended 25 April 2021 (audited):
(4)
UK Rest of Wholesale
UK Premium Retail European World Total & Group
Sports Lifestyle Total Retail Retail Retail Licensing Total
(GBP'm) (GBP'm) (GBP'm) (GBP'm) (GBP'm) (GBP'm) (GBP'm) (GBP'm)
Property, plant & equipment
depreciation 131.9 42.3 174.2 35.3 5.7 215.2 1.2 216.4
Property, plant & equipment
impairment 87.2 20.4 107.6 40.6 - 148.2 - 148.2
IFRS 16 ROU depreciation 51.5 6.4 57.9 21.9 2.3 82.1 - 82.1
IFRS 16 ROU impairment 114.1 20.5 134.6 31.0 2.6 168.2 - 168.2
Investment property
depreciation 1.9 - 1.9 - - 1.9 - 1.9
Investment property
impairment 0.6 - 0.6 - - 0.6 - 0.6
IFRS 16 disposal and
modification/remeasurement
of lease liabilities (20.0) (5.6) (25.6) (1.4) (0.7) (27.7) - (27.7)
Intangible amortisation - - - 0.5 - 0.5 6.6 7.1
Intangible impairment 3.7 2.3 6.0 3.1 - 9.1 - 9.1
The following tables reconciles the 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 Profit Before Tax to Adjusted PBT for the 52 week period ended 24 April 2022 (unaudited):
UK Sports Premium UK Retail European Rest Of Total Wholesale Group
Retail Lifestyle Total Retail World Retail Retail & Licensing Total
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
Profit Before Tax 232.1 10.4 242.5 85.7 31.9 360.1 6.0 366.1
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
Exceptional items 1.3 - 1.3 - - 1.3 - 1.3
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
Fair value adjustment
to derivative
financial
instruments (7.7) - (7.7) - - (7.7) - (7.7)
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ -------- Fair value (gains)/losses and profit on disposal of equity derivatives (35.3) - (35.3) - - (35.3) - (35.3) ---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ -------- Realised FX loss 1.0 0.1 1.1 2.9 0.8 4.8 1.0 5.8 ---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ -------- Share scheme 10.4 - 10.4 - - 10.4 4.2 14.6 ---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ -------- Adjusted PBT 201.8 10.5 212.3 88.6 32.7 333.6 11.2 344.8 ---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
Reconciliation of Reported PBT to Adjusted PBT for the 52 week period ended 25 April 2021(1) (audited):
UK Sports Premium UK Retail European Rest Of Total Wholesale Group
Retail Lifestyle Total Retail World Retail Retail & Licensing Total
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
Reported PBT 46.4 (9.6) 36.8 (53.6) 10.8 (6.0) 14.5 8.5
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
Exceptional items (3.1) 1.6 (1.5) 3.1 - 1.6 - 1.6
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
Fair value adjustment
to derivative
financial
instruments 4.6 - 4.6 - - 4.6 - 4.6
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
Fair value
(gains)/losses
and profit on
disposal
of equity
derivatives (82.2) - (82.2) - - (82.2) - (82.2)
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
Realised FX loss /
(gain) 20.2 0.2 20.4 (0.8) 1.4 21.0 5.3 26.3
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
Share scheme 1.3 - 1.3 - - 1.3 - 1.3
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
Adjusted PBT (12.8) (7.8) (20.6) (51.3) 12.2 (59.7) 19.8 (39.9)
---------------------- --------- ---------- --------- ----------- ------------- -------- ------------ --------
(1) The FY21 numbers have been re-categorised due to changes in the reporting segments, with freehold property owning companies where trading is purely from Premium Lifestyle fascias being moved from UK Sports Retail to Premium Lifestyle.
3. INVESTMENT INCOME
(Unaudited) (Audited)
52 weeks ended 52 weeks ended
24 April 2022 25 April 2021
(GBP'm) (GBP'm)
Profit on disposal of equity derivatives 23.2 27.4
Premium received on equity derivatives 13.2 13.3
Fair value gain on equity derivatives 31.8 62.5
Dividend income 1.0 0.5
69.2 103.7
The profit on disposal of equity derivatives mainly relates to Hugo Boss contracts for difference. The fair value gain on equity derivatives mainly relates to Hugo Boss options. The premium received on equity derivatives mainly relates to Hugo Boss options.
4. INVESTMENT COSTS
(Unaudited) (Audited)
52 weeks ended 52 weeks ended
24 April 2022 25 April 2021
(GBP'm) (GBP'm)
Fair value loss on equity derivatives 19.7 7.7
19.7 7.7
The fair value loss on equity derivatives in the current period mainly relates to Hugo Boss contracts for difference.
5. FINANCE INCOME
(Unaudited) (Audited)
52 weeks ended 52 weeks ended
24 April 2022 25 April 2021
(GBP'm) (GBP'm)
Bank interest receivable 4.5 3.5
Other finance income 1.8 5.5
Fair value adjustment to derivatives 24.0 -
30.3 9.0
The fair value adjustment to derivatives largely relates to movement in the fair value of interest rate swaps.
6. FINANCE COSTS
(Unaudited) (Audited)
52 weeks ended 52 weeks ended
24 April 2022 25 April 2021
(GBP'm) (GBP'm)
Interest on bank loans and overdrafts 12.9 11.1
Other interest 6.9 8.6
Interest on retirement benefit obligations 0.1 0.1
IFRS 16 lease interest 12.2 11.8
Fair value adjustment to derivatives 16.3 4.6
48.4 36.2
The fair value adjustment to derivatives 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.
7. PROPERTY, PLANT AND EQUIPMENT
The below table excludes SRL.
Right of use Freehold Land Long-term Short-term Plant and Total (GBP'm)
asset (GBP'm) and Buildings Leasehold Leasehold equipment
(GBP'm) (GBP'm) improvements (GBP'm)
(GBP'm)
COST
At 26 April 2020
(Audited) 524.4 918.9 70.6 131.6 772.6 2,418.1
Acquisitions 2.1 0.5 - - 29.0 31.6
Additions 118.8 84.3 4.3 2.0 128.8 338.2
Eliminated on
disposals (48.1) (16.5) (0.7) (6.0) (57.4) (128.7)
Reclassifications
/
Remeasurements(1) 76.4 (79.4) 79.2 0.1 8.7 85.0
Exchange
differences (4.5) (2.4) (0.1) (0.3) (2.9) (10.2)
At 25 April 2021
(Audited) 669.1 905.4 153.3 127.4 878.8 2,734.0
Acquisitions - - - - - -
Additions 100.9 79.3 4.1 2.5 195.3 382.1
Eliminated on
disposals (75.9) (42.0) (1.2) (4.7) (82.0) (205.8)
Reclassifications
/ Remeasurements (5.4) (43.4) - - (0.2) (49.0)
Exchange
differences (7.7) (2.3) (0.5) (0.1) (3.0) (13.6)
At 24 April 2022
(Unaudited) 681.0 897.0 155.7 125.1 988.9 2,847.7
ACCUMULATED
DEPRECIATION AND
IMPAIRMENT
At 26 April 2020
(Audited) (218.7) (153.3) (16.7) (113.9) (567.9) (1,070.5)
Charge for the
period (82.1) (74.5) (11.6) (11.5) (118.8) (298.5)
Impairment (168.2) (84.4) (3.9) (0.1) (59.8) (316.4)
Eliminated on
disposals 47.5 11.2 0.3 6.7 54.4 120.1
Reclassifications
/
Remeasurements(1) - 18.1 (17.9) - (8.8) (8.6)
Exchange
differences 2.1 0.2 0.1 0.1 2.3 4.8 At 25 April 2021 (Audited) (419.4) (282.7) (49.7) (118.7) (698.6) (1,569.1) Charge for the period (77.5) (47.9) (12.4) (3.6) (104.8) (246.2) Impairment (76.8) (106.5) (2.0) - (40.7) (226.0) Eliminated on disposals 75.9 15.7 1.1 1.8 79.1 173.6 Reclassifications / Remeasurements - 0.6 (0.1) (1.1) 4.0 3.4 Exchange differences 6.0 0.4 0.1 0.2 1.8 8.5 At 24 April 2022 (Unaudited) (491.8) (420.4) (63.0) (121.4) (759.2) (1,855.8) NET BOOK VALUE At 24 April 2022 (Unaudited) 189.2 476.6 92.7 3.7 229.7 991.9 At 25 April 2021 (Audited) 249.7 622.7 103.6 8.7 180.2 1,164.9 At 26 April 2020 (Audited) 305.7 765.6 53.9 17.7 204.7 1,347.6
(1) In FY21 a number of properties were identified that were previously classified within Freehold Land and Buildings but management believe it to be more appropriate to classify within Long-term Leasehold. These have therefore been adjusted in the period as reclassifications.
8. BORROWINGS
(Unaudited) (Audited)
24 April 2022 25 April 2021
(GBP'm) (GBP'm)
CURRENT:
Lease liabilities 119.3 188.5
NON-CURRENT:
Bank and other loans 684.3 705.9
Lease liabilities 492.3 534.2
Total 1,295.9 1,428.6
As at period end, Bank and other loans are in sterling and are at a rate of interest of 2.0% (FY21: 1.3%) over the interbank rate of the country within which the borrowing entity resides.
Reconciliation Of Liabilities Arising From Financing Activities
The changes in the Group's liabilities arising from financing activities can be classified as follows:
Non-current borrowings Current borrowings Total
(GBP'm) (GBP'm) (GBP'm)
At 26 April 2020 (Audited) 1,376.2 147.9 1,524.1
Cash-flows:
- Borrowings drawn down 1,128.1 - 1,128.1
- Borrowings repaid (1,322.2) - (1,322.2)
Lease liability:
- IFRS 16 Lease Liabilities - cash-flows - (78.0) (78.0)
- IFRS 16 Lease Liabilities - modifications/remeasurements,
transfers from non-current to
current, and foreign exchange adjustments (40.3) 98.1 57.8
- IFRS 16 Lease Liabilities - new leases 98.3 20.5 118.8
At 25 April 2021 (Audited) 1,240.1 188.5 1,428.6
Cash-flows:
- Borrowings drawn down 1,374.4 - 1,374.4
- Borrowings repaid (1,396.1) - (1,396.1)
Lease liability:
- IFRS 16 Lease Liabilities - cash-flows - (176.0) (176.0)
- IFRS 16 Lease Liabilities -
modifications/remeasurements, transfers from non-current
to
current, and foreign exchange adjustments (131.3) 95.4 (35.9)
- IFRS 16 Lease Liabilities - new leases 89.5 11.4 100.9
At 24 April 2022 (Unaudited) 1,176.6 119.3 1,295.9
On 30 November 2021 the Group refinanced its existing borrowings and entered into a combined term loan and revolving credit facility of GBP930.0m for a period of 3 years, with the possibility to extend this by a further 2 years. This facility increased to GBP940.0m as at 24 April 2022 and to GBP980.0m subsequent to the period end.
The Group continues to operate comfortably within its banking facilities and covenants and the Board remains comfortable with the Group's available headroom. The carrying amounts and fair value of the borrowings are not materially different.
Reconciliation of Net Debt:
(Unaudited) (Audited)
24 April 2022 25 April 2021
(GBP'm) (GBP'm)
Borrowings (1,295.9) (1,428.6)
Add back:
- Lease liabilities 611.6 722.7
Cash and cash equivalents 292.7 457.0
Net Debt (391.6) (248.9)
9. CASH FLOW FROM OPERATING ACTIVITIES
(Unaudited) (Audited)
52 weeks 52 weeks ended
ended
24 April 25 April 2021
2022
(GBPm) (GBPm)
Profit before taxation 366.1 8.5
Net finance costs 18.1 27.2
Net investment income (49.5) (96.0)
Operating profit 334.7 (60.3)
Depreciation of property, plant and equipment 246.2 298.5
Depreciation on investment properties 5.9 1.9
Gain on disposal and modification/remeasurement
of lease liabilities (28.3) (27.7)
Amortisation of intangible assets 6.5 7.1
Impairment of tangible and intangible assets
and investment properties 232.7 326.1
Profit on disposal of property, plant and equipment (10.8) (9.7)
Profit on disposal of intangibles - (7.5)
Gain on bargain purchase - (3.1)
Share based payment charge in equity (excluding
deferred tax) 8.6 -
Operating cash inflow before changes in working
capital 795.5 525.3
(Increase) in receivables(1) (227.2) (136.6)
(Increase) / decrease in inventories (158.2) 99.3
Increase in payables(2) 63.7 14.6
Increase in provisions 23.9 25.4
Cash inflows from operating activities 497.7 528.0
(1) This includes the inter-company receivable from SRL.
(2) GBP50.3m has been recategorised from the 25 April 2021 increase in payables to proceeds in relation to equity derivatives, which is shown in the cash flow statement. This has no impact on net cash.
GLOSSARY
ALTERNATIVE PERFORMANCE MEASURES (excluding SRL)
Excluding acquisitions and currency neutral performance measure reconciliation:
UK Sports Premium European Rest Wholesale Group
Retail Lifestyle Retail Of World & Licensing Total
Retail
Revenue
FY22 Unaudited 2,581.7 1,056.6 790.2 150.3 168.1 4,746.9
Adjustments for acquisitions
and currency neutral (31.7) (3.9) - - - (35.6)
FY22 Excluding acquisitions
and currency neutral 2,550.0 1,052.7 790.2 150.3 168.1 4,711.3
FY21 Audited 1,968.5 735.6 615.2 152.7 153.3 3,625.3
Adjustments for acquisitions
and currency neutral (8.2) (0.8) (23.0) (0.8) (1.7) (34.5)
FY21 Excluding acquisitions
and currency neutral 1,960.3 734.8 592.2 151.9 151.6 3,590.8
% Variance 30.1% 43.3% 33.4% (1.1%) 10.9% 31.2%
Adjusted PBT
FY22 Unaudited 201.8 10.5 88.6 32.7 11.2 344.8
Adjustments for acquisitions
and currency neutral 27.5 (0.4) - - - 27.1
FY22 Excluding acquisitions
and currency neutral 229.3 10.1 88.6 32.7 11.2 371.9 FY21 Audited(1) (12.8) (7.8) (51.3) 12.2 19.8 (39.9) Adjustments for acquisitions and currency neutral 15.8 0.2 2.0 (0.1) (0.1) 17.8 FY21 Excluding acquisitions and currency neutral 3.0 (7.6) (49.3) 12.1 19.7 (22.1) % Variance 7,543.3% 232.9% 279.7% 170.2% (43.1%) 1,782.8%
(1) The FY21 numbers have been re-categorised due to changes in the reporting segments, with freehold property owning companies where trading is purely from Premium Lifestyle fascias being moved from UK Sports Retail to Premium Lifestyle.
Reconciliation of Adjusted PBT performance measure, 5 year record:
52 weeks 52 weeks 52 weeks 52 weeks 52 weeks
ended ended ended 26 ended 28 ended 29
24 April 25 April April 2020 April 2019 April 2018
2022 (Unaudited) 2021 (Audited) (Audited) (Audited) (Audited)
PBT (GBP'm) PBT (GBP'm) PBT (GBP'm) PBT (GBP'm) PBT (GBP'm)
Profit Before Tax 366.1 8.5 143.5 179.2 61.1
Exceptional items 1.3 1.6 13.1 41.0 4.8
Fair value gain on step acquisition - - (20.4) - -
Fair value adjustments to
derivatives included within
Finance (income) / costs (7.7) 4.6 (21.3) (39.7) 17.7
Fair value (gains) / losses
and profit on disposal of
equity derivatives (35.3) (82.2) 35.1 (3.3) 103.6
Realised foreign exchange
(gain) / loss 5.8 26.3 (34.9) (22.1) (24.1)
Share scheme 14.6 1.3 - - (6.0)
ADJUSTED 344.8 (39.9) 115.1 155.1 157.1
Draft Studio Retail Limited (SRL) Balance Sheet
The significant balances expected to be included within the SRL balance sheet on 24 April 2022 include Fixed Assets approx. GBP22m, Inventory approx. GBP55m, Trade and other receivables approx. GBP235m (net of GBP140m provisions), Cash and cash equivalents GBP44m, Bank and other loans GBP144m and Trade and other payables approx. GBP25m.
Note that the balance sheet of SRL is currently going through the period end audit process and could be subject to material change.
KEY PERFORMANCE INDICATORS
Performance Measure Closest equivalent Reconciling Definition and purpose
statutory items to statutory
measure measure
--------------------- ------------------ -------------------- -------------------------------------
Group revenue - - Total revenue for the Group.
The Board considers that
this measure is a key indicator
of the Group's growth
--------------------- ------------------ -------------------- -------------------------------------
Adjusted PBT Profit before Adjusting items Adjusted PBT shows how well
taxation (see Glossary the Group is managing its
reconciliation trading and operational efficiency,
above) and its investment in its
elevation strategy, and therefore
the overall performance of
the Group
--------------------- ------------------ -------------------- -------------------------------------
Profit Before Tax - - Profit Before Tax shows how
well the Group is managing
its trading and operational
efficiency, and its investment
in its elevation strategy,
and therefore the overall
performance of the Group
--------------------- ------------------ -------------------- -------------------------------------
Net assets - - Net assets are an indicator
of the growth and strength
of the Group
--------------------- ------------------ -------------------- -------------------------------------
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