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
-- 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
--------------------- ------------------ -------------------- -------------------------------------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
TSTBKKBBKBKBKOB
(END) Dow Jones Newswires
July 21, 2022 02:00 ET (06:00 GMT)
Sports Direct (LSE:SPD)
Historical Stock Chart
From Apr 2024 to May 2024
Sports Direct (LSE:SPD)
Historical Stock Chart
From May 2023 to May 2024