REG - Dr. Martens PLC - FY24 Results
30/05/2024 07:00
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RNS Number : 3631Q Dr. Martens PLC 30 May 2024
30 May 2024
Dr. Martens plc
Preliminary results for the year ended 31 March 2024
"Our FY24 results were as expected and reflect continued weak USA consumer
demand. This particularly impacted our USA wholesale business and offset our
Group DTC performance, where pairs grew by 7%. We have achieved robust
performances in EMEA and APAC, and our supply chain strategy continues to
deliver good savings. We are clear that we need to drive demand in the USA to
return to growth in FY26 onwards and are executing a detailed plan to achieve
this, with refocused and increased USA marketing investment in the year ahead.
We are also announcing a cost action plan across the Group, targeting savings
of £20m to £25m. I am confident that the actions we are taking as we enter
this year of transition will put us in good shape for the years ahead."
Kenny Wilson, Chief Executive Officer
£m FY24 % change Actual % change CC(2)
FY23
Revenue 877.1 1,000.3 -12.3% -9.8%
DTC revenue mix 61% 52% +9pts
EBITDA(1) 197.5 245.0 -19.4%
EBITDA margin 22.5% 24.5% -2.0pts
EBIT 122.2 176.2 -30.6%
Profit Before Tax (before FX) (1) 97.2 170.1 -42.9%
Profit After Tax 69.2 128.9 -46.3%
Basic EPS (p) 7.0 12.9 -45.7%
Net Debt(1) 357.5 288.3
Dividend per share (p) 2.55 5.84
1. Alternative Performance Measure (APM) as defined in the Glossary on pages
66 and 67.
2. Constant currency applies the same exchange rate to the FY23 and FY24
results, based on FY23 budgeted rates
· Revenue down 12% (10% constant currency (CC)), with DTC revenue
up 2% (5% CC) offset by Wholesale revenue down 28% (26%CC) primarily driven by
USA wholesale
· Within DTC, Retail revenue was up 6% (10% CC) and ecommerce was
broadly flat (down 1% or up 1% CC)
· By region:
o EMEA revenue was down 3% (actual and CC), with 12% growth in DTC offset by
wholesale decline, driven predominantly by the planned strategic decision to
reduce volumes into EMEA etailers
o Americas revenue declined 24% (20% CC) driven by wholesale
o APAC revenue was broadly flat (down 7% or up 1% CC) driven by good growth
in Japan
· Strong performance in shoes and sandals, with DTC pairs in both
categories growing over 20% year-on-year, showing the continued strength of
the brand
· Opened 35 net new own stores globally, with the majority of these
being in continental Europe and APAC
· Successful supply chain strategy delivered continued savings,
supporting gross margins which increased 3.8%pts to 65.6%
· Continued investment into IT systems including the Customer Data
Platform and Supply and Demand Planning Systems, which will generate benefits
FY26 onwards
· Profit before tax (before FX losses) of £97.2m, down 43% driven
by the decline in EBITDA together with increased Depreciation &
Amortisation
· Further strides made in Sustainability with the launch of UK
Authorised Repair, USA ReWair and our first products made from reclaimed
leather
· Net Debt increased to £357.5m (FY23: £288.3m) due to returns to
shareholders, lower profits and increased lease liabilities. Inventory was
flat year-on-year, in line with expectations
· The Board proposes a final dividend of 0.99p, taking the total
dividend to 2.55p, equating to a 35% earnings payout. The Board's intention is
to hold the FY25 dividend flat in absolute terms, before returning to an
earnings payout in line with our dividend policy (of 25% to 35% payout) in
FY26 onwards
Current trading and guidance
Current trading is in line with our expectations and our planning assumptions
for FY25 are unchanged from those shared in our announcement on 16(th) April.
There remains a wide range of potential outcomes for both revenue and profit
for the year, dependent on the performance through the key peak trading
period. For the first half, we expect a Group revenue decline of around 20%,
driven by wholesale revenues down around a third. Combined with the cost
headwinds which impact both halves, the impact of operational deleverage is
significantly more pronounced in the first half. Overall results this year
will therefore be very second-half weighted, particularly from a profit
perspective.
Detailed financial guidance is on page 12.
Enquiries
Investors and analysts
Bethany Barnes, Director of Investor Relations
Bethany.Barnes@drmartens.com
+44 7825 187465
Beth Callum, Investor Relations Manager
Beth.Callum@drmartens.com
Press
H/Advisors Maitland
+44 20 7379 5151
Katharine
Spence
+44 7384 535739
Gill Hammond, Director of
Communications
+44 7384 214248
Presentation of full year results
Kenny Wilson, CEO and Giles Wilson, CFO will be presenting the FY24 results at
09:30 (UK time) on 30 May 2024. The presentation will be streamed live and the
link to join is https://www.drmartensplc.com (https://www.drmartensplc.com) .
A playback of the presentation will be available on our corporate website
after the event, at https://www.drmartensplc.com/investors/results-centre
(https://www.drmartensplc.com/investors/results-centre) .
About Dr. Martens
Dr. Martens is an iconic British brand founded in 1960 in Northamptonshire.
Produced originally for workers looking for tough, durable boots, the brand
was quickly adopted by diverse youth subcultures and associated musical
movements. Dr. Martens has since transcended its working-class roots while
still celebrating its proud heritage and, six decades later, "Docs" or "DM's"
are worn by people around the world who use them as a symbol of empowerment
and their own individual attitude. The Company listed on the main market of
the London Stock Exchange on 29 January 2021 (DOCS.L) and is a constituent of
the FTSE 250 index.
Cautionary statement relating to forward-looking statements
Announcements, presentations to investors, or other documents or reports filed
with or furnished to the London Stock Exchange (LSE) and any other written
information released, or oral statements made, to the public in the future by
or on behalf of Dr. Martens plc and its group companies ("the Group"), may
contain forward-looking statements.
Forward-looking statements give the Group's current expectations or forecasts
of future events. An investor can identify these statements by the fact that
they do not relate strictly to historical or current facts. They use words
such as 'aim', 'ambition', 'anticipate', 'estimate', 'expect', 'intend',
'will', 'project', 'plan', 'believe', 'target' and other words and terms of
similar meaning in connection with any discussion of future operating or
financial performance. In particular, these include statements relating to
future actions, future performance or results of current and anticipated
products, expenses, the outcome of contingencies such as legal proceedings,
dividend payments and financial results. Other than in accordance with its
legal or regulatory obligations (including under the Market Abuse Regulation,
the UK Listing Rules and the Disclosure and Transparency Rules of the
Financial Conduct Authority), the Group undertakes no obligation to update any
forward-looking statements, whether as a result of new information, future
events or otherwise. The reader should, however, consult any additional
disclosures that the Group may make in any documents which it publishes and/or
files with the LSE. All readers, wherever located, should take note of these
disclosures. Accordingly, no assurance can be given that any particular
expectation will be met and investors are cautioned not to place undue
reliance on the forward-looking statements.
Forward-looking statements are subject to assumptions, inherent risks and
uncertainties, many of which relate to factors that are beyond the Group's
control or precise estimate. The Group cautions investors that a number of
important factors, including those referred to in this document, could cause
actual results to differ materially from those expressed or implied in any
forward-looking statement. Any forward-looking statements made by or on behalf
of the Group speak only as of the date they are made and are based upon the
knowledge and information available to the Directors on the date of this
report.
BUSINESS REVIEW
FY24 was a challenging year for our business, with a difficult trading
environment and considerable macroeconomic uncertainty. Our largest market,
the USA, continues to face two significant external headwinds, namely weak
consumer confidence impacting spending and a particularly challenging boots
segment, which was down 17% for the year overall (source: Circana data). This
resulted in widespread caution from wholesale customers, leading to weaker
wholesale order books, as well as impacting our DTC ('Direct-to-consumer')
performance. The USA has the highest wholesale penetration of any major
market, and therefore the weak performance here had a significant impact on
our business overall. We have a new leadership team in the Americas which is
still embedding, and our marketing and trading execution during the year was
not as strong as it should have been. In the next section we detail the
changes we're making in our marketing approach and the action plan we're
implementing to reignite demand in this market.
In FY24 we took the strategic decision to reduce the breadth and depth of
volume we sell to EMEA etailers, which reduced wholesale revenues in this
region. The 11.8% EMEA DTC growth is therefore more indicative of our
underlying performance, albeit it was partially flattered by the earlier
timing of Easter. Within EMEA, our conversion markets of Germany, Italy and
Spain saw strong double-digit DTC growth and UK DTC growth was positive,
although at a lower level. Japan makes up the majority of our APAC region and
we saw continued good growth in this largely DTC market.
We achieved significant supply chain savings through the year, which benefited
gross margin. These savings were due to our supply chain transformation
strategy together with a relatively benign sourcing backdrop. The ongoing
supply chain transformation has steadily increased direct control over our
supply chain inputs, from around 10% five years ago to around 70% today. This
has enabled improved quality and consistency, diversification of risk from
single point dependency and direct negotiation of costs. The savings delivered
in FY24 as a result of this strategy include lower costs for key components,
factory benchmarking to align profit, re-negotiation of our inbound shipping
contract and optimisation and re-tender of retail outbound freight.
Our product strategy is 'icons and innovation', meaning that we aim to grow
revenue of our iconic continuity products through constant innovation around
this core, to drive brand heat and newness. We aim to grow all three
categories of boots, shoes and sandals simultaneously. Pairs sold declined by
17% year-on-year, however this was entirely due to weakness in wholesale
orders, with DTC pairs up 7%. By category, DTC pairs for both shoes and
sandals grew more than 20% year-on-year, whilst DTC boots pairs saw a small
decline. Growing shoes and sandals, alongside growing boots, is an important
part of our strategy to broaden our product portfolio over the medium-term,
and we saw particularly good success during the year with our mules range
within sandals and loafers within shoes. We are steadfastly focused on growing
our boots category, with this accounting for 66% of Group revenues in FY24.
During AW23 we launched a capsule collection of our new Amp category: 14XX.
Amp and 14XX represents the pinnacle of our creative expression, with
cutting-edge innovation at the forefront while still remaining true to our
product handwriting and design principles of durability and versatility. The
capsule collection, built around our original 1460 boot, 1461 shoe and 2976
Chelsea boot, saw encouraging consumer feedback and in AW24 we will launch a
larger 14XX range to consumers. The purpose of these collections is to create
a 'trickle down' effect, creating demand for the mainline product range.
Collaborations have always been an important part of our product strategy,
being an incubator for future product success and scale, whilst also driving
brand heat. In FY24 our collaborations included a partnership with Lagos-born,
London-based collective Motherlan, which reinterpreted our 1461 shoe. We also
worked with streetwear brand Girls Don't Cry with our creeper shoe, which was
released through our ecommerce channels globally together with Dover Street
Market locations and sold out worldwide within 48 hours. As part of our
celebration of 10 years of the Jadon, our biggest product within our Fusion
category and one of our four icon products, we launched a collaboration with
fashion-forward brand Ganni, with a high impact activation event in New York.
We also returned to our highly successful partnership with Rick Owens, this
time creating two iterations of our 1460 boot together with our 18 eyelet 1918
boot. These boots stood on our inflated DMXL sole which originated in our 14XX
range. Exaggerating our classic construction, the sole combines lightweight
EVA with durable PVC pods.
The business continues on a professionalisation journey, of which a key
element is the next phase of our technology investment programme. The projects
currently underway are the Customer Data Platform and the Supply and Demand
Planning System. The Customer Data Platform will give us a single customer
view across both DTC channels (retail and ecommerce), enabling more targeted
marketing and consumer engagement. The Supply and Demand Planning System is a
modern and agile planning system, which will improve availability and accuracy
of product forecasting. This will drive meaningful working capital savings,
beginning in FY26. Alongside these two projects we have a number of other
technology workstreams underway to improve our data capabilities, increase our
speed of decision making and drive efficiency.
We continue to make significant strides in sustainability. Our Science Based
Targets were verified and approved by the Science Based Target Initiative in
October. We have committed to reducing our absolute greenhouse gas emissions
aligned with the Science Based Targets initiative to achieve near-term
reduction targets by 2030 and Net Zero by FY40.
In October we launched our Authorised Repair service to consumers in the UK.
The service enables consumers to repair their Dr. Martens products, working
with a third-party repair partner and using our own machines and materials.
Consumer reaction so far has been very encouraging and we will look to roll
this out in our other key markets in the future.
In March we launched our own resale offering in the USA, named ReWair. We
repair and restore second hand Dr. Martens products and sell them through a
directly run dedicated resale site. ReWair is an important part of our Net
Zero by FY40 target as the carbon generated from a resale is substantially
lower than a new product. Although relatively early days, performance since
launch has exceeded expectations, for both revenue and conversion rate, and
we've had high positive engagement on social media.
In late March we also launched three products in Genix Nappa, a new upper
material made from reclaimed leather. This is an important step in our efforts
to achieve our target of 100% of products made from sustainable materials by
2040. It is early days, however press and consumer engagement has been
positive.
LOOKING TO FY25 AND BEYOND
FY25 will be a year of transition for our business. In EMEA and APAC regions
we will continue to execute our successful DOCS strategy, to take advantage of
the significant whitespace growth opportunity in both.
We continue to see good brand metrics globally. Total brand awareness has
increased by 2% to 74%. In EMEA, our key conversion markets of Germany, Italy
and Spain each saw brand awareness growth of 2-3%pts. Our home market of UK
saw a marginal decline in brand awareness although this remains significantly
above the Group at 92%. In Japan our brand awareness increased by 1%pts to
53%, with continued opportunity to close the gap to the Group average.
In the USA, where we have seen a disappointing trading performance, brand
awareness is flat at 73%, however we have seen a meaningful decline in
consideration from consumers who have not purchased recently and therefore our
efforts will be particularly focused on broadening our appeal to attract new
consumers.
Under the direction of Ije Nwokorie, in his current role as Chief Brand
Officer (CBO), we are shifting our marketing efforts globally from
storytelling focused on culture to a relentless focus on product marketing.
Our AW24 marketing will lead and be dominated by boots and the marketing
organisation has been reorganised to product-led marketing, centred around
icons.
The USA remains our number one priority across the business and we are
implementing a detailed action plan to return this business to growth,
targeting a return to positive DTC growth in H2 FY25. Against this action plan
we are increasing marketing investment as a percentage of revenue in the USA
in the year ahead, whilst ensuring that we maximise the return and efficiency
of this spend. The key pillars of this action plan are:
- Marketing: We will have an 'always on' product marketing
approach to icons, a re-energisation of boots in AW24 and four key seasonal
boot stories to ensure we drive newness and excitement. Marketing spend will
be increased on mid to lower funnel activity, to drive consideration.
- Digital: We will improve the quality of our product detail pages
and optimise our checkout process to maximise ecommerce conversion. We will
seek to drive more qualified traffic to our site, again to improve conversion.
Finally, we will implement an order in store offering.
- Wholesale: Given the nature of wholesale order books, there will
be a lag between when we see our USA DTC performance improve and when our
wholesale business will return to growth. Our expectation is that we won't see
an in-market restock driving a recovery in our USA wholesale revenues until
AW25 at the earliest, which equates to the second half of FY26. We therefore
anticipate our USA wholesale revenue declining double-digit percentage in
FY25. Through FY25, however, we will work with key USA wholesale customers to
focus actions on driving boots sell-through in store.
Over recent years we have invested in the business and built an operating cost
base in anticipation of a larger business, and with revenues weaker we are
therefore seeing significant deleverage. Alongside our action plan to reignite
DTC boots growth, we will also be implementing a cost action plan across the
Group, led by new CFO Giles Wilson and the leadership team. We will target
£20m to £25m of cost reduction, with savings from organisational efficiency
and design, better procurement and operational streamlining. We will see the
benefit of this saving in FY26, with the FY25 benefit likely to be immaterial
due to the costs of implementation. Further details and a progress update will
be provided at our first half results in November.
FINANCE REVIEW
Total revenue declined 12.3% (9.8% CC) with 2.4% growth in DTC (4.9% CC)
offset by a 28.3% decline in wholesale revenues (-26.0% CC). Profit before tax
(before FX charge) was £97.2m (FY23: £170.1m), down 42.9%, reflecting lower
EBITDA, increased depreciation and amortisation charges due to continued
investments in new stores and IT projects, and higher rate-led interest costs.
Earnings per share declined by 45.7% to 7.0p.
Results - at a glance
£m FY24 FY23 % change % change
Actual CC(4)
Revenue Ecommerce 276.3 279.0 -1.0% 1.0%
Retail 256.8 241.7 6.2% 9.5%
DTC 533.1 520.7 2.4% 4.9%
Wholesale(3) 344.0 479.6 -28.3% -26.0%
877.1 1,000.3 -12.3% -9.8%
Gross margin 575.2 618.1 -6.9%
Opex (377.7) (373.1) 1.2%
EBITDA(1) 197.5 245.0 -19.4%
Depreciation & Amortisation (72.3) (54.2) 33.4%
EBIT(1) 122.2 176.2 -30.6%
Profit before tax (before FX charge) (1) 97.2 170.1 -42.9%
Profit before tax 93.0 159.4 -41.7%
Profit after tax 69.2 128.9 -46.3%
Basic earnings per share (p) 7.0 12.9 -45.7%
Dividend per share (p) 2.55 5.84 -56.3%
Key statistics Pairs sold (m) 11.5 13.8 -17%
No. of stores(2) 239 204 17%
DTC mix % 61% 52% +9pts
Gross margin % 65.6% 61.8% +3.8pts
EBITDA margin %(1) 22.5% 24.5% -2.0pts
1. Alternative Performance Measure (APM) as defined in the
Glossary on pages 66 and 67.
2. Own stores on streets and malls operated under arm's length
leasehold arrangements.
3. Wholesale revenue including distributor customers.
4. Constant currency applies the same exchange rate to the
FY24 and FY23 non-GBP results, based on FY24 budgeted rates.
PERFORMANCE BY CHANNEL
Revenue decreased by 12.3% to £877.1m (FY23: £1,000.3m), down 9.8% on a CC
basis. DTC grew 2.4% to £533.1m (FY23: £520.7m), up 4.9% on a CC basis,
representing 61% of revenue mix. Wholesale revenues declined 28.3% to £344.0m
(FY23: £479.6m), down 26% on a CC basis. The wholesale channel was impacted
both by planned strategic decisions to reduce volumes into EMEA etailers and
cease the distributor contract in China, and very weak wholesale orders in USA
due to widespread caution from wholesale customers. Volume, represented by
pairs sold, declined 17% to 11.5m pairs with all the reduction in wholesale;
DTC volume increased 7%.
Ecommerce revenue was down 1.0% to £276.3m (FY23: £279.0m) and was up 1.0%
on a CC basis which represented a revenue mix of 32% (FY23: 28%). Good growth
throughout the year in both EMEA (up 9.6% CC) and APAC (up 12.5% CC), was
offset by continued weak trading in USA, (down 9.9% CC). We saw traffic growth
in EMEA and APAC, whilst in USA traffic declined. Ecommerce conversion
improved in all three regions. Following the implementation of an order
management system ("OMS") in EMEA, we successfully rolled out a full
omnichannel offer across all UK stores with Continental Europe to follow in
FY25.
Retail revenue grew 6.2% to £256.8m (FY23: £241.7m), up 9.5% on a CC basis.
Growth was led by new and maturing stores (stores opened last financial year)
across all geographies, with continued footfall recovery in EMEA and APAC,
offset by footfall decline in USA. We also benefitted from the transfer of 14
Japan franchise stores at the end of FY23. During the year, we opened 46 new
stores and closed 11 stores, to end the year with 239 own stores.
Wholesale revenue was down 28.3% to £344.0m (FY23: £479.6m), 26.0% lower on
a CC basis. As previously announced, we took three strategic decisions which
impacted wholesale revenues this year. Firstly, we significantly reduced the
quantity and breadth of product sold into EMEA etailers, in order to ensure
scarcity of supply in the region and migrate sales to our own websites. We
also ceased sales to our distributor in China ahead of the contract ending in
June 2023, and in USA we worked with two large wholesale accounts who had
excess inventory, reducing shipments through the first half in order to right
size their inventory positions. In addition to these strategic decisions,
revenues were impacted by widespread caution amongst wholesale customers in
the USA, resulting in a significantly weaker USA order book year-on-year.
The total number of wholesale accounts globally decreased to 1.6k after
closing c.500 accounts and opening c.200 accounts. Total revenues per account
declined by 18%.
PERFORMANCE BY REGION
£m FY24 FY23 % change % change
Actual CC
Revenue: EMEA 431.8 443.0 -2.5% -3.0%
Americas 325.8 428.2 -23.9% -20.2%
APAC 119.5 129.1 -7.4% 0.5%
877.1 1,000.3 -12.3% -9.8%
EBITDA(1): EMEA 140.8 146.1 -3.6%
Americas 64.4 100.1 -35.7%
APAC 31.7 33.8 -6.2%
Support costs(2) (39.4) (35.0) 12.6%
197.5 245.0 -19.4%
EBITDA(1) margin by region: EMEA 32.6% 33.0% -0.4pts
Americas 19.8% 23.4% -3.6pts
APAC 26.5% 26.2% +0.3pts
Total 22.5% 24.5% -2.0pts
1. Alternative Performance Measure (APM) as defined in the
Glossary on pages 66 and 67.
2. Support costs represent group related support costs not
directly attributable to each region's operations and including Group Finance,
Legal, Group HR, Global Brand and Design, Directors and other group only
related costs and expenses.
EMEA Revenue was down 2.5% to £431.8m (FY23: £443.0m) and down 3.0% on a CC
basis. DTC grew by 11.8% (10.7% CC) with retail and ecommerce both up 11.8%
(11.9% CC and 9.6% CC respectively). DTC mix grew by 7.7%pts, with DTC growth
in all core markets (UK and France both up low single-digits, with Germany,
Spain and Italy all up over 25% on a CC basis). DTC growth was offset by
wholesale revenue down 19.2% as expected, due to the strategic decision to
reduce volume and breadth sold to etailers.
During the year we opened 20 new stores: six stores in Italy, four stores each
in Germany and UK, two stores each in Spain and Belgium, one store in France
and our first store in Denmark. Included in the new store openings were six
locations that were closed and relocated to more prominent positions in
Belgium, Germany and UK.
EMEA EBITDA was down 3.6% to £140.8m (FY23: £146.1m), with EBITDA margin
32.6%, 0.4%pts lower than last year, impacted by foreign exchange on purchases
and the opex investments including the expansion of retail stores and
investment in brand and demand marketing.
Americas Revenue was down 23.9% to £325.8m (FY23: £428.2m) (20.2% CC). DTC
revenue was down 6.9% with lower footfall and traffic in retail and ecommerce
respectively only partly mitigated by new and maturing stores and better
conversion across both channels. DTC mix increased by 8.3%pts. Wholesale
revenue declined 32.7% on a CC basis, partly due to the strategic decision to
manage down inventory of some of our larger wholesale customers but also
driven by widespread caution from wholesale customers resulting in weaker
order books. We maintained a disciplined approach to wholesale, and at the end
of the financial year the average inventory position of our top ten USA
wholesale customers was down around a quarter compared to the prior year.
During the year we opened 7 new stores: two in LA and one in each Washington
DC, Miami, Philadelphia, San Antonio and Denver. We also improved picking
automation in our Los Angeles distribution centre ("LADC"), expanded
operational functionality and space in the New Jersey distribution centre
("NJDC") and relocated our Canada distribution centre from the West Coast to
Toronto.
Americas EBITDA was 35.7% lower at £64.4m (FY23: £100.1m) with EBITDA margin
3.6%pts lower than last year, reflecting lower revenue together with
additional storage costs of £13.1m due to the elevated inventory levels in
this market.
APAC Revenue was down 7.4% to £119.5m (FY23: £129.1m) (+0.5% CC). We saw
lower revenue in China due to the planned exit of the distributor contract in
June 2023 and in Japan we transferred 14 franchise stores at the end of last
financial year; these two factors drove APAC wholesale revenue down 24.0% on a
CC basis. DTC revenues grew 18.8%, improving DTC mix by 10.4%pts, with both
retail and ecommerce growing double-digits. This was led by Japan with DTC
revenues up 35.5% with both underlying growth and the benefit of the franchise
stores transfer at the end of FY23.
During the year we opened 19 new stores with six stores each in Japan and
South Korea, five in China and two in Hong Kong.
APAC EBITDA was down 6.2% to £31.7m (FY23: £33.8m) and EBITDA margin up
0.3%pts due to increased mix from Japan (our most profitable market), partly
offset by lower EBITDA in China (as a result of lower distributor revenue in
the period across a fixed cost base).
RETAIL STORE ESTATE
During the year, we opened 46 (FY23: 52) new own retail stores (via arm's
length leasehold arrangements) and closed 11 (FY23: 6) stores as follows:
Opened Closed 31 March 2024
1 April 2023
EMEA: UK 33 4 (2) 35
Germany 17 4 (2) 19
France 16 1 - 17
Italy 6 6 - 12
Spain 4 2 - 6
Other 12 3 (2) 13
88 20 (6) 102
Americas: 54 7 - 61
APAC: Japan 40 6 (3) 43
China 5 5 (1) 9
South Korea 11 6 - 17
Hong Kong 6 2 (1) 7
62 19 (5) 76
Total 204 46 (11) 239
The Group also trades from 22 (FY23: 28) concession counters in department
stores in South Korea and a further 77 (FY23: 119) mono-branded franchise
stores around the world with no stores in China (FY23: 55, the decline being
due to the end of the distributor contract), 19 in Japan (FY23: 16), 24 across
Australia and New Zealand (FY23: 20), 34 across other South East Asia
countries, the Nordics and Canada (FY23: 28).
ANALYSIS OF PERFORMANCE BY HALF YEAR
Revenue in H2 was down 17.3% to £481.3m (FY23: £581.7m) (down 14.5% CC) with
EBITDA down 23.2% to £119.9m (FY23: £156.2m).
Ecommerce revenue was up 5.1% in H1 and down 1.0% in H2 on a CC basis. In
retail, revenue grew in both halves of the financial year led by new and
maturing stores and continued footfall recovery in both EMEA and APAC. Both
EMEA and APAC were impacted by strategic decisions, of reducing EMEA etailer
volumes and ceasing the distributor in China respectively. In Americas,
revenue was down in both halves as expected, predominantly driven by
wholesale.
H2 FY24
H1 FY24
Actual CC Actual CC
Total Revenue -5.4% -3.5% -17.3% -14.5%
Channel: Ecommerce 3.3% 5.1% -2.9% -1.0%
Retail 15.1% 17.4% 0.9% 4.6%
DTC 9.2% 11.3% -1.2% 1.5%
Wholesale(1) -16.5% -14.7% -40.0% -37.4%
Region: EMEA 8.5% 7.5% -10.0% -10.1%
Americas -17.8% -14.6% -28.3% -24.3%
APAC -10.0% -3.3% -5.2% 3.6%
1. Wholesale revenue including distributor customers.
ANALYSIS OF PERFORMANCE BY QUARTER
DTC Revenue in Q4 showed a return to growth at 9.7% CC vs a 3.2% CC decline in
Q3, however this benefitted from the timing of Easter and the end of season
sale, which moved from Q1 FY25 (as is typically the case) to Q4 FY24. Retail
grew in all quarters on a CC basis led by new and maturing stores and
continued footfall recovery, supported by volume growth in EMEA and APAC.
Ecommerce grew in the first half, declined in Q3, before returning to positive
growth in Q4, again helped by timing changes.
Wholesale was down in all quarters due a combination of the strategic
decisions taken in EMEA and APAC, together with the continued challenging
backdrop in the USA.
Q2 Q3 Q4
Q1
Actual CC Actual CC Actual CC Actual CC
Total Revenue -11.0% -11.2% -2.2% 1.3% -20.5% -17.9% -12.9% -9.8%
Revenue: Ecommerce 7.3% 6.8% 0.1% 3.8% -9.3% -7.6% 9.5% 11.8%
Retail 27.4% 27.2% 5.6% 9.5% -0.1% 2.9% 2.6% 7.4%
DTC 17.4% 17.1% 2.9% 6.7% -5.4% -3.2% 6.2% 9.7%
Wholesale(1) -41.1% -41.0% -5.3% -2.1% -48.6% -46.1% -31.7% -29.3%
Region: EMEA -1.4% -2.7% 13.8% 13.1% -14.5% -14.9% -3.0% -2.6%
Americas -26.3% -26.5% -12.3% -6.3% -30.8% -26.3% -25.2% -21.9%
APAC 12.2% 16.1% -21.7% -13.9% -8.0% -1.1% -1.9% 9.0%
1. Wholesale revenue including distributor customers.
EBITDA ANALYSIS
Gross margin improved by 3.8pts to 65.6% with the biggest benefit being from
supply chain savings, together with the benefits of new and maturing stores
and price net COGS inflation. In the year, the average price increase was 4.5%
and COGs inflation was approximately 6%.
Operating expenses increased by 1.2%, or £4.6m, to £377.7m. Within this
movement we benefitted from supply chain savings, which were offset by the
operating cost drag from new and maturing stores, together with a small
year-on-year increase in marketing spend. The supply chain savings were the
result of continued good cost control, including lower volume-related costs
and retail outbound freight savings. Within our operating costs we incurred
£13.1m (FY23: £14.5m) in relation to temporary inventory storage space
rented in LA, given the elevated inventory levels in this market.
EBITDA decreased by 19.4% to £197.5m (FY23: £245.0m) resulting in an EBITDA
margin decrease of 2.0pts to 22.5%. Increased costs (as a percentage of
revenue) were partially offset by supply chain savings.
EBIT decreased by 30.6% to £122.2m as a result of the decline in EBITDA
together with increased depreciation and amortisation.
EARNINGS
The following table analyses the results for the year from EBITDA to profit
before tax.
£m FY24 FY23
EBITDA(1) 197.5 245.0
Depreciation and amortisation (72.3) (54.2)
Impairment - (3.9)
Other gains 1.2 -
Foreign exchange losses (4.2) (10.7)
EBIT(1) 122.2 176.2
Net interest cost on bank debt (19.4) (10.8)
Amortisation of loan issue costs/interest on lease liabilities (9.8) (6.0)
Profit before tax 93.0 159.4
Tax (23.8) (30.5)
Earnings 69.2 128.9
1. Alternative Performance Measure (APM) as defined in the
Glossary on pages 66 and 67.
Profit before tax (including FX charge) declined by 41.7% to £93.0m (FY23:
£159.4m) with profit after tax of £69.2m (FY23: £128.9m). This was
primarily due to lower EBITDA together with higher depreciation and
amortisation costs and higher interest costs.
Depreciation and amortisation charged in the period was £72.3m (FY23:
£54.2m), and is analysed as follows:
£m FY24 FY23
Amortisation of intangibles(1) 5.8 8.4
Depreciation of property, plant and equipment(2) 15.2 13.6
21.0 22.0
Depreciation of right-of-use assets(3) 51.3 32.2
Total 72.3 54.2
1. Mainly represented by IT related spend with the average term of
5 to 15 years.
2. Mainly represented by new store fit out costs with the average
term of 5 years.
3. Mainly represented by depreciation of IFRS 16 capitalised
leases with the average term remaining of 3.8 years and 263 properties (FY23:
5.1 years and 229 properties).
Foreign Exchange
Dr. Martens is a global brand selling to consumers across the world in many
different currencies, with the financial statements reported in GBP. Foreign
currency amounts in the profit or loss account are prepared on an average
actual currency rate basis for the year. These exchange rates are calculated
monthly and applied to revenue and costs generated in that month, such that
the actual performance translated across the year is dependent on monthly
trading profiles as well as movement in currency exchange rates. To aid
comparability of underlying performance, we have also calculated constant
currency for revenue. This is calculated by translating non-sterling revenues
at the same exchange rate year on year.
Foreign exchange exposures mainly impacting the Group are £/$, £/€ and
£/¥. The following table summarises average exchange rates used in the year:
£/$ £/€ £/¥
FY24 FY23 % FY24 FY23 % FY24 FY23 %
H1 1.26 1.22 3% 1.16 1.17 -1% 178 163 9%
H2 1.26 1.19 6% 1.16 1.14 2% 186 163 14%
FY 1.26 1.21 4% 1.16 1.16 0% 182 163 12%
The Group takes a holistic approach to exchange rate risk, monitoring
exposures on a Group-wide, net cashflow basis, seeking to maximise natural
offsets wherever possible. While COGs purchases for the Group are
predominantly denominated in USD, foreign exchange risk on this currency is
partially offset from USD revenues earned in Americas and from distributor
revenues, which are also largely USD denominated. Where a net foreign currency
exposure is considered material, the Group seeks to reduce volatility from
exchange movements by using derivative financial instruments. During the
period, a £1.5m gain was recorded in revenues related to derivatives
partially hedging the net EUR inflows.
Retranslation of foreign currency denominated monetary assets and liabilities
in the year resulted in a foreign exchange loss of £4.2m (FY23: loss
£10.7m). This was predominantly due to the revaluation of receivable balances
following the appreciation of GBP against EUR and USD.
Interest
The Group's exposure to changes in interest rates relates primarily to cash
investments, borrowings, and IFRS 16 lease liabilities. Total Group interest
costs for the year were £29.2m, £12.4m higher than prior year (FY23 £16.8m)
primarily due to increases in bank debt related borrowing expenses of £22.3m
(FY23: £12.7m). The increase compared to the prior year was driven from a
higher benchmark EURIBOR rate and interest costs of the in-year drawn RCF
amounts. This was partially offset by a £1.3m gain on higher interest
receivables from cash investments. In addition, we incurred higher interest
costs on lease liabilities of £3.8m due to new stores opened in the year.
The tax charge was £23.8m (FY23: £30.5m) with an effective tax rate of 25.6%
(FY23: 19.1%) which is slightly higher than the UK corporate tax rate of
25.0%, due mainly to overseas tax rates and deferred tax on temporary
differences. The effective tax rate was higher than last year due to the
increase in UK tax rate from 19.0% to 25.0% on 1 April 2023.
Earnings per share was 7.0p (FY23: 12.9p). The total number of diluted shares
is detailed in note 9 in the financial statements. The following table
summarises these EPS figures:
FY24 pence FY23 pence % change
Earnings per share Basic 7.0 12.9 -46%
Diluted 7.0 12.9 -46%
EPS and diluted EPS for the current and prior year are presented as the same
amount due to the minimal dilutive impact of share options on the total
diluted share number.
OPERATING CASH FLOW
£m FY24 FY23
EBITDA(1) 197.5 245.0
Increase in inventories (1.6) (133.2)
Decrease/(increase) in debtors 23.0 (6.6)
Increase in creditors (37.7) (9.2)
Total change in net working capital (16.3) (149.0)
Share-based payments 4.0 0.5
Capital expenditure (28.4) (51.2)
Operating cash flow(1) 156.8 45.3
Operating cash flow conversion(1) 79% 18%
1. Alternative Performance Measure (APM) as defined in the
Glossary on pages 66 and 67.
Operating cash inflow was £156.8m (FY23: £45.3m) representing a cash
conversion of EBITDA of 79% (FY23 18%), in line with guidance.
Trade debtor days remained at 52 days, primarily due to customer mix with a
higher proportion of Americas debtors (with debtor days at 55) than EMEA (with
debtor days at 48).
Capex was £28.4m (FY23: £51.2m) and represented 3.2% of revenue (FY23:
5.1%). The breakdown in capex by category is as follows:
£m FY24 FY23
Retail stores 14.4 18.9
Supply Chain 2.7 19.2
IT/Tech 11.3 13.1
( ) 28.4 51.2
Net cash flow after interest
Net cash flow after interest costs is summarised below:
£m FY24 FY23
Operating cash flow(1) 156.8 45.3
Net interest paid (17.0) (5.6)
Investment - (1.0)
Payment of lease liabilities (52.2) (33.9)
Taxation (18.8) (22.3)
Repurchase of shares (50.5) -
Derivatives settlement (4.0) 3.1
Dividends paid (57.8) (58.4)
Net cash outflow (43.5) (72.8)
Opening cash 157.5 228.0
Net cash exchange translation (2.9) 2.3
Closing cash 111.1 157.5
1. Alternative Performance Measure (APM) as defined in the
Glossary on pages 66 and 67.
Net interest paid was £17.0m, higher than FY23 by £11.4m due to the timing
of interest payments and higher interest rates, which were partially offset by
higher interest receivables from cash investments. The increase in lease
liabilities was due mainly to the increased number of retail stores opened in
the period under lease arrangements and increased space across the DC network.
Funding and Leverage
The Group is funded by cash, bank debt and equity. Further details on the
capital structure and debt are given in note 17 of the financial statements.
The Group's bank debt is denominated in Euros which allows the excess Euros
the Group generates from trading in Continental Europe to fund interest costs.
The bank debt falls due for repayment in full on 2 February 2026. The Group
also has a revolving credit facility of £200.0m which also matures on 2
February 2026 with £30.0m drawn down and subsequently fully repaid during the
period. Included in this facility is a committed line of £3.4m used for
guarantee arrangements primarily for landlord rent guarantees.
The group financing arrangements are subject to a total net leverage covenant
test every six months. The total net leverage test is calculated with a full
12 months of EBITDA and net debt being inclusive of IFRS 16 lease liabilities
at the balance sheet date. At 31 March 2024 the Group had total net leverage
of 1.8 times (FY23: 1.2 times).
BALANCE SHEET
£m 31 March 31 March
2024 2023
Freehold property 7.0 7.4
Right-of-use assets 173.5 144.1
Other fixed assets 81.7 78.8
Inventory 254.6 257.8
Debtors 70.4 92.2
Creditors(2) (100.7) (133.7)
Working capital 224.3 216.3
Other(1) (1.5) 5.2
Operating net assets 485.0 451.8
Goodwill 240.7 240.7
Cash 111.1 157.5
Bank debt (288.6) (296.8)
Unamortised bank fees 2.3 3.4
Lease liabilities (182.3) (152.4)
Net assets 368.2 404.2
1. Other includes investments, deferred tax assets, income tax
assets, and provisions.
2. Includes bank interest of £8.4m (FY23: £6.0m).
Net Debt(1) is summarised below:
£m 31 March 31 March
2024 2023
Bank loans (286.3) (293.4)
Cash 111.1 157.5
Net bank loans (175.2) (135.9)
Lease liabilities (182.3) (152.4)
Net Debt(1) (357.5) (288.3)
1. Alternative Performance Measure (APM) as defined in the
Glossary on pages 66 and 67.
Inventory
Given the high proportion of continuity products we sell, with four out of
five pairs being black and having a strong product margin structure, we have
minimal markdown risk below cost. Inventory levels are currently at elevated
levels in our Americas business. As a result we have reduced purchases for the
year ahead and are targeting a reduction in inventory in FY25.
31 March 31 March
2024 2023
Inventory (£m) 254.6 257.8
Turn (x)(1) 1.2x 1.5x
Weeks cover(2) 44 35
1. Calculated as historic LTM COGS divided by inventory.
2. Calculated as 52 weeks divided by stock turn.
Equity of £368.2m can be analysed as follows:
£m 31 March 2024
Share capital 9.6
Hedging reserve 0.9
Capital redemption reserve 0.4
Merger reserve (1,400.0)
Non-UK translation reserve 9.7
Retained earnings 1,747.6
Equity 368.2
RETURNS TO SHAREHOLDERS
Our capital allocation philosophy guides our view of returns to shareholders
and usage of excess cash. The first priority for investment is into the
business and we will continue to invest in a targeted manner to support
long-term growth and resilience of the Group. This is mainly represented by
investment into marketing, logistics, people, systems and inventory. Beyond
this, our priority is to return excess cash to shareholders, through a regular
dividend and, when possible, further returns.
Dividends
The Board has proposed, subject to shareholder approval, a final dividend of
0.99p, taking the total dividend for FY24, including the interim dividend of
1.56p, to 2.55p, a 35% payout ratio. Whilst this is a year-on-year reduction
given the higher payout in FY23 and lower earnings achieved this year, the 35%
payout for FY24 is at the top of the policy range. The Board's intention is to
hold the FY25 dividend flat in absolute terms, before returning to an earnings
payout in line with our dividend policy (of 25% to 35% payout) in FY26
onwards.
Going forwards, the Board is also adopting a consistent approach to setting
the interim dividend, with this dividend set at one-third of the previous
year's total dividend. We are also adjusting the payment dates for the
dividends, to better reflect the trading cash profile of the Group, and
therefore the final dividend will be paid in early October. The final dividend
for FY24 will be paid to shareholders on the register as at 30 August 2024
with payment on 1 October 2024.
£m FY24 FY23
Earnings 69.2 128.9
Interim dividend (declared and paid): 1.56p (FY23: 1.56p) 15.0 15.6
Final dividend (proposed): 0.99p (FY23: 4.28p) 9.5 42.8
Total dividend (paid and proposed): 2.55p (FY23: 5.84p) 24.5 58.4
Payout ratio % 35% 45%
Share Buyback
During the year to 31 March 2024 the Group repurchased 39.9m shares. The cash
outflow was £50.5m (including transaction costs of £0.5m) pursuant to the
share buyback scheme that was announced on 14 July 2023 and concluded on 19
December 2023. For further details please refer to notes 23 and 24 of the
Consolidated Financial Statements.
FY25 guidance
Our key targets for FY25 are:
- Positive USA DTC growth in the second half
- Inventory declining by c.£40m
- Net debt declining to £310m to £330m (including lease
liabilities)
Alongside this, our guidance for FY25 is:
- USA wholesale revenue declining double-digit percentage in FY25
- New own store openings of 25 to 30
- Depreciation and Amortisation of £75m to £80m
- Net finance costs of £27m to £30m
- Blended tax rate of c.27%
- Capex of around £40m
For the first half, we expect a Group revenue decline of around 20%, driven by
wholesale revenues down around a third. Combined with the cost headwinds which
impact both halves, the impact of operational deleverage is significantly more
pronounced in the first half. Overall results this year will therefore be very
second-half weighted, particularly from a profit perspective.
Consolidated Statement of Profit or Loss
For the year ended 31 March 2024
Note FY24 FY23
£m £m
Revenue 3 877.1 1,000.3
Cost of sales (301.9) (382.2)
Gross profit 575.2 618.1
Selling and administrative expenses 4 (453.0) (441.9)
Finance income 3.0 1.9
Finance expense 7 (32.2) (18.7)
Profit before tax 93.0 159.4
EBITDA(1) 3 197.5 245.0
Depreciation and amortisation 4 (72.3) (54.2)
Impairment 4 - (3.9)
Foreign exchange losses (4.2) (10.7)
Other gains 1.2 -
Net finance expense (29.2) (16.8)
Profit before tax 93.0 159.4
Tax expense 8 (23.8) (30.5)
Profit for the year 69.2 128.9
Note FY24 FY23
Earnings per share
Basic 9 7.0p 12.9p
Diluted 9 7.0p 12.9p
1. Alternative Performance Measure (APM) as defined in the Glossary on pages
66 and 67.
The results for the years presented above are derived from continuing
operations and are entirely attributable to the owners of the Parent Company.
The notes on pages 18 to 54 form part of these Consolidated Financial
Statements.
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2024
Note FY24 FY23
£m £m
Profit for the year 69.2 128.9
Other comprehensive (expense)/income
Items that may subsequently be reclassified to profit or loss
Foreign currency translation differences (2.8) 5.5
Cash flow hedges: Fair value movements in equity (1.8) 1.9
Cash flow hedges: Reclassified and reported in profit or loss 19 3.9 (2.5)
Tax in relation to share schemes 8 0.5 -
Tax in relation to cash flow hedges 8 (0.7) 0.2
(0.9) 5.1
Total comprehensive income for the year 68.3 134.0
The notes on pages 18 to 54 form part of these Consolidated Financial
Statements.
Consolidated Balance Sheet
As at 31 March 2024
Note(s) FY24 FY23
£m £m
ASSETS
Non-current assets
Intangible assets 11 270.0 265.6
Property, plant and equipment 12 59.4 61.3
Right-of-use assets 12 173.5 144.1
Investments 20 1.0 1.0
Derivative financial assets 19 0.1 -
Deferred tax assets 22 11.2 11.8
515.2 483.8
Current assets
Inventories 13 254.6 257.8
Trade and other receivables 14 68.8 93.0
Income tax assets 1.2 -
Derivative financial assets 19 1.5 0.5
Cash and cash equivalents 15 111.1 157.5
437.2 508.8
Total assets 952.4 992.6
LIABILITIES
Current liabilities
Trade and other payables 16 (92.2) (127.7)
Borrowings 17 (8.4) (6.0)
Lease liabilities 17, 28 (47.0) (28.1)
Derivative financial liabilities 19 (0.1) (1.3)
Income tax payable (5.8) (1.4)
(153.5) (164.5)
Non-current liabilities
Borrowings 17 (286.3) (293.4)
Lease liabilities 17, 28 (135.3) (124.3)
Provisions 18 (6.3) (4.4)
Deferred tax liabilities 22 (2.8) (1.8)
(430.7) (423.9)
Total liabilities (584.2) (588.4)
Net assets 368.2 404.2
EQUITY
Equity attributable to the owners of the Parent
Ordinary share capital 23 9.6 10.0
Treasury shares 24 - -
Hedging reserve 25 0.9 (0.5)
Capital redemption reserve 25 0.4 -
Merger reserve 25 (1,400.0) (1,400.0)
Foreign currency translation reserve 25 9.7 12.5
Retained earnings 25 1,747.6 1,782.2
Total equity 368.2 404.2
The notes on pages 18 to 54 form part of these Consolidated Financial
Statements.
The Consolidated Financial Statements on pages 13 to 54 were approved and
authorised by the Board of Directors on 29 May 2024 and signed on its behalf
by:
Kenny
Wilson
Giles Wilson
Chief Executive
Officer
Chief Financial Officer
Consolidated Statement of Changes in Equity
For the year ended 31 March 2024
Ordinary share capital Treasury shares Hedging reserve Merger reserve Foreign translation reserve Retained earnings Total equity
Capital redemption reserve
Note(s) £m £m £m £m £m £m £m £m
At 1 April 2022 10.0 - (0.1) - (1,400.0) 7.0 1,711.3 328.2
Profit for the year - - - - - - 128.9 128.9
Other comprehensive (expense)/income - - (0.4) - - 5.5 - 5.1
Total comprehensive (expense)/income for the year - - (0.4) - - 5.5 128.9 134.0
Dividends paid 10 - - - - - - (58.4) (58.4)
Share-based payments 26 - - - - - - 0.4 0.4
At 31 March 2023 10.0 - (0.5) - (1,400.0) 12.5 1,782.2 404.2
Profit for the year - - - - - - 69.2 69.2
Other comprehensive income/(expense) - - 1.4 - - (2.8) 0.5 (0.9)
Total comprehensive income/(expense) for the year - - 1.4 - - (2.8) 69.7 68.3
Dividends paid 10 - - - - - - (57.8) (57.8)
Shares issued 23 - - - - - - - -
Share-based payments 26 - - - - - - 4.0 4.0
Repurchase of ordinary share capital 23, 24 - (50.0) - - - - (0.5) (50.5)
Cancellation of repurchased ordinary share capital 23, 24 (0.4) 50.0 - 0.4 - - (50.0) -
At 31 March 2024 9.6 - 0.9 0.4 (1,400.0) 9.7 1,747.6 368.2
The notes on pages 18 to 54 form part of these Consolidated Financial
Statements.
Consolidated Statement of Cash flows
For the year ended 31 March 2024
Note FY24 FY23
£m £m
Profit after taxation 69.2 128.9
Add back: income tax expense 8 23.8 30.5
finance income (3.0) (1.9)
finance expense 7 32.2 18.7
depreciation, amortisation and impairment 72.3 58.1
other gains (1.2) -
foreign exchange losses 4.2 10.7
share-based payments charge 26 4.0 0.5
Increase in inventories (1.6) (133.2)
Decrease/(increase) in trade and other receivables 23.0 (6.6)
Decrease in trade and other payables (37.7) (9.2)
Change in net working capital (16.3) (149.0)
Cash flows from operating activities
Cash generated from operations 185.2 96.5
Taxation paid (18.8) (22.3)
Settlement of matured derivatives 1.5 (1.5)
Net cash inflow from operating activities 167.9 72.7
Cash flows from investing activities
Additions to intangible assets 11 (10.2) (11.8)
Additions to property, plant and equipment 12 (18.2) (39.6)
Finance income received 2.9 1.6
Capital contributions received for right-of-use assets - 0.2
Purchase of equity investment 20 - (1.0)
Net cash outflow from investing activities (25.5) (50.6)
Cash flows from financing activities
Finance expense paid (19.9) (7.2)
Payment of lease interest 28 (8.6) (4.8)
Payment of lease liabilities 28 (43.6) (29.1)
Repurchase of 23 (50.5) -
shares
Revolving credit facility drawdown 17 30.0 -
Revolving credit facility repayment 17 (30.0) -
Settlement of matured derivatives (5.5) 4.6
Dividends paid 10 (57.8) (58.4)
Net cash outflow from financing activities (185.9) (94.9)
Net decrease in cash and cash equivalents (43.5) (72.8)
Cash and cash equivalents at beginning of year 157.5 228.0
Effect of foreign exchange on cash held (2.9) 2.3
Cash and cash equivalents at end of year 15 111.1 157.5
The notes on pages 18 to 54 form part of these Consolidated Financial
Statements.
Notes to the Consolidated Financial Statements
For the year ended 31 March 2024
1. General information
Dr. Martens plc (the 'Company') is a public company limited by shares
incorporated in the United Kingdom, and registered and domiciled in England
and Wales, whose shares are traded on the London Stock Exchange. The Company's
registered office is: 28 Jamestown Road, Camden, London NW1 7BY. The principal
activity of the Company and its subsidiaries (together referred to as the
'Group') is the design, development, procurement, marketing, selling and
distribution of footwear, under the Dr. Martens brand.
2. Accounting policies
The principal accounting policies adopted in the preparation of the financial
statements are set out below. The policies have been consistently applied to
the periods presented, unless otherwise stated. Amounts are presented in GBP
and to the nearest million pounds (to one decimal place) unless otherwise
noted. The reporting period is defined as the year ended 31 March 2024 and
year ended 31 March 2023 for the comparative period.
2.1 Basis of preparation
The Consolidated Financial Statements of the Group have been prepared in
accordance with UK-adopted International Accounting Standards in conformity
with the requirements of the Companies Act 2006 as applicable to companies
reporting under those standards. The Group's Consolidated Financial Statements
have been prepared on a going concern basis under the historical cost
convention, except for equity investments, derivative financial instruments,
money market funds, share-based payments and pension scheme assets that have
been measured at fair value.
Certain amounts in the Statement of Profit or Loss and the Balance Sheet have
been grouped together for clarity, with their breakdown being shown in the
notes to the financial statements. The distinction presented in the Balance
Sheet between current and non-current entries has been made on the basis of
whether the assets and liabilities fall due within more than one year.
Consideration of climate risk matters
The Group continues to assess the impact of climate risk matters on many
aspects of the business, including climate related scenario analysis as
required by the Task Force on Climate-Related Disclosures. Building on this
scenario analysis, consideration has been given to the impact of climate
related risk on management judgements and estimates, and compliance with
existing accounting requirements. The incurred costs and investments
associated with our sustainability strategy are reflected in the Group's
Financial Statements. The impact of climate related risk matters is not
expected to be material to the 31 March 2024 Consolidated Financial
Statements, the Group going concern assessments to 30 September 2025, or the
viability of the Group over the next three years.
Financial calendar
During the year, the Group amended the basis of preparation of the
Consolidated Financial Statements to align with the operational trading of the
business; by moving from a calendar year to a retail calendar basis. The
retail calendar will report a 52-week year, split into monthly 5-4-4 Monday to
Sunday week formats. A 53-week year will be reported around every six years to
avoid the retail calendar deviating by more than seven days to the calendar
year and accounting reference date of 31 March. As 31 March 2024 falls on a
Sunday, the FY25 period will begin on a Monday and conform to a retail
calendar thereafter.
Going concern
The financial statements have been prepared on the going concern basis. The
going concern assessment covers at least the 12-month period from the date of
the signing of the financial statements, and the going concern basis is
dependent on the Group maintaining adequate levels of resources to operate
during the period. To support this assessment, detailed trading and cash flow
forecasts, including forecast liquidity and covenant compliance, were prepared
for the 16-month period to 30 September 2025. The Directors' assessment used
the same assumptions and methods as the viability assessment on pages 44 and
45 of the Annual Report.
The key stages of the assessment process are summarised as follows:
· The Group planning process forms the basis of the Going Concern
review, starting from the DOCS strategy and producing outputs for long, medium
and short term financial plans, based on key assumptions which are agreed with
the GLT and Board.
· The trading outlook over the long, medium and short term is
evaluated, contextualising our assessments within the broader macroeconomic
environment.
· Micro and macro central planning assumptions are identified and
incorporated into the assessments.
· The Directors of the Group have considered the future position
based on current trading and a number of potential downside scenarios which
may occur, including the impact of appropriate principal risks crystallising.
· Further details on the potential downside scenarios relevant to the
going concern assessment period have been included below.
The Directors also considered the Group's funding arrangements at 31 March
2024 with cash of £111.1m, available undrawn facilities of £194.5m and
bullet debt repayment of £288.6m not due until 2 February 2026.
Consistent with the Viability Statement on pages 44 and 45 of the Annual
Report, management have modelled, and the Directors have reviewed 'top-down'
sensitivity and stress testing, including a review of the cash flow
projections and covenant compliance under a severe but plausible scenario in
relation to two main risks and specific 'black swan' events assessed which are
detailed below:
· the impact of a factory closure in one key production geographic
area due to climate change (flooding).
· weaker consumer sentiment and lower demand.
'Top-down' sensitivity and stress testing included a review of the cash flow
projections and covenant compliance under a severe but plausible scenario in
relation to the downside scenarios described above. In the unlikely event of
the above two scenarios occurring together, the Group can withstand material
revenue decline and by applying available mitigations, headroom above covenant
requirements remain in line with expectation and the Group continues to have
satisfactory liquidity and covenant headroom throughout the period under
review. Experience over three years of FY22, FY23 and FY24 have indicated
minimal wholesale bad debt risk and minimal margin risk with the principal
risk to meeting covenant compliance being lower revenue.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
2. Accounting policies (continued)
2.1 Basis of preparation (continued)
Going concern (continued)
In modelling our severe but plausible downside we have incorporated the impact
of a double digit decrease in revenue from the base plan in the short term,
with the base plan already representing a single digit decline versus FY24.
Under this scenario, certain mitigations are available or are intrinsically
linked to the forecast, including some cost and cash savings that materialise
immediately if the Group's performance is below budget and other planned and
standard cost reductions.
A more extreme downside scenario is not considered plausible.
A reverse stress test has also been modelled to determine what could break
covenant compliance estimates and liquidity before mitigating actions. To
model these reverse stress tests the impact on revenue of zero covenant
headroom and zero liquidity was calculated at the end of the going concern
period. Under the covenant breach test it is concluded that the business could
weather extreme growth reductions without mitigation versus the base plan,
with the base plan already representing a single digit decline versus FY24.
The business would have to experience -11%pts to revenue growth in the going
concern period before covenants are breached. Similarly, the business would
have to experience -51%pts revenue growth reduction in the going concern
period before zero cash headroom is reached. The Directors have assessed the
likelihood of occurrence to be remote.
We have also assessed the qualitative and quantitative impact of
climate-related risks, as noted in our TCFD scenario analysis in the Annual
Report and above, on asset recoverable amounts and concluded that there would
not be a material impact on the business and cash flows in the going concern
period.
We will continue to monitor the impact of the macroeconomic backdrop and
geopolitical events on the Group in the countries where we operate, and we
plan to maintain flexibility to react as appropriate.
2.2 Basis of consolidation
The Consolidated Financial Statements comprise the financial statements of the
Company and its subsidiaries as at 31 March 2024 and 31 March 2023. Control is
achieved when the Group has rights to variable returns from its involvement
with the investee and the ability to use its power over the investee to affect
the amount of the investor's returns. Specifically, the Group controls an
investee if, and only if, the Group has:
· power over the investee (i.e. existing rights that give it the
current ability to direct the relevant activities of the investee);
· exposure, or rights, to variable returns from its involvement with
the investee; and
· the ability to use its power over the investee to affect its
returns.
Generally, there is a presumption that a majority of voting rights results in
control. To support this presumption and when the Group has less than a
majority of the voting or similar rights of an investee, the Group considers
all relevant facts and circumstances in assessing whether it has power over an
investee, including:
· the contractual arrangement(s) with the other vote holders of the
investee;
· rights arising from other contractual arrangements; and
· the Group's voting rights and potential voting rights.
The Group re-assesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements of control. Consolidation of a subsidiary begins when the Group
obtains control over the subsidiary and ceases when the Group loses control of
the subsidiary. Assets, liabilities, income and expenses of a subsidiary
acquired or disposed of during the year are included in the Consolidated
Financial Statements from the date the Group gains control until the date the
Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed
to the equity holders of the parent of the Group. When necessary, adjustments
are made to the financial statements of subsidiaries to bring their accounting
policies in line with the Group's accounting policies. All intra-group assets
and liabilities, equity, income, expenses and cash flows relating to
transactions between members of the Group are eliminated in full on
consolidation.
A change in the ownership interest of a subsidiary, without a loss of control,
is accounted for as an equity transaction.
If the Group loses control over a subsidiary, it derecognises the related
assets (including goodwill), liabilities, non-controlling interest and other
components of equity, while any resultant gain or loss is recognised in profit
or loss. Any investment retained is recognised at fair value.
2.3 Adoption of new and revised standards
A number of new or amended standards became applicable for the current
reporting period. These standards, amendments or interpretations are not
expected to have a material impact on the Group in the current or future
reporting periods:
· Amendments to IAS 1 - Classification of liabilities as current, and
disclosure of accounting policies
· Amendments to IAS 8 - Definition of accounting estimates
· Amendments to IAS 12 - Deferred tax related to assets and
liabilities arising from a single transaction
· Amendments to IAS 12 - Pillar Two model rules
· Implementation of IFRS 17 - Insurance contracts
New standards and interpretations not yet applied
The following new or amended IFRS accounting standards, amendments and
interpretations are not yet adopted and it is expected that where applicable,
these standards and amendments will be adopted on each respective effective
date:
· Amendments to IAS 1 - Presentation of financial statements:
non-current liabilities with covenants
· Amendments to IFRS 16 - Leases on sale and leaseback
· Amendments to IAS 7 and IFRS 7 - Supplier finance arrangements
These standards, amendments or interpretations are not expected to have a
material impact on the Group in the current or future reporting periods.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
2. Accounting policies (continued)
2.4 Alternative Performance Measures (APMs)
Management exercises judgement in determining the adjustments to apply to IFRS
measurements in order to derive suitable APMs. As set out on pages 66 to 67 of
the Glossary, APMs are used as management believes these measures provide
additional useful information on the underlying trends, performance and
position of the Group. These measures are used for performance analysis. The
APMs are not defined by IFRS and therefore may not be directly comparable with
other companies' APMs. These measures are not intended to be a substitute for,
or superior to, IFRS measurements.
2.5 Foreign currency translation
The Consolidated Financial Statements are presented in GBP, which is the
Group's presentational currency. The Group includes foreign entities whose
functional currencies are not GBP. On consolidation, the assets and
liabilities of the Group entities that have a functional currency different
from the presentation currency are translated into GBP at the closing rate at
the date of that Balance Sheet. Income and expenses for each Statement of
Profit or Loss are translated at average foreign exchange rates for the
period. Foreign exchange differences are recognised in other comprehensive
income. The functional currency of each company in the Group is that of the
primary economic environment in which the entity operates.
2.6 Revenue
The Group's revenue arises from the sale of goods to customers. Contracts
with customers generally have one performance obligation. The Group has
concluded that the revenue from the sale of goods should be recognised at a
point in time when control of the goods is transferred to the customer, which
is dependent on the revenue channel. Revenue is recognised at the invoiced
price less any associated discounts and sales taxes.
The Group assessed its revenue channels against the IFRS 15 five-step model,
identifying the contracts, the performance obligations and the transaction
price, and then allocating this to determine the timing of revenue
recognition. The revenue channels that have been separately assessed are as
follows:
· ecommerce revenue, including delivery charge income;
· retail revenue; and
· wholesale revenue.
Control is passed to the customer on the following basis under each of the
revenue channels as follows:
· ecommerce channel: upon receipt of the goods by the customer;
· retail channel: upon completion of the transaction; and
· wholesale channel: upon delivery of the goods or upon dispatch to
the customer if the customer takes responsibility for delivery.
The payment terms across each of these revenue channels varies. The payments
for retail are received at the transfer of control. Ecommerce payments are
mainly received in advance of transfer of control by less than one week as
there is a timing difference between receipt of cash on order and receipt of
goods by the customer. Wholesale customers pay on terms generally between 30
and 60 days.
Some contracts for the sale of goods provide customers with a right of return
and rebates. Under IFRS 15, this gives rise to variable consideration, which
is constrained such that it is highly probable that significant reversal will
not occur.
Rights of return
When a contract provides a customer with a right of return, under IFRS 15, the
consideration is variable because the contract allows the customer to return
the product. The Group uses the expected value method to estimate the goods
that will be returned and recognise a refund liability and an asset for the
goods to be recovered. Provisions for returned goods are calculated based on
future expected levels of returns for each channel, assessed across a variety
of factors such as historical trends, economic factors and other measures.
Rebates
Under IFRS 15, rebates give rise to variable consideration. To estimate this
the Group applies the most likely amount method.
2.7 Finance income and expenses
Finance expenses consist of interest payable on various forms of debt and
finance income consists of interest receivable amounts from cash held. Both
are recognised in the Statement of Profit or Loss under the effective interest
rate method.
2.8 Exceptional items
Exceptional items consist of material non-recurring items and items arising
outside the normal trading of the Group.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
2. Accounting policies (continued)
2.9 Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax movement recognised. The tax currently payable is based on taxable profit.
Taxable profit differs from net profit as reported in the Statement of Profit
or Loss because it excludes items of income or expense that are taxable or
deductible in other periods and it further excludes items that are never
taxable or deductible. The Group's liability for current tax is calculated by
using tax rates that have been enacted or substantively enacted by the end of
each reporting period.
Tax provisions are recognised when there is a potential exposure to an
uncertain tax position and an outflow of resources is probable. The Group
applies IFRIC 23 Uncertainty over Income Tax Treatments to measure uncertain
tax positions. The Group calculates each provision using either the expected
value method or the most likely outcome method in line with the guidance
contained within IFRIC 23. The uncertain tax positions are reviewed regularly
and there is ongoing monitoring of tax cases and rulings which could impact
the provision.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amount of assets and liabilities in the historical
financial information and the corresponding tax bases used in the computation
of taxable profit and is accounted for using the Balance Sheet liability
method based on rates that are enacted or substantively enacted by the end of
each reporting period. Deferred tax liabilities are recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and liabilities
are not recognised if the temporary difference arises from goodwill or from
the initial recognition (other than in a business combination) of other assets
and liabilities in a transaction which affects neither the taxable profit nor
the accounting profit. Deferred tax liabilities are recognised for taxable
temporary differences arising in investments in subsidiaries except where the
Group is able to control the reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the foreseeable
future. The carrying amount of deferred tax assets is reviewed at the end of
each reporting period and reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to allow all or part of the
asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply to the
period when the asset is realised, or the liability is settled. Deferred tax
is charged or credited in the Statement of Profit or Loss, except when it
relates to items credited or charged directly to equity, in which case the
deferred tax is also dealt with in equity. Both deferred tax assets and
liabilities and current tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against current tax
liabilities, when they relate to income taxes levied by the same taxation
authority, and the Group intends to settle its current tax assets and
liabilities on a net basis.
On 23 May 2023, the IASB issued an amendment to IAS 12 'Income Taxes' to
clarify how the effects of the global minimum tax framework should be
accounted for and disclosed effective 1 January 2023. This was endorsed by the
UK Endorsement Board on 19 July 2023 and has been adopted by the Group for
2024 reporting. The Group has applied the exemption to recognising and
disclosing information about deferred tax assets and liabilities related to
Pillar Two income taxes.
2.10 Dividends
Final dividends are recorded in the financial statements in the period in
which they are approved by the Company's shareholders. Interim dividends are
recorded in the period in which they are approved and paid.
2.11 Intangible assets
Goodwill
Business combinations are accounted for by applying the acquisition method.
Goodwill acquired represents the excess of the fair value of the consideration
over the fair value of the identifiable net assets acquired.
After initial recognition, positive goodwill is measured at cost less any
accumulated impairment losses. At the date of acquisition, the goodwill is
allocated to cash generating units, usually at business segment level or
statutory company level as the case may be, for the purpose of impairment
testing and is tested at least annually for impairment, or if an indicator of
impairment exists. On subsequent disposal or termination of a business
acquired, the profit or loss on termination is calculated after charging the
carrying value of any related goodwill. Negative goodwill is recognised
directly in the Statement of Profit or Loss.
Separately acquired intangible assets
Separately acquired intangible assets comprise other intangibles. Other
intangibles that have finite useful lives are carried at cost less accumulated
amortisation and any provision for impairment. The finite life other
intangibles are amortised on a straight line basis over the expected useful
economic life of each of the assets, which is considered to be 5 to 15 years.
Amortisation expense is charged to selling and administrative expenses. Other
intangibles with an indefinite useful life are carried at cost less
impairment. These are other intangibles for which the estimated useful life is
indefinite. The carrying value of intangible assets is reviewed for impairment
whenever events or changes in circumstances indicate the carrying value may
not be recoverable.
Software
Software comprises internally generated software development. Research
expenditure is charged to income in the year in which it is incurred.
Development expenditure is charged to income in the year it is incurred unless
it meets the recognition criteria of IAS 38 Intangible Assets to be
capitalised as an intangible asset. Following initial recognition of the
development expenditure as an asset, the asset is carried at cost less any
accumulated amortisation and impairment losses. Amortisation begins when
development is complete, and the asset is available for use. These assets are
considered to have finite useful lives and are amortised on a straight line
basis over the expected useful economic life of the assets, which is
considered to be 5 to 15 years. Amortisation expense is charged to selling and
administrative expenses. The carrying value of intangible assets is reviewed
for impairment whenever events or changes in circumstances indicate the
carrying value may not be recoverable.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
2. Accounting policies (continued)
2.12 Property, plant and equipment
Property, plant and equipment is carried at cost less accumulated depreciation
and provision for impairment. Depreciation is calculated to write down the
cost of the assets less estimated residual value over its expected useful life
on a straight line basis as follows:
Freehold property 50 years
Freehold improvements 10 years
Leasehold improvements Over the life of the lease
Plant and machinery 15 years
Fixtures and fittings 5-15 years
Office and computer equipment 3 years for computer equipment and 5 years for all other office equipment
Motor vehicles 3 years
Depreciation expense is charged to selling and administrative expenses. Any
gain or loss arising on the derecognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying amount of the
asset) is included in the Statement of Profit or Loss in the period that the
asset is derecognised.
2.13 Lease accounting
The Group assesses at contract inception whether a contract is, or contains, a
lease. That is, if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration.
Group as a lessee
The Group applies a single recognition and measurement approach for all
leases, except for short-term leases and leases of low-value assets. As part
of the measurement approach, the Group uses its incremental borrowing rate
which is adjusted by both property type and geography. The Group recognises
lease liabilities to make lease payments and right-of-use assets representing
the right to use the underlying assets.
i) Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease
(i.e. the date the underlying asset is available for use). Right-of-use assets
are measured at cost, less any accumulated depreciation and impairment losses,
and adjusted for any remeasurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities recognised,
initial direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received. Right-of-use assets are
depreciated on a straight line basis over the shorter of the lease term and
the estimated useful lives of the assets, as follows:
Right-of-use-assets Shorter of lease term and estimated useful life (3 to 15 years)
If ownership of the leased asset transfers to the Group at the end of the
lease term or the cost reflects the exercise of a purchase option,
depreciation is calculated using the estimated useful life of the asset. The
right-of-use assets are also subject to impairment. Refer to the accounting
policies in the Impairment of non-financial assets section.
ii) Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities
measured at the present value of lease payments to be made over the lease
term. The lease payments include fixed payments (including in substance fixed
payments) less any lease incentives receivable, variable lease payments that
depend on an index or a rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include the exercise price of a
purchase option reasonably certain to be exercised by the Group and payments
of penalties for terminating the lease, if the lease term reflects the Group
exercising the option to terminate.
Variable lease payments that do not depend on an index or a rate are
recognised as expenses (unless they are incurred to produce inventories) in
the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses its
incremental borrowing rate (adjusted by both property type and geography) at
the lease commencement date because the interest rate implicit in the lease is
not readily determinable. After the commencement date, the amount of lease
liabilities is increased to reflect the interest charge and reduced for the
lease payments made. In addition, the carrying amount of lease liabilities is
remeasured if there is a modification that does not increase the scope of the
lease, a change in the lease term, a change in the lease payments (e.g.
changes to future payments resulting from a change in an index or rate used to
determine such lease payments) or a change in the assessment of an option to
purchase the underlying asset. A lease modification is accounted for as a
separate lease where the modification increases the scope of the lease, and
the lease consideration increases by an amount reflecting the stand-alone
price for the increase in scope.
The Group's lease liabilities are included in interest-bearing loans and
borrowings (note 17).
iii) Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term
leases of machinery and equipment (i.e. those leases that have a lease term of
12 months or less from the commencement date and do not contain a purchase
option). It also applies the lease of low-value assets recognition exemption
to leases of office equipment that are considered to be low value. Lease
payments on short-term leases and leases of low-value assets are recognised as
an expense on a straight line basis over the lease term.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
2. Accounting policies (continued)
2.14 Impairment of non-financial assets
The carrying amounts of the Group's relevant assets are reviewed at each
year-end date to determine whether there is any indication of impairment, and
if an indicator is present the asset is tested for impairment. For goodwill
and intangible assets that have an indefinite useful life, an impairment test
is also performed each year-end. If an impairment test is required, the Group
estimates the asset's recoverable amount. An asset's recoverable amount is the
higher of its fair value less costs of disposal and its value in use. An
impairment is present if the recoverable amount is less than the carrying
value of the asset. Impairment losses are recognised in the Statement of
Profit or Loss in those expense categories consistent with the function of the
impaired asset. Refer to notes 11 and 12 for further details.
2.15 Inventories
Inventories are stated at the lower of cost and net realisable value. The
cost of inventories consists of all costs of purchase, costs of design and
other costs incurred in bringing the inventory to its first point of sale
location and condition. Inventories are valued at weighted average cost,
including freight to warehouse and duty. Net realisable value is based on
estimated selling price less any costs expected to be incurred to completion
or disposal.
2.16 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of
one entity and a financial liability or equity instrument of another entity.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is
reported in the Consolidated Balance Sheet if there is a currently enforceable
legal right to offset the recognised amounts and there is an intention to
settle on a net basis, to realise the assets, and to settle the liabilities
simultaneously.
Categorisation of inputs for fair value measurements
Assets and liabilities held at fair value are categorised into levels that
have been defined according to IFRS 13 'Fair Value Measurement' measurement
hierarchy as follows:
· quoted prices (unadjusted) in active markets for identical assets
or liabilities (Level 1);
· inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (that is, as prices) or
indirectly (that is, derived from prices) (Level 2); and
· inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (Level 3).
The fair value of derivatives are calculated using valuation models to
determine the fair values based on observable market curves such as forward
foreign exchange rates, discounted back to present value using risk free
interest rates. The impacts of counterparty credit, volatility and currency
basis are also considered as part of the fair valuation where appropriate.
All financial instruments that are held at fair value use Level 2 inputs
except for equity investments which use Level 3 inputs. Furthermore, under
IFRS 9, cost has been used as the best estimate for fair value for equity
investments due to insufficient recent information available to measure fair
value.
2.17 Financial assets
Recognition and derecognition
Purchases and sales of financial assets are recognised on trade date being the
date on which the Group commits to purchase or sell the asset. Financial
assets are derecognised when the rights to receive cash flows from the
financial assets have expired or have been transferred and the Group has
transferred substantially all the risks and rewards of ownership.
Investments
Equity investments that are not held for trading have been irrevocably
designated as fair value through other comprehensive income. Subsequent to
initial recognition at fair value plus transaction costs, these assets are
recorded at fair value at each period end with the movements recognised in
other comprehensive income until derecognition or impaired. On derecognition,
the cumulative gain or loss previously recognised in other comprehensive
income is never recycled to the income statement. Dividends on financial
assets at fair value through other comprehensive income are recognised in the
income statement when the entity's right to receive payment is established.
Equity investments are recorded in non-current assets unless they are expected
to be sold within one year.
Trade and other receivables
Trade receivables are assessed under IFRS 9 and measured at amortised cost
using the effective interest rate method. The Group recognises an allowance
for expected credit losses (ECLs) for all debt instruments not held at fair
value through profit or loss (FVPL). The most significant financial assets of
the Group are its cash and trade receivables. ECLs are based on the difference
between the contractual cash flows due in accordance with the contract and all
the cash flows that the Group expects to receive, discounted at an
approximation of the original effective interest rate.
Cash and cash equivalents
Cash and cash equivalents primarily comprise cash held within bank accounts,
Money Market Funds (MMFs) and bank term deposits maturing less than three
months from inception. All cash is held short term in highly liquid
investments that are readily convertible to a known amount of cash and are
subject to an insignificant risk of changes in value.
Included within cash and cash equivalents are debit and credit card payments
made by customers which are receivable from card acquiring financial
institutions, and cash in transit from various payment processing
intermediaries that provide receipting services to the Group.
All cash and cash equivalents are measured at amortised cost with the
exception of MMFs which are held at fair value through profit or loss.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
2. Accounting policies (continued)
2.17 Financial assets (continued)
Summary of the Group's financial assets:
Financial asset IFRS 9 classification
Investments Fair value through other comprehensive income.
Trade and other receivables excluding prepayments and accrued income Amortised cost.
Derivative financial assets Fair value through other comprehensive income.
Cash and cash equivalents Amortised cost, except for cash amounts held within Money Market Funds which
are held at fair value through profit or loss.
2.18 Financial liabilities
The Group classifies and measures all of its non-derivative financial
liabilities at amortised cost.
Initial recognition
Financial liabilities are classified according to the substance of the
contractual arrangements entered into.
Derecognition
A financial liability is derecognised when the obligation under the liability
is discharged or cancelled or expires. When an existing financial liability is
replaced by another from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified, such an
exchange or modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in the
respective carrying amounts is recognised in the Statement of Profit or Loss.
Trade and other payables
Trade payables are obligations to pay for goods or services that have been
acquired in the course of ordinary business from suppliers. Accounts payable
are classified as current liabilities if payment is due within one year or
less. If not, they are presented as non-current liabilities. Trade payables
are recognised initially at fair value and subsequently held at amortised cost
using the effective interest rate method.
Summary of the Group's financial liabilities:
Financial liability IFRS 9 classification
Bank debt Amortised cost.
Bank interest Amortised cost.
Lease liabilities Amortised cost.
Derivative financial instruments Fair value through other comprehensive income.
Trade and other payables excluding non-financial liabilities Amortised cost.
2.19 Derivative financial instruments and hedging activities
The Group uses foreign exchange forward contracts to hedge its foreign
currency risks. Such derivative financial instruments are initially recognised
at fair value on the date a derivative contract is entered into and are
subsequently remeasured at fair value. The method of recognising the resulting
gain or loss depends on whether the derivative is designated as a hedging
instrument, and if so, the nature of the item being hedged.
Gains or losses arising from changes in fair value related to derivatives held
in a cash flow hedge relationship are recognised in other comprehensive
income/(expense) and deferred in the hedging reserve to the extent that the
hedges are deemed effective. Amounts are transferred to the income statement
in the same period in which the hedged risk affects the income statement and
against the same line item.
The Group designates foreign exchange derivative hedges on a full forward or
spot basis. Where only the spot element of a foreign exchange derivative is
designated, the cost of hedging election is applied to the forward points with
fair value movements recognised in other comprehensive income and released to
profit or loss depending on the nature of the underlying hedged item.
The Group performs regular hedge effectiveness testing. For cash flow hedges
where the forecast transaction is no longer expected to occur, hedge
accounting is discontinued, and all accumulated gains or losses held in the
hedging reserve are immediately recognised in profit or loss. Where hedge
accounting is discontinued as a result of expiry, disposal or termination of
the derivative instrument (and where the hedge relationship was deemed to be
effective), accumulated gains or losses up to the point of discontinuation are
held in the hedging reserve and released to profit or loss in line with the
hedged item.
Derivative financial instruments consist of foreign currency exchange forward
contracts, which are categorised within Level 2 under the IFRS 13 measurement
hierarchy (refer to note 2.16 for further detail on fair value level
categorisation).
The full fair value of derivatives are classified as a non-current asset or
liability if the remaining maturity of the derivatives are more than 12 months
and as a current asset or liability if the maturity of the derivatives are
less than 12 months.
2.20 Borrowings
Borrowings are recognised initially at fair value, net of transaction costs
incurred, and subsequently carried at amortised cost using the effective
interest rate method so that any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in the Statement of
Profit or Loss over the period of the borrowings. Details of the Group's
borrowings are included in note 17.
Borrowing costs
The Group expenses borrowing costs in the period the costs are incurred. Where
borrowing costs are attributable to the acquisition, construction or
production of a qualifying asset, such costs are capitalised as part of the
specific asset and amortised over the estimated useful life of the asset.
Details of the Group's borrowings are included in note 17.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
2. Accounting policies (continued)
2.21 Ordinary share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
Where the Company purchases any of its own equity instruments, for example,
pursuant to the share buyback programme, the consideration paid, including any
directly attributable incremental costs, is deducted from equity attributable
to the owners of the Company. The repurchased shares are recognised as
treasury shares until the shares are cancelled. The programme concluded on 19
December 2023.
2.22 Segmental analysis
IFRS 8 'Operating Segments' requires operating segments to be determined by
the Group's internal reporting to the Chief Operating Decision Maker (CODM).
The CODM has been determined to be both the CEO and CFO, who receive
information on this basis of the Group's revenue in key geographical regions
based on the Group's management and internal reporting structure. The CODM
assesses the performance of geographical segments based on a measure of
revenue and EBITDA(1). To increase transparency the Group also includes
additional voluntary disclosure analysis of global revenue within different
operating channels.
2.23 Pension arrangements
The Group provides pension benefits which include both defined benefit and
defined contribution arrangements.
Defined contribution pension schemes
For defined contribution schemes the amount charged to the Statement of Profit
or Loss represents the contributions payable to the plans in the accounting
period. Differences between contributions payable in the period and
contributions actually paid are shown as either accruals or prepayments in the
Balance Sheet.
Defined benefit pension scheme
The Group operates a defined benefit pension scheme, which requires
contributions to be made to separately administered funds for administration
expenses. The Group did not make any contributions to the scheme in the year
(FY23: £nil). The UK defined benefit scheme was closed to new members on 6
April 2002, from which time membership of a defined contribution plan was
available. It was then closed to all future accrual for all existing members
on 31 January 2006. A valuation of the Plan is carried out at least once every
three years to determine whether the Statutory Funding Objective is met. The
last valuation was carried out at 30 June 2022, the next valuation is due at
30 June 2025. No asset is recognised in the Balance Sheet in respect of
defined benefit pension plans due to the uncertainty over the Group's right to
a refund of the surplus from the scheme as set out in note 2.26. The defined
benefit obligation is calculated annually by independent actuaries using the
projected unit credit method. The present value of the defined benefit
obligation is determined by discounting the estimated future cash outflows
using interest rates of high-quality corporate bonds that are denominated in
the currency in which the benefits will be paid, and that have terms to
maturity approximating to the terms of the related pension obligation.
Past-service costs are recognised immediately in income.
The net interest cost is calculated by applying the discount rate to the net
balance of the defined benefit obligation and the fair value of plan assets.
The net interest cost is limited by the asset ceiling. When occurring, this
cost is included in employee benefit expense in the Statement of Profit or
Loss. Actuarial gains and losses arising from experience adjustments and
changes in actuarial assumptions are charged or credited to equity in other
comprehensive income in the period in which they arise.
2.24 Share Incentive Plan (SIP) Trusts
The Group operates two SIP Trusts for the benefit of its employees. Under
accounting standard IFRS 10 Consolidated Financial Statements, control for
accounting purposes has a different test threshold than under a legal basis
and as a result the Group's SIP Trusts are deemed to be under the control of
Dr. Martens plc. The Trust deed for the Dr. Martens plc UK Share Incentive
Plan Trust was adopted by the Board on 10 September 2021.
2.25 Share-based payments and share schemes
The Group provides benefits to employees in the form of share-based payment
transactions, whereby employees render services as consideration in exchange
for equity instruments ('equity-settled transactions').
The cost of equity-settled transactions is measured by reference to the fair
value of the equity instruments at the date on which they are granted and is
recognised as an expense over the vesting period, which ends on the date the
relevant employee becomes fully entitled to the award. The fair value is
calculated using an appropriate option pricing model and takes into account
the impact of any market performance conditions. The impact of non-market
performance conditions is not considered in determining the fair value at the
date of grant. Vesting conditions which relate to non-market conditions are
allowed for in the assumptions used for the number of options expected to
vest. The level of vesting is reviewed at each Balance Sheet date and the
charge adjusted to reflect actual and estimated levels of vesting. The cost of
share-based payment transactions is recognised as an expense over the vesting
period of the awards, with a corresponding increase in equity. Further details
of share-based awards granted in the year can be found in note 26.
A proportion of the annual Executive Bonus Scheme is settled in the form of
purchased Parent Company shares. This is accounted for as a cash-settled
scheme as although participants received equity, it is driven by a cash amount
that is paid and converted into shares at a point in time. The proximity of
the date of communication of the bonus to when the shares are received means
that there would be minimal difference between cash- and equity-settled
treatment.
(1. Alternative Performance Measure (APM) as defined in the Glossary on pages
66 and 67.)
( )
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
2. Accounting policies (continued)
2.26 Significant judgements and estimates
The preparation of the Group's financial statements in conforming with IFRS
requires management to make judgements, estimates and assumptions that affect
the application of policies and reported amounts in the financial statements.
These judgements and estimates are based on management's best knowledge of the
relevant facts and circumstances. However, the nature of estimation means that
actual outcomes could differ from those estimates. Information about such
judgements and estimation is contained in the accounting policies and/or notes
to the financial statements and the key areas are summarised below:
Key judgements
The following judgement has had the most significant effect on amounts
recognised in the financial statements:
Defined benefit scheme surplus
The Group acknowledges that the recognition of pension scheme surplus is an
area of accounting judgement, which depends on the interpretation of the
Scheme Rules and the relevant accounting standards including IAS 19 and IFRIC
14. The surplus under the scheme is not recognised as an asset benefitting the
Group on the Balance Sheet, as the Group believes there is uncertainty in
relation to the recoverability of any surplus, which is therefore unlikely to
derive any economic benefits from that surplus. In the Group's view there is
uncertainty over whether the Scheme Rules provide the Group with an
unconditional right to a refund of the surplus from the scheme due to
third-party discretionary investment powers which could use up any surplus
prior to wind-up. Consistent with previous years, given this uncertainty, the
Group has applied an asset ceiling to the pension scheme surplus of zero. As
such, an asset ceiling has been applied to the Balance Sheet, and the net
surplus of £9.1m (FY23: £11.1m) has not been recognised on the Balance
Sheet.
The net surplus has been capped to £nil (FY23: £nil). The key sensitivities
of the defined benefit obligation to the actuarial assumptions are shown in
note 29.
Other areas of judgement and accounting estimates
The Consolidated Financial Statements include other areas of judgement and
accounting estimates. While these areas do not meet the definition under IAS 1
of significant accounting estimates or critical accounting judgements, the
recognition and measurement of certain material assets and liabilities are
based on assumptions and/or are subject to longer-term uncertainties. The
other areas of judgement and accounting estimates are listed below:
Judgements
Determining the lease term of contracts with renewal and termination options -
Group as lessee
The Group determines the lease term as the non-cancellable term of the lease,
together with any periods covered by an option to extend the lease if it is
reasonably certain to be exercised, or any periods covered by an option to
terminate the lease, if it is reasonably certain not to be exercised.
The Group has several lease contracts that include extension and termination
options. The Group applies judgement in evaluating whether it is reasonably
certain whether or not to exercise the option to renew or terminate the lease.
That is, it considers all relevant factors that create an economic incentive
for it to exercise either the renewal or termination. After the commencement
date, the Group reassesses the lease term if there is a significant event or
change in circumstances that is within its control and affects its ability to
exercise or not to exercise the option to renew or to terminate (e.g.
construction of significant leasehold improvements or significant
customisation to the leased asset).
The Group included the renewal period as part of the lease term for leases of
plant and machinery with shorter non-cancellable periods (i.e. three to five
years). The Group typically exercises its option to renew these leases because
there will be a significant negative effect on production if a replacement
asset is not readily available. The renewal periods for leases of leasehold
property with longer non-cancellable periods (i.e. 10 to 15 years) are not
included as part of the lease term, unless there is an economic incentive to
extend the lease, as these are not reasonably certain to be exercised.
Furthermore, the periods covered by termination options are included as part
of the lease term only when they are reasonably certain not to be exercised.
Sources of estimation uncertainty and assumptions
The following estimates are dependent upon assumptions which could change in
the next financial year and have an effect on the carrying amount of assets
and liabilities recognised at the Balance Sheet date:
Inventory net realisable value and provisions
The assessment of the valuation of inventory requires the determination of net
realisable value. Sales prices, patterns and other assumptions are reviewed to
estimate net realisable value. Inventory provisioning requires significant
judgement on which inventory lines should be classed as obsolete. Inventory
age, historic sales patterns and trading forecasts are used when classifying
inventory lines to be provided against.
Uncertain tax positions
The Group recognises liabilities for anticipated tax issues based on estimates
of whether additional taxes will be due. Where the final tax outcome of these
matters is different from the amounts that were initially recorded, such
differences will impact the current and deferred tax assets and liabilities in
the period in which the determination is made. Management is required to
determine the amount of deferred tax assets that can be recognised, based upon
the likely timing and level of future taxable profits together with an
assessment of the effect of future tax planning strategies (see notes 8 and
22). In addition, the assessment of uncertain tax positions is based on
management's interpretation of relevant tax rules and decided cases, external
advice obtained, the statute of limitations, the status of the negotiations
and past experience with tax authorities. In evaluating whether a provision is
needed it is assumed that tax authorities have full knowledge of the facts and
circumstances applicable to each issue.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
2. Accounting policies (continued)
2.26 Significant judgements and estimates (continued)
Carrying value of non-financial assets
The Group assesses at each reporting date whether there is an indication that
an asset may be impaired. If any indication exists, or when annual impairment
testing for an asset is required, the Group performs an impairment test and
estimates the asset's recoverable amount. An asset's recoverable amount is the
higher of its fair value less costs of disposal and its value in use. An
impairment is present if the recoverable amount is less than the carrying
value of the asset.
The recoverable amount is determined for an individual asset, unless the asset
does not generate cash inflows that are largely independent of those from
other assets or groups of assets. When the carrying amount of an asset or CGU
exceeds its recoverable amount, the asset is considered impaired and is
written down to its recoverable amount. If assessing value in use, estimates
of future cash flows are discounted to present value using pre-tax discount
rates derived from risk-free rates based on long-term government bonds,
adjusted for risk factors such as region and market risk in the territories in
which the Group operates and the time value of money. The future cash flows
are then extended into perpetuity using long-term growth rates. If determining
fair value less costs of disposal, recent market transactions are considered.
If no such transactions can be identified, an appropriate valuation model is
used. These calculations are corroborated by valuation multiples, quoted share
prices for publicly traded companies or other available fair value indicators.
For details of relevant non-financial assets, see notes 11 and 12.
Defined benefit pension scheme assumption
Determining the fair value of the defined benefit pension scheme, which
relates to the pension of the Group, requires assumptions to be made by
management and the Group's independent qualified actuary around the actuarial
valuations of the scheme's assets and liabilities. For details see note 29.
Leases - estimating the incremental borrowing
rate
The Group cannot readily determine the interest rate implicit in the lease;
therefore, it uses its incremental borrowing rate (IBR) to measure lease
liabilities. The IBR is the rate of interest that the Group would have to pay
to borrow over a similar term, and with a similar security, the funds
necessary to obtain an asset of a similar value to the right-of-use asset in a
similar economic environment. The IBR therefore reflects what the Group 'would
have to pay', which requires estimation when no observable rates are available
(such as for subsidiaries that do not enter into financing transactions) or
when they need to be adjusted to reflect the terms and conditions of the lease
(for example, when leases are not in the subsidiary's functional currency).
The Group estimates the IBR using observable inputs (such as market interest
rates) when available and is required to make certain entity-specific
estimates (such as the subsidiary's stand-alone credit rating). The IBR is
reassessed when there is a reassessment of the lease liability or a lease
modification.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
3. Segmental analysis
FY24 FY23
£m £m
Revenue by geographical market(1)
EMEA 431.8 443.0
Americas 325.8 428.2
APAC 119.5 129.1
Total revenue 877.1 1,000.3
1. Revenue by geographical
market represents revenue from external customers; there is no inter-segment
revenue.
FY24 FY23
£m £m
EBITDA(2) by geographical market
EMEA 140.8 146.1
Americas 64.4 100.1
APAC 31.7 33.8
Support costs (39.4) (35.0)
EBITDA(2) 197.5 245.0
Depreciation, amortisation and impairment (21.0) (22.6)
Depreciation and impairment of right-of-use assets (51.3) (35.5)
Foreign exchange losses (4.2) (10.7)
Other gains 1.2 -
Depreciation, amortisation, impairment, foreign exchange losses and other (75.3) (68.8)
gains
Finance income and expense (29.2) (16.8)
Profit before tax 93.0 159.4
2. Alternative Performance Measure 'APM' as defined in the Glossary on pages
66 and 67.
Additional revenue analysis
The Group derives its revenue in geographical
markets from the following sources:
FY24 FY23
£m £m
Revenue by channel
Ecommerce 276.3 279.0
Retail 256.8 241.7
Total DTC revenue 533.1 520.7
Wholesale 344.0 479.6
Total revenue 877.1 1,000.3
FY24 FY23
£m £m
Non-current assets
EMEA(1) 153.4 143.3
Americas 92.2 72.6
APAC 17.7 15.4
Goodwill 240.7 240.7
Deferred tax 11.2 11.8
Total non-current assets 515.2 483.8
1. Included in the EMEA non-current assets is £83.9m (FY23: £79.4m) in
relation to the UK legal entities.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
4. Expenses analysis
Profit before tax is stated after charging and crediting:
Note FY24 FY23
£m £m
Selling and administrative expenses
Staff costs 6 155.8 143.8
Operating costs 221.9 229.3
377.7 373.1
Amortisation 11 5.8 8.4
Depreciation 12 15.2 13.6
Depreciation of right-of-use assets 12 51.3 32.2
Impairment 12 - 0.6
Impairment of right-of-use assets 12 - 3.3
Foreign exchange losses 4.2 10.7
Other gains (1.2) -
Depreciation, amortisation, impairment, foreign exchange losses and other 75.3 68.8
gains
Total selling and administrative expenses 453.0 441.9
5. Auditors' remuneration
FY24 FY23
£m £m
Audit services in respect of the financial statements of the Parent Company 0.8 0.6
and consolidation
Audit services in respect of the financial statements and of the financial 1.5 1.1
statements of subsidiary companies
Other non-audit related services 0.2 0.1
2.5 1.8(1)
1. FY23 auditor's remuneration
of £2.1m disclosed in the Audit and Risk Committee Report on page 141 of the
Annual Report is different to this as it includes additional fees relating to
the FY23 audit which were agreed and have been incurred as an accounting
expense in FY24.
6. Staff costs
The aggregate payroll costs were as follows:
FY24 FY23
£m £m
Wages and salaries 126.7 117.5
Social security costs 14.2 13.4
Pension costs 5.4 4.7
Other benefits(1) 9.5 8.2
155.8 143.8
1. Includes share-based payments of £4.0m (FY23: £0.5m).
For details of remuneration relating to Directors, please refer to the
Directors' Remuneration Report on pages 119 to 133 of the Annual Report.
The monthly number of employees (including Directors) employed by the Group
during the year was:
FTE(1) Average(2)
As at 31 March For the year ended 31 March
2024 2023 2024 2023
No. No. No. No.
EMEA 1,044 951 1,853 1,615
Americas 599 580 819 768
APAC 385 468 553 484
Global support functions 602 592 600 594
2,630 2,591 3,825 3,461
1. FTE (Full Time Equivalent) is calculated by dividing the employee's
contracted hours by the Group's standard full time contract hours.
2. Average is the average actual employees of the Group during the year
calculated on a monthly basis.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
7. Finance expense
FY24 FY23
£m £m
Bank debt and other charges 22.3 12.7
Interest on lease liabilities 8.6 4.8
Amortisation of bank loan issue costs 1.2 1.2
Other interest charges 0.1 -
Total financing expense 32.2 18.7
8. Tax expense
The Group calculates the tax expense for the year using the tax rate that
would be applicable to the expected total annual earnings. The major
components of tax expense in the Consolidated Statement of Profit or Loss are:
FY24 FY23
£m £m
Current tax
Current tax on UK profit for the year 17.2 28.1
Adjustment in respect of prior years (0.6) (1.7)
Current tax on overseas profits for the year 6.4 4.3
23.0 30.7
Deferred tax
Origination and reversal of temporary differences (0.8) (1.0)
Adjustment in respect of prior years 1.6 0.8
0.8 (0.2)
Total tax expense in the Consolidated Statement of Profit or Loss 23.8 30.5
Other Comprehensive Income
Tax in relation to unexercised share options (0.5) -
Tax in relation to cash flow hedges 0.7 (0.2)
Total tax expense in the Consolidated Statement of Comprehensive Income 24.0 30.3
FY24 FY23
£m £m
Factors affecting the tax expense for the year:
Profit before tax 93.0 159.4
Profit before tax multiplied by standard rate of UK corporation tax of 25% 23.3 30.3
(FY23: 19%)
Effects of:
Non-deductible expenses 0.2 0.2
Effect of change in UK tax rate - 0.1
Share-based payments 0.3 0.1
Difference in foreign tax rates (0.8) 0.8
Other adjustments (0.2) (0.1)
Adjustments in respect of prior years(1) 1.0 (0.9)
Total tax expense in the Consolidated Statement of Profit or Loss 23.8 30.5
Other Comprehensive Income
Tax in relation to unexercised share options (0.5) -
Tax in relation to cash flow hedges 0.7 (0.2)
Total tax expense in the Consolidated Statement of Comprehensive Income 24.0 30.3
Effective tax rate 25.6% 19.1%
1. The adjustments in respect of the prior years are in relation to current
and deferred tax on temporary differences.
Factors that may affect future tax charges
On 20 June 2023, Finance (No.2) Act 2023 was substantively enacted in the UK,
introducing a global minimum effective tax rate of 15% for large groups for
financial years beginning on or after 31 December 2023.
Based on an initial analysis, all territories in which the Group operates are
expected to qualify for one of the safe harbour exemptions such that top-up
taxes should not apply. To the extent that this is not the case there is the
potential for Pillar Two taxes to apply, but these are not expected to be
material.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
9. Earnings per share
The calculation of basic earnings per share is based on the profit
attributable to ordinary shareholders of the Parent Company divided by the
weighted average number of ordinary shares in issue during the year.
Diluted earnings per share is calculated by dividing the profit for the year
attributable to ordinary equity holders of the Parent Company by the weighted
average number of ordinary shares in issue during the year plus the weighted
average number of ordinary shares that would be issued on the conversion of
all dilutive potential ordinary shares into ordinary shares.
FY24 FY23
£m £m
Profit after tax 69.2 128.9
FY24 FY23
No. No.
Weighted average number of shares for calculating basic earnings per share 983.5 1,000.5
(millions)
Potentially dilutive share awards (millions) 2.1 0.7
Weighted average number of shares for calculating diluted earnings per share 985.6 1,001.2
(millions)
FY24 FY23
Earnings per share
Basic earnings per share 7.0p 12.9p
Diluted earnings per share 7.0p 12.9p
During the year to 31 March 2024 the Group repurchased 39.9 million shares.
The cash outflow was £50.5m (including transaction costs of £0.5m) pursuant
to the share buyback scheme that was announced on 14 July 2023 and concluded
on 19 December 2023.
10. Dividends
FY24 FY23
£m £m
Equity dividends on ordinary shares declared and paid during the year
Final dividend paid for FY23: 4.28p (FY22: 4.28p) 42.8 42.8
Interim dividend for FY24: 1.56p (FY23: 1.56p) 15.0 15.6
Total dividends declared and paid during the year 57.8 58.4
Proposed for approval by shareholders at the AGM
(not recognised as a liability at 31 March 2024 or 31 March 2023)
Final dividend for FY24: 0.99p (FY23: 4.28p) 9.5 42.8
Total interim dividend paid and final dividend proposed 24.5 58.4
Dividend as a % of earnings 35% 45%
Dividend per share
Total dividend per share (pence) 2.55p 5.84p
The Board has proposed, subject to shareholder approval, a final dividend of
0.99p (FY23: 4.28p), taking the total dividend for FY24, including the interim
dividend of 1.56p, to 2.55p, a 35% payout ratio. Whilst this is a year-on-year
reduction given the higher payout in FY23 and lower earnings achieved this
year, the 35% payout for FY24 is at the top of the policy range. The Board's
intention is to hold the FY25 dividend flat in absolute terms, before
returning to an earnings payout in line with our dividend policy (of 25% to
35% payout) in FY26 onwards.
Going forwards, the Board is also adopting a consistent approach to setting
the interim dividend, with this dividend set at one-third of the previous
year's total dividend. We are also adjusting the payment dates for the
dividends, to better reflect the trading cash profile of the Group, and
therefore the final dividend will be paid in early October. The final dividend
for FY24 will be paid to shareholders on the register as at 30 August 2024
with payment on 1 October 2024.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
11. Intangible assets
Software intangibles(1) Goodwill Total
£m Other intangibles £m £m
£m
Cost
At 1 April 2022 38.8 1.2 240.7 280.7
Additions 11.8 - - 11.8
Disposals (2.5) - - (2.5)
Reclassifications to right-of-use assets(2) (0.2) - - (0.2)
Reclassifications to property, plant and equipment (0.1) - - (0.1)
Foreign exchange 0.4 - - 0.4
At 31 March 2023 48.2 1.2 240.7 290.1
Additions 10.2 - - 10.2
Disposals (1.0) - - (1.0)
Foreign exchange (0.1) - - (0.1)
At 31 March 2024 57.3 1.2 240.7 299.2
Accumulated amortisation and impairment
At 1 April 2022 18.6 - - 18.6
Charge for the year 8.4 - - 8.4
Disposals (2.4) - - (2.4)
Foreign exchange (0.1) - - (0.1)
At 31 March 2023 24.5 - - 24.5
Charge for the year 5.7 0.1 - 5.8
Disposals (1.0) - - (1.0)
Foreign exchange (0.2) 0.1 - (0.1)
At 31 March 2024 29.0 0.2 - 29.2
Net book value
At 31 March 2024 28.3 1.0 240.7 270.0
At 31 March 2023 23.7 1.2 240.7 265.6
1. Software intangible additions in the year of £10.2m (FY23:
£11.8m) include permanent employee staff costs capitalised of £0.8m (FY23:
£0.6m).
2. Relates to a reclassification of assets to right-of-use
assets in relation to key money.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
11. Intangible assets (continued)
Goodwill impairment assessment
Goodwill is required to be tested for impairment on an annual basis by
estimating the asset's recoverable amount. An asset's recoverable amount is
the higher of its fair value less costs of disposal and its value in use. An
impairment is present if the recoverable amount is less than the carrying
value of the asset. The recoverable amount is estimated for goodwill with
reference to the cash generating units (CGUs) to which goodwill was originally
allocated and each of these CGUs has been separately assessed and tested. The
CGUs were agreed by the Directors as the geographical regions in which the
Group operates. These regions are the lowest level at which goodwill is
monitored and represent identifiable operating segments. There have been no
changes to the composition of the Group's CGUs during the period.
The aggregate carrying amount of goodwill allocated to each CGU was as
follows:
FY24 FY23
£m £m
EMEA 66.6 66.6
Americas 114.1 114.1
APAC 60.0 60.0
240.7 240.7
All CGUs were tested for impairment. No impairment charge was made in the
current year (FY23: £nil).
Judgements, assumptions and estimates
The results of the Company's impairment tests are dependent upon estimates and
judgements made by management. All CGUs' recoverable amounts are measured
using a value in use calculation. The value in use calculation uses cash flow
forecasts based on financial projections reviewed by the Board covering a
five-year period (pre-perpetuity). The forecasts are based on annual budgets
and strategic projections representing the best estimate of future
performance. Management considers forecasting over this period to
appropriately reflect the business cycle of the CGUs. These cash flows are
consistent with those used to review going concern and viability, however, are
required by IAS 36 to be adjusted for use within an impairment review to
exclude new retail development to which the Group is not yet committed.
In determining the value in use of CGUs it is necessary to make a series of
assumptions to estimate the present value of future cash flows. The following
key assumptions have been made by management reflecting past experience and
are consistent with relevant external sources of information.
Operating cash flows
The main assumptions within the forecast operating cash flows include the
achievement of future growth in ecommerce, retail and wholesale channels,
sales prices and volumes (including reference to specific customer
relationships and product lines), raw material input costs, the cost structure
of each CGU, the impact of foreign currency rates upon selling price and cost
relationships and the levels of capital expenditure required to support each
sales channel.
Pre-tax risk adjusted discount rates
Future cash flows are discounted to present value using pre-tax discount rates
derived from risk-free rates based on long-term government bonds, adjusted for
risk factors such as region and market risk in the territories in which the
Group operates and the time value of money. Consistent with the 2019 IFRS IASB
Staff Paper, post-tax discount rates and post-tax cash flows are used as
observable inputs, and then the pre-tax discount rates are calculated from
this to comply with the disclosure requirements under IAS 36.
The pre-tax risk adjusted discount rates have been calculated to be 12.7% for
EMEA (FY23: 12.3%), 12.6% for Americas (FY23: 12.5%), and 12.4% for APAC
(FY23: 11.6%).
Long-term growth rates
To forecast beyond the five-year detailed cash flows into perpetuity, a
long-term average growth rate has been used. The long-term growth rates
applied for the regions are 1.9% for EMEA (FY23: 1.9%), 2.2% for Americas
(FY23: 2.2%), and 3.4% for APAC (FY23: 3.5%). The rates used are in line with
geographical forecasts included within industry reports.
Sensitivity analysis
Sensitivity analysis to potential changes in these key assumptions has been
reviewed and there are no reasonably possible changes to key assumptions that
would cause the carrying amount for any CGU to exceed its recoverable amount.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
12. Property, plant and equipment
Freehold property and improvements Leasehold improvements Plant, machinery, fixtures and fittings Office and computer equipment Motor vehicles Total
£m £m £m £m £m £m
Cost
At 1 April 2022 6.5 60.0 4.6 8.3 0.1 79.5
Additions 1.0 19.9 12.7 2.8 - 36.4
Disposals - (5.0) (0.9) (2.4) (0.1) (8.4)
Reclassifications from intangible fixed assets - 0.1 - - - 0.1
Foreign exchange 0.5 1.3 (0.2) - - 1.6
At 31 March 2023 8.0 76.3 16.2 8.7 - 109.2
Additions 0.1 14.7 0.1 1.3 - 16.2
Disposals (0.1) (3.9) - (1.3) - (5.3)
Reclassifications to right-of-use assets - (3.3) - - - (3.3)
Foreign exchange (0.2) (1.8) (0.3) (0.2) - (2.5)
At 31 March 2024 7.8 82.0 16.0 8.5 - 114.3
Accumulated depreciation and impairment
At 1 April 2022 0.4 31.9 3.2 5.6 0.1 41.2
Charge for the year 0.3 10.3 1.0 2.0 - 13.6
Impairment - 0.5 - 0.1 - 0.6
Eliminated on disposal - (5.0) (0.9) (2.4) (0.1) (8.4)
Foreign exchange (0.1) 1.0 0.1 (0.1) - 0.9
At 31 March 2023 0.6 38.7 3.4 5.2 - 47.9
Charge for the year 0.3 11.9 0.8 2.2 - 15.2
Impairment - - - - - -
Eliminated on disposal (0.1) (3.9) - (1.3) - (5.3)
Reclassifications to right-of-use assets - (1.6) - - - (1.6)
Foreign exchange - (1.2) - (0.1) - (1.3)
At 31 March 2024 0.8 43.9 4.2 6.0 - 54.9
Net book value
At 31 March 2024 7.0 38.1 11.8 2.5 - 59.4
At 31 March 2023 7.4 37.6 12.8 3.5 - 61.3
13.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
12. Property, plant and equipment (continued)
Set out below are the carrying amounts of right-of-use assets recognised and
the movements during the year:
Right-of-use assets
£m
Cost or valuation
At 1 April 2022 159.5
Additions(1) 66.3
Reassessments of leases(2) 5.5
Reclassifications from intangible fixed assets 0.2
Disposals (0.8)
Foreign exchange 4.7
At 31 March 2023 235.4
Additions(1) 77.0
Reassessments of leases(2) (4.0)
Reclassifications from property, plant and equipment 3.3
Modifications of leases 10.1
Disposals (10.1)
Foreign exchange (8.8)
At 31 March 2024 302.9
Accumulated depreciation and impairment
At 1 April 2022 54.0
Charge for the year 32.2
Impairment(3) 3.3
Foreign exchange 1.8
At 31 March 2023 91.3
Charge for the year 51.3
Reclassifications from property, plant and equipment 1.6
Disposals (10.0)
Foreign exchange (4.8)
At 31 March 2024 129.4
Net book value
At 31 March 2024 173.5
At 31 March 2023 144.1
1. Additions include £2.0m of
direct costs (FY23: £3.2m) and £2.5m (FY23: £2.7m) in relation to costs of
removal and restoring.
2.Lease reassessments relate to measurement adjustments for rent reviews and
stores that have exercised lease breaks.
3.During FY23, impairment charged was mainly in relation to three stores in
the USA where footfall recovery, in their locality, was weak, and they were
written down to £nil.
Impairment of property, plant and equipment and right-of-use assets
The Group has determined that each retail store is a separate CGU. Each CGU
is assessed for indicators of impairment at the Balance Sheet date and tested
for impairment if any indicators exist. The Group has some leases that meet
the IAS 36 definition of corporate assets, such as offices, as they do not
generate independent cash flows. These are assessed for impairment indicators
and if required to be tested for impairment, are done so using the two-step
impairment process under IAS 36 in which they are allocated to the
Regional-level CGUs as determined for goodwill impairment (note 11). There has
been no change to the way in which CGUs are determined in the period.
Judgements, assumptions and estimates - retail stores
The results of the Company's impairment tests are dependent upon estimates and
judgements made by management. If an indicator of impairment has been
identified, a CGU's recoverable amount is measured using the value in use
method. The value in use calculation uses cash flow forecasts based on
financial projections reviewed by the Board covering a five-year period. The
forecasts are based on annual budgets and strategic projections representing
the best estimate of future performance. Management considers forecasting over
this period to appropriately reflect the business cycle of the CGUs. These
cash flows are consistent with those used to review going concern and
viability, however, are adjusted for relevance to the nature and tenure of the
retail store lease.
If determining the value in use of CGUs it is necessary to make a series of
assumptions to estimate the present value of future cash flows which reflect
past experience and are consistent with relevant external sources of
information.
Operating cash flows - retail stores
If an indicator of impairment has been identified and a CGU's recoverable
amount is required to be estimated, the main assumptions within the forecast
operating cash flows include the achievement of future growth in retail sales,
sales prices and volumes, raw material input costs, the cost structure of each
CGU, the impact of foreign currency rates upon selling price and cost
relationships and the levels of capital expenditure required to support the
associated sales.
Pre-tax risk adjusted discount rate - retail stores
If an indicator of impairment has been identified and a CGU's recoverable
amount is required to be estimated future cash flows are discounted to present
value using a pre-tax discount rate derived from risk-free rates based on
long-term government bonds, adjusted for risk factors such as region and
market risk in the territories in which the Group operates and the time value
of money. Consistent with the 2019 IFRS IASB Staff Paper, a post-tax discount
rate and post-tax cash flows are used as observable inputs, and then the
pre-tax discount rate is calculated from this to comply with the disclosure
requirements under IAS 36. The pre-tax discount rate for the Group has been
calculated to be 12.7% (FY23: 12.3%).
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
12. Property, plant and equipment (continued)
Sensitivity analysis - retail stores
If an indicator of impairment has been identified and a CGU's recoverable
amount is required to be estimated, the results of the Group's impairment
tests are dependent upon estimates and judgements made by management. No
indicators of impairment were identified in FY24 and therefore no recoverable
amount was estimated (FY23: sensitivity analysis to potential changes in key
assumptions were reviewed and there were no reasonably possible changes to key
assumptions that would have caused the carrying amount of any CGU to exceed
its recoverable amount).
13. Inventories
FY24 FY23
£m £m
Raw materials 2.2 2.3
Finished goods 252.4 255.5
Inventories net of provisions 254.6 257.8
FY24 FY23
£m £m
Inventory provision 2.6 2.7
Inventory written off to Consolidated Statement of Profit or Loss 0.9 0.8
The cost of inventories recognised as an expense and included in cost of sales
amounted to £284.3m (FY23: £348.8m). The remainder of total cost of sales of
£301.9m (FY23: £382.2m) relates to freight including shipping out costs.
14. Trade and other receivables
FY24 FY23
£m £m
Trade receivables 55.1 80.6
Less: allowance for expected credit losses (0.8) (1.8)
Trade receivables - net 54.3 78.8
Other receivables 7.7 7.5
62.0 86.3
Prepayments 6.8 6.7
68.8 93.0
All trade and other receivables are expected to be recovered within 12 months
of the year-end date. Due to the short-term nature of the current receivables,
their carrying amount is considered to be the same as their fair value. The
carrying value of trade receivables represents the maximum exposure to credit
risk. For some trade receivables the Group may obtain security in the form of
guarantees, insurances or letters of credit which can be called upon if the
counterparty is in default under the terms. As at 31 March 2024 the amount of
collateral held was £0.3m (FY23: £0.3m).
As at 31 March 2024 trade receivables of £1.9m (FY23: £4.5m) were due over
90 days, trade receivables of £0.7m (FY23: £1.4m) were due between 60-90
days and trade receivables of £52.5m (FY23: £75.0m) were due in less than 60
days. The Group establishes a loss allowance that represents its estimate of
potential losses in respect of trade receivables, where it is deemed that a
receivable may not be recovered, and considers factors which may impact risk
of default.
Where appropriate, we have grouped these receivables with the same overall
risk characteristics. When the receivable is deemed irrecoverable, the
provision is written off against the underlying receivables.
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses (bad debt provision) which uses a lifetime expected loss allowance for
all trade receivables.
To measure expected credit losses (bad debt provision), trade receivables have
been grouped based on customer segment, geographical location, and the days
past due. The expected loss rates are based on the historical credit losses
experienced in previous periods. The rates are adjusted to reflect current and
forward-looking information, including macroeconomic factors, by obtaining and
reviewing relevant market data affecting the ability of customers to settle
the receivables based on their customer segment and geographical location.
Where objective evidence exists that a trade receivable balance may be
impaired, provision is made for the difference between its carrying amount and
the present value of the estimated cash that will be recovered. Evidence of
impairment may include such factors as a customer entering insolvent
administration proceedings.
As at 31 March 2024 trade receivables were carried net of expected credit
losses (bad debt provision) of £0.8m (FY23: £1.8m). The individually
impaired receivables relate mainly to accounts which are outside the normal
credit terms. The ageing analysis of these provisions against trade
receivables is as follows:
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
14. Trade and other receivables (continued)
FY24 FY23
£m £m
Up to 60 days 0.1 0.4
60 to 90 days - 0.1
Over 90 days 0.7 1.3
0.8 1.8
FY24 FY23
£m £m
At 1 April 1.8 0.7
Change in provision for expected credit losses (1.0) 1.1
At 31 March 0.8 1.8
Debtors days 52 52
The carrying amount of the Group's trade and other receivables is denominated
in the following currencies:
FY24 FY23
£m £m
UK Sterling 4.9 4.1
Euro 13.1 28.0
US Dollar 27.4 43.7
Japanese Yen 2.5 1.5
Other currencies 6.4 1.5
54.3 78.8
15. Cash and cash equivalents
FY24 FY23
£m £m
Cash and cash equivalents 111.1 157.5
16. Trade and other payables
FY24 FY23
£m £m
Trade payables 33.0 64.2
Taxes and social security costs 12.2 10.2
Other payables 7.6 5.6
52.8 80.0
Accruals(1) 39.4 47.7
92.2 127.7
1. Included within accruals is the refund liability of £3.9m (FY23: £4.5m)
and deferred income of £2.5m (FY23: £1.8m). The balance of £33.0m (FY23:
£41.4m) consists of accruals for royalties, goods received not invoiced and
other accruals.
All trade and other payables are expected to be settled within 12 months of
the year-end date. Due to the short-term nature of the current payables, their
carrying amount is considered to be the same as their fair value. At 31 March
2024, other payables included £6.3m (FY23: £5.6m) in relation to employment
related payables, mainly the holiday pay accrual.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
17. Borrowings
FY24 FY23
£m £m
Current
Bank interest 8.4 6.0
Lease liabilities (note 28) 47.0 28.1
Total current 55.4 34.1
Non-current
Bank loans (net of unamortised bank fees) 286.3 293.4
Lease liabilities (note 28) 135.3 124.3
Total non-current 421.6 417.7
Total borrowings(1) 477.0 451.8
Analysis of bank loan:
Non-current bank loans (net of unamortised bank fees) 286.3 293.4
Add back unamortised fees 2.3 3.4
Total gross bank loan 288.6 296.8
1. From total borrowings, only bank loans (excluding unamortised bank fees)
and lease liabilities are included in debt for bank loan covenant calculation
purposes.
On 29 January 2021, the Group entered into a New Facilities Agreement,
comprising a new Term Loan B facility of €337.5m (equivalent to £300.0m at
that date) and a new multi-currency revolving credit facility of £200.0m.
These facilities have a maturity date of 2 February 2026. Included within this
agreement is a committed ancillary facility of which £3.4m (FY23: £3.7m) has
been utilised primarily related to landlord bank guarantees.
During the year the Group drew down £30.0m (FY23: £nil) of debt under the
revolving credit facility to support short-term working capital requirements,
and this was fully repaid during the year on 30 November 2023.
The Group value of the bank loan as at 31 March 2024 (excluding unamortised
bank fees and accrued interest) of £288.6m (FY23: £296.8m) is £11.4m lower
(FY23: £3.2m lower) than the amount borrowed on 29 January 2021 due to an
appreciation of the GBP/Euro foreign exchange rate movement. The Group's total
gross bank loan is denominated in Euros and loan repayments will occur in
February 2026.
The Group's total gross bank loan is denominated in the following currencies:
FY24 FY23
£m £m
Euro Term Loan B(1) 288.6 296.8
Total bank loan 288.6 296.8
1. Euro denominated amount €337.5m (FY23: €337.5m).
Loan repayments will occur as follows:
Term Loan
B (Euro)
£m
Year to 31 March
2026 (2 February 2026) (€337.5m) 288.6
Total 288.6
Interest of the Euro Term Loan B is charged with a variable margin depending
on the Group leverage over floating EURIBOR. The weighted total interest rate
for this instrument in the year was 6.6% (FY23: 3.57%).
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
17. Borrowings (continued)
Implementation of alternative benchmark
interest rates
Following the cessation of several 'Inter Bank Offer Rates' (IBORs) the Group
has continued to transition to using alternative benchmark interest rates
where appropriate, with the overall impact assessed as being immaterial.
The Group's existing £200m multi-currency revolving credit facility was
transitioned to allow the continued drawing of GBP and JPY as currencies
fixing against Risk Free Rates (SONIA and TONIA respectively) from LIBOR.
The Group's €337.5m Euro Term Loan B currently fixes against floating
EURIBOR where, following a methodology reform of this benchmark by the
European Money Markets Institute (EMMI) in 2019, no indication has been given
that it is likely to cease in the near future. The Group assesses there to
be no other material impact as part of the reform and has no interest rate
hedge accounting relationships as at 31 March 2024.
Bank loans
FY24 FY23
£m £m
Revolving credit facility utilisation
Guarantees 3.4 3.7
Total utilised facility 3.4 3.7
Available facility (unutilised) 196.6 196.3
Total revolving facility 200.0 200.0
% %
Interest rate charged on unutilised facility 0.90 0.83
The bank loans are secured by a fixed and floating charge over all assets of
the Group.
On 29 January 2021, the Group entered into a £200.0m multi-currency revolving
credit facility available until 2 February 2026.
Fair value measurement
The fair value of the items classified as loans and borrowings is shown above.
The book and fair values of borrowings are deemed to be materially equal.
Movements in bank loans (excluding the accrual and payment of interest) were
as follows:
Cash flows
1 April 2023 New loans Repayment of capital Foreign exchange movement 31 March 2024
£m £m £m £m £m
Euro Term Loan B 296.8 - - (8.2) 288.6
Total borrowings 296.8 - - (8.2) 288.6
Cash flows
1 April 2022 New loans Repayment of capital Foreign exchange movement 31 March 2023
£m £m £m £m £m
Euro Term Loan B 285.6 - - 11.2 296.8
Total borrowings 285.6 - - 11.2 296.8
Net debt(1) reconciliation
The breakdown of net debt(1) was as follows:
FY24 FY23
£m £m
Cash and cash equivalents 111.1 157.5
Bank loans (net of unamortised bank fees) (286.3) (293.4)
Lease liabilities (182.3) (152.4)
Net debt(1) (357.5) (288.3)
1. Alternative Performance Measure 'APM' as defined in the Glossary on pages
66 and 67.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
18. Provisions
Property provisions Total
£m £m
At 1 April 2022 1.9 1.9
Arising during the year 2.7 2.7
Amounts utilised (0.2) (0.2)
At 31 March 2023 4.4 4.4
Arising during the year 2.5 2.5
Amounts utilised (0.4) (0.4)
Foreign exchange (0.2) (0.2)
At 31 March 2024 6.3 6.3
Property provisions relate to the estimated repair and restoration costs for
retail stores at the end of the lease. The provisions are not discounted for
the time value of money as this is not considered materially different from
the current cost.
19. Derivative assets and liabilities
FY24 FY23
£m £m
Assets
Foreign exchange forward contracts - Current 1.5 0.5
Foreign exchange forward contracts - Non-current 0.1 -
Liabilities
Foreign exchange forward contracts - Current (0.1) (1.3)
Foreign exchange forward contracts - Non-current - -
Derivative financial instruments consist of foreign exchange forward
contracts, which are categorised within Level 2 (refer to note 2.16 for
details on fair value hierarchy categorisation). The full fair value of a
derivative is classified as a non-current asset or liability if the remaining
maturity is more than 12 months and as a current asset or liability if the
maturity of the derivative is less than 12 months.
Foreign exchange forward derivatives
The Group takes a holistic approach to foreign exchange risk, viewing
exposures on Group wide net cash flow basis, seeking to maximise natural
offsets wherever possible. Where considered material the Group manages its
exposure to variability in GBP from foreign exchange by hedging highly
probable future cash flows arising in other currencies. The Group's principal
net currency exposures are to EUR, CAD, JPY and USD.
The Group adopts a rolling, layered approach to hedging its operating cash
flows using forward foreign exchange contracts on an 18-month horizon. Other
derivative contracts and longer tenors may be used provided these are approved
by the Board and Audit and Risk Committee. The Group also utilises foreign
exchange derivatives in a hedging relationship to partially hedge the foreign
exchange translation risk (into functional GBP) on its term loan.
The following table represents the nominal amounts and types of derivatives
held as at each Balance Sheet date:
FY24 FY23
Average foreign exchange rate
Cash flow hedges: sell GBP buy EUR 1.1539 1.1225
Cash flow hedges: sell EUR buy GBP 1.1366 1.1381
Derivatives measured at fair value through profit or loss: sell EUR buy GBP 1.1448 -
Nominal amounts
Cash flow hedges: sell GBP buy EUR €m €m
Less than a year 130.0 136.3
More than a year but less than two years - -
Cash flow hedges: sell EUR buy GBP £m £m
Less than a year 66.5 76.0
More than a year but less than two years 2.1 5.8
Derivatives measured at fair value through profit or loss: sell EUR buy GBP £m £m
Less than a year 1.9 -
More than a year but less than two years - -
For hedges of forecast receipts and payments in foreign currencies, the
critical terms of the hedging instruments match exactly with the terms of the
hedged items and, therefore, the Group performs a qualitative assessment of
effectiveness. The fair value of forecast hedge items are assessed to move
materially equally and opposite to continuing cash flow hedge instruments.
Ineffectiveness may arise if the timing of the forecast transaction changes
from what was originally estimated or if there are changes in the credit risk
of the Group or the derivative counterparty. The hedge ratio is 1:1.
If a hedged item is no longer expected to occur, the hedge instruments are
immediately de-designated from a cash flow hedge relationship. Amounts
recognised in relation to de-designated derivatives are released from the
hedging reserve and thereafter movements are classified as fair value through
profit or loss. Amounts de-designated during the year ended 31 March 2024 were
not material.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
19. Derivative assets and liabilities (continued)
(Losses)/gains reclassified from the Consolidated Statement of Comprehensive
Income to the Consolidated Statement of Profit or Loss during the period are
as follows:
FY24 FY23
£m £m
Revenue 1.5 (1.5)
Foreign exchange (losses)/gains (5.4) 4.0
(3.9) 2.5
Derivative financial assets and liabilities are subject to offsetting,
enforceable master netting arrangements with counterparties. However, these
amounts are presented gross on the face of the Balance Sheet as the conditions
for netting specified in IAS 32 'Financial Instruments Presentation' are not
met.
FY24
Gross carrying amounts Amounts not offset Net amounts
£m £m £m
Derivative financial assets 1.6 (0.1) 1.5
Derivative financial liabilities (0.1) 0.1 -
FY23
Gross carrying amounts Amounts not offset Net amounts
£m £m £m
Derivative financial assets 0.5 (0.4) 0.1
Derivative financial liabilities (1.3) 0.4 (0.9)
20. Investments
FY24 FY23
£m £m
Investments 1.0 1.0
On 16 January 2023 the Group made an investment of £1.0m in the share capital
of Generation Phoenix Ltd (GP), a company that specialises in producing a
sustainable alternative to leather and produces a recycled leather product
using part processed offcuts.
21. Financial instruments
IFRS 13 requires the classification of financial instruments measured at fair
value to be determined by reference to the source of inputs used to derive
fair value. The fair values of all financial instruments, except for leases,
in both years are materially equal to their carrying values. All financial
instruments are measured at amortised cost with the exception of derivatives,
cash amounts held within Money Market Funds, and investments in equity
instruments which are measured at fair value. Derivatives and Money Market
Funds are classified as Level 2 under the fair value hierarchy, and
investments in equity instruments as Level 3, which is consistent with that
defined in note 2.16 of the Consolidated Financial Statements for the year
ended 31 March 2024.
31 March 2024
Assets at amortised cost Fair value through other comprehensive income Fair value through profit or loss Total
£m £m £m £m
Assets as per Balance Sheet
Investments - 1.0 - 1.0
Trade and other receivables excluding prepayments and accrued - - 62.0
income
62.0
Derivative financial assets - Current - 1.5 - 1.5
Derivative financial assets - Non-current - 0.1 - 0.1
Cash and cash equivalents 52.2 - 58.9(1) 111.1
114.2 2.6 58.9 175.7
1. A proportion of our cash is invested in high-quality overnight money market
funds to mitigate concentration and counterparty risk.
Liabilities at amortised cost Fair value through other comprehensive income Fair value through profit or loss Total
£m £m £m £m
Liabilities as per Balance Sheet
Bank debt 288.6 - - 288.6
Bank interest - Current 8.4 - - 8.4
Lease liabilities - Current 47.0 - - 47.0
Lease liabilities - Non-current 135.3 - - 135.3
Derivative financial instruments - Current - 0.1 - 0.1
Trade and other payables excluding non-financial liabilities (mainly tax and 77.5 - - 77.5
social security costs)
556.8 0.1 - 556.9
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
21. Financial instruments (continued)
31 March 2023
Assets at amortised cost Fair value through other comprehensive income Fair value through profit or loss Total
£m £m £m £m
Assets as per Balance Sheet
Investments - 1.0 - 1.0
Trade and other receivables excluding prepayments and accrued income - - 86.3
86.3
Derivative financial assets - Current - 0.5 - 0.5
Cash and cash equivalents 86.3 - 71.2(1) 157.5
172.6 1.5 71.2 245.3
1. A proportion of our cash is invested in high-quality overnight money market
funds to mitigate concentration and counterparty risk.
Liabilities at amortised cost Fair value through other comprehensive income Fair value through profit or loss Total
£m £m £m £m
Liabilities as per Balance Sheet
Bank debt 293.4 - - 293.4
Bank interest - Current 6.0 - - 6.0
Lease liabilities - Current 28.1 - - 28.1
Lease liabilities - Non-current 124.3 - - 124.3
Derivative financial instruments - Current - 1.3 - 1.3
Trade and other payables excluding non-financial liabilities (mainly tax and - - 115.7
social security costs)
115.7
567.5 1.3 - 568.8
Group financial risk factors
The Group's activities expose it to a wide variety of financial risks
including liquidity, credit and market risk (including foreign exchange and
interest rate risks). The Group's Treasury policies seek to manage residual
financial risk to within the Board agreed tolerance in a cost-effective manner
and taking advantage of natural offsets that exist or can be created through
its operating activities. Where appropriate the Group uses derivative
financial instruments to hedge certain risk exposures (for example to reduce
the impacts of foreign exchange volatility).
Risk management is carried out by a central Treasury Department under policies
approved by the Board of Directors and the Audit and Risk Committee. Group
Finance and Treasury identifies, evaluates and hedges financial risks in close
cooperation with the Group's Regional operating units. The Board agrees
written principles for overall risk management as well as written policies
covering specific areas such as foreign exchange risk, interest rate risk,
credit risk and liquidity risk. These policies cover the allowable use of
selective derivative financial instruments and investment management processes
for excess liquidity.
Liquidity risk
Cash flow forecasting is regularly performed in the operating entities of the
Group and aggregated by Group Treasury. Treasury monitors rolling forecasts of
the Group's liquidity requirements to ensure that it has sufficient cash to
meet operational needs while maintaining sufficient headroom in its undrawn
committed borrowing facilities at all times so that the Group does not breach
borrowing limits or covenants. Surplus cash held by operating entities over
and above balances required for working capital are transferred to Group
Treasury to be managed centrally. Treasury policy is to invest surplus cash in
high quality, short-term, interest bearing instruments including current
accounts, term deposit and low volatility money market funds.
The Group continually reviews any medium to long-term financing requirements
to ensure cost effective access to funding is available if and when it is
needed (including any debt refinancing).
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
21. Financial instruments (continued)
The table below sets out the contractual maturities (representing undiscounted
contractual cash flows) of loans, borrowings and other financial liabilities:
At 31 March 2024
Up to 3 months Between 3 & 12 months Between 1 & 5 years More than 5 years Total
£m £m £m £m £m
Bank loans - Principal - - 288.6 - 288.6
Bank loans - Interest 10.7 11.6 22.3 - 44.6
Total bank loans 10.7 11.6 310.9 - 333.2
Lease liabilities 14.0 39.5 118.5 30.7 202.7
Derivative financial instruments - 0.1 - - 0.1
Trade and other payables excluding non-financial liabilities 77.5 - - - 77.5
102.2 51.2 429.4 30.7 613.5
At 31 March 2023
Up to 3 months Between 3 & 12 months Between 1 & 5 years More than 5 years Total
£m £m £m £m £m
Bank loans - Principal - - 296.8 - 296.8
Bank loans - Interest 7.8 8.6 37.7 - 54.1
Total bank loans 7.8 8.6 334.5 - 350.9
Lease liabilities 8.4 25.9 99.3 39.9 173.5
Derivative financial instruments 0.2 1.1 - - 1.3
Trade and other payables excluding non-financial liabilities 115.7 - - - 115.7
132.1 35.6 433.8 39.9 641.4
Credit risk
Credit risk is managed on a Group basis, except for credit risk relating to
accounts receivable balances. Each local entity is responsible for managing
and analysing the credit risk of their new customers before standard payment
and delivery terms and conditions are offered. Credit risk arises from cash
and cash equivalents, derivative financial instruments, as well as credit
exposures to wholesale and retail customers, including outstanding receivables
and committed transactions. Cash investments and derivative transactions are
only executed with financial institutions who hold an investment grade rating
with at least one of Moody's, Standard & Poor's or Fitch's rating
agencies. The Group's Treasury policy defines strict limits that do not
allow concentration of risk with individual counterparties.
For wholesale customers, risk control assesses the credit quality of the
customer, taking into account its financial position, past experience and
other factors. Individual risk limits are regularly monitored. Sales to
wholesale customers are settled primarily by bank transfer and retail
customers are settled in cash or by major debit/credit cards. The Group has
no significant concentration of credit risk as exposure is spread over a large
number of customers.
Market risk
Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk
arising from the various currency exposures, primarily with respect to the US
Dollar, Euro, Canadian Dollar and Japanese Yen. Foreign exchange risk arises
from future commercial transactions, recognised assets and liabilities and net
investments in overseas operations. Foreign exchange risk arises when future
commercial transactions or recognised assets and liabilities are denominated
in a currency that is not the entity's functional currency.
The Group purchases the vast majority of its inventory from factories in Asia
which are paid in US Dollars. On a net basis, the majority of Group EBITDA is
earned in currencies other than Pounds Sterling. In addition, the Group has
other currency denominated debt and investments in overseas operations whose
net assets are exposed to foreign currency translation risk upon
consolidation.
Cash flow and fair value interest rate risk
The Group's interest rate risk arises from its floating rate bank debt and
cash amounts held. Borrowings issued at fixed rates expose the Group to fair
value interest rate risk. The Group's bank debt borrowings are denominated in
Euros, and incur interest at variable rates subject to floating EURIBOR with a
zero rate floor.
At 31 March 2024, if interest rates on bank borrowings had been 50 basis
points higher or lower with all other variables held constant, the calculated
pre-tax profit for the year would change by £1.5m (FY23: £1.5m).
Capital risk
The Group manages its capital to ensure that entities in the Group will be
able to continue as going concerns while maximising the return to stakeholders
through the optimisation of the debt and equity balances. The Group's overall
strategy remains consistent with that from the past few years.
The capital structure of the Group consists of net debt disclosed in note 17
and equity attributable to equity holders of the parent, comprising issued
ordinary share capital, reserves and retained earnings as disclosed in notes
23 and 24 and the Consolidated Statement of Changes in Equity. The Group's
Board of Directors reviews the capital structure on an annual basis. The Group
is not subject to any externally imposed capital requirement.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
21. Financial instruments (continued)
Foreign currency risk
The Group has analysed the impact of a movement in foreign exchange rate of
the major non-GBP currencies on its EBITDA(1) (all other foreign exchange
rates remaining unchanged) as follows:
10% appreciation of currency FY24 FY23
£m £m
US Dollar 6.1 2.8
Euro 18.5 19.9
Yen 4.3 4.1
1. Alternative Performance Measure 'APM' as defined in the
Glossary on pages 66 and 67.
Note the US Dollar movement is lower as the Group earns US Dollars from its US
business and purchases substantially all inventory in US Dollar, which
provides a degree of natural offsetting. In addition to the above, a 10%
appreciation in Euro against GBP would increase annualised bank loan interest
by £2.2m (FY23: £0.9m) under the terms of the new loan agreement.
22. Deferred taxation
The analysis of deferred tax assets and liabilities is as follows:
FY24 FY23
£m £m
Non-current
Assets 11.2 11.8
Liabilities (2.8) (1.8)
8.4 10.0
The gross movement on the deferred income tax is as follows:
FY24 FY23
£m £m
Credit for the year in the Statement of Comprehensive Income 1.6 0.4
The deferred tax asset provided in the financial statements is supported by
budgets and trading forecasts and relates to the following temporary
differences:
· accelerated capital allowances are the differences between the
net book value of fixed assets and their tax base;
· other temporary differences are the other differences between the
carrying amount of an asset/liability and its tax base that eventually will
reverse;
· unrealised profits in intra-group transactions and expenses;
· trade losses expected to be utilised in future years; and
· deferred tax on share-based payments in relation to the expected
future tax deduction on the exercise of granted share options spread over the
vesting period.
The movement in deferred income tax assets and liabilities during the year is
as follows:
Accelerated capital allowances Unrealised intra-group profits Other temporary differences Tax losses Share-based payments Total
£m £m £m £m £m £m
At 1 April 2022 (2.0) 3.2 7.1 0.6 0.7 9.6
Statement of Profit or Loss (charge)/credit (0.4) 0.1 0.1 (0.4)
0.8 0.2
Credited directly to equity - - 0.2 - - 0.2
Foreign exchange - - - - - -
At 31 March 2023 (2.4) 4.0 7.4 0.7 0.3 10.0
Statement of Profit or Loss (charge)/credit (0.8) 0.5 (0.1) -
(0.4) (0.8)
(Charged)/credited directly to equity - - (0.7) - 0.5 (0.2)
Foreign exchange - (0.3) (0.3) - - (0.6)
At 31 March 2024 (3.2) 3.3 6.9 0.6 0.8 8.4
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
22. Deferred taxation (continued)
Deferred taxation not provided in the financial statements:
FY24 FY23
£m £m
Tax losses(1) 9.1 9.1
1. This is the tax effected amount of losses that have not been provided for
in the financial statements, calculated using the rate at which the losses
would be expected to be used. There is £36.3m (FY23: £36.6m) of gross tax
losses that have not been provided for because they are either capital losses
(which can only be used against future capital gains which we are not
forecasting) or they are non-trade loan relationship losses which can only be
used in the same company (and are in companies we don't expect to have any
loan relationship profits).
The deferred tax assets and liabilities have been measured at the corporation
tax rate expected to apply to the reversal of the timing difference, based on
rates that are enacted or substantively enacted by the end of each reporting
period. There are no material temporary differences associated with
investments in subsidiaries, branches and associates and interests in joint
arrangements, for which deferred tax liabilities have not been recognised.
23. Ordinary share capital
FY24 FY24 FY23 FY23
No. £m No. £m
Authorised, called up and fully paid
Ordinary shares of £0.01 each 961,878,608 9.6 1,000,793,898 10.0
The movements in the ordinary share capital during the year ended 31 March
2024 and 31 March 2023 were as follows:
FY24 FY24 FY23 FY23
No. £m No. £m
At 1 April 1,000,793,898 10.0 1,000,222,700 10.0
Shares issued 953,845 - 571,198 -
Repurchase and cancellation of ordinary share capital (39,869,135) (0.4) - -
At 31 March 961,878,608 9.6 1,000,793,898 10.0
The cost of shares purchased by the SIP Trusts is offset against the profit
and loss account, as the amounts paid reduce the profits available for
distribution by the Company.
During the year ended 31 March 2024 Dr. Martens plc repurchased 39.9 million
ordinary shares for a total consideration of £50.5m, including transaction
costs of £0.5m, as part of a share repurchase programme announced on 1 July
2023. All shares purchased were for cancellation. The repurchased shares
represented 4.1% of ordinary share capital. The number of shares in issue is
reduced where shares are repurchased.
24. Treasury shares
The movements in treasury shares held by the Company during the year ended 31
March 2024 were as follows:
FY24 FY24 FY23 FY23
No. £m No. £m
At 1 April 110,153 - 16,925 -
Repurchase of shares for cancellation 39,869,135 50.0 - -
Cancellation of shares (39,869,135) (50.0) - -
Shares issued for share schemes held in trust 284,770 - 93,228 -
At 31 March 394,923 - 110,153 -
On 14 July 2023 Dr. Martens plc announced a share buyback programme. Treasury
shares existed during the year as a result of the timing delay between the
repurchase of shares under this programme and the subsequent cancellation of
these shares. The programme concluded on 19 December 2023.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
25. Reserves
The following describes the nature and purpose of each reserve within equity:
Reserve Description and purpose
Ordinary share capital Nominal value of subscribed shares.
Hedging reserve Represents the movements in fair value on designated hedging instruments.
Treasury shares This reserve relates to shares held by SIP Trusts as 'treasury shares'. The
shares held by the SIP Trusts were issued directly to the Trusts in order to
satisfy outstanding employee share options and potential awards under the
employee share incentive schemes. The Company issued 284,770 shares directly
to the Trusts during the year and held 394,923 as at 31 March 2024 (31 March
2023: 110,153). This reserve was previously referred to as 'capital reserve -
own shares'. This reserve also included treasury shares repurchased but not
yet cancelled, pursuant to the share buyback programme, which concluded during
FY24.
Capital redemption reserve A non-distributable reserve into which amounts are transferred following the
redemption or purchase of own shares. The reserve was created in order to
ensure sufficient distributable reserves were available for the purpose of
redeeming preference shares in the prior years.
Merger reserve The difference between the nominal value of shares acquired by Dr. Martens plc
(the Parent Company) in the share for share exchange with Doc Topco Limited
and the nominal value of shares issued to acquire them on 11 December 2020.
Foreign currency translation reserve Includes translation gains or losses on translation of foreign subsidiaries'
financial statements from the functional currencies to the presentational
currency.
Retained earnings Retained earnings represent the profits of the Group made in current and
preceding years, net of distributions and equity-settled share-based awards.
Included in retained earnings are distributable reserves.
26. Share-based payments and share schemes
Executive Share Plan - The Dr. Martens Long Term Incentive Plan (LTIP)
Awards of shares to Executive Directors and other senior executives are made
under the Long Term Incentive Plan (LTIP): the Performance Share Plan (PSP)
for the Executive Directors and Global Leadership Team (GLT) and the
Restricted Share Unit Plan (RSU) for GLT direct reports and other employees.
The LTIP is a discretionary share plan under which awards are approved and
granted at the discretion of the Remuneration Committee.
Long Term Incentive Plan - Performance Share Plan (PSP)
Awards of conditional shares are granted to the Executive Directors and GLT.
These awards are currently capable of vesting subject to the achievement of
set performance conditions over a three-year performance period and continued
service. There are two performance conditions attached to the awards which are
Total Shareholder Return (TSR), which is a market-based performance condition,
and EPS growth, which is a non-market-based performance condition. The fair
value of the TSR element of the performance conditions is calculated and fixed
at the date of grant using a Stochastic options pricing model. The fair value
of the EPS element of the performance conditions is reviewed at each Balance
Sheet date and adjusted through the number of awards expected to vest. The
fair value of the PSP is the face value of the awards at the date of grant
(calculated using the closing share price on the day preceding grant). The
awards will vest to participants at the end of the vesting period subject to
the performance conditions of the award being met. The entitlement of any of
the awards for leavers are subject to good and bad leaver provisions as set
out in the Plan Rules. There are no cash settlement alternatives and the Group
accounts for the PSP as an equity-settled plan. Full details on the
performance conditions for all the LTIP awards can be found in the
Remuneration Report on pages 119 to 133 of the Annual Report.
Long Term Incentive Plan - Restricted Share Unit Plan (RSU)
Conditional awards of shares under the RSU are granted to GLT direct reports
and other employees of the Group. There are no performance conditions attached
to the awards, the awards will only vest should the participants remain
employed on the vesting date. If participants leave the Group their awards
would usually lapse in full, however there are good and bad leaver provisions
set out in the Plan Rules. The fair value of Restricted Share Unit awards is
the face value of the awards at the date of grant (calculated using the
closing share price on the day preceding grant). The Group accounts for the
Restricted Share Unit awards as an equity-settled plan.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
26. Share-based payments and share schemes (continued)
Movements during the year
The following table illustrates the number and weighted average exercise
prices (WAEP) of, and movements in, shares subject to LTIP schemes during the
year:
FY24 FY23
LTIP LTIP
No. WAEP No. WAEP
Outstanding at the beginning of the year 6,788,582 - 3,187,899 -
Granted 10,597,184 £0.00 4,593,183 £0.00
Vested (653,105) - (402,860) -
Forfeited (1,408,092) - (589,640) -
Outstanding at the end of the year 15,324,569 £0.00 6,788,582 £0.00
Weighted average contractual life remaining (years) 1.6 £0.00 1.8 £0.00
Fair value measurement
The following table lists the inputs to the models used for the plans granted
during the year ended 31 March 2024:
FY24
LTIP
PSP RSU RSU
Date of grant 30/06/2023 30/06/2023 14/12/2023
Share price (pence) 119.3 119.3 88.5
Fair value at grant date (pence) 96.7 119.3 88.5
Exercise price (pence) 0 0 0
Dividend yield (%) Nil Nil Nil
Expected volatility (%) 55.05% Nil Nil
Risk-free interest rate (%) 5.13% Nil Nil
Expected life (years) 3 years 3 years 3 years
Model used Monte Carlo n/a n/a
FY23
LTIP
PSP RSU RSU
Date of grant 15/06/2022 15/06/2022 08/12/2022
Share price (pence) 238 238 193
Fair value at grant date (pence) 205 238 193
Exercise price (pence) 0 0 0
Dividend yield (%) Nil Nil Nil
Expected volatility (%) 50.71% Nil Nil
Risk-free interest rate (%) 2.23% Nil Nil
Expected life (years) 3 years 3 years 2.7 years
Model used Monte Carlo N/A N/A
The following schemes granted in FY22 were also still in existence during FY23
and FY24:
FY22
LTIP
PSP RSU RSU
Date of grant 15/12/2021 06/07/2021 15/12/2021
Share price (pence) 388 453 388
Fair value at grant date (pence) 301 453 388
Exercise price (pence) 0 0 0
Dividend yield (%) Nil Nil Nil
Expected volatility (%) 54.57% Nil Nil
Risk-free interest rate (%) 0.42% Nil Nil
Expected life (years) 2.3 years 2.7 years 2.3 years
Model used Monte Carlo N/A N/A
Volatility
For determining expected volatility, IFRS 2 requires the fair value to take
into account historical volatility over the expected term. Where Dr. Martens
plc has been listed for less than the expected life of the plans it does not
have sufficient information on historical volatility, and it computes
volatility for the longest period for which trading activity is available. It
also considered the historical volatility of similar entities in the same
industry for the equivalent period of their listed share price history.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
26. Share-based payments (continued)
All employee Plan - Share Incentive Plan (SIP) and International Share
Incentive Plan
The Group has two SIP Trusts, Dr. Martens plc UK Share Incentive Plan Trust
('SIP-UK') and Dr Martens plc International Share Incentive Plan Trust
('SIP-International'), for the purpose of facilitating the holding of shares
in Dr. Martens plc for the benefit of employees of the Group. The assets of
the employee share trusts are held by the separate trusts, of which the
Directors consider that Dr. Martens plc has control for accounting purposes.
Share Incentive Plan (SIP): Buy As You Earn
In October 2021 employees were granted Free Shares under the Share Incentive
Plan (SIP), these shares remain under restriction and will become available to
employees from October 2024 when the forfeiture period lifts. In September
2022 the Company launched the purchase and matching element of the SIP known
as Buy As You Earn (BAYE). Employees can elect to make a monthly contribution
from their gross pay to purchase shares in Dr. Martens plc ('partnership
shares'). For each partnership share acquired, the Company will award a
'matching' share. Matching shares are subject to a three-year forfeiture
period, and employees will receive the matching shares if they remain employed
at the end of this period of service.
The matching shares fall within the scope of IFRS 2 and are classed as
equity-settled share-based payments with a three-year forfeiture period, due
to the condition of continued service for three years from the allocation
date. A new invitation to join the plan will be rolled out each year effective
1 September. On 11 November 2022, the first matching shares were allocated to
employees who had opted into the plan and purchased partnership shares. These
awards are subject to a three-year forfeiture period after the date of
purchase of the corresponding partnership shares. There are no cash settlement
alternatives and the Group accounts for the SIP as an equity-settled plan.
Global Share Incentive Plan (SIP): International Buy As You Earn
In October 2021 employees were granted Free Shares under the International
Share Incentive Plan (SIP); these shares vested in April 2022 where sufficient
shares were sold to cover their tax/social security liabilities where
applicable and are now beneficially owned by the employees. In March 2023 the
Company launched the purchase and matching element of the International SIP
known as International Buy As You Earn (BAYE). Employees can elect to make a
monthly contribution from their net pay to purchase shares in Dr. Martens plc
('partnership shares'). Partnership shares are purchased quarterly with the
first purchase in July 2023. For each partnership share acquired, the Company
will award a 'matching' share annually. Matching shares are subject to a
three-year forfeiture period. The matching shares fall within the scope of
IFRS 2 and are classed as equity-settled share-based payments with a three
year forfeiture period, and employees will receive the matching shares if they
remain employed at the end of this period of service. A new invitation to join
the plan will be rolled out each year effective 1 September.
The following table illustrates the number and weighted average exercise
prices (WAEP) of, and movements in, SIP shares during the year:
FY24 FY23
SIP SIP
No. No.
Outstanding at the beginning of the year 92,318 -
Granted 335,940 93,591
Vested - -
Forfeited (42,735) (1,273)
Outstanding at the end of the year 385,523 92,318
Weighted average contractual life remaining (years) 2 years 3 years
Fair value measurement
The following table lists the inputs to the model used for the SIP plans for
the years ended 31 March 2024 and 2023:
FY24 FY23
SIP
Date of grant 22/09/2023 15/09/2022
Share price (pence) 82-165 128-290
Fair value at grant date (pence) 82-165 128-290
Exercise price (pence) 0 0
Dividend yield (%) Nil Nil
Expected volatility (%) 0 0
Risk-free interest rate 0 0
Expected life (years) 3 years 3 years
Model used N/A N/A
Share schemes-- additional information
Employer payroll taxes are being accrued, where applicable, at local rate,
which management expects to be the prevailing rate when the awards are
exercised, based on the share price at the reporting date. The total employer
payroll taxes for the year relating to all the awards was £0.2m (FY23:
£nil).
Included in staff costs and accruals is £0.1m (FY23: £0.4m) in relation to
expenses arising from cash-settled share-based payments.
Included in staff costs is £3.9m (FY23: £0.5m) in relation to expenses
arising from equity-settled share-based payments. Within this amount is
£0.1m (FY23: £nil) in relation to the SIP.
Global Bonus Scheme Share Plan
The Remuneration Committee of the Group has determined that a proportion of
the annual Executive Bonus Scheme will be utilised (on a net basis) to
purchase Parent Company shares. There were no cancellations or modifications
during the year.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
27. Financial commitments
The Group is party to a number of warehousing agreements whereby it is
committed to certain costs which are not required to be reflected on the
Balance Sheet. These costs pertain to storage costs for some warehouses that
do not meet the recognition requirements of IFRS 16, and the fixed-cost
elements of the additional services that the Group's warehouse operators
provide.
The below table discloses the contractual cash flows that the Group is
committed to under these arrangements, excluding the effects of future rate
increases allowable within the agreements.
FY24 FY23
£m £m
Within 1 year 7.4 8.2
1 to 5 years 9.0 16.7
Over 5 years - -
16.4 24.9
Short-term leases for retail stores are not required to be included above as
the portfolio of short-term leases to which the Group is committed to at the
end of the reporting period is not dissimilar to the portfolio of short-term
leases to which the short-term lease expense disclosed in note 28 relates.
Guarantees exist in the form of rent guarantees to various landlords of £3.2m
(FY23: £3.5m) and other guarantees of £0.2m (FY23: £0.2m). These guarantees
which aggregate to £3.4m (FY23: £3.7m) are guaranteed under the revolving
credit facility.
Capital expenditure contracted for at the end of the reporting period but not
recognised as liabilities is as follows:
FY24 FY23
£m £m
Property, plant and equipment - 1.7
The Group has additional commitments relating to leases where the Group has
entered into an obligation but does not yet have control of the underlying
asset. The future lease payments to which the Group is committed, over the
expected lease term, but are not recorded on the Group's Balance Sheet are as
follows:
FY24 FY23
£m £m
Within 1 year 0.3 1.1
1 to 5 years 0.9 6.6
Over 5 years 0.1 8.5
1.3 16.2
28. Leases
Set out below are the carrying amounts of lease liabilities (included under
interest-bearing loans and borrowings) and the movements during the year:
FY24 FY23
£m £m
At 1 April 152.4 112.9
Additions(1) 72.5 60.6
Reassessments (4.7) 5.5
Modifications 10.1 (0.8)
Interest expense (note 7) 8.6 4.8
Lease capital and interest repayments (52.2) (33.9)
Foreign exchange (4.4) 3.3
At 31 March 182.3 152.4
Current (note 17) 47.0 28.1
Non-current (note 17) 135.3 124.3
1. Additions comprises RoU additions less working capital of £4.5m (FY23:
£5.9m).
The following amounts were recognised in the Statement of Profit or Loss:
FY24 FY23
£m £m
Depreciation expense of right-of-use assets 51.3 32.2
Gain on remeasurement of leases (1.1) -
Interest expense on lease liabilities (note 7) 8.6 4.8
Expenses relating to short-term leases 0.3 1.3
Variable lease payments 3.5 2.8
Total operating expenses recognised in profit 3.8 4.1
Total amount recognised in profit 62.6 41.1
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
28. Leases (continued)
Variable lease payments on sales
Some leases of retail stores contain variable lease payments that are based on
sales that the Group makes at the store. These payment terms are common in
retail stores in some countries where the Group operates. Fixed and variable
payments for the year ended 31 March 2024 were as follows:
Fixed payments Variable payments Total payments Estimated annual impact on rent of a 1% increase in sales
£m
£m £m £m
FY24: Leases with lease payments based on sales 13.5 3.5 17.0 0.1
FY23: Leases with lease payments based on sales 10.2 2.8 13.0 0.1
Turnover related rent is where the contract states the lease rent is the
higher of the fixed base rent or percentage of turnover of the store. Unless
specified otherwise in the lease, turnover rent is defined as net turnover
(i.e. excluding returns), not including click and collect. To verify the
correct rent, the landlord often requests 'turnover certificates' on a regular
basis, e.g. monthly/quarterly/annually. The rent is invoiced in arrears based
on this calculation and accrued monthly. It is paid as invoiced depending on
the lease terms. The fixed base element is capitalised as above and the
variable element (based on turnover) is expensed to the Consolidated Statement
of Profit or Loss.
Extension options
Some leases contain extension options exercisable by the Group up to one year
before the end of the non-cancellable contract period. Where practicable, the
Group seeks to include extension options in new leases to provide operational
flexibility. The extension options held are exercisable only by the Group and
not by the lessors. The Group will reassess and remeasure when there is a
significant event or change in circumstances. For example, lease renewals or
business decisions to exercise lease breaks. These are reviewed and embedded
to the model by the Property Accountant as they occur.
Lease liabilities recognised (discounted) Potential future lease payments not included in lease liabilities
(undiscounted)
£m
£m
FY24: Leases with lease extension options 43.3 84.0
FY23: Leases with lease extension options 35.3 56.6
29. Pensions
Defined contribution scheme
The Group operates a defined contribution pension scheme for its employees.
The Group's expenses in relation to this scheme were £5.4m for the year ended
31 March 2024 (FY23: £4.7m) and at 31 March 2024 £1.0m (FY23: £0.8m)
remained payable to the pension fund.
Defined benefit scheme
Dr Martens Airwair Group Limited and Airwair International Limited
(subsidiaries of the Group) operate a pension arrangement called the Dr.
Martens Airwair Group Pension Plan (the Plan). The Plan has a defined
benefit section that provides benefits based on final salary and length of
service on retirement, leaving service or death. The defined benefit section
closed to new members on 6 April 2002 and closed to future accrual with effect
from 31 January 2006. The Plan also has a defined contribution section that
provides money purchase benefits to some current and former employees.
The Plan is managed by a board of Trustees appointed in part by Airwair
International Limited and in part from elections by members of the Plan. The
Trustees have responsibility for obtaining valuations of the fund,
administering benefit payments and investing the Plan's assets. The Trustees
delegate some of these functions to their professional advisers where
appropriate.
The defined benefit section of the Plan is subject to the Statutory Funding
Objective under the Pensions Act 2004. A valuation of the Plan is carried out
at least once every three years to determine whether the Statutory Funding
Objective is met. The last valuation was carried out at 30 June 2022 which
confirmed that the Plan had sufficient assets to meet the Statutory Funding
Objective. The next valuation is due at 30 June 2025. The Statutory Funding
Objective does not currently impact on the recognition of the Plan in these
financial statements.
During the year, no discretionary benefits were awarded. There were no Plan
amendments, settlements or curtailments during the year.
The weighted average duration of the defined benefit obligation is
approximately 12 years (FY23: 13 years). Around 50% of the undiscounted
benefits are due to be paid beyond 17 years' time, with the projected
actuarial cash flows declining to zero in about 70 years.
Key risks
The defined benefit section of the Plan exposes Airwair International Limited
to a number of risks:
· Investment risk. The Plan holds investments in asset classes,
such as equities, which have volatile market values and while these assets are
expected to provide real returns over the long term, the short-term volatility
can cause additional funding to be required if a deficit emerges.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
29. Pensions (continued)
Key risks (continued)
· Interest rate risk. The value of the Plan's liabilities is
assessed using market yields on high quality corporate bonds to discount the
liabilities. As the Plan holds assets such as equities, the value of the
assets and liabilities may not move in the same way. The Plan holds
derivatives to manage a proportion of the interest rate risk.
· Inflation risk. A significant proportion of the benefits under
the Plan are linked to inflation. Although the Plan's assets are expected to
provide a good hedge against inflation over the long term, movements in
inflation expectations over the short term could lead to a deficit emerging.
The Plan holds some derivatives to hedge a proportion of the potential changes
in the value of the liabilities due to changes in market inflation
expectations.
· Mortality risk. In the event that members live longer than
assumed, a deficit could emerge in the Plan.
Although the Lloyds Banking Group Pensions Trustees Limited v. Lloyds Bank PLC
(and others) court judgment on 26 October 2018 (and the subsequent court
judgment on 20 November 2020) provided some clarity in respect of GMP
equalisation and the obligations that this places on schemes, the actual
impact of equalising the Plan's GMPs remains uncertain. An approximate
allowance equivalent to 1.1% (FY23: 0.8%) of the value of the liabilities has
been made in the disclosures for the impact of GMP equalisation. There were no
other plan amendments, curtailments or settlements during the year.
A judgment in the High Court case of Virgin Media vs NTL Trustees was handed
down on 16 June 2023. The judge ruled that, where benefit changes were made
without a valid 'section 37' certificate from the Scheme Actuary, those
changes could be considered void. The judgment could have material
consequences for some defined benefit schemes, such as the Plan, which
previously contracted-out of the state pension system. The Group understands
that the judgment is due to be appealed and, as such, there is considerable
uncertainty as to whether the judgment will stand and, if it does, the impact
on the Plan, if any. As a result of this uncertainty, these disclosures have
been calculated assuming that this ruling will not affect the Plan's benefits.
Effect of the Plan on the Company's future cash flows
Airwair International Limited is required to agree a Schedule of Contributions
with the Trustees of the Plan following a valuation, which must be carried out
at least once every three years. Following the valuation of the Plan at 30
June 2022, a Schedule of Contributions was agreed under which Airwair
International Limited was not required to make any contributions to the
defined benefit section of the Plan (other than payments in respect of
administrative expenses). Accordingly, Airwair International Limited does not
expect to contribute to the defined benefit section of the Plan, although it
will continue to contribute to the defined contribution section in line with
the Schedule of Contributions. The next valuation of the Plan is due at 30
June 2025. If this reveals a deficit then Airwair International Limited may be
required to pay contributions to the Plan to repair the deficit over time.
The amounts recognised in the Balance Sheet (under IAS 19 Employee Benefits)
are determined as follows:
FY24 FY23
£m £m
Fair value of plan assets - defined benefit section 46.7 49.5
Present value of funded obligations - defined benefit section (37.6) (38.4)
Surplus of funded plans 9.1 11.1
Impact of asset ceiling (9.1) (11.1)
Net pension asset - -
Although the Plan has a surplus, this is not recognised on the grounds that
Airwair International Limited is unlikely to derive any future economic
benefits from the surplus. As such, an asset ceiling has been applied to the
Balance Sheet, and the net surplus of £9.1m (FY23: £11.1m) has not been
recognised on the Balance Sheet. The net surplus has been capped to £nil
(FY23: £nil).
A reconciliation of the net defined benefit asset over the year is given
below:
FY24 FY23
£m £m
Net defined benefit asset at beginning of year - -
Total defined benefit charge in the Statement of Profit or Loss - -
Remeasurement losses in the Statement of Comprehensive Income - -
Employer's contributions - -
Net defined benefit asset at end of the year - -
The amount charged to the Statement of Profit or Loss and Statement of
Comprehensive Income in respect of the defined benefit section of the Plan was
£nil (FY23: £nil). Costs in respect of the defined contribution section of
the Plan, and other defined contribution arrangements operated by Airwair
International Limited, are allowed for separately.
The remeasurements in respect of the defined benefit section of the Plan, to
be shown in the Statement of Comprehensive Income, are shown below:
FY24 FY23
£m £m
Losses on defined benefit assets in excess of interest 3.0 18.3
Experience loss on defined benefit obligation 0.3 -
Gains from changes to demographic assumptions (0.4) (0.4)
Gains from changes to financial assumptions (0.4) (15.4)
Change in effect of asset ceiling (2.5) (2.5)
Total remeasurements to be shown in other comprehensive income - -
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 March 2024
29. Pensions (continued)
The change in defined benefit scheme assets over the year was:
FY24 FY23
£m £m
At 1 April 49.5 68.6
Interest on defined benefit assets 2.3 1.7
Movement on defined benefit section assets less interest (3.0) (18.3)
Benefits paid from the defined benefit section (2.1) (2.5)
At 31 March 46.7 49.5
The change in the defined benefit scheme funded obligations over the year was:
FY24 FY23
£m £m
At 1 April 38.4 55.3
Past service cost - -
Interest cost on defined benefit obligation 1.8 1.4
Experience loss on defined benefit obligation 0.3 -
Changes to demographic assumptions (0.4) (0.4)
Changes to financial assumptions (0.4) (15.4)
Benefits paid from the defined benefit section (2.1) (2.5)
At 31 March 37.6 38.4
The change in the effect of the asset ceiling over the year was as follows:
FY24 FY23
£m £m
At 1 April 11.1 13.3
Net interest charge on asset ceiling 0.5 0.3
Changes in the effect of the asset ceiling excluding interest (2.5) (2.5)
At 31 March 9.1 11.1
A breakdown of the assets is set out below, split between those assets that
have a quoted market value in an active market and those that do not. The
assets do not include any investment in shares of Airwair International
Limited, nor any property owned or occupied by the Group.
FY24 FY23
£m £m
Assets with a quoted market value in an active market:
Cash and other
Domestic 0.1 0.2
0.1 0.2
Assets without a quoted market value in an active market:
Equities and property
Domestic 3.0 0.2
Foreign 4.3 4.5
7.3 4.7
Fixed interest bonds
Unspecified 6.3 9.4
6.3 9.4
Index linked gilts
Domestic 30.0 30.1
30.0 30.1
Alternatives
Unspecified 1.8 3.9
1.8 3.9
Property
Unspecified 0.4 1.0
0.4 1.0
Insured annuities
Domestic 0.9 0.9
0.9 0.9
Cash and other
Domestic 1.5 1.0
Foreign - -
Unspecified (1.6) (1.7)
(0.1) (0.7)
Fair value of plan assets 46.7 49.5
Notes to the Consolidated Financial Statements
For the year ended 31 March 2024
29. Pensions (continued)
A full actuarial valuation was carried out at 30 June 2022. The results of
that valuation were updated to 31 March 2024 by a qualified independent
actuary. The principal assumptions selected by Airwair International Limited
and used by the actuary to calculate the Plan's defined benefit obligation
were:
FY24 FY23
£m £m
Discount rate 4.9% 4.8%
Inflation assumption (RPI) 3.2% 3.3%
Inflation assumption (CPI) 2.5% 2.6%
LPI pension increases subject to 5% cap 3.1% 3.2%
LPI pension increases subject to 3% cap 2.5% 2.5%
Revaluation in deferment 2.5% 2.6%
Post retirement mortality assumption 105% (males) and 111% (females) of S3PA tables, with allowance for future 105% (males) and 111% (females) of S3PA tables, with allowance for future
improvements in line with the CMI_2022 core projection model using 0% 2020 and improvements in line with the CMI_2021 core projection model using 7.5% 2020
2021 weight parameters, a 25% 2022 weight parameter, a long-term rate of and 2021 weight parameters, a long-term rate of improvement of 1.0% p.a. and
improvement of 1.0% p.a. and an initial addition of 0.2% an initial addition of 0.2%
Tax free cash Members are assumed to take 50% of the maximum tax free cash possible Members are assumed to take 50% of the maximum tax free cash possible
Proportion married at retirement or earlier death 80% of male members and 65% of female members are assumed to be married at 80% of male members and 65% of female members are assumed to be married at
retirement or earlier death retirement or earlier death
Age difference Males three years older than dependant, females one year younger than Males three years older than dependant, females one year younger than
dependant dependant
Assumed life expectancies on retirement at age 65 are:
Retiring today: Male 21.1 21.3
Female 23.2 23.4
Retiring in 20 years' time: Male 22.1 22.3
Female 24.3 24.5
The key sensitivities of the defined benefit obligation to the actuarial
assumptions are shown below:
FY24 FY23
£m £m
Discount rate
Plus 0.5% (2.7) (2.2)
Minus 0.5% 3.0 2.4
Plus 1.0% (4.6) (4.4)
Minus 1.0% 5.7 5.5
Rate of inflation
Plus 0.5% 2.0 0.9
Minus 0.5% (1.8) (0.7)
Life expectancy
Plus 1.0 year 1.6 1.4
Minus 1.0 year (1.6) (1.4)
The sensitivity illustrations set out above are approximate. They show the
likely effect of an assumption being adjusted while all other assumptions
remain the same. Only the impact on the liability value (i.e. the defined
benefit obligation) is considered - in particular:
· No allowance is made for any changes to the value of the Plan's
invested assets in scenarios where interest rates or market inflation
expectations change; and
· No allowance is made for changes in the value of the annuity
policies held by the Plan, which is calculated using the same actuarial
assumptions as for the Plan's defined benefit obligation.
Such changes to the asset values would be likely to partially offset the
changes in the defined benefit obligation.
The net Balance Sheet and Statement of Profit or Loss are not sensitive to the
actuarial assumptions used at the current time, due to the effect of the asset
ceiling.
Notes to the Consolidated Financial Statements
For the year ended 31 March 2024
30. Related party transactions
Transactions with related parties
Transactions between the Company and its wholly owned subsidiaries, which are
related parties of the Company, have been eliminated on consolidation and are
not disclosed in this note. A list of investments in subsidiary undertakings
can be found in note 13 to the Parent Company financial statements.
FY24 FY23
£'000 £'000
GFM GmbH Trademarks(1)
Amounts incurred 64.7 262.3
Amounts payable by/(owed) at year end (4.6) (6.3)
TeamViewer(2)
Amounts incurred 16.2 17.1
Amounts payable by/(owed) at year end - -
Truepoint(3)
Amounts incurred 212.0 -
Amounts payable by/(owed) at year end - -
1. GFM GmbH Trademarks is related to the Group as it provides services or has
a transactional relationship with the Group and is an equity-accounted joint
venture under joint control of the Group.
2. TeamViewer is related to the Group as they provide services or have a
transactional relationship with the Group and represents an investment within
funds advised by Permira Advisers LLP. The Group's largest investor, IngreLux
S.àr.l., is also owned by funds advised by Permira Advisers LLP.
3. Truepoint is related to the Group as they provide services or have a
transactional relationship with the Group and one of the Group's Independent
Directors is also a Director at the related entity.
Key management personnel compensation
The compensation of key management (including Executive and Non-Executive
Directors) for the year was as follows:
FY24 FY23
£m £m
Salaries and benefits 5.1 5.5
Pensions 0.3 0.2
LTIPs - Share-based payments 0.6 0.9
Parent Company Balance Sheet
As at 31 March 2024
Company registration number 12960219
Note Total Total
FY24 FY23
£m £m
Fixed assets
Investments 6 1,413.4 1,413.4
1,413.4 1,413.4
Current assets
Debtors 7 3.1 1.7
Cash and cash equivalents 8 0.1 0.2
3.2 1.9
Total assets 1,416.6 1,415.3
Current liabilities
Trade and other payables 9 (1.2) (10.5)
Total liabilities (1.2) (10.5)
Net assets 1,415.4 1,404.8
Equity
Ordinary share capital 10 9.6 10.0
Treasury shares 11 - -
Capital redemption reserve 12 0.4 -
Retained earnings 12 1,405.4 1,394.8
Total equity 1,415.4 1,404.8
As permitted by section 408 of the Companies Act 2006, the Company's Statement
of Profit or Loss has not been included in these financial statements.
The Company generated a profit for the year to 31 March 2024 of £114.9m
(FY23: £46.2m).
The notes on pages 57 to 62 are an integral part of these financial
statements.
The financial statements on pages 55 to 62 were approved and authorised by the
Board of Directors on 29 May 2024 and signed on its behalf by:
Kenny
Wilson
Giles Wilson
Chief Executive
Officer
Chief Financial Officer
Parent Company Statement of Changes in Equity
For the year ended 31 March 2024
Ordinary share capital Treasury shares Capital redemption reserve Retained earnings Total equity
Note £m £m £m £m £m
At 1 April 2022 10.0 - - 1,406.5 1,416.5
Profit for the year - - - 46.2 46.2
Total comprehensive income for the year - - - 46.2 46.2
Dividends paid 5 - - - (58.4) (58.4)
Shares issued 10 - - - - -
Share-based payments - - - 0.5 0.5
At 31 March 2023 10.0 - - 1,394.8 1,404.8
Profit for the year - - - 114.9 114.9
Total comprehensive income for the year - - - 114.9 114.9
Dividends paid 5 - - - (57.8) (57.8)
Shares issued 10 - - - - -
Share-based payments - - - 4.0 4.0
Repurchase of ordinary share capital 11 - (50.0) - (0.5) (50.5)
Cancellation of repurchased ordinary share capital 11 (0.4) 50.0 0.4 (50.0) -
At 31 March 2024 9.6 - 0.4 1,405.4 1,415.4
Notes to the Parent Company Financial Statements
For the year ended 31 March 2024
1. General information
Dr. Martens plc (the 'Company') is a public company limited by shares
incorporated in the United Kingdom, and registered and domiciled in England
and Wales, whose shares are traded on the London Stock Exchange. The Company's
registered office is: 28 Jamestown Road, Camden, London NW1 7BY. The principal
activity of the Company and its subsidiaries (together referred to as the
'Group') is the design, development, procurement, marketing, selling and
distribution of footwear, under the Dr. Martens brand.
2. Accounting policies
The principal accounting policies adopted in the preparation of the financial
statements are set out below. The policies have been consistently applied to
the periods presented, unless otherwise stated. Amounts are presented in GBP
and to the nearest million pounds (to one decimal place) unless otherwise
noted.
Basis of preparation
The financial statements of the Company have been prepared in accordance with
the Companies Act 2006 and Financial Reporting Standard 101 'Reduced
Disclosure Framework' ('FRS 101'). The financial statements have been prepared
on a going concern basis under the historical cost convention. FRS 101 enables
the financial statements of the Company to be prepared in accordance with IFRS
but with certain disclosure exemptions. The main areas of reduced disclosure
are in respect of equity-settled share-based payments, financial instruments,
the Statement of Cash Flows, and related party transactions with Group
companies. The accounting policies adopted for the Company are otherwise
consistent with those used for the Group which are set out on pages 18 to 27.
As permitted by Section 408 of the Companies Act 2006, the Statement of Profit
or Loss of the Company is not presented as part of the financial statements.
The preparation of financial statements in conformity with FRS 101 requires
the use of certain critical accounting estimates. It also requires management
to exercise its judgement in the process of applying the Company's accounting
policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the financial
statements, are disclosed in the significant judgements and estimates section.
Financial Reporting Standard 101 - reduced disclosure exemptions
This basis of preparation has enabled the Company to take advantage of the
applicable disclosure exemptions permitted by FRS 101 in the financial
statements. The following disclosures have not been provided as permitted by
FRS 101:
- a cash flow statement and related notes;
- disclosures in respect of transactions with wholly owned subsidiaries;
- disclosures in respect of capital management;
- the effects of new but not yet effective IFRS;
- disclosures in respect of the compensation of key management personnel as
required; and
- statement of compliance with all IFRS.
The Company has also taken the exemption under FRS 101 available in respect of
the requirements of paragraphs 45(b) and 46 to 52 of IFRS 2 (Share-based
Payment) in respect of Group settled share-based payments as the Consolidated
Financial Statements of the Group include the equivalent disclosures.
Notes to the Parent Company Financial Statements (continued)
For the year ended 31 March 2024
2. Accounting policies (continued)
Going concern
The financial statements have been prepared on a going concern basis. The
ability of the Company to continue as a going concern is contingent on the
ongoing viability of the Group. The Directors have considered the business
activities, as well as the principal risks, the other matters discussed in
connection with the viability statement, and uncertainties faced by the
business. Based on this information, and the Group's trading and cash flow
forecasts, the Directors are satisfied that the Group will maintain an
adequate level of resources to be able to operate during the period under
review. Refer to note 2.1 of the Consolidated Financial Statements for further
information.
Distributable reserves
When making a distribution to shareholders, the Directors determine the
profits available for distribution by reference to guidance on realised and
distributable profits under Companies Act 2006 issued by the Institute of
Chartered Accountants in England and Wales.
Investments
Investments are stated at cost less any provision for impairment.
Share-based payments
The Company provides benefits to employees in the form of share-based payment
transactions, whereby employees render services as consideration in exchange
for equity instruments ('equity-settled transactions'). Refer to note 2.25 of
the Consolidated Financial Statements for further information.
Dividends
Final dividends are recorded in the financial statements in the period in
which they are approved by the Company's shareholders. Interim dividends are
recorded in the period in which they are approved and paid.
Share buyback
Where the Company purchases any of its own equity instruments, for example,
pursuant to the share buyback programme, the consideration paid, including any
directly attributable incremental costs, is deducted from equity attributable
to the owners of the Company. The repurchased shares are recognised as
treasury shares until the shares are cancelled. The programme concluded on 19
December 2023.
Significant judgements and estimates
The following judgement has had the most significant effect on amounts
recognised in the financial statements:
Carrying value of investments
The Company assesses at each reporting date whether there is an indication
that its investment may be impaired. If any indication exists, the Company
estimates the investment's recoverable amount. The investment's recoverable
amount is the higher of its fair value less costs of disposal and its value in
use. An impairment is present if the recoverable amount is less than the
carrying value of the asset. In assessing an investment's recoverable amount
using a value in use calculation, estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and future cash flows are then
extended into perpetuity using long-term growth rates.
UK registered subsidiaries exempt from audit
Airwair Property Limited, a wholly owned subsidiary, is exempt from the
Companies Act 2006 requirements relating to the audit of their individual
financial statements by virtue of Section 479A of the Companies Act, as this
Company has provided a guarantee for Airwair Property Limited under Section
479C of the Companies Act.
3. Staff costs
Other than the Directors, the Company had no employees during the year (FY23:
none). Details of Directors' remuneration can be found in the Remuneration
Report on pages 119 to 133 of the Annual Report.
4. Auditors' remuneration
The Company has incurred audit fees of £21,600 (FY23: £20,000) for the year.
5. Dividends
Details in respect of dividends proposed and paid during the year by the
Company are included in note 10 to the Consolidated Financial Statements.
6. Investments
FY24 FY23
£m £m
At 1 April 2023 1,413.4 1,413.4
Acquisitions - -
At 31 March 2024 1,413.4 1,413.4
Investment impairment assessment
The Company's investment is a non-financial asset and required to be reviewed
for impairment indicators each year-end date. If an indicator of impairment
exists, the asset is required to be tested for impairment by estimating its
recoverable amount. An asset's recoverable amount is the higher of its fair
value less costs of disposal and its value in use. An impairment is present if
the recoverable amount is less than the carrying value of the asset.
An appropriate check to begin with per IAS 36 is assessing whether the
carrying amount of the Company's net assets is higher than the market
capitalisation. Management has reviewed the share price as at 31 March 2024
and the average share price over a variety of preceding time periods to
examine the average market capitalisation for comparison to Dr. Martens plc's
net assets. It is relevant to consider the volatility of the share price over
recent years when interpreting a company's market capitalisation. Where there
is volatility, taking a point in time measure may be misleading, as market
Notes to the Parent Company Financial Statements (continued)
For the year ended 31 March 2024
6. Investments (continued)
Investment impairment assessment (continued)
sentiment fluctuations can result in significant point in time changes that
are not necessarily reflective of the true value of a business. It is also
noted that stock market movements recently are not unique to Dr. Martens only,
and significant macroeconomic and geopolitical events have impacted many
companies, again potentially inaccurately reflecting the true value of the
business. Over some of the periods reviewed, Dr. Martens plc's net assets
exceed the market capitalisation and others they did not, therefore showing a
potential indicator of impairment but not necessarily concluding that the
investment was impaired. As this review showed a potential impairment
indicator, management decided to run a test for impairment.
The investment's recoverable amount was deemed to be more than it's carrying
amount and hence no charge was made in the current year (FY23: £nil).
Judgements, assumptions and estimates
The results of the Company's impairment tests are dependent upon estimates and
judgements made by management. The recoverable amount of the Company's
investment is estimated using a value in use calculation. The value in use
calculation uses cash flow forecasts based on financial projections reviewed
by the Board covering a five-year period (pre-perpetuity). The forecasts are
based on annual budgets and strategic projections representing the best
estimate of future performance. Management considers forecasting over this
period to appropriately reflect the business cycle of the Group. These cash
flows are consistent with those used to review going concern and viability,
however, are required by IAS 36 to be adjusted for use within an impairment
review to exclude new retail development to which the Group is not yet
committed.
Operating cash flows
The main assumptions within the forecast operating cash flows include the
achievement of future growth in ecommerce, retail and wholesale channels,
sales prices and volumes (including reference to specific customer
relationships and product lines), raw material input costs, the cost structure
of the Group, the impact of foreign currency rates upon selling price and cost
relationships and the levels of capital expenditure required to support each
sales channel.
Future sales are estimated to increase on a compound annual growth rate (CAGR)
basis over the 5 years pre-perpetuity from FY24 reported sales by 10.7%. The
CAGR is forecasted to be achieved through growth as set out in our central
planning assumptions underlying our medium term forecasts, the first three
years of which form the basis of the assumptions in the Viability Statement.
The value in use calculation also includes repayment of the Term Loan B in
February 2026 per IAS 36 requirements, but in practical terms, the loan is
expected to be refinanced in 2026.
The adjustments required to estimate value in use result in lower cash flows
than the method used for assessing the Group's viability and hence are not
considered likely to occur.
Pre-tax risk adjusted discount rate
Future cash flows are discounted to present value using a pre-tax discount
rate derived from risk-free rates based on long-term government bonds,
adjusted for risk factors such as region and market risk in the territories in
which the Group operates and the time value of money. Consistent with the 2019
IFRS IASB Staff Paper, a post-tax discount rate and post-tax cash flows are
used as observable inputs, and then the pre-tax discount rate is calculated
from this to comply with the disclosure requirements under IAS 36. The pre-tax
discount rate for the Group has been calculated to be 12.7% (FY23: 12.3%).
Long-term growth rate
To forecast beyond the five-year detailed cash flows into perpetuity, a
long-term average growth rate has been used. The long-term growth rate applied
for Group is 2.2% (FY23: 2.2%). The rate used includes aggregation of
geographical forecasts included within industry reports.
Sensitivity analysis
The Company has assessed that the two significant assumptions used within the
value in use calculation are pre-perpetuity sales growth and the pre-tax
discount rate and potential changes in these have been sensitised as follows:
FY24
£m
Original headroom 262.8
Headroom using a 10% decrease in forecasted sales(1) (150.7)
Headroom using a 10% increase in forecasted sales(1) 1,032.0
Headroom using a 1%pt decrease in pre-tax discount rate 483.0
Headroom using a 1%pt increase in pre-tax discount rate 83.4
Headroom combining a 10% decrease in forecasted sales and a 1%pt increase in (359.2)
pre-tax discount rate
1. These sensitivities are based on a +/-10% movement in sales each year and
into perpetuity. A decrease in forecast sales of -10% results in a revised
CAGR over the 5 years pre-perpetuity from FY24 sales of 8.4%, and an increase
of 10% results in a revised CAGR of 12.9%.
A decrease in forecasted sales of -10% has been calculated for illustrative
purposes applied each year and into perpetuity. This would result in the
carrying amount being above the recoverable amount. The required differences
in the forecasted cash flows used for the impairment assessment versus those
used for the purpose of the Group's going concern and viability assessments
result in different outputs, and this -10% sales sensitivity outputs lower
total forecasted sales in FY25 versus the severe but plausible scenario and is
considered unlikely. Furthermore, the exclusion of new retail development as
required by IAS 36 is not in line with actual expected trading growth. The
reduction in forecast sales that would result in the carrying amount and the
recoverable amount being equal would be -7.5%.
An increase of 1 percentage point (1%pt) in the pre-tax discount rate of 12.7%
to 13.7% has been calculated for illustrative purposes and would not result in
the carrying amount being above the recoverable amount and is also not
considered likely given that the pre-tax discount rate in FY23 was 12.3% and
hence has moved less than 0.5%pts since FY23. The pre-tax discount rate that
would result in the carrying amount and the recoverable amount being equal
would be 14.2%. This sensitivity has been included to provide an illustration
should the forecasted sales decline by -10% and the pre-tax discount rate also
increases by 1%pt. This would result in the carrying amount being above the
recoverable amount.
A list of the Company's investments in subsidiary undertakings can be found in
note 13.
Notes to the Parent Company Financial Statements (continued)
For the year ended 31 March 2024
7. Debtors
FY24 FY23
£m £m
Income tax receivable 0.1 -
Social security and other taxes - -
Prepayments and accrued income 0.3 0.8
Amounts owed by subsidiary undertakings(1) 2.7 0.9
3.1 1.7
1. Amounts owed by subsidiary undertakings are non-interest bearing trading
balances and are repayable on demand.
IFRS 9 expected credit losses have been assessed as immaterial in relation to
all balances.
8. Cash and cash equivalents
FY24 FY23
£m £m
Cash and cash equivalents 0.1 0.2
9. Trade and other payables
FY24 FY23
£m £m
Trade creditors 0.1 0.1
Amounts due to subsidiary undertakings(1) 0.2 10.3
Accruals and deferred income 0.9 0.1
1.2 10.5
1. Amounts owed to subsidiary undertakings are non-interest bearing trading
balances and are repayable on demand.
10. Ordinary share capital
FY24 FY24 FY23 FY23
No. £m No. £m
Authorised, called up and fully paid
Ordinary shares of £0.01 each 961,878,608 9.6 1,000,793,898 10.0
The movements in the ordinary share capital
during the year ended 31 March 2024 and 31 March 2023 were as follows:
FY24 FY24 FY23 FY23
Shares Ordinary share capital Shares Ordinary share capital
no. £m no. £m
At 1 April 1,000,793,898 10.0 1,000,222,700 10.0
Shares issued 953,845 - 571,198 -
Repurchase and cancellation of ordinary share capital (39,869,135) (0.4) - -
At 31 March 961,878,608 9.6 1,000,793,898 10.0
The cost of shares purchased by the SIP Trusts is offset against the profit
and loss account, as the amounts paid reduce the profits available for
distribution by the Company.
11. Treasury shares
The movements in treasury shares held by the Company during the years ended 31
March 2024 were as follows:
FY24 FY24 FY23 FY23
No. £m No. £m
At 1 April 110,153 - 16,925 -
Repurchase of shares for cancellation 39,869,135 50.0 - -
Cancellation of shares (39,869,135) (50.0) - -
Shares issued for share schemes 284,770 - 93,228 -
At 31 March 394,923 - 110,153 -
On 14 July 2023 Dr. Martens plc announced a share buyback programme. Treasury
shares existed during the year as a result of the timing delay between the
repurchase of shares under this programme and the subsequent cancellation of
these shares. The programme concluded on 19 December 2023.
Notes to the Parent Company Financial Statements (continued)
For the year ended 31 March 2024
12. Reserves
Reserve Description and purpose
Ordinary share capital Nominal value of subscribed shares.
Treasury shares This reserve relates to shares held by SIP Trusts as 'treasury shares'. The
shares held by the SIP Trusts were issued directly to the Trusts in order to
satisfy outstanding employee share options and potential awards under the
employee share incentive schemes. The Company issued 284,770 shares directly
to the Trusts during the year and held 394,923 as at 31 March 2024 (31 March
2023: 110,153). This reserve was previously referred to as 'capital reserve -
own shares'. This reserve also included treasury shares repurchased but not
yet cancelled, pursuant to the share buyback programme, which concluded during
FY24.
Capital redemption reserve A non-distributable reserve into which amounts are transferred following the
redemption or purchase of own shares. The reserve was created in order to
ensure sufficient distributable reserves were available for the purpose of
redeeming preference shares in the prior years.
Retained earnings To recognise the profit or loss, all other net gains and losses and
transactions with owners (e.g. dividends) not recognised elsewhere, and the
value of equity-settled share-based awards provided to Executive Directors and
other senior executives as part of their remuneration (refer to the Directors'
Remuneration Report on pages 119 to 133 of the Annual Report for further
details).
Notes to the Parent Company Financial Statements (continued)
For the year ended 31 March 2024
13. Subsidiary undertakings
The registered address and principal place of business of each subsidiary
undertaking are shown in the footnotes below the table. The financial
performance and financial position of these undertakings have been
consolidated in the Consolidated Financial Statements.
Nature of investment
Name Country of registration Class of share capital held Direct Indirect Nature of business
Airwair (1994) Limited(1) England and Wales Ordinary - 100% Management company
Airwair (1996) Limited(1) England and Wales Ordinary - 100% Management company
Airwair International Limited(1) England and Wales Ordinary - 100% Footwear retail and distribution
Airwair Limited(1) England and Wales Ordinary - 100% Management company
Airwair Property Limited(1) England and Wales Ordinary - 100% Property investment
Ampdebtco Limited(2) England and Wales Ordinary 100% - Management company
DM Airwair Germany GmbH(13) Germany Ordinary - 100% Footwear retail and distribution
DM Airwair Sweden AB(14) Sweden Ordinary - 100% Footwear retail and distribution
Dr. Martens Airwair (Ireland) Limited(12) Republic of Ireland Ordinary - 100% Footwear retail and distribution
Dr. Martens Airwair Trading (Zhuhai) Company Limited(*4) China Ordinary - 100% Manufacturing support
Dr. Martens Airwair Austria GmbH(22) Austria Ordinary - 100% Footwear retail and distribution
Dr Martens Airwair Belgium SA(8) Belgium Ordinary - 100% Footwear retail and distribution
Dr. Martens Airwair Canada Inc.(19) Canada Capital of no par value - 100% Footwear retail and distribution
Dr Martens Airwair France SAS(9) France Ordinary - 100% Footwear retail and distribution
Dr Martens Airwair Group Limited(1) England and Wales Ordinary - 100% Management company
Dr. Martens Airwair Hong Kong Limited(5) Hong Kong SAR Ordinary - 100% Footwear retail and distribution
Dr. Martens Airwair Japan K.K.(7) Japan Ordinary - 100% Footwear retail and distribution
Dr. Martens Airwair Korea Limited(6) Korea Ordinary - 100% Footwear retail and distribution
Dr. Martens Airwair Spain S.L.U.(17) Spain Ordinary - 100% Footwear retail and distribution
Dr. Martens Airwair USA LLC(3) USA Capital of no par value - 100% Footwear retail and distribution
Dr Martens Airwair Wholesale Limited(1) England and Wales Ordinary - 100% Footwear retail and distribution
Dr Martens Airwair Italy S.R.L.(15) Italy Ordinary - 100% Footwear retail and distribution
Dr Martens Airwair Netherlands B.V.(10) Netherlands Ordinary - 100% Footwear retail and distribution
GFM GmbH Trademarks(11) Germany Ordinary - 50% Trademark registration
Shanghai Airwair Trading Limited(*16) China Ordinary - 100% Footwear retail and distribution
Dr. Martens Airwair Poland Z.o.o.(20) Poland Ordinary - 100% Footwear retail and distribution
Dr. Martens Airwair Denmark ApS(21) Denmark Ordinary - 100% Footwear retail and distribution
Dr. Martens Airwair Vietnam Company Limited(23) Vietnam Ordinary - 100% Footwear retail and distribution
Dr Martens Airwair Limited(1) England and Wales Ordinary - 100% Dormant
Dr. Martens Sports & Leisure Limited(1) England and Wales Ordinary - 100% Dormant
Dr. Martens Airwair Singapore PTE Ltd(18) Singapore Ordinary - 100% Non-trading
Dr Martens Airwair & Co. Limited(1) England and Wales Ordinary - 100% Dormant
Dr. Martens Dept. Store Limited(1) England and Wales Ordinary - 100% Dormant
*The financial year of this entity ends on 31 December in line with local
requirements.
1. Cobb's Lane, Wollaston, Northamptonshire, England, NN29 7SW.
2. 28 Jamestown Road, Camden, London, England, NW1 7BY.
3. 16192 Coastal Hwy, Lewes, Delaware 19958, United States.
4. No. 04B, F16. Seat B, No 2021, Jiuzhou Avenue West, Zhuhai 519000,
Guangdong Province, China.
5. Unit 2306-11, 23F, Sun Life Tower, The Gateway Tower 5, Harbour City, 15
Canton Road, Tsim Sha Tsui, Hong Kong.
6. 14/F, Room 1, 2, SB Tower, 318 Dosan-daero, Gangnam-gu, Seoul, Republic of
Korea.
7. 5-2-28 Jingumae, Shibuya, Tokyo, Japan 150-0001.
8. Avenue du Port 86C, Box 204, 1000 Brussels, Belgium.
9. 5, Cité Trévise 75009 Paris, France.
10. Herikerbergweg 238, Luna Arena, 1101 CM Amsterdam, Netherlands.
11. Seeshaupt, Landkreis Weilheim-Schongau, Germany. Note: this entity is
equity accounted not consolidated.
12. TMF Group Ground Floor, Two Dockland Central, Guild St, North Dock,
Dublin, Republic of Ireland, D01 K2C5.
13. Wagnerstr. 1A, 40212 Düsseldorf, Germany.
14. Blekingegatan 48, 11662 Stockholm, Sweden.
15. Via Morimondo 26-20143 Milano, Italy.
16. Room 1610-11, 1612, Level 16, Tower A, THREE ITC, No. 183 Hongqiao Road,
Xuhui, Shanghai, China.
17. C/Principe de Vergara, 112 4A Planta 28002, Madrid, Spain.
18. 77 Robinson Road, 13-00 Robinson 77, Singapore 068896.
19. 221-451 Dundas Street West, Toronto, Ontario, M5T 1G8, Canada.
20. Rondo, Daszyńskiego 2B, 00-843 Warsaw, Poland.
21. H.C. Andersens Boulevard 38, 3. Th, 1553, København, 1553 Langebro,
Denmark.
22. Teinfaltstraße 8/4, 1010 Vienna, Austria.
23. Level 6 & 7, Friendship Tower, No. 31 Le Duan Street, Ben Nghe Ward,
District 1, Ho Chi Minh City, Vietnam.
Five-year financial summary (unaudited)
For the year ended 31 March 2024
FY24 FY23 FY22 FY21(1) FY20
£m £m £m £m £m
Revenue:
Ecommerce 276.3 279.0 262.4 235.4 136.4
Retail 256.8 241.7 185.6 99.7 165.2
DTC 533.1 520.7 448.0 335.1 301.6
Wholesale(5) 344.0 479.6 460.3 437.9 370.6
877.1 1,000.3 908.3 773.0 672.2
Gross profit 575.2 618.1 578.8 470.5 401.5
Operating expenses (377.7) (373.1) (315.8) (247.6) (217.0)
EBITDA(2) 197.5 245.0 263.0 222.9 184.5
Profit before tax and exceptional items 93.0 159.4 214.3 150.2 113.0
Profit before tax(3) 93.0 159.4 214.3 69.7 101.0
Tax expense (23.8) (30.5) (33.1) (35.0) (26.2)
Profit after tax 69.2 128.9 181.2 34.7 74.8
Earnings per share
Basic 7.0p 12.9p 18.1p 3.5p
Diluted 7.0p 12.9p 18.1p 3.5p
Key statistics:
Pairs sold (m) 11.5 13.8 14.1 12.7 11.1
No. of stores(4) 239 204 158 135 122
DTC mix % 61% 52% 49% 43% 45%
Gross margin %(2) 65.6% 61.8% 63.7% 60.9% 59.7%
EBITDA %(2) 22.5% 24.5% 29.0% 28.8% 27.4%
1. Results for the year ended 31 March 2021 have been retrospectively restated
in relation to a change in accounting policy for the treatment of cloud-based
software. This resulted in £nil impact on cash.
2. Alternative Performance Measure 'APM' as defined in the Glossary on pages
66 and 67.
3. Post exceptional items.
4. Own stores on streets and malls operated under arm's length leasehold
arrangements.
5. Wholesale revenue including distributor customers.
Five-year financial summary (unaudited)
For the year ended 31 March 2024
FY24 FY23 FY22 FY21(1) FY20
£m £m £m £m £m
Revenue by region:
EMEA 431.8 443.0 398.5 335.6 287.9
Americas 325.8 428.2 382.7 295.8 252.2
APAC 119.5 129.1 127.1 141.6 132.1
877.1 1,000.3 908.3 773.0 672.2
Revenue mix:
EMEA % 49% 44% 44% 44% 43%
Americas % 37% 43% 42% 38% 37%
APAC % 14% 13% 14% 18% 20%
EBITDA(2) by region:
EMEA 140.8 146.1 143.8 115.3 92.4
Americas 64.4 100.1 120.0 91.9 75.4
APAC 31.7 33.8 32.6 39.7 35.5
Group support costs (39.4) (35.0) (33.4) (24.0) (18.8)
197.5 245.0 263.0 222.9 184.5
EBITDA %(2) by region:
EMEA 32.6% 33.0% 36.1% 34.4% 32.1%
Americas 19.8% 23.4% 31.4% 31.1% 29.9%
APAC 26.5% 26.2% 25.6% 28.0% 26.9%
22.5% 24.5% 29.0% 28.8% 27.4%
1. Results for the year ended 31 March 2021 have been retrospectively restated
in relation to a change in accounting policy for the treatment of cloud-based
software. This resulted in £nil impact on cash.
2. Alternative Performance Measure 'APM' as defined in the Glossary on pages
66 and 67.
First half/second half analysis (unaudited)
For the year ended 31 March 2024
H1 H2 FY
Unaudited Unaudited Variance Unaudited Unaudited Variance Audited Audited Variance
FY24 FY23 FY24 FY23 FY24 FY23
£m £m % £m £m % £m £m %
Revenue by channel:
Ecommerce 91.7 88.8 3% 184.6 190.2 -3% 276.3 279.0 -1%
Retail 104.7 91.0 15% 152.1 150.7 1% 256.8 241.7 6%
DTC 196.4 179.8 9% 336.7 340.9 -1% 533.1 520.7 2%
Wholesale(4) 199.4 238.8 -16% 144.6 240.8 -40% 344.0 479.6 -28%
395.8 418.6 -5% 481.3 581.7 -17% 877.1 1,000.3 -12%
Gross profit 254.9 257.8 -1% 320.3 360.3 -11% 575.2 618.1 -7%
EBITDA(1) 77.6 88.8 -13% 119.9 156.2 -23% 197.5 245.0 -19%
Profit before tax(2) 25.8 57.9 -55% 67.2 101.5 -34% 93.0 159.4 -42%
Tax expense (6.8) (13.2) -48% (17.0) (17.3) -2% (23.8) (30.5) -22%
Profit after tax 19.0 44.7 -57% 50.2 84.2 -40% 69.2 128.9 -46%
Earnings per share
Basic 1.9p 4.5p -58% 5.1p 8.4p -39% 7.0p 12.9p -46%
Diluted 1.9p 4.5p -58% 5.1p 8.4p -39% 7.0p 12.9p -46%
Key statistics:
Pairs sold (m) 5.7 6.3 -10% 5.8 7.5 -23% 11.5 13.8 -17%
No. of stores(3) 225 174 29% 239 204 17% 239 204 17%
DTC mix % 50% 43% +7pts 70% 59% +11pts 61% 52% +9pts
Gross margin %(1) 64.4% 61.6% +2.8pts 66.5% 61.9% +4.6pts 65.6% 61.8% +3.8pts
EBITDA %(1) 19.6% 21.2% -1.6pts 24.9% 26.9% -2.0pts 22.5% 24.5% -2.0pts
Revenue by region:
EMEA 194.2 179.0 8% 237.6 264.0 -10% 431.8 443.0 -3%
Americas 147.7 179.7 -18% 178.1 248.5 -28% 325.8 428.2 -24%
APAC 53.9 59.9 -10% 65.6 69.2 -5% 119.5 129.1 -7%
395.8 418.6 -5% 481.3 581.7 -17% 877.1 1,000.3 -12%
Revenue mix:
EMEA % 49% 43% +6pts 49% 45% +4pts 49% 44% +5pts
Americas % 37% 43% -6pts 37% 43% -6pts 37% 43% -6pts
APAC % 14% 14% - 14% 12% +2pts 14% 13% +1pts
EBITDA(1) by region:
EMEA 55.8 52.8 6% 85.0 93.3 -9% 140.8 146.1 -4%
Americas 28.6 41.4 -31% 35.8 58.7 -39% 64.4 100.1 -36%
APAC 12.2 13.1 -7% 19.5 20.7 -6% 31.7 33.8 -6%
Support costs (19.0) (18.5) 3% (20.4) (16.5) 24% (39.4) (35.0) 13%
77.6 88.8 -13% 119.9 156.2 -23% 197.5 245.0 -19%
EBITDA %(1):
EMEA 28.7% 29.5% -0.8pts 35.8% 35.3% +0.5pts 32.6% 33.0% -0.4pts
Americas 19.4% 23.0% -3.6pts 20.1% 23.6% -3.5pts 19.8% 23.4% -3.6pts
APAC 22.6% 21.9% +0.7pts 29.7% 29.9% -0.2 pts 26.5% 26.2% +0.3pts
Total 19.6% 21.2% -1.6pts 24.9% 26.9% -2.0pts 22.5% 24.5% -2.0pts
1. Alternative Performance Measure 'APM' as defined in the Glossary on pages
66 and 67.
2. Post exceptional items.
3. Own stores on streets and malls operated under arm's length leasehold
arrangements.
4. Wholesale revenue including distributor customers.
Glossary and Alternative Performance Measures (APMs)
The Group tracks a number of key performance indicators (KPIs) including
Alternative Performance Measures (APMs) in managing its business, which are
not defined or specified under the requirements of IFRS because they exclude
amounts that are included in, or include amounts that are excluded from, the
most directly comparable measures calculated and presented in accordance with
IFRS or are calculated using financial measures that are not calculated in
accordance with IFRS.
The Group believes that these APMs, which are not considered to be a
substitute for or superior to IFRS measures, provide stakeholders with
additional helpful information on the performance of the business. These
APMs are consistent with how the business performance is planned and reported
within the internal management reporting to the Board.
The Group is no longer presenting underlying earnings per share. In previous
years this metric was introduced to present earnings per share exclusive of
prior year tax adjustments in relation to exceptional costs. The Group
recognised £nil prior year tax adjustments in relation to exceptional costs
in FY24 and FY23; as such this adjusted measure is no longer relevant.
These APMs should be viewed as supplemental to, but not as a substitute for,
measures presented in the Consolidated Financial Statements relating to the
Group, which are prepared in accordance with IFRS. The Group believes that
these APMs are useful indicators of its performance. However, they may not be
comparable with similarly titled measures reported by other companies due to
differences in the way they are calculated.
Metric Definition Rationale APM KPI
Revenue Revenue per financial statements. Helps evaluate growth trends, establish budgets and assess operational No Yes
performance and efficiencies.
Revenue by geographical market Revenue per the Group's geographical segments. Helps evaluate growth trends, establish budgets and assess operational No Yes
performance and efficiencies.
Revenue: EMEA
Revenue: Americas
Revenue: APAC
Revenue by channel Helps evaluate growth trends, establish budgets and assess operational No Yes
performance and efficiencies.
Revenue: ecommerce Revenue from the Group's ecommerce platforms.
Revenue: retail Revenue from the Group's own stores (including concessions).
Revenue: DTC Revenue from the Group's direct-to-consumer (DTC) channel (= ecommerce plus
retail revenue).
Revenue: wholesale Revenue from the Group's business-to-business channel, revenue to wholesale
customers, distributors and franchisees.
Constant currency basis Non-GBP results with the same foreign exchange rate applied to the current and Presenting results of the Group excluding foreign exchange volatility. No No
prior periods, based on the current budgeted rates.
Gross margin Revenue less cost of sales (raw materials and consumables). Helps evaluate growth trends, establish budgets and assess operational No No
performance and efficiencies.
Cost of sales is disclosed in the Consolidated Statement of Profit or Loss.
Gross margin % Gross margin divided by revenue. Helps evaluate growth trends, establish budgets and assess operational Yes No
performance and efficiencies.
Glossary and Alternative Performance Measures (APMs) (continued)
Metric Definition Rationale APM KPI
Opex Selling and administrative expenses and finance expenses less depreciation, Opex is used to reconcile between gross margin and EBITDA. Yes No
amortisation, foreign exchange gains/(losses) and finance expense.
EBITDA Profit/(loss) for the year before income tax expense, financing expense, EBITDA is used as a key profit measure because it shows the results of normal, Yes Yes
foreign exchange gains/(losses), depreciation of right-of-use assets, core operations exclusive of income or charges that are not considered to
depreciation, amortisation and exceptional items. represent the underlying operational performance.
Exceptional items are material items that are considered exceptional in nature
by virtue of their size and/or incidence.
EBITDA % EBITDA divided by revenue. Helps evaluate growth trends, establish budgets and assess operational Yes Yes
performance and efficiencies.
EBIT Profit/(loss) for the year before income tax expense, financing expense, EBIT is used as a key profit measure because it shows the results of normal, Yes No
foreign exchange gains/(losses) and exceptional items. core operations exclusive of income or charges that are not considered to
represent the underlying operational performance.
Exceptional items are material items that are considered exceptional in nature
by virtue of their size and/or incidence.
Operating cash flow EBITDA less change in net working capital, share-based payment expense and Operating cash flow is used as a trading cash generation measure because it Yes Yes
capital expenditure. shows the results of normal, core operations exclusive of income or charges
that are not considered to represent the underlying operational performance.
Operating cash flow conversion Operating cash flow divided by EBITDA. Used to evaluate the efficiency of a company's operations and its ability to Yes Yes
employ its earnings toward repayment of debt, capital expenditure and working
capital requirements.
Free cash flow Operating cash flow less cash outflows for exceptional items, net interest Free cash flow is used as a net cash flow measure for the Group before changes Yes No
paid, taxation and lease liabilities. in the debt/capital structure.
Net debt Net debt is calculated by subtracting cash and cash equivalents from bank To aid the understanding of the reader of the financial statements in respect Yes No
loans and lease liabilities. of liabilities owed.
Profit before tax (before FX charge) Profit before tax and before foreign exchange gains/losses. Helps evaluate growth trends, establish budgets and assess operational Yes No
performance and efficiencies.
Earnings per share IFRS measure. This indicates how much money a company makes for each share of its stock, No Yes
and is a widely used metric to estimate company value.
No Yes
No No
Basic earnings per share The calculation of earnings per ordinary share is based on earnings after tax A higher EPS indicates greater value because investors will pay more for a
and the weighted average number of ordinary shares in issue during the company's shares if they think the company has higher profits relative to
period/year. its share price.
Diluted earnings per share Calculated by dividing the profit attributable to ordinary equity holders of Used to gauge the quality of EPS if all convertible securities were
the parent by the weighted average number of ordinary shares in issue during exercised.
the period/year plus the weighted average number of ordinary shares that would
have been issued on the conversion of all dilutive potential ordinary shares
into ordinary shares.
Ecommerce mix % Ecommerce revenue as a percentage of total revenue. Helps evaluate progress towards strategic objectives. No Yes
DTC mix % DTC revenue as a percentage of total revenue. Helps evaluate progress towards strategic objectives. No Yes
No. of stores Number of 'own' stores open in the Group. Helps evaluate progress towards strategic objectives. No Yes
Pairs Pairs of footwear sold during a period. Used to show volumes and growths in the Group. No Yes
Company Information
Shareholders' enquiries
Any shareholder with enquiries relating to their shareholding should, in the
first instance, contact our registrar, Equiniti, using the telephone number or
address on this page.
Electronic shareholder communications
Shareholders can elect to receive communications by email each time the
Company distributes documents, instead of receiving paper copies. This can be
done by registering via Shareview at no extra cost, at www.shareview.co.uk. In
the event that you change your mind or require a paper version of any document
in the future, please contact the registrar.
Access to Shareview allows shareholders to view details about their holdings,
submit a proxy vote for shareholder meetings and notify a change of address.
In addition to this, shareholders have the opportunity to complete dividend
mandates online which facilitates the payment of dividends directly into a
nominated account.
Registered office
28 Jamestown Road
Camden
London
NW1 7BY
Investor relations
investor.relations@drmartens.com
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Tel: 0371 384 2030 (from the UK)
Tel: +44 121 4157047 (from overseas)
Independent Auditor
PricewaterhouseCoopers LLP
1 Embankment Place
London
WC2N 6RH
Tel: +44 (0) 20 7583 5000
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