REG - Frasers Group PLC - Half-year Report
07/12/2023 07:00
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RNS Number : 9519V Frasers Group PLC 07 December 2023
7 December 2023
FRASERS GROUP PLC ("Frasers Group", "the Group", or "the Company")
Unaudited half year results for the 26 weeks ended 29 October 2023 ("FY24 H1")
Elevation Strategy drives strong first half performance; on track to achieve
full year guidance
FY24 H1 FY23 H1 ((1)) Change
UK Sports Retail £1,485.0m £1,473.1m 0.8%
Premium Lifestyle £550.1m £533.5m 3.1%
International Retail £645.8m £570.3m 13.2%
Retail revenue £2,680.9m £2,576.9m 4.0%
Property £31.4m £14.0m 124.3%
Financial Services £57.3m £61.1m (6.2%)
Group revenue £2,769.6m £2,652.0m 4.4%
Retail gross margin 41.8% 40.5% +130 bps
Group gross margin 43.0% 42.3% +70 bps
Retail operating costs (£755.9m) (£752.6m) (0.4%)
Retail profit from trading £364.7m £290.2m 25.7%
Other operating costs (£21.5m) (£21.3m) (0.9%)
Gain on disposal of properties - £91.2m (100.0%)
Group profit from trading £412.5m £439.0m (6.0%)
Depreciation & amortisation (£132.9m) (£112.8m) (17.8%)
Impairments net of impairment reversals £5.9m (£77.7m) 107.6%
Share-based payments (£9.3m) (£6.7m) (38.8%)
Foreign exchange realised £21.9m £43.8m (50.0%)
Operating profit £298.1m £285.6m 4.4%
Reported profit before tax ("PBT") £310.2m £287.2m 8.0%
Fair value adjustment to derivative financial instruments (£15.7m) (£12.4m)
Fair value losses on equity derivatives £21.9m £32.0m
Realised FX gain (£21.9m) (£43.8m)
Share-based payments £9.3m £6.7m
Adjusted profit before tax ("APBT")((2)) £303.8m £269.7m 12.6%
Reported profit after tax £234.6m £222.2m 5.6%
Reported basic earnings per share ("EPS") 53.0p 46.7p 13.5%
Adjusted basic EPS 53.7p 45.4p 18.3%
Cash inflow from operating activities before working capital £441.1m £389.9m 13.1%
Net assets £1,736.2m £1,391.2m 24.8%
Michael Murray, Chief Executive of Frasers Group:
"We have delivered a strong performance in the first half of the year, with
great momentum as we head into the Christmas trading period. The elevation
strategy continues to drive strong trading performance across the business
with good growth in Sports Direct supported by our brand partners.
Our long-term ambitions for our Premium Lifestyle business remain unchanged
although it is likely that progress will remain subdued for the short to
medium term in the face of a softer luxury market however, we continue to
invest with confidence in our unique proposition.
During the period, we have opened new elevated stores, and further
strengthened brand partnerships to allow us to deliver the best consumer
experience. I am also excited about the potential of our strategic investments
which we expect to unlock further opportunities for the Group. We have a
clear ambition to be the leading sports retailer in EMEA and we are making
progress on broadening our footprint through a focused international M&A
strategy.
As we look to 2024, we are confident that our diversified proposition will
continue to provide consumers with choice across a range of brands and price
points. I want to thank our talented colleagues for their relentless focus and
hard work which has enabled another strong set of results."
Outlook
"As noted at the FY23 preliminary results, FY24 started well. This strong
trading momentum continued throughout the first half of FY24 and into the
early recent weeks of the second half especially at Sports Direct. We are
looking forward to our Christmas trading period and remain confident of
achieving APBT in the range £500m-£550m. We are building a diverse business
for sustained multi-year growth. Our substantial ongoing investment into our
elevation strategy, infrastructure and new business integrations continues to
unlock that potential, and we expect further profitable growth for FY25 and
beyond."
Headlines
· Continued strategic progress against key priorities:
· Strong trading performance with continued revenue and profit
growth in UK Sports and International;
· Investment in elevation and brand relationships, bringing in new
brands including The North Face and On Running;
· Completion of warehouse automation project has increased the
efficiency of our warehouse and inventory handling processes. We expect this
will lead to a 5% to 15% gross reduction in like-for-like inventory holding in
the next 12 months; and
· Accelerated integration of acquired entities (including Studio
Retail and Sportmaster) which will improve efficiency and profitability in
coming years.
· Retail profit from trading of £364.7m, an increase of £74.5m
(25.7%) driven by strong trading performance from Sports Direct reflecting the
continuing success of the elevation strategy and strengthening brand
relationships.
· APBT ((2)) increased by 12.6% to £303.8m despite lower profits
from the disposal of properties and subsidiaries (£20.0m in the current
period vs. £117.5m in H1 of FY23). There was also a significant reduction in
property and acquisition related impairments as a result of the strong trading
performance, and future forecasts outweighing our downside impairment
assumptions (a net impairment reversal of £5.9m in the current period vs.
£77.7m of impairments in H1 of FY23).
· Reported PBT of £310.2m, an increase of 8.0% and reported profit
after tax of £234.6m, an increase of 5.6% reflecting the strong trading
performance partially offset by a reduction in foreign exchange gains and an
increase in effective tax rate.
Summary of financial performance
· Group:
· Retail revenue increased by 4.0%, largely due to the impact of
businesses acquired in H2 of FY23 and a strong underlying performance from
Sports Direct. Excluding acquisitions and disposals, on a currency neutral
basis, revenue increased by 0.8%. ((3))
· Group gross margin increased to 43.0% from 42.3%, driven by an
increase in retail gross margin reflecting improvements in Sports Direct's
product mix as a result of strengthening brand relationships.
· UK Sports (53.6% of total group revenue):
· Revenue increased by 0.8% with Sports Direct more than mitigating
a decline in Game UK and Studio Retail.
· Gross profit increased by £76.7m and gross margin increased by
+490 bps to 44.4% reflecting an improved product mix in Sports Direct due to
strengthening brand relationships, as well as reduced lower margin sales from
Game UK and Studio Retail. This contributed to a substantial £105.5m (74.7%)
increase in the segment's profit from trading.
· Premium Lifestyle (19.9% of total group revenue):
· Revenue increased by 3.1%, with the impact of planned House of
Fraser store closures and a softer luxury market offset by sales from the
businesses acquired from JD Sports Fashion plc in H2 of FY23. Excluding
acquisitions and disposals, revenue decreased by 11.2%. ((3))
· Segment profit from trading reduced by £35.1m driven by the
planned clearance of surplus inventory from businesses acquired from JD Sports
Fashion plc and the impact of continuing closures of legacy House of Fraser
stores, combined with an increase in operating costs related to integrating
these acquired businesses into the Group.
· We have invested in a unique proposition in our luxury business
and are well positioned for the future. Our long-term ambitions for this
business remain unchanged although it is likely that progress will remain
subdued for the short to medium term in the face of a softer market.
· International Retail (23.3% of total group revenue):
· Revenue increased by 13.2% due to growth from Game Spain, and the
Sports Direct business in Europe, especially in Ireland, as well as the
acquisition of the MySale business in Australia at the end of H1 FY23. Game
Spain's sales have benefited from increased availability of games consoles as
inventory has become available in the Spanish market. Excluding acquisitions
and disposals, on a currency neutral basis, revenue increased by 12.7%. ((3))
· Segment profit from trading increased by £4.1m (5.5%) year on
year as gross profit growth (achieved at a lower margin % due to Game Spain)
was partially offset by the one-off costs associated with integrating acquired
businesses.
· Property (1.1% of total group revenue):
· Revenue increased by 124.3%, largely due to the acquisitions of
the Luton and Dundee shopping centres and Coventry Arena.
· Segment profit from trading declined by £93.3m, with the
equivalent result in H1 of FY23 including a £91.2m gain on disposal of
properties.
· Financial Services (2.1% of total group revenue):
· Revenue decreased 6.2% due to lower sales in the Studio Retail
business which was largely the result of reduced trading whilst the business
was integrated into the Group's warehouse and ecommerce infrastructure.
· Segment profit from trading was down year-on-year with the
impairment charge returning to normalised levels (a charge of £15.2m vs. a
credit of £3.8m). H1 of FY23 benefitted from a reduction in impairment
provision as a result of the impact of the cost-of-living crisis being less
severe than anticipated. We remain focused on rebuilding a profitable Studio
Retail business and growing Frasers Plus.
· Basic EPS of 53.0p, an increase of 6.3p year-on-year.
· Cash inflow from operating activities before working capital
movements of £441.1m, an increase of £51.2m (13.1%) largely driven by strong
trading performance particularly in Sports Direct.
· Net assets have increased to £1,736.2m from £1,668.2m at 30
April 2023, due to the H1 profitability of the Group offset by share buybacks.
Strategic and operational highlights
Strategic progress:
· Significant momentum behind the growth of Sports Direct,
supporting our ambition to become the number one sports retailer in EMEA.
· Continued to diversify and strengthen our brand partnerships,
with new brands such as On Running, The North Face, Columbia and Salomon,
joining other category-leading brands from adidas and Nike, to Puma and Under
Armour.
· Promising early uptake of Frasers Plus, following the roll-out
across the Group earlier in the year.
· Submitted planning application for a global headquarters campus
in Warwickshire, which will enable Frasers' future growth.
· Continued investment into the omni-channel experience for
consumers, opening new flagship models across our Sports, Premium and Luxury
pillars, including our largest and most advanced Everlast Gym concept in
Newcastle post period-end.
Acquisitions and investments:
· Launched new joint venture in Indonesia to support our
international expansion.
· Made further strategic investments in AO World, ASOS, Currys and
Boohoo, as the Group looks to explore opportunities to expand commercial
relationships and further develop the Group's ecosystem.
· Sold the Missguided intellectual property for £28m, enabling us
to rationalise the number of brands within the Premium Lifestyle segment. This
resulted in a gain on disposal of £20m in the period.
· Acquired shopping destinations in Castleford, Luton, and Dundee,
each of which are well positioned to unlock future growth opportunities in
high-performing retail locations.
Revised segments
Following a review of the Group's operating segments at the start of the
2023/24 financial year, a decision was taken to change the Group's segmental
reporting to more accurately reflect the impact of recent acquisitions and
strategy changes on how management views the business and makes decisions, and
to allow a more granular analysis of the Group's operating base. Further
details are given in note 1 to the condensed consolidated financial statements
and in the appendix below.
Other notes
(1) Restated to reflect the Group's revised segmental
reporting, the reclassification of rental income and the change in accounting
policy regarding the valuation of investment property. Please refer to note 1
of the condensed consolidated financial statements and the appendix below for
details.
(2) This is an Alternative Performance Measure, for which the
reconciliation to the equivalent GAAP measure is set out in the Glossary
section below. Adjusted EPS is discussed in note 8.
(3) A reconciliation to results excluding acquisitions and
disposals, and currency neutral performance measures can be found in the
Glossary section below.
Enquiries
Andrew Kasoulis
Investor Relations Director
E. andrew.kasoulis@frasers.group
T. 07826 532191
Ronnie Laffar
Group Head of Communications
E. fgpr@frasers.group
T. 07931 841082
Rosie Oddy
Brunswick Group, PR
Advisors
E. frasersgroup@brunswickgroup.com
T. 07557 804512
CEO'S STATEMENT
Introduction
We are pleased to report a strong start to the year, and we are firmly on
track to achieve the profit guidance set out at FY23. Demand across the
Group's key brands remains resilient despite the economic headwinds, with our
biggest segment, Sport, driving a particularly strong performance. Our
substantial ongoing investment into our elevation strategy, infrastructure and
integrations continues to unlock Frasers potential, and we expect further
profitable growth for FY25 and beyond.
Strategy
The Elevation Strategy continues to deliver, with significant progress across
the key priorities we set out at full year results.
The global growth of, and interest in, Sport is at an all time high and
continues to grow. Sports Direct is a market leader, delivering against our
mission to serve the athlete with the best kit their money can buy. Our brand
partnerships are stronger than ever, unlocking a more elevated product mix for
our consumers, and we are proud to now have all the leading sports brands
available via the Frasers ecosystem. During the year we welcomed On Running
and The North Face, joining other leading brands from adidas and Nike, to Puma
and Under Armour. The significant momentum we see behind our biggest segment,
Sports Direct, provides us with confidence in the Group's future expansion
strategy.
In our Premium and Luxury division, our dynamic brand partnerships enable us
to elevate the consumer experience whilst providing an unrivalled proposition.
FLANNELS continues to collaborate with its luxury brand partners, including
Christian Louboutin, C.P. Company and Hugo Boss, while the FLANNELS X concept
space in London keeps pioneering innovative cultural experiences.
Whilst there has been some softening in the global luxury market, partly
because of the cost-of-living challenges facing the consumer, we have seen a
positive demand due to our unique proposition. Our long-term ambitions for our
Premium and Luxury business remain unchanged and we continue to invest with
confidence in our unique proposition, although it is likely that progress will
remain subdued for the short to medium term in the face of a softer luxury
market. However, we are excited about the potential prospects and are well
placed to capitalise on opportunities in the sector.
In our Frasers business, we are seeing a successful execution of our new
concept stores, with a positive response from consumers and partners. We
continue to redefine the brand as we build a sustainable and productive
business model.
As huge advocates of physical retail, we continue to make significant
investments in our Group portfolio, both in the UK and internationally. Our
programme of refurbishments, relocations and new store openings remains on
track, with several new, experiential FLANNELS, Frasers and Sports Direct
stores. Last month, we were also excited to open our largest and most advanced
Everlast Gyms concept in Gateshead, Newcastle alongside a FLANNELS and Sports
Direct flagship store.
To further innovate our omni-channel experience, we are investing
significantly to transform the Group's digital infrastructure by building a
cutting-edge digital platform which will elevate the consumer experience
through personalisation, elevated designs and better product discoverability.
Our improved digital capabilities will support the launch of the next phase of
Frasers Plus, our credit and loyalty facility, which will change how consumers
can shop across the Group's brands. Frasers Plus has now been rolled out
across the Group, and we have been pleased to see a promising initial take-up
as well as gaining invaluable consumer insights which will help us serve
consumers better.
In addition, we have been pleased to see the completion of our automation
programme across the supply chain which is enabling us to manage our stock
more efficiently. Due to the increased optimisation, we expect this will lead
to a gross stock reduction of 5-15% on a like-for-like basis for HY25. ----
Investments
Strategic investments and acquisitions are a key part of Frasers' DNA, and we
have continued to explore new partnerships which are aligned with our
strategy, strengthen our ecosystem, and unlock synergies.
In the UK, we made further investments in AO World, ASOS, Currys and Boohoo,
and to rationalise the number of brands in our women's ecommerce portfolio, we
divested the Missguided IP to SHEIN, the Singapore-based fashion retailer.
More broadly, the integrations of our recent acquisitions remain on track to
unlock further cost savings this year and beyond.
We remain committed to our ambition to be the leading sports retailer in EMEA
and we are excited about potential strategic investments and acquisitions.
While we were disappointed by the insolvency of SportScheck, we continue to
believe it is an attractive asset in one of Europe's most important markets,
and are actively working with the appointed administrator to explore the
possibility of acquiring the business out of administration. We have also
strategically invested into the Norwegian sports retailer, XXL, and look
forward to unlocking future synergies.
As we grow our footprint in South East Asia and build on the success we have
seen with our Sport business, we have entered into a joint venture with MAP
Active, a retail conglomerate which is rapidly expanding across South East
Asia. The joint venture will allow us to introduce Sports Direct stores across
Indonesia with both wholesale and retail components.
Our investments in property remain an important element of the Elevation
Strategy, acquiring real estate where we have good occupational demands,
whilst offering strong investment returns. Over the past year we have acquired
shopping destinations in Castleford, Luton and Dundee, each of which are well
positioned to unlock future growth opportunities for Frasers brands in popular
retail locations.
People
Our people remain our greatest asset. Through their unrivalled passion,
attitude and determination we have been able to make huge strides in
progressing our strategy and delivering another successful set of results. -
To ensure we continue to have the best team on the planet, we believe it's
important to create an inclusive and diverse working environment where
everyone is set up for success. That is why we purchased, subject to planning,
a new site in Rugby, Warwickshire for the development of a potential Frasers
Group Global Headquarters, a state-of-the-art campus which would give us the
scale to grow while providing amazing facilities for colleagues and the
public. The planning, which was submitted in October, includes proposals that
would deliver a well-located, world-class platform to further bolster our
sector-leading ecosystem and growth ambitions.
As part of our efforts to create an inclusive and energetic workforce, we have
introduced 'Retail Reconnect' for Head Office staff whereby they will spend
two days a year in either a Retail or Warehouse environment. The benefits so
far have been incredible, driving collaboration and enabling our teams to
better understand our consumers and our business. I have spent some time
working at the Sports Direct Oxford Street flagship, which provided me with
invaluable insights that have enabled us to improve our operations, and I look
forward to working within our Premium and Luxury stores in the remainder of
FY24.
As we look ahead, I am confident and excited about the future for Frasers
Group. Our proposition remains compelling, and our dynamic ecosystem allows us
to deliver on our strategic vision and grow at pace.
Michael Murray
Chief Executive Officer
6 December 2023
INTERIM MANAGEMENT STATEMENT
SUMMARY OF RESULTS
26 weeks ended 26 weeks ended
29 October 2023 23 October 2022
(Unaudited) (Unaudited)((1))
Retail revenue £2,680.9m £2,576.9m
Total revenue £2,769.6m £2,652.0m
Retail gross profit £1,120.6m £1,042.8m
Group gross profit £1,189.9m £1,121.7m
Retail gross margin 41.8% 40.5%
Group gross margin 43.0% 42.3%
Retail profit from trading £364.7m £290.2m
Group profit from trading £412.5m £439.0m
Adjusted profit before tax ("APBT")((2)) £303.8m £269.7m
Adjusted basic EPS((2)) 53.7p 45.4p
Cash inflow from operating activities before working capital £441.1m £389.9m
Net assets £1,736.2m £1,391.2m
(1) Restated to reflect the Group's revised segmental reporting,
the reclassification of rental income and the change in accounting policy
regarding the valuation of investment property. Please refer to note 1 of the
condensed consolidated financial statements and the appendix below for
details.
(2) This is an Alternative Performance Measure, for which the
reconciliation to the equivalent GAAP measure is set out in the Glossary
section below. Adjusted EPS is discussed in note 8.
The Directors have adopted Alternative Performance Measures (APM's). APM's
should be considered in addition to UK-Adopted International Accounting
Standards ("UK IAS") measures. The Directors believe that Adjusted profit
before tax ("APBT") and Adjusted basic EPS provide further useful information
for shareholders on the underlying performance of the Group in addition to the
reported numbers and are consistent with how business performance is measured
internally. They are not recognised profit measures under UK IAS and may not
be directly comparable with "adjusted" or "alternative" profit measures used
by other companies.
PERFORMANCE OVERVIEW
Retail revenue increased by 4.0%, largely due to the impact of businesses
acquired in H2 of FY23 and a strong underlying performance from Sports Direct.
Total group revenue increased 4.4% due to retail growth combined with revenue
from acquisitions in the property segment.
Group gross margin increased to 43.0% from 42.3%, driven by an increase in
retail gross margin reflecting improvements in Sports Direct's product mix as
a result of strengthening brand relationships.
Retail profit from trading increased by £74.5m (25.7%) to £364.7m, driven by
strong trading performance from Sports Direct reflecting the continuing
success of the elevation strategy and strengthening brand relationships.
APBT ((2)) increased by 12.6% to £303.8m despite lower profits from the
disposal of properties and subsidiaries (£20.0m in the current period vs.
£117.5m in H1 of FY23). There was also a significant reduction in property
and acquisition related impairments as a result of the strong trading
performance, and future forecasts outweighing our downside impairment
assumptions (a net impairment reversal of £5.9m in the current period vs.
£77.7m of impairments in H1 of FY23).
Reported PBT of £310.2m, an increase of 8.0% and reported profit after tax of
£234.6m, an increase of 5.6% reflecting the strong trading performance
partially offset by a reduction in foreign exchange gains and an increase in
effective tax rate.
Adjusted EPS increased by 8.3p (18.3%) to 53.7p.
Cash inflow from operating activities before working capital movements of
£441.1m, an increase of £51.2m (13.1%) largely driven by strong trading
performance particularly in Sports Direct.
Net assets have increased to £1,736.2m from £1,668.2m at 30 April 2023, due
to the H1 profitability of the Group offset by share buybacks.
REVIEW BY BUSINESS SEGMENT
UK SPORTS
This segment now includes the results of the Group's core sports retail store
operations in the UK, plus all the Group's sports retail online business,
other UK-based sports retail and wholesale operations, GAME UK stores and
online operations, retail store operations in Northern Ireland, Frasers
Fitness, and the Group's central operating functions (including the Shirebrook
campus).
UK Sports accounts for 53.6% (FY23 H1: 55.5%) of the Group's revenue.
26 weeks ended 26 weeks ended
29 October 2023 23 October 2022
(Unaudited) (Unaudited)((1))
Revenue £1,485.0m £1,473.1m
Cost of sales (£825.7m) (£890.5m)
Gross profit £659.3m £582.6m
Gross margin % 44.4% 39.5%
Profit from trading £246.7m £141.2m
Operating profit £241.8m £121.1m
(1) Restated to reflect the Group's revised segmental reporting,
the reclassification of rental income and the change in accounting policy
regarding the valuation of investment property. Please refer to note 1 of the
condensed consolidated financial statements and the appendix below for
details.
Revenue increased by 0.8% with Sports Direct more than mitigating a decline in
Game UK and Studio Retail.
Gross profit increased by £76.7m and gross margin increased by +490 bps to
44.4% reflecting an improved product mix in Sports Direct due to strengthening
brand relationships, as well as reduced lower margin sales from Game UK and
Studio Retail. This contributed to a substantial £105.5m (74.7%) increase in
the segment's profit from trading.
UK Sports' operating profit result of £241.8m (FY23 H1: £121.1m) includes
impairment reversals of £23.7m (FY23 H1: impairments of £10.2m), a result of
the strong trading performance, and future forecasts outweighing our downside
impairment assumptions, and foreign exchange gains of £24.9m (FY23 H1:
£47.7m).
UK SPORTS RETAIL STORE PORTFOLIO ((3))
29-Oct-23 23-Oct-22 30-Apr-23
England 381 387 384
Scotland 38 37 38
Wales 28 29 29
Northern Ireland 20 19 20
Isle of Man 1 1 1
GAME UK (1) 277 276 267
Evans Cycles (2) 51 60 57
USC 11 17 16
Total 807 826 812
Opened 44 60 93
Closed (49) (42) (89)
Acquired - - -
Area (sq.ft.) Approx 6.8m Approx 6.8m Approx. 6.9m
(1) The GAME UK store numbers include 205 concessions operating
within Sports Direct fascia stores (30 April 2023: 176) and does not include
BELONG arenas.
(2) The Evans Cycles store numbers include 2 concessions
operating within House of Fraser fascia stores (30 April 2023: 2).
(3) Table excludes the Group's standalone gyms.
( )
PREMIUM LIFESTYLE
This segment includes the results of the Group's premium and luxury retail
businesses FLANNELS, Cruise, Van Mildert, Jack Wills, House of Fraser, Gieves
and Hawkes, and Sofa.com along with the related websites, the businesses
acquired from JD Sports in FY23, as well as the results from the I Saw it
First website and the Missguided website until the disposal of the Missguided
intellectual property in October 2023.
Premium Lifestyle accounts for 19.9% (FY23 H1: 20.1%) of the Group's revenue.
26 weeks ended 26 weeks ended
29 October 2023 23 October 2022
(Unaudited) (Unaudited)((1))
Revenue £550.1m £533.5m
Cost of sales (£347.0m) (£310.3m)
Gross profit £203.1m £223.2m
Gross margin % 36.9% 41.8%
Profit from trading £39.9m £75.0m
Operating profit £23.1m £20.2m
(1) Restated to reflect the Group's revised segmental reporting,
the reclassification of rental income and the change in accounting policy
regarding the valuation of investment property. Please refer to note 1 of the
condensed consolidated financial statements and the appendix below for
details.
Revenue increased by 3.1%, with the impact of planned House of Fraser store
closures and a softer luxury market offset by sales from the businesses
acquired from JD Sports Fashion plc in H2 of FY23. Excluding acquisitions and
disposals, revenue decreased by 11.2%. ((3))
Segment profit from trading reduced by £35.1m driven by the planned clearance
of surplus inventory from businesses acquired from JD Sports Fashion plc and
the impact of continuing closures of legacy House of Fraser stores, combined
with an increase in operating costs related to integrating these acquired
businesses into the Group.
Premium Lifestyle's operating profit result of £23.1m (FY23 H1: £20.2m)
includes impairment reversals of £2.4m (FY23 H1: impairments of £48.0m
including £20.5m in respect of writing down intangibles recognised on the
acquisition of Missguided and I Saw it First).
We have invested in a unique proposition in our luxury business and are well
positioned for the future. Our long-term ambitions for this business remain
unchanged although it is likely that progress will remain subdued for the
short to medium term in the face of a softer luxury market.
PREMIUM LIFESTYLE STORE PORTFOLIO
29-Oct-23 23-Oct-22 30-Apr-23
Fashion Brands (3) 37 - 67
Jack Wills (2) 32 48 33
FLANNELS 76 56 58
House of Fraser / Frasers (2) 29 34 31
Gieves & Hawkes 5 - 5
Sofa.com (1) 20 23 20
Cruise 3 5 4
18 Montrose 2 3 2
Garment Quarter 1 1 1
Total 205 170 221
Opened 24 7 9
Acquired - - 82
Closed (40) (16) (49)
Area (sq.ft.) Approx. 3.4m Approx. 3.8m Approx. 3.6m
(1) Sofa.com store numbers include 13 concessions operating
within House of Fraser fascia stores (30 April 2023: 13).
(2) Jack Wills and Frasers stores in Republic of Ireland are
shown in the International store numbers as opposed to the Premium Lifestyle
store numbers.
(3) During the period 18 stores were closed from Fashion Brands
and rebranded as Flannels and Flannels Junior
INTERNATIONAL
( )
This segment includes the results all of the Group's sports retail stores,
management and operating functions in Europe, Asia and the rest of the world,
including the Group's European Distribution Centres in Belgium and Austria,
GAME Spain stores, the Baltics & Asia e-commerce offerings, the MySale
business in Australia, the Group's US retail operations until they were
disposed of in 2022, and all non-UK based wholesale and licensing activities
(relating to brands such as Everlast, Karrimor and Slazenger).
( )
International accounts for 23.3% (FY23 H1: 21.5%) of the Group's revenue.
( )
( )
( )
( )
26 weeks ended 26 weeks ended
29 October 2023 23 October 2022
(Unaudited) (Unaudited)((1))
Revenue £645.8m £570.3m
Cost of sales (£387.6m) (£333.3m)
Gross profit £258.2m £237.0m
Gross margin % 40.0% 41.6%
Profit from trading £78.1m £74.0m
Operating profit £35.9m £33.2m
(1) Restated to reflect the Group's revised segmental reporting,
the reclassification of rental income and the change in accounting policy
regarding the valuation of investment property. Please refer to note 1 of the
condensed consolidated financial statements and the appendix below for
details.
Revenue increased by 13.2% due to growth from Game Spain, and the Sports
Direct business in Europe, especially in Ireland, as well as the acquisition
of the MySale business in Australia at the end of H1 FY23. Game Spain's sales
have benefited from increased availability of games consoles as inventory has
become available in the Spanish market. Excluding acquisitions and
disposals, on a currency neutral basis, revenue increased by 12.7%. ((3))
Segment profit from trading increased by £4.1m (5.5%) year on year as gross
profit growth, achieved at a lower margin % (-160bps) due to lower margins
made by Game Spain on the sale of consoles, was partially offset by the
one-off costs associated with integrating acquired businesses.
International's operating profit result of £35.9m (FY23 H1: £33.2m) includes
impairments of £4.2m (FY23 H1: impairments of £8.4m) and foreign exchange
losses of £4.6m (FY23 H1: losses of £3.8m).
INTERNATIONAL STORE PORTFOLIO
29-Oct-23 23-Oct-22 30-Apr-23
GAME Spain 226 234 233
Sportmaster - Denmark 48 75 68
Republic of Ireland(2) 46 44 45
Belgium 33 34 34
Estonia(1) 23 22 22
Portugal 21 21 21
Austria 19 19 19
Lithuania(1) 22 19 19
Latvia(1) 20 18 18
Poland 22 13 15
Slovenia 11 12 11
Czech Republic 10 12 12
Spain 13 12 12
Hungary 8 7 7
Cyprus 6 6 6
Holland 5 5 5
Slovakia 5 5 5
France 7 4 7
Luxembourg 2 2 2
Iceland 2 2 2
Germany 1 1 1
Malaysia 33 33 33
Total 583 600 597
Opened 20 8 16
Acquired - 75 75
Closed (34) (6) (17)
Disposed - (42) (42)
Area (sq.ft.) Approx. 4.3m Approx. 4.3m Approx. 4.3m
(1) Includes only stores with SPORTSDIRECT.com and SPORTLAND
fascias.
(2) Excluding Heatons fascia stores.
PROPERTY
This segment includes the results from the Group's freehold property owning
and long leasehold holding property companies that generate third party rental
and other property related income (e.g., car parking, conference and events
income). The results of the Coventry Arena are reported in this segment.
Property accounts for 1.1% (FY23 H1: 0.5%) of the Group's revenue.
26 weeks ended 26 weeks ended
29 October 2023 23 October 2022
(Unaudited) (Unaudited)((1))
Revenue £31.4m £14.0m
Cost of sales (£4.2m) -
Gross profit £27.2m £14.0m
Gross margin % 86.6% 100.0%
Profit from trading £9.5m £102.8m
Operating (loss)/profit (£40.2m) £70.3m
(1) Restated to reflect the Group's revised segmental reporting,
the reclassification of rental income and the change in accounting policy
regarding the valuation of investment property. Please refer to note 1 of the
condensed consolidated financial statements and the appendix below for
details.
Revenue increased by 124.3%, largely due to the acquisitions of Luton, Dundee
and Coventry Arena.
Segment profit from trading declined by £93.3m, with the equivalent result in
H1 of FY23 including a £91.2m gain on disposal of properties.
Property's operating loss of £40.2m (FY23 H1: profit of £70.3m) includes
impairments of £16.0m (FY23 H1: impairments of £6.4m) and depreciation of
£35.5m (FY23 H1: £26.1m).
The cost of sales in the current period of £4.2m (FY23 H1: £nil) relates to
the generation of non-rental income at the Coventry Arena.
FINANCIAL SERVICES
This segment includes the results of Frasers Group Financial Services. This
includes interest charged on amounts advanced to consumer credit customers,
along with the associated impairment and operating costs.
Financial Services accounts for 2.1% (FY23 H1: 2.3%) of the Group's revenue.
26 weeks ended 26 weeks ended
29 October 2023 23 October 2022
(Unaudited) (Unaudited)((1))
Revenue £57.3m £61.1m
Impairment (losses) / profits on credit receivables* (£15.2m) £3.8m
Gross profit £42.1m £64.9m
Gross margin % 73.5% 106.2%
Profit from trading £38.3m £46.0m
Operating profit £37.5m £40.8m
* In the Financial Services segment, impairment losses on consumer credit
receivables are disclosed within gross margin.
(1) Restated to reflect the Group's revised segmental reporting,
the reclassification of rental income and the change in accounting policy
regarding the valuation of investment property. Please refer to note 1 of the
condensed consolidated financial statements and the appendix below for
details.
Revenue decreased 6.2% due to lower sales in the Studio Retail business which
was largely the result of reduced trading whilst the business was integrated
into the Group's warehouse and ecommerce infrastructure.
Segment profit from trading was down year-on-year with the impairment charge
returning to normalised levels (a charge of £15.2m vs. a credit of £3.8m).
H1 of FY23 benefitted from a reduction in impairment provision as a result of
the impact of the cost-of-living crisis being less severe than anticipated. We
remain focused on rebuilding a profitable Studio Retail business and growing
Frasers Plus.
STRATEGIC INVESTMENTS
Included within long-term financial assets at the period ended 29 October 2023
are the following direct interests held by the Group:
29 October 2023 23 October 2022 30 April 2023
(unaudited) (unaudited) (audited)
% % %
Mulberry Group plc 36.9 36.9 36.9
AO World plc 22.8 - -
N Brown Group plc 19.8 - 17.6
Boohoo Group plc 16.5 - -
ASOS plc 12.6 2.9 5.5
XXL ASA 12.2 - -
In addition to those listed, there are various other interests held, none of
which represent more than 5% of the voting power of the investee. The
movements in fair value of these long-term financial assets are recognised
within Other Comprehensive Income.
The Group also holds indirect strategic investments via options. The fair
value of the options are recognised in Derivative Financial Assets or
Liabilities on the Group Balance Sheet, with the movement in fair value
recorded in the Income Statement.
The Group's largest sold put position is in Hugo Boss at approximately 18% of
the equivalent share capital. On 15 December 2023 10.9% of this position
expires, and as at the date of reporting it is anticipated that these will
expire unexercised. Management would anticipate a significant double digit %
decline in the Hugo Boss spot price being required for these sold put options
in December 2023 to exercise.
FOREIGN EXCHANGE AND TREASURY
The Group reports its results in GBP but trades internationally and is
therefore exposed to currency fluctuations on currency cash flows in various
ways. These include purchasing inventory from overseas suppliers, making sales
in currencies other than GBP and holding overseas assets in other currencies.
The Board mitigate the cash flow risks associated with these fluctuations with
the careful use of currency hedging using forward contracts and other
derivative financial instruments.
The Group uses forward contracts that qualify for hedge accounting in two main
ways - to hedge highly probable EUR sales income and USD inventory purchases.
This introduces a level of certainty into the Group's planning and forecasting
process. Management has reviewed detailed forecasts and the growth assumptions
within them and are satisfied that the forecasts meet the criteria as being
highly probable forecast transactions.
As at 29 October 2023, the Group had the following forward contracts that
qualified for hedge accounting under IFRS 9 Financial Instruments, meaning
that fluctuations in the value of the contracts before maturity are recognised
in the Hedging Reserve through Other Comprehensive Income. After maturity, the
sales and purchases are then valued at the hedge rate.
Currency Hedging against Currency value Timing Rates
EUR / GBP Euro sales EUR 576m FY24-FY26 0.98 - 1.09
USD / GBP USD inventory purchases USD 390m FY24 1.21 - 1.26
USD / EUR USD inventory purchases USD 30m FY24 1.31
The Group also uses currency options, swaps and spots for more flexibility
against cash flows that are less than highly probable and therefore do not
qualify for hedge accounting under IFRS 9 Financial Instruments. The fair
value movements before maturity are recognised in the Income Statement.
The Group has the following currency options and unhedged forwards:
Currency Expected use Currency value Timing Rates
EUR / GBP Euro sales EUR 1,116m FY24 - FY27 0.98 - 1.09
USD / GBP USD inventory purchases USD 570m FY24 - FY25 1.21 - 1.26
USD / EUR USD inventory purchases USD 100m FY24 - FY25 1.11 - 1.31
The Group also holds short-term swaps for Treasury management purposes:
Currency Expected use Currency value Timing Rates
EUR / GBP Cash flow management EUR 120m FY24 1.14 - 1.15
USD / EUR Cash flow management EUR 70m FY24 0.88 - 1.07
The Group is proactive in managing its currency requirements. The Treasury
team works closely with senior management to understand the Group's plans and
forecasts, they also discuss and understand appropriate financial products
with various financial institutions, including those within the Group's Bank
Financed Facility. This information is then used to implement suitable
currency products to align with the Group's strategy.
Regular reviews of the hedging performance are performed by the Treasury team
alongside senior management to ensure the continued appropriateness of the
currency hedging in place, and where suitable, either implementing additional
strategies and/or restructuring existing approaches in conjunction with our
financial institution partners.
Given the potential impact of commodity prices on raw material costs, the
Group may hedge certain input costs, including cotton, crude oil and
electricity.
CASH FLOW AND NET DEBT
Net debt increased by £180.7m from £416.8m at 30 April 2023 to £597.5m at
29 October 2023. Net debt includes £146.3m borrowings relating to the Frasers
Group Financial Services Limited securitisation facility (30 April 2023:
£161.6m). Net interest on bank loans and overdrafts increased to £25.0m
(FY23 H1: £16.8m) largely due to increased interest rates and increased usage
of the Revolving Credit Facility ("RCF") in the period.
Analysis of net debt:
29 October 2023 (Unaudited) 23 October 2022 (Unaudited) 30 April 2023 (Audited)
Cash and cash equivalents £266.7m £314.8m £332.9m
Borrowings (£864.2m) (£813.9m) (£749.7m)
Net debt (£597.5m) (£499.1m) (£416.8m)
Securitisation (disclosed within borrowings) (£146.3m) (£134.4m) (£161.6m)
Net debt excluding securitisation (£451.2m) (£364.7m) (£255.2m)
Cash flow:
26 weeks ended 29 October 2023 (Unaudited) 26 weeks ended 23 October 2022 (Unaudited)((1))
Operating cash inflow before changes in working capital £441.1m £389.9m
Decrease in receivables £3.7m £46.5m
Increase in inventories (£125.3m) (£152.3m)
Increase in payables £162.7m £43.3m
Decrease in provisions (£46.6m) (£9.8m)
Cash inflows from operating activities £435.6m £317.6m
Income taxes paid (£68.2m) (£58.4m)
Net cash inflows from operating activities £367.4m £259.2m
Lease payments (£70.6m) (£71.5m)
Net finance costs paid (£19.3m) (£23.9m)
Net capital expenditure (including sale & leasebacks) (£151.4m) £103.6m
Net proceeds from acquisition and disposal of subsidiary undertakings - £10.5m
Borrowings acquired through business combinations - (£7.0m)
Purchase of listed investments, net of disposal proceeds (£184.9m) (£96.1m)
Purchase of associated undertakings - (£11.9m)
Proceeds in relation to equity derivatives £32.9m £48.6m
Increase in deposits relating to equity derivatives (£54.3m) (£145.8m)
Investment income £2.0m £1.4m
Exchange movement on opening cash balances (£0.2m) £5.3m
Purchase of own shares (£102.3m) (£80.4m)
Movement in net debt (£180.7m) (£8.0m)
(1) Restated to reflect the change in presentation of movements
in deposits relating to equity derivatives detailed in the FY23 annual report.
SUMMARY CONSOLIDATED BALANCE SHEET (EXTRACT)
29 October 2023 (Unaudited) 23 October 2022 (Unaudited)((1)) 30 April 2023 (Audited)((1))
Property, plant & equipment £1,173.1m £990.6m £1,150.7m
Investment properties £192.9m £58.5m £141.3m
Long-term financial assets £410.7m £241.4m £289.6m
Intangible assets £24.2m £152.0m £24.1m
Inventories £1,590.2m £1,466.5m £1,464.9m
Trade & other receivables £790.7m £942.0m £720.1m
Trade & other payables (£874.9m) (£838.9m) (£711.9m)
Provisions (£259.9m) (£426.1m) (£306.5m)
Net debt (£597.5m) (£499.1m) (£416.8m)
Lease liabilities (£684.2m) (£659.9m) (£679.9m)
Other (£29.1m) (£35.8m) (£7.4m)
Net assets £1,736.2m £1,391.2m £1,668.2m
(1) Restated to reflect the change in accounting policy
regarding the valuation of investment property. Please refer to note 1 of the
condensed consolidated financial statements and the appendix below for
details.
The increase within property, plant and equipment from 30 April 2023 is
largely due to net additions offset by depreciation and the transfer of three
properties with a net book value of approximately £50m to investment property
following a change of use in the period. This transfer also accounts for the
increase in investment property since 30 April 2023.
Long-term financial assets have increased since 30 April 2023 due to the
business making significant strategic investments in AO World plc, ASOS plc
and Boohoo plc during the period.
Inventory has increased from 30 April 2023 as holdings are increased in the
build up to the peak Christmas trading period and also due to acquisitions.
The increase compared to 23 October 2022 is principally due to acquisitions.
Trade and other receivables includes £244.4m relating to deposits in respect
of derivative financial instruments (30 April 2023: £190.1m; 23 October 2022:
£389.7m) and the Frasers Group Financial Services consumer credit receivables
portfolio with a carrying value of £211.5m (30 April 2023: £225.9m; 23
October 2022: £240.3m).
See note 10 for further details in relation to provisions.
The increase in trade and other payables since 30 April 2023 largely follows
the seasonal increase in inventory holding noted above.
RELATED PARTY TRANSACTIONS
Related party transactions are disclosed in note 15. There have been no
material changes in the related party transactions described in the last
annual report.
GOING CONCERN
Having thoroughly reviewed the performance of the Group and having made
suitable enquiries, the Directors are confident that the Group has adequate
resources to remain in operational existence for the foreseeable future which
is at least 12 months from the date of approval of these unaudited condensed
consolidated financial statements. Full details of this assessment can be
found in note 1.
DIRECTORS' RESPONSIBILITY STATEMENT
There have been no changes in Directors in the period. Each of the directors
confirm that to the best of their knowledge:
· The condensed set of financial statements has been prepared in
accordance with UK-adopted IAS 34 'Interim Financial Reporting' and the
Disclosure Guidance and Transparency Rules Sourcebook of the United Kingdom's
Financial Conduct Authority.;
· The interim management report includes a fair review of the
information required by:
a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being
an indication of important events during the first 26 weeks of the financial
year and their impact on the condensed set of financial statements; and a
description of the principal risks and uncertainties for the remaining 26
weeks of the year; and
b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being
related party transactions that have taken place in the first 26 weeks of the
current financial year and that have materially affected the financial
position or performance of the entity during that period; and any changes in
the related party transactions described in the last annual report that could
do so.
The summary of results for the 53 weeks ended 30 April 2023 is an extract from
the published Annual Report and Financial Statements which have been reported
on by the Group's auditors at the time and delivered to the Registrar of
Companies. The audit report was unqualified, did not draw attention to any
matters by way of emphasis and did not contain a statement under s498 (2) or
s498 (3) of the Companies Act 2006.
Michael Murray
Chief Executive Officer
6 December 2023
FINANCIAL INFORMATION
CONSOLIDATED INCOME STATEMENT
FOR THE 26 WEEKS ENDED 29 OCTOBER 2023
26 weeks ended 26 weeks ended 26 weeks ended 26 weeks ended
29 October 2023 23 October 2022 23 October 2022 23 October 2022
Note (unaudited) (unaudited)((1)) (unaudited) ((1)) (unaudited) ((1))
£m £m £m £m
Continuing operations Continuing operations Discontinued operations Total
Revenue 2,716.4 2,587.3 8.5 2,595.8
Credit account interest 53.2 56.2 - 56.2
Total revenue (including credit account interest) 2,769.6 2,643.5 8.5 2,652.0
Cost of sales (1,564.5) (1,529.7) (4.4) (1,534.1)
Impairment (losses)/reversals on credit customer receivables (15.2) 3.8 - 3.8
Gross profit 1,189.9 1,117.6 4.1 1,121.7
Selling, distribution and administrative expenses (899.9) (875.2) (4.0) (879.2)
Other operating income 2.2 2.0 0.1 2.1
Property related impairments 5.9 (50.2) - (50.2)
Profit on sale of properties - 91.2 - 91.2
Operating profit 3 298.1 285.4 0.2 285.6
Gain on sale of subsidiaries / discontinued operation 20.0 - 26.3 26.3
Investment income 4 34.9 27.2 - 27.2
Investment costs 5 (21.9) (40.4) - (40.4)
Finance income 6 28.0 24.7 - 24.7
Finance costs 7 (48.9) (36.1) (0.1) (36.2)
Profit before taxation 310.2 260.8 26.4 287.2
Taxation (75.6) (64.9) (0.1) (65.0)
Profit for the period 234.6 195.9 26.3 222.2
ATTRIBUTABLE TO:
Equity holders of the Group 234.2 188.7 26.3 215.0
Non-controlling interests 0.4 7.2 - 7.2
Profit for the period 234.6 195.9 26.3 222.2
EARNINGS PER SHARE ATTRIBUTABLE TO THE EQUITY SHAREHOLDERS
Pence per share Pence per share Pence per share Pence per share
Basic earnings per share 8 53.0 41.0 5.7 46.7
Diluted earnings per share 8 53.0 41.0 5.7 46.7
(1) Restated to reflect the change in accounting policy
regarding the valuation of investment property and the reclassification of
rental income. Please refer to note 1 of the condensed consolidated financial
statements and the appendix below for details.
The accompanying accounting policies and notes form part of these condensed
consolidated financial statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE 26 WEEKS ENDED 29 OCTOBER 2023
26 weeks ended 26 weeks ended
29 October 2023 23 October 2022
Note (unaudited) (unaudited) ((1))
£m £m
Profit for the period 234.6 222.2
OTHER COMPREHENSIVE INCOME
ITEMS THAT WILL NOT BE RECLASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS
Fair value movement on long-term financial assets (66.4) (69.7)
Remeasurements of defined benefit pension scheme 0.2 (1.2)
Deferred tax on remeasurements of defined benefit pension scheme - 0.3
ITEMS THAT WILL BE RECLASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS
Exchange differences on translation of foreign operations (12.9) (2.4)
Fair value movement on hedged contracts - recognised in the period 11 10.7 24.6
Fair value movement on hedged contracts - reclassified and reported in sales 11 (1.5) (12.6)
Fair value movement on hedged contracts - reclassified and reported in 11 (2.4) (19.6)
inventory/cost of sales
Fair value movement on hedged contracts - taxation taken to reserves 11 (2.1) 2.2
Fair value adjustment in respect of investment properties 1.2 -
OTHER COMPREHENSIVE LOSS FOR THE PERIOD, NET OF TAX (73.2) (78.4)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 161.4 143.8
ATTRIBUTABLE TO:
Equity holders of the Group 161.0 136.6
Non-controlling interest 0.4 7.2
161.4 143.8
(1) Restated to reflect the change in accounting policy
regarding the valuation of investment property. Please refer to note 1 of the
condensed consolidated financial statements and the appendix below for
details.
The accompanying accounting policies and notes form part of these condensed
consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
29 October 2023 23 October 2022 30 April 2023 24 April 2022
(unaudited)
(unaudited) ((1))
Note
(audited) ((1)) (audited) ((1))
£m £m
£m £m
ASSETS - NON CURRENT
Property, plant and equipment 1,173.1 990.6 1,150.7 1,011.0
Investment properties 192.9 58.5 141.3 95.5
Intangible assets 24.2 152.0 24.1 120.6
Long-term financial assets 410.7 241.4 289.6 206.6
Investment in associated undertakings 17.2 11.9 16.9 -
Retirement benefit surplus 0.8 0.6 0.8 2.2
Deferred tax assets 81.9 93.7 82.1 100.8
1,900.8 1,548.7 1,705.5 1,536.7
ASSETS - CURRENT
Inventories 1,590.2 1,466.5 1,464.9 1,277.6
Trade and other receivables 9 790.7 942.0 720.1 841.4
Derivative financial assets 11 92.6 131.6 79.3 116.5
Cash and cash equivalents 266.7 314.8 332.9 336.8
2,740.2 2,854.9 2,597.2 2,572.3
Assets in disposal groups classified as held for sale - - - 40.0
TOTAL ASSETS 4,641.0 4,403.6 4,302.7 4,149.0
Share capital 64.1 64.1 64.1 64.1
Share premium 874.3 874.3 874.3 874.3
Treasury shares reserve (746.5) (569.3) (644.2) (488.9)
Permanent contribution to capital 0.1 0.1 0.1 0.1
Capital redemption reserve 8.0 8.0 8.0 8.0
Foreign currency translation reserve 34.5 33.2 47.4 35.6
Reverse combination reserve (987.3) (987.3) (987.3) (987.3)
Own share reserve (66.8) (66.8) (66.8) (66.8)
Hedging reserve 11 18.7 49.9 14.0 55.3
Share based payment reserve 42.0 20.0 33.1 14.1
Revaluation reserve 1.2 - - -
Retained earnings 2,453.5 1,928.8 2,285.5 1,784.4
Issued capital and reserves attributable to owners of the parent 1,695.8 1,355.0 1,628.2 1,292.9
Non-controlling interests 40.4 36.2 40.0 22.0
TOTAL EQUITY 1,736.2 1,391.2 1,668.2 1,314.9
LIABILITIES - NON CURRENT
Lease liabilities 513.4 516.6 560.3 503.6
Borrowings 864.2 813.9 749.7 827.9
Retirement benefit obligations 1.6 1.7 1.7 1.6
Deferred tax liabilities 16.6 44.7 15.7 40.4
Provisions 10 251.9 426.1 290.2 433.0
1,647.7 1,803.0 1,617.6 1,806.5
LIABILITIES - CURRENT
Derivative financial liabilities 11 92.1 180.8 66.5 107.2
Trade and other payables 874.9 838.9 711.9 729.8
Lease liabilities 170.8 143.3 119.6 117.0
Provisions 10 8.0 - 16.3 -
Current tax liabilities 111.3 46.4 102.6 50.9
1,257.1 1,209.4 1,016.9 1,004.9
Liabilities in disposal groups classified as held for sale - - - 22.7
TOTAL LIABILITIES 2,904.8 3,012.4 2,634.5 2,834.1
TOTAL EQUITY AND LIABILITIES 4,641.0 4,403.6 4,302.7 4,149.0
(1) Restated to reflect the change in accounting policy
regarding the valuation of investment property. Please refer to note 1 of the
condensed consolidated financial statements and the appendix below for
details.
The accompanying accounting policies and notes form part of these condensed
consolidated financial Statements.
CONSOLIDATED CASH FLOW STATEMENT
FOR THE 26 WEEKS ENDED 29 OCTOBER 2023
26 weeks ended 26 weeks ended
29 October 2023 23 October 2022
(unaudited) (unaudited)((1))
£m £m
Profit before taxation 310.2 287.2
Net finance costs 20.9 11.5
Net investment (income)/costs (13.0) 13.2
Gain on disposal of subsidiaries/discontinued operations (20.0) (26.3)
Operating profit 298.1 285.6
Depreciation of property, plant and equipment 131.3 112.9
Amortisation of intangible assets 1.6 3.3
(Impairment reversal)/impairment of tangible assets and intangible assets (5.9) 77.7
Loss/(gain) on modification/remeasurement of lease liabilities 6.5 (3.4)
Profit on disposal of property, plant and equipment - (91.2)
Share-based payment charge in equity (excluding deferred tax) 9.3 4.6
Pension contributions less income statement charge 0.2 0.4
Operating cash inflow before changes in working capital 441.1 389.9
Decrease in receivables 3.7 46.5
Increase in inventories (125.3) (152.3)
Increase in payables 162.7 43.3
Decrease in provisions (46.6) (9.8)
CASH INFLOW FROM OPERATING ACTIVITIES 435.6 317.6
Income taxes paid (68.2) (58.4)
NET CASH INFLOW FROM OPERATING ACTIVITIES 367.4 259.2
Proceeds on disposal of property, plant and equipment and investment property 5.9 0.1
Proceeds from sale and leaseback transactions - 171.5
Proceeds on disposal of listed investments 85.0 17.4
Premiums in relation to equity derivatives 32.9 48.6
Proceeds on disposal of subsidiary undertaking - 51.4
Purchase of subsidiaries, net of cash acquired - (40.9)
Purchase of property, plant and equipment and investment property (157.3) (118.8)
Purchase of listed investments (269.9) (113.5)
Purchase of associated undertakings - (11.9)
Increase in deposits relating to equity derivatives ((2)) (54.3) (145.8)
Investment income received 2.0 1.4
Finance income received 2.0 3.7
NET CASH INFLOW / (OUTFLOW) FROM INVESTING ACTIVITIES (353.7) (136.8)
Lease payments (70.6) (71.5)
Finance costs paid (21.3) (27.6)
Borrowings drawn down 199.2 466.3
Borrowings repaid (84.7) (487.3)
Proceeds from sale and leaseback transactions - 50.8
Purchase of own shares (102.3) (80.4)
NET CASH OUTFLOW FROM FINANCING ACTIVITIES (79.7) (149.7)
NET DECREASE IN CASH AND CASH EQUIVALENTS (66.0) (27.3)
Exchange movement on cash balances (0.2) 5.3
CASH AND CASH EQUIVALENTS INCLUDING OVERDRAFTS AT BEGINNING OF PERIOD 332.9 336.8
CASH AND CASH EQUIVALENTS INCLUDING OVERDRAFTS AT THE PERIOD END 266.7 314.8
(1) Restated to reflect the change in accounting policy regarding
the valuation of investment property. Please refer to note 1 of the condensed
consolidated financial statements and the appendix below for details.
(2) Movements in deposits relating to equity derivatives have
been presented as a separate line item within net cash outflows from investing
activities in the current period. Following a reassessment in FY23, management
have concluded that this is a more appropriate presentation of movements in
these collateral deposits in line with IAS 7 Statement of Cash Flows. Prior
period information has been restated on an equivalent basis. The
presentational adjustment does not have any impact on net decrease in cash and
cash equivalents, the balance sheet, the Group's profit, or earnings per share
in any of the periods presented.
The accompanying accounting policies and notes form part of these condensed
consolidated financial Statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE 26 WEEKS ENDED 29 OCTOBER 2023 (UNAUDITED)
Share Share premium((1)) Treasury shares Share scheme reserve Foreign currency translation Own share reserve Retained earnings Other((2)) Total attributable to owners of Non-controlling Total
capital parent interests
(£m) (£m) (£m) (£m) (£m) (£m) (£m) (£m) (£m) (£m) (£m)
At 30 April 2023((1)) 64.1 874.3 (644.2) 33.1 47.4 (66.8) 2,285.5 (965.2) 1,628.2 40.0 1,668.2
Purchase of own shares - - (102.3) - - - - - (102.3) - (102.3)
Share scheme - - - 8.9 - - - - 8.9 - 8.9
TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS - - (102.3) 8.9 - - - - (93.4) - (93.4)
Profit for the financial period - - - - - - 234.2 - 234.2 0.4 234.6
OTHER COMPREHENSIVE INCOME
Cashflow hedges - recognised in the period - - - - - - - 10.7 10.7 - 10.7
Cashflow hedges - recognised time value of options - - - - - - - - - - -
Cashflow hedges - reclassified and reported in sales - - - - - - - (1.5) (1.5) - (1.5)
Cashflow hedges - reclassified and reported in inventory/cost of sales - - - - - - - (2.4) (2.4) - (2.4)
Cashflow hedges - taxation - - - - - - - (2.1) (2.1) - (2.1)
Fair value adjustment in respect of long-term financial assets - recognised - - - - - - (66.4) - (66.4) - (66.4)
Remeasurements of defined benefit pension scheme - - - - - - 0.2 - 0.2 - 0.2
Fair value adjustment in respect of investment properties - - - - - - - 1.2 1.2 - 1.2
Translation differences - Group - - - - (12.9) - - - (12.9) - (12.9)
Total comprehensive income for the period - - - - (12.9) - 168.0 5.9 161.0 0.4 161.4
At 29 October 2023 64.1 874.3 (746.5) 42.0 34.5 (66.8) 2,453.5 (959.3) 1,695.8 40.4 1,736.2
FOR THE 26 WEEKS ENDED 23 OCTOBER 2022 (UNAUDITED)
Share Share premium((1)) Treasury shares Share scheme reserve Foreign currency translation Own share reserve Retained earnings Other((2)) Total attributable to owners of Non-controlling Total
capital parent interests
(£m) (£m) (£m) (£m) (£m) (£m) (£m) (£m) (£m) (£m) (£m)
At 24 April 2022((1)) 64.1 874.3 (488.9) 14.1 35.6 (66.8) 1,784.4 (923.9) 1,292.9 22.0 1,314.9
Acquisitions - - - - - - - - - 7.0 7.0
Purchase of own shares - - (80.4) - - - - - (80.4) - (80.4)
Share scheme - - - 5.9 - - - - 5.9 - 5.9
TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS - - (80.4) 5.9 - - - - (74.5) 7.0 (67.5)
Profit for the financial period((1)) - - - - - - 215.0 - 215.0 7.2 222.2
OTHER COMPREHENSIVE INCOME
Cash flow hedges - recognised in the period - - - - - - - 24.6 24.6 - 24.6
Cash flow hedges - reclassified and reported in sales - - - - - - - (12.6) (12.6) - (12.6)
Cash flow hedges - reclassified and reported in inventory/cost of sales - - - - - - - (19.6) (19.6) - (19.6)
Cash flow hedges - taxation - - - - - - - 2.2 2.2 - 2.2
Fair value adjustment in respect of long term financial assets - recognised - - - - - - (69.7) - (69.7) - (69.7)
Remeasurements of defined benefit pension scheme - - - - - - (1.2) - (1.2) - (1.2)
Deferred tax on remeasurements of defined benefit pension scheme - - - - - - 0.3 - 0.3 - 0.3
Translation differences - Group - - - - (2.4) - - - (2.4) - (2.4)
Total comprehensive income for the period - - - - (2.4) - 144.4 (5.4) 136.6 7.2 143.8
At 23 October 2022 64.1 874.3 (569.3) 20.0 33.2 (66.8) 1,928.8 (929.3) 1,355.0 36.2 1,391.2
(1) Restated to reflect the change in accounting policy
regarding the valuation of investment property. Please refer to note 1 of the
condensed consolidated financial statements and the appendix below for
details.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL INFORMATION
FOR THE 26 WEEKS ENDED 29 OCTOBER 2023
1. BASIS OF PREPARATION
Non-Statutory
The results for the first half of the financial year have not been audited or
reviewed by external auditors. The financial information in the Group's Annual
Report and Financial Statements for the 53 week period ended 30 April 2023 is
prepared in accordance with UK-adopted International Accounting Standards and
the requirements of the Companies Act 2006 and which have been delivered to
the Registrar of Companies. The Interim Results have been prepared on the
basis of the policies set out in the 2023 Annual Report and in accordance with
International Accounting Standard (IAS) 34 'Interim Financial Reporting' as
adopted by the UK and the Disclosure Guidance and Transparency Rules of the
UK's Financial Conduct Authority (DTR). The Interim Results do not include all
of the information required for full annual statements and should be read in
conjunction with the 2023 Annual Report.
The summary of results for the 53 weeks ended 30 April 2023 is an extract from
the published Annual Report and Financial Statements which have been reported
on by the Group's auditors at the time and delivered to the Registrar of
Companies. The audit report was unqualified, did not draw attention to any
matters by way of emphasis and did not contain a statement under s498 (2) or
s498 (3) of the Companies Act 2006.
Going Concern
The Directors have reviewed the current financial performance and liquidity of
the business, including modelling a number of downside scenarios. The Group is
still profitable, highly cash generative and has considerable financial
resources. The Group is able to operate within its banking facilities which
mature in November 2026, and is well placed to take advantage of strategic
opportunities as they arise. As a consequence, the Directors believe that the
Group is well placed to manage its business risks successfully despite the
continued uncertain economic outlook.
Management have assessed the level of trading and have forecast and projected
a conservative base case scenario and also a number of even more conservative
scenarios taking into account the Group's open positions in relation to
various option positions. These forecasts and projections show that the Group
will be able to operate within the current facility and its covenant
requirements (being interest cover and net debt to EBITDA ratios). Management
have also identified a number of mitigating actions which could be taken if
required such as putting on hold discretionary spend, liquidating certain
assets on the balance sheet and paying down the Revolving Credit Facility.
Having thoroughly reviewed the Group's performance and having made suitable
enquiries, the Directors are confident that the Group has adequate resources
to remain in operational existence for at least 12 months from the date of
approval of these condensed consolidated financial statements. Trading would
need to fall significantly below levels observed during the pandemic to
require mitigating actions or a relaxation of covenants. On this basis, the
Directors continue to adopt the going concern basis for the preparation of
these condensed consolidated financial statements.
New accounting standards, interpretations and amendments adopted by the Group
The principal accounting policies have remained unchanged from those applied
for the 53-week period ended 30 April 2023 except as noted below.
Several amendments apply for the first time during the period but have not
resulted in any changes to the Group's accounting policies or have any other
material impact on the financial position or performance of the Group. The
Group continues to monitor the potential impact of new standards and
interpretations which have been or may be endorsed and require adoption by the
Group in future reporting periods. The Group does not consider that any
standards, amendments or interpretation issued by the UK Endorsement Board,
but not yet applicable, will have a significant impact on the condensed
consolidated financial statements.
Risks and uncertainties
The Board has considered the risks and uncertainties for the remaining half of
the financial year and determined that the risks and the level of risks
presented in the FY23 Annual Report, noted below, also remain relevant for the
rest of the financial year and that there aren't any further risks or
uncertainties to add at this stage:
· Strategy
· Third-party brand relationships, key suppliers and supply chain
management
· Global macro-economic conditions, events (pandemic) or political
factors
· Treasury, liquidity and credit risks
· Customer
· Governance, legal and regulatory compliance
· Technology capability and infrastructure renewal
· Cyber risks, data loss and data privacy
· Business continuity management and incident response
· People, talent management and succession
· Environmental, social & governance (ESG)
· Property
· Mergers & acquisitions
Detailed explanations of the principal risks and uncertainties can be found in
the Principal Risks and Uncertainties section of the FY23 Annual Report.
Segmental Reporting
IFRS 8 requires operating segments to be identified on the basis of the
internal financial information reports to the Chief Operating Decision Maker
("CODM") who is primarily responsible for the allocation of resources to
segments and assessment of performance of the segments.
Historically the Group has presented four operating segments:
· UK Sports
This segment included the Group's core sports retail store operations in the
UK, plus all the Group's sports retail online business, Frasers Fitness, the
Group's Shirebrook campus operations, freehold property owning companies
excluding Premium Lifestyle fascia properties, GAME UK stores and online
operations, Frasers Group Financial Services Limited, and retail store
operations in Northern Ireland.
· Premium Lifestyle
This segment included the results of the Group's premium and luxury retail
businesses FLANNELS, Cruise, Van Mildert, Jack Wills, House of Fraser, Gieves
and Hawkes, and Sofa.com along with the related websites, the Missguided and I
Saw it First websites, and freehold property owning companies where trading
was purely from Premium Lifestyle fascias.
· Wholesale & Licensing
This segment included the results of the Group's portfolio of internationally
recognised brands such as Everlast, Karrimor, and Slazenger.
· International
This segment included all of the Group's sports retail stores, management and
operating functions in Europe, Asia and the rest of the world, including the
Group's European Distribution Centres in Belgium and Austria, European
freehold property owning companies, GAME Spain stores, the Baltics & Asia
e-commerce offerings, the MySale business in Australia, and the Group's US
retail operations until they were disposed of in 2022.
Following the acquisition of Frasers Group Financial Services Limited
(formerly known as Studio Retail Limited) and the launch of the Group's
consumer credit offering, Frasers Plus, as well as recent acquisitions of
investment property, the Group has decided that its financial services and
property businesses should be disclosed as separate operating segments.
In addition, the Group's wholesale and licensing activities have become less
of an area of focus in recent periods and therefore management judge the
results from these activities no longer warrant separate presentation as an
operating segment.
As a result, the Group will now present five operating segments, with the
creation of new Property and Financial Services segments, and the Wholesale
and Licensing Segment being absorbed into the UK Sports and International
segments:
· UK Sports
This segment now includes the results of the Group's core sports retail store
operations in the UK, plus all the Group's sports retail online business,
other UK-based sports retail and wholesale operations, GAME UK stores and
online operations, retail store operations in Northern Ireland, Frasers
Fitness, and the Group's central operating functions (including the Shirebrook
campus).
· Premium Lifestyle
This segment includes the results of the Group's premium and luxury retail
businesses FLANNELS, Cruise, Van Mildert, Jack Wills, House of Fraser, Gieves
and Hawkes, and Sofa.com along with the related websites, the businesses
acquired from JD Sports Fashion plc in FY23, as well as the results from the I
Saw it First website and the Missguided website until the disposal of the
Missguided intellectual property in October 2023.
· International
This segment includes the results all of the Group's sports retail stores,
management and operating functions in Europe, Asia and the rest of the world,
including the Group's European Distribution Centres in Belgium and Austria,
GAME Spain stores and e-commerce offering, the Baltics & Asia e-commerce
offerings, the MySale business in Australia, the Group's US retail operations
until they were disposed of in 2022, and all non-UK based wholesale and
licensing activities (relating to brands such as Everlast, Karrimor, and
Slazenger).
· Property
This segment includes the results from the Group's freehold property owning
and long leasehold holding property companies that generate third party rental
and other property related income (e.g., car parking, conference and events
income). The results of the Coventry Arena are reported in this segment.
· Financial Services
This segment includes the results of Frasers Group Financial Services. This
includes interest charged on amounts advanced to consumer credit customers,
along with the associated impairment and operating costs.
The operating performance of each segment will be assessed by reference to
revenue, gross margin, and profit from trading activities after operating
expenses. For the avoidance of doubt, operating costs in the Group's three
retail operating segments include rents payable to third party landlords.
Intra-group rent payments are eliminated on consolidation.
For the property segment, profit from trading activities includes fair value
gains and losses in respect of investment properties (see further below) and
gains or losses on disposal of properties since the Group's property
businesses seek to generate income from rentals and capital appreciation of
properties held.
In the Financial Services segment, impairment losses on consumer credit
receivables are disclosed within gross margin, which management deem to be the
appropriate treatment for a financial services business.
Depreciation, amortisation and impairments (net of any reversals) are
disclosed as part of each segment's operating profit.
Net investment and finance income and costs are not split by segment as
management consider that these items relate to the Group as a whole and any
split would not be meaningful. The segmental results for the comparative
period ended 23 October 2022 have been restated to present segmental
information on a consistent basis.
Change to classification of rental income
As a result of the changes above, management has concluded that it is more
appropriate to disclose rental income received from third parties within
revenue from the property segment rather than in other operating income in
various retail segments as was previously disclosed.
The impact of this change is to increase reported revenue in the 26-week
period ended 23 October 2022 by £14.0m and in the 53-week period ended 30
April 2023 by £29.3m, in each case reducing the amounts reported in other
operating income by an equivalent amount.
The changes to our segmental analysis and the reclassification of rental
income have no impact on the Group's results overall.
Change in accounting policy in respect of investment properties
Following the creation of the Property operating segment, management conducted
a review of the accounting treatment of investment properties (properties held
to earn rentals or for capital appreciation or both, rather than for use in
operations) and concluded that it would be more appropriate to adopt the fair
value model set out in paragraphs 33-35 of IAS 40 Investment Property for
remeasuring the value of these properties, rather than on the cost model set
out in paragraph 56 of the standard, which was previously used. As result, in
future, these assets will not be depreciated but held at fair value with
changes in fair value being recorded in the income statement in the period in
which they occur.
Management has considered this voluntary change in accounting policy in
accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and
Errors and concluded that the fair value model results in the financial
statements providing reliable and more relevant information. The key driver of
this change is to align periodic movements in fair value of investment
properties with the Property segment's aim of generating profits via rental
income and capital appreciation, enabling a more complete assessment of the
segment's performance for each reporting period. The changes have been
applied retrospectively and as such prior period figures have been restated on
an equivalent basis to allow for meaningful comparison.
The impact of this change in accounting policy is to increase the carrying
value of the Group's investment properties held on 25 April by 2022 by £6.3m,
with a corresponding adjustment being made to the Group's opening retained
earnings at this date. The carrying value of these assets as at 24 April 2023
increased by £10.0m vs. the amount previously reported, resulting in an
increase to profit before tax for the 53-week period ended 2023 of £3.7m and
an increase in basic and diluted earnings per share of 0.8p.
Management concluded that there was no material difference in the fair value
of investment properties between 25 April 2022 and 23 October 2022.
Consequently, the reported profit after tax for the 26-week period 23 October
2022 increased by £2.6m, reflecting the reversal of depreciation charged
under the cost method previously applied. Basic, diluted and adjusted earnings
per share tax for the 26-week period 23 October 2022 increased by 0.6p because
of this change in accounting policy.
This change in accounting policy does not have a material impact on the
reported tax charge in the comparative period, nor on the Group's consolidated
cash flow statement.
Transfer of properties to investment property
During the current period management has transferred three properties with a
net book value of approximately £50m to investment property from property
plant and equipment, following a change of use. The properties were
transferred at fair value. A £1.2m increase in carrying value at the point of
transfer has been recognised in other comprehensive income.
2. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
Climate Change
We have considered the potential impact of climate change in preparing these
financial statements. Tackling climate change is a global imperative and
measures which support climate change initiatives and our wider ESG agenda
continue to be key components of our strategic direction, supporting
sustainability, the broader social agenda and consumer choice. The risks
associated with climate change have been deemed to be arising in the medium to
long term and we are working to mitigate these risks as detailed within the
TCFD section of the FY23 Annual Report.
We have considered climate change as part of our cash flow projections within
going concern, impairment assessments and viability, and the impact of climate
change is not deemed to have a significant impact on these assessments
currently and therefore they are not deemed to be a key source of estimation
uncertainty. The Group will continue to monitor the impacts of climate change
over the coming years.
Determining Related Party Relationships
Management determines whether a related party relationship exists by assessing
the nature of the relationship by reference to the requirements of IAS 24,
Related Party Disclosures. This is in order to determine whether significant
influence exists as a result of control, shared directors or parent companies,
or close family relationships. The level at which one party may be expected to
influence the other is also considered for transactions involving close family
relationships.
Control and Significant Influence Over Certain Entities
Under IAS 28 Investments in Associates and Joint Ventures if an entity holds
20% or more of the voting power of the investee, it is presumed that the
entity has significant influence, unless it can clearly demonstrate that this
is not the case.
In assessing the level of control that management have over certain entities,
management will consider the various aspects that allow management to
influence decision making. This includes the level of share ownership, board
membership, the level of investment and funding and the ability of the Group
to influence operational and strategic decisions and effect its returns
through the exercise of such influence. If management were to consider that
the Group does have significant influence over the entity then the equity
method of accounting would be used and the percentage shareholding multiplied
by the results of the investee in the period would be recognised in profit or
loss.
Mulberry Group Plc
During the period the Group has held greater than 20% of the voting rights of
Mulberry Group Plc. Management consider that the Group does not have
significant influence over this entity for the following reasons:
• The Group does not have any representation on the board of
directors of the investee.
• There is no participation in decision making and strategic
processes, including participation in decisions about dividends or other
distributions.
• There have been no material transactions between the entity
and the investee company.
• There has been no interchange of managerial personnel.
• No non-public essential technical management information is
provided to the investee.
Four (Holdings) Limited
The Group holds 49% of the share capital of Four (Holdings) Limited which is
accounted for as an associate using the equity method. The Group does not have
any representation on the board of directors and no participation in decision
making about relevant activities such as establishing operating and capital
decisions, including budgets, appointing or remunerating key management
personnel or service providers and terminating their services or employment.
However, in prior periods the Group has provided Four (Holdings) Limited with
a significant loan. At the reporting date, the gross amount owed by Four
(Holdings) Limited for this loan totalled £30.0m (£6.3m net of amounts
recognised in respect of loss allowance). The Group is satisfied that the
existence of these transactions provides evidence that the entity has
significant influence over the investee but in the absence of any other
rights, in isolation it is insufficient to meet the control criteria of IFRS
10, as the Group does not have power over Four (Holdings) Limited.
Tymit Limited
The Group holds 25% of the share Capital of Tymit Limited. This holding is
accounted for as an associate under IAS 28, although the carrying value of the
investment is £nil as a result of management's assessment of future trading
prospects of the business. Management has advanced Tymit convertible loans of
£11.0m (FY23: £7.3m at 29 October 2023), which have been fully provided for.
Management has considered whether any of the rights attaching to the loan
notes could give rise to control and concluded that this was not the case.
Kangol LLC
In the prior period, the Group sold 51% of its shareholding in Kangol LLC to
Bollman Hat Company for £17.6m, retaining a 49% shareholding. Management
considered the criteria set out in IFRS 10 when assessing whether or not it
retains control of the entity or significant influence as defined by IAS 28.
It was concluded that the Group has significant influence by virtue of its
holding more than 20% of the voting power of the investee, but not control
since Bollman holds 51% of total voting rights. Consequently, the Group's 49%
shareholding has been accounted for as an associate under IAS 28. This
treatment remains the same for the current period.
AO World plc
During the period the Group has held greater than 20% of the voting rights of
AO World Plc. Management consider that the Group does not have significant
influence over this entity for the following reasons:
• The Group does not have any representation on the board of
directors of the investee.
• There is no participation in decision making and strategic
processes, including participation in decisions about dividends or other
distributions.
• There have been no material transactions between the entity
and the investee company.
• There has been no interchange of managerial personnel.
• No non-public essential technical management information is
provided to the investee.
Cash Flow Hedging
The Group uses a range of forward and option contracts that are entered into
at the same time, they are in contemplation with one another and have the same
counterparty. A judgement is made in determining whether there is an economic
need or substantive business purpose for structuring the transactions
separately that could not also have been accomplished in a single transaction.
Management are of the view that there is a substantive distinct business
purpose for entering into the options and a strategy for managing the options
independently of the forward contracts. The forward and options contracts are
therefore not viewed as one instrument and hedge accounting for the forwards
is permitted.
Under IFRS 9 in order to achieve cash flow hedge accounting, forecast
transactions (primarily Euro denominated sales and USD denominated purchases)
must be considered to be highly probable. The hedge must be expected to be
highly effective in achieving offsetting changes in cash flows attributable to
the hedged risk. The forecast transaction that is the subject of the hedge
must be highly probable and must present an exposure to variations in cash
flows that could ultimately affect profit or loss. Management have reviewed
the detailed forecasts and growth assumptions within them and are satisfied
that forecasts in which the cash flow hedge accounting has been based meet the
criteria per IFRS 9 as being highly probable forecast transactions. Should the
forecast levels not pass the highly probable test, any cumulative fair value
gains and losses in relation to either the entire or the ineffective portion
of the hedged instrument would be recognised in the Consolidated Income
Statement.
Management considers various factors when determining whether a forecast
transaction is highly probable. These factors include detailed sales and
purchase forecasts by channel, geographical area and seasonality, conditions
in target markets and the impact of expansion in new areas. Management also
consider any change in alternative customer sales channels that could impact
on the hedged transaction.
If the forecast transactions were determined to be not highly probable and all
hedge accounting was discontinued, amounts in the Hedging reserve of up to
£18.7m (30 April 23: £14.0m) would be shown in Finance Income.
Key Sources of Estimation Uncertainty
The critical estimates and assumptions that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities within
the next financial year are addressed below:
Property Related Provisions
Property related estimates and judgements are continually evaluated and are
based on historical experience, external advice and other factors, including
expectations of future events that are believed to be reasonable under the
circumstances.
Dilapidations - Note 10
The Group provides for its legal responsibility for dilapidation costs
following advice from chartered surveyors and previous experience of exit
costs (including strip out costs and professional fees). Management use a
reference estimate of £100,000 (FY23 £100,000) for large leasehold stores,
£50,000 (FY23: £50,000) for smaller leasehold stores (£25,000 per store for
Game UK and Game Spain stores) and $/€50,000 (FY23: $/€50,000) for non-UK
stores. Management do not consider these costs to be capital in nature and
therefore dilapidations are not capitalised, except for in relation to the
sale and leaseback of Shirebrook for which a material dilapidations provision
was capitalised in FY20. The annual movement in the dilapidations provisions
is considered to be immaterial.
A 10% increase in dilapidation cost per store would result in an approx.
£8.8m (FY23: £8.5m) reduction in profit before tax.
Legal and regulatory provisions - Note 10
Provisions are made for items where the Group has identified a present legal
or constructive obligation arising as a result of a past event, it is probable
that an outflow of resources will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation.
Legal and regulatory provisions reflect management's best estimate of the
potential costs arising from the settlement of outstanding disputes of a
commercial and regulatory nature. A substantial portion of the amounts
provided relates to ongoing legal claims and non-UK tax enquiries. Further
details can be found in note 10. Management have made a judgement to consider
all claims collectively given their similar nature. In accordance with
IAS37.92, management have concluded that it would prejudice seriously the
position of the entity to provide further specific disclosures in respect of
amounts provided for non-UK tax enquiries and legal claims.
Other Receivables and Amounts Owed By Related Parties
Other receivables and amounts owed by related parties are stated net of
provision for any impairment. Management have applied estimates in assessing
the recoverability of working capital and loan advances made to investee
companies. Matters considered include the relevant financial strength of the
underlying investee company to repay the loans, the repayment period and
underlying terms of the monies advanced, forecast performance of the
underlying borrower, and where relevant, the Group's intentions for the
companies to which monies have been advanced. Management have applied a
weighted probability to certain potential repayment scenarios, with the
strongest weighting given to expected default after two years.
Impairment of Assets
a) IFRS 16 right-of-use assets and associated plant and equipment
IFRS 16 defines the lease term as the non-cancellable period of a lease
together with the options to extend or terminate a lease, if the lessee were
reasonably certain to exercise that option. The Group will assess the
likelihood of extending lease contracts beyond the break date by taking into
account current economic and market conditions, current trading performance,
forecast profitability and the level of capital investment in the property.
IFRS 16 states that the lease payments shall be discounted using the lessee's
incremental borrowing rate where the rate implicit in the lease cannot be
readily determined. Accordingly, all lease payments have been discounted using
the incremental borrowing rate (IBR). The IBR has been determined by using a
synthetic credit rating for the Group which is used to obtain market data on
debt instruments for companies with the same credit rating, this is split by
currency to represent each of the geographical areas the Group operates within
and adjusted for the lease term.
The right of use assets are assessed for impairment at each reporting period
in line with IAS 36 to review whether the carrying amount exceeds its
recoverable amount. For impairment testing purposes the Group has determined
that each store is a separate CGU. The recoverable amount is calculated based
on the Group's latest forecast cash flows which are then extrapolated to cover
the period to the break date of the lease taking into account historic
performance and knowledge of the current market, together with the Group's
views on future profitability of each CGU. The key assumptions in the
calculations are the sales growth rates, gross margin rates, changes in the
operating cost base and the pre-tax discount rate derived from the Group's
weighted average cost of capital using the capital asset pricing model, the
inputs of which include a risk-free rate, equity risk premium and a risk
adjustment (Beta). Given the number of assumptions used, the assessment
involves significant estimation uncertainty.
Impairments in the period have been recognised for the amount of £3.0m (FY23
H1: impairment of £38.7m) due to the ongoing challenges in the retail
sector on the forecast cash flows of the CGU, including price increases and
the cost-of-living squeeze on customers. This is broken down as follows:
· £0.9m (FY23 H1: £23.6m) against the right-of-use assets; and
· £2.1m (FY23 H1: £15.1m) against plant and equipment
The key assumptions, which are equally applicable to each CGU, in the cash
flow projections used to support the carrying amount of the right of use asset
are consistent with the cashflow projections for the Freehold land and
Buildings impairment assessment (see below).
In line with IAS 36 Impairment of Assets, management have considered whether
any amounts should be recognised for the reversal of prior period impairment
losses with £35.1m (FY23: £nil) being recognised in the period.
A sensitivity analysis has been performed in respect of sales, margin, the new
store exemption and operating costs as these are considered to be the most
sensitive of the key assumptions:
Forecast: Impact of change in assumption: Impairment increase / (decrease) £m
Sales decline year 1 10% improvement to 6% (2.8)
Sales decline year 1 10% reduction to -14% 8.2
Existing gross margin year 1 > 40% 100bps - improvement (1.3)
Existing gross margin year 1 > 40% 100bps - reduction 1.4
New store exemption ((1)) Change from 1 to 2 years (2.7)
Operating costs increase year 1 Change from 3% to 6% 1.5
(1) Stores which have been open for less than one year are not
reviewed for impairment.
b) Freehold land and buildings, long-term leasehold, investment
property and associated plant and equipment
Freehold land and buildings and long-term leasehold assets are assessed at
each reporting period for whether there is any indication of impairment in
line with IAS 36.
An asset is impaired when the carrying amount exceeds its recoverable amount.
IAS 36 defines recoverable amount as the higher of an asset's or
cash-generating unit's fair value less costs of disposal and its value in use,
the Group has determined that each store is a separate CGU.
Impairments in the period have been recognised in the amount of £39.7m (FY23
H1: £11.5m) due to the ongoing challenges in the retail sector on the
forecast cash flows of the CGU. This is broken down as follows:
· £15.9m (FY23 H1: £6.4m) against freehold land and buildings
· £8.3m (FY23 H1: £3.5m) against long-term leasehold; and
· £15.5m (FY23 H1: £1.6m) plant and equipment
In line with IAS 36 Impairment of Assets, management have considered whether
any amounts should be recognised for the reversal of prior period impairment
losses with £13.5m (FY23: £nil) being recognised in the period.
Value In Use (VIU)
The value in use is calculated based on a five year cash flow projection.
These are formulated by using the Group's forecast cash flows of each
individual CGU, taking into account historic performance of the CGU, and then
adjusting for the Group's current views on future profitability of each CGU.
The key assumptions in the calculations are the sales growth rates, gross
margin rates, changes in the operating cost base and the pre-tax discount rate
derived from the Group's weighted average cost of capital using the capital
asset pricing model, the inputs of which include a risk-free rate, equity risk
premium and a risk adjustment (Beta). Given the number of assumptions used,
the assessment involves significant estimation uncertainty.
The key assumptions, which are equally applicable to each CGU, in the cash
flow projections used to support the carrying amount of the freehold land and
buildings were as follows:
Key assumptions Year 1 Year 2 Year 3 Year 4 Year 5
Sales decline -4% -3% -2% -2% -2%
Existing gross margin > 40% -150bps -125bps -100bps -75bps -50bps
Operating costs increase per annum 3% 3% 3% 3% 3%
Terminal growth rate of 2%
Properties purchased within a year, or stores which have been open for less
than one year, are not reviewed for impairment
Fair value less costs of disposal
For those CGUs where the value in use is less than the carrying value of the
asset, the fair value less costs of disposal has been determined using both
external and internal market valuations. This fair value is deemed to fall in
to Level 3 of the fair value hierarchy as per IFRS 13. The property portfolio
consists of vacant, Frasers Group occupied and third party tenanted units, one
property can include all three types. The following valuation methodology has
been adopted for each:
Scenario Valuation methodology Key assumptions
Vacant units Estimated Rental Value (ERV) and suitable reversionary yield applied to Void period and rent free band - two bands applied depending on circumstances:
reflect the market to generate a net capital value. A deduction to the capital
value generated is then made based on the void period with applicable rates • 1 year void, 2 years rent free;
payable for the unit and rent-free incentive. or
• 2 years void, 3 years rent free.
Yield bands - ranging from 5.5% - 14.0%
Frasers Group occupied Will be assumed the unit is vacant given there is no legally binding Void period and rent free band - two bands applied depending on circumstances:
inter-company agreement in place. Therefore, a void and rent free incentive
period assumed, the cost amount then deducted from the capital value generated • 1 year void, 2 years rent free;
by the ERV and reversionary yield. Although we consider the commercial reality or
is that fair value less costs to sell will be higher than vacant possession
this very conservative assumption is in line with both technical accounting • 2 years void, 3 years rent free.
rules and that of our management experts.
Yield bands - ranging from 5.5% - 14.0%
Third party tenanted ERV is applied reflecting the market for the applicable unit. An appropriate ERV is applied reflecting the market for the applicable unit. An appropriate
reversionary yield is applied reflecting the risk of tenant and renewal to reversionary yield is applied reflecting the risk of tenant and renewal to
generate a capital value. This will also provide a net initial yield based off generate a capital value. This will also provide a net initial yield based off
the current passing rent. the current passing rent.
A 10% increase in the market valuation amounts used in the impairment
calculations would result in a decrease in impairment of £2.0m (FY23 H1:
£1.3m).
The total recoverable amount of the assets that were impaired at the period
end was £19.9m (FY23 H1: £29.5m), with £19.9m (FY23 H1: £21.6m) of this
being based on their fair value less costs of disposal and £nil (FY23 H1:
£7.9m) being based on their value in use.
Credit Customer Receivables
The Group's credit customer receivables are recognised on balance sheet at
amortised cost (i.e., net of provision for expected credit loss). At 29
October 2023, consumer credit receivables with a gross value of £309.6m were
recorded on the balance sheet, less a provision for impairment of £98.1m (30
April 2023: gross value of £326.0m, less a provision for impairment of
£100.1m). Further details are provided in Note 9.
Expected credit loss
An appropriate allowance for expected credit loss in respect of trade
receivables is derived from estimates and underlying assumptions such as the
Probability of Default and the Loss Given Default, taking into consideration
forward looking macro-economic assumptions. The assessment involves
significant estimation uncertainty. Changes in the assumptions applied such as
the value and frequency of future debt sales in calculating the Loss Given
Default, and the estimation of customer repayments and Probability of Default
rates, as well as the weighting of the macro-economic scenarios applied to the
impairment model could have a significant impact on the carrying value of
trade receivables. These assumptions are continually assessed for relevance
and adjusted accordingly. Revisions to estimates are recognised
retrospectively. Sensitivity analysis is given in note 9.
Macroeconomic scenarios
The principial macroeconomic driver factored into the impairment model is
unemployment. The latest economic scenarios used in the model along with the
probably weighting applied to each are summarised as follows:
Scenario Qualitative explanation Probability weighting applied
Upside Inflation recedes leading to cuts in interest rates to 3.25% by end-2024. 0%
Unemployment falls to 3.5% whilst wage growth remains strong and supportive of
high growth.
Baseline Unemployment rate peaks at approximately 4.5% and remains at this level for 50%
most of 2024. Inflation begins to fall by mid-2024.
Downside Interest rates continue to rise and unemployment peaks at 6.5% in mid-2024 30%
Stress Inflation continues to rise leading to sharp increases in interest rates. 20%
Unemployment peaks at 8% in 2024.
Post model adjustment
As noted in the prior year, the impairment model was not designed to take into
account changes to customer payment and default performance arising as a
result of the current cost of living crisis where levels of price inflation
greatly exceed income growth, as the existing model uses unemployment rates as
the principal determinant in considering forward looking macro-economic
assumptions.
It is our expectation that Studio's customer base has seen and will continue
to see a significant reduction in real earnings as a result of the current
cost of living crisis and, whilst the adverse impact payment and arrears
performance has been less severe than anticipated to date, it will continue to
be felt in future. Judgement has therefore been exercised in applying a post
model adjustment of £8.0m (April 2023: £6.6m) to the output of the
impairment model in arriving at the provision. This reflects management's best
estimate based on the information available to them at the current time.
Inventory provisioning
The Group carries significant amounts of inventory, against which there are
provisions for expected losses to be incurred in the sale of slow moving,
obsolete and delisted products. At 29 October 2023 a provision of £223.8m (30
April 2023: £220.6m; 23 October 2022: £256.9m) was held against a gross
inventory value of £1,814.0m (30 April 2023: £1,685.5m; 23 October 2022:
£1,723.4m).
In assessing the level of provision required, management has applied its
experience and industry knowledge to divide the core UK inventory holding into
separate categories based on internal management classifications and
behavioural characteristics, taking account of experience by fascia, as
follows:
· Continuity inventory - inventory that is considered to be
perennial and therefore exhibits limited risk of obsolescence.
· Current season inventory - inventory that has been purchased
specifically for seasons in the current calendar year.
· Out of season inventory (including inventory previously
classified as continuity) - inventory that has moved out of the two categories
above because of its age, range development or because it is being sold at
below cost to clear warehouse/store space.
An adjusted rate of loss is then calculated based on losses incurred on the
sale of out of season inventory over the past three years (being management's
assessment of the time taken to clear through out of season inventory), with
any inventory remaining on hand after three years of being classified as out
of season being assumed to require a 100% provision rate. The historical rate
is sensitised to reflect management's best estimate of future performance by
making assumptions around changes to sales prices achieved on the sale of out
of season inventory vs. those achieved in the past three years and the level
of inventory remaining after three years of being classified as out of season.
In the current period, management have estimated that selling prices will need
to reduce by a further 5% to clear an equivalent volume of out of season
inventory and that approximately twelve times as much Premium Lifestyle out of
season inventory will remain on hand at the end of the three-year period of
assessment than has typically been the case historically, requiring a 100%
provision rate, reflecting the different profile of this inventory to Sports
inventory.
In addition, management has applied a provision rate of 100% against a portion
of the inventory holding that is either currently being sold at a loss or
exhibits an unusually high level of obsolescence risk. The 100% provision rate
reflects the costs associated with clearing and disposing of this inventory.
The adjusted rate of loss is applied to the gross value of inventory in each
of the categories above as follows:
· Continuity inventory - the adjusted loss rate is applied to 30%
of the gross holding (representing the proportion of inventory in this
category that is expected to roll into the out of season category based on
historical experience).
· Current season inventory - the adjusted loss rate is applied to
30% of the gross holding (representing the proportion of inventory in this
category that is expected to roll into the out of season category based on
historical experience).
· Out of season inventory (including inventory previously
classified as continuity) - the adjusted loss rate is applied to this
population, excluding those specific items that carry at 100% provision rate
based on the analysis detailed above.
The provisioning calculations require a high degree of judgement, given the
significant level of estimation uncertainty, in the classification of
inventory lines and the roll rates between classifications, as well as the use
of estimates around future sales prices and the remaining inventory holding
for out of season inventory. Sensitivity analysis relating to these key
assumptions is set out below.
% of inventory rolling into out of season (including inventory previously
classified as continuity) category
Base assumption 30%
Sensitised assumption 25%/35%
(Decrease)/Increase to provision (£6.1m)/£8.3m
Decrease in sales prices on out of season inventory
Base assumption -5%
Sensitised assumption 0%/-10%
(Decrease)/Increase to provision (£4.1m)/£7.2m
Increase in out of season Premium Lifestyle inventory on hand after
three-years
Base assumption 12 times historical rate
Sensitised assumption 10 times historical rate/14 times historical rate
(Decrease)/increase to provision (£1.6m)/£7.7m
These sensitivities reflect management's assessment of reasonably possible
changes to key assumptions which could result in adjustments to the level of
provision within the next financial year.
3. SEGMENTAL ANALYSIS
IFRS 8 requires operating segments to be identified on the basis of the
internal financial information reports to the CODM who is primarily
responsible for the allocation of resources to segments and assessment of
performance of the segments.
Following a review of the Group's operating segments at the start of the
2023/24 financial year, a decision was taken to change the Group's segmental
reporting to more accurately reflect the impact of recent acquisitions and
strategy changes on how management views the business, and to allow a more
granular analysis of the Group's operating base.
As a result, the Group will now present five operating segments, with the
creation of new Property and Financial Services segments, and the Wholesale
and Licensing Segment being absorbed into the UK Sports and International
segments:
· UK Sports
This segment now includes the results of the Group's core sports retail store
operations in the UK, plus all the Group's sports retail online business,
other UK-based sports retail and wholesale operations, GAME UK stores and
online operations, retail store operations in Northern Ireland, Frasers
Fitness, and the Group's central operating functions (including the Shirebrook
campus).
· Premium Lifestyle
This segment includes the results of the Group's premium and luxury retail
businesses FLANNELS, Cruise, Van Mildert, Jack Wills, House of Fraser and
Sofa.com along with the related websites, the businesses acquired from JD
Sports in FY23, as well as the results from the I Saw it First website and the
Missguided website until the disposal of the Missguided intellectual property
in October 2023.
· International
This segment includes the results of all of the Group's sports retail stores,
management and operating functions in Europe, Asia and the rest of the world,
including the Group's European Distribution Centres in Belgium and Austria,
GAME Spain stores and e-commerce business, the Baltics & Asia e-commerce
offerings, the MySale business in Australia, the Group's US retail operations
until they were disposed of in 2022, and all non-UK based wholesale and
licensing activities (relating to brands such as Everlast, Karrimor, and
Slazenger).
· Property
This segment includes the results from the Group's freehold property owning
and long leasehold holding property companies that generate third party rental
and other property related income (e.g., car parking, conference and events
income). The results of the Coventry Arena are reported in this segment.
· Financial Services
This segment includes the results of Frasers Group Financial Services. This
includes interest charged on amounts advanced to consumer credit customers,
along with the associated impairment and operating costs.
Segmental information for the 26 weeks ended 29 October 2023 (unaudited):
UK Sports Premium lifestyle International Retail Property Financial Services Group
Total
(£'m) (£'m) (£'m) (£'m) (£'m) (£'m) (£'m)
Revenue 1,485.0 550.1 645.8 2,680.9 31.4 57.3 2,769.6
Cost of sales (825.7) (347.0) (387.6) (1,560.3) (4.2) (15.2) (1,579.7)
Gross profit 659.3 203.1 258.2 1,120.6 27.2 42.1 1,189.9
Gross Margin % 44.4% 36.9% 40.0% 41.8% 86.6% 73.5% 43.0%
Operating costs (412.6) (163.2) (180.1) (755.9) (17.7) (3.8) (777.4)
Profit from trading 246.7 39.9 78.1 364.7 9.5 38.3 412.5
Depreciation & amortisation (44.2) (19.0) (33.4) (96.6) (35.5) (0.8) (132.9)
Impairments net of impairment reversals 23.7 2.4 (4.2) 21.9 (16.0) - 5.9
Share-based payments (9.3) - - (9.3) - - (9.3)
Foreign exchange realised 24.9 (0.2) (4.6) 20.1 1.8 - 21.9
Operating profit 241.8 23.1 35.9 300.8 (40.2) 37.5 298.1
Gain on sale of subsidiaries/discontinued operations 20.0
Net investment income 13.0
Net finance costs (20.9)
Profit before tax 310.2
Fair value adjustment to derivative financial instruments (15.7)
Fair value losses on equity derivatives 21.9
Realised FX gain (21.9)
Share-based payments 9.3
Adjusted profit before tax ("APBT") 303.8
Segmental information for the 26 weeks ended 23 October 2022 (unaudited)
((1)):
UK Sports Premium lifestyle International Retail Property Financial Services Group
Total
(£'m) (£'m) (£'m) (£'m) (£'m) (£'m) (£'m)
Revenue 1,473.1 533.5 570.3 2,576.9 14.0 61.1 2,652.0
Cost of sales (890.5) (310.3) (333.3) (1,534.1) - 3.8 (1,530.3)
Gross profit 582.6 223.2 237.0 1,042.8 14.0 64.9 1,121.7
Gross Margin % 39.5% 41.8% 41.6% 40.5% 100.0% 106.2% 42.3%
Operating costs (441.4) (148.2) (163.0) (752.6) (2.4) (18.9) (773.9)
Gain on disposal of properties - - - - 91.2 - 91.2
Profit from trading 141.2 75.0 74.0 290.2 102.8 46.0 439.0
Depreciation & amortisation (52.7) (6.7) (26.8) (86.2) (26.1) (0.5) (112.8)
Impairments net of impairment reversals (10.2) (48.0) (8.4) (66.6) (6.4) (4.7) (77.7)
Share-based payments (4.9) - (1.8) (6.7) - - (6.7)
Foreign exchange realised 47.7 (0.1) (3.8) 43.8 - - 43.8
Operating profit 121.1 20.2 33.2 174.5 70.3 40.8 285.6
Gain on sale of subsidiaries/discontinued operations 26.3
Net investment income (13.2)
Net finance costs (11.5)
Profit before tax 287.2
Fair value adjustment to derivative financial instruments (12.4)
Fair value losses on equity derivatives 32.0
Realised FX gain (43.8)
Share-based payments 6.7
Adjusted profit before tax ("APBT") 269.7
(1) Prior period numbers have been re-categorised due to changes
in the reporting segments, see Note 1 for further details.
Other segment items included in the income statement for the 26 weeks ended 29
October 2023 (unaudited):
UK Sports Premium lifestyle International Retail Property Financial Services Group Total
(£'m) (£'m) (£'m) (£'m) (£'m) (£'m) (£'m)
Property, plant & equipment depreciation (27.1) (14.6) (15.8) (57.5) (35.5) (0.8) (93.8)
Property, plant & equipment impairment (2.1) (6.2) (4.0) (12.3) (16.0) - (28.3)
IFRS 16 ROU depreciation (17.1) (4.4) (16.0) (37.5) - - (37.5)
IFRS 16 ROU impairment 25.8 8.6 (0.2) 34.2 - - 34.2
Revaluation on transfer to investment property* - - - - 1.2 - 1.2
IFRS 16 disposal and modification/remeasurement of lease liabilities (3.8) - (2.7) (6.5) - - (6.5)
Intangible amortisation - - (1.6) (1.6) - - (1.6)
*Recorded in other comprehensive income
Other segment items included in the income statement for the 26 weeks ended 23
October 2022 (unaudited)((1)):
UK Sports Premium lifestyle International Retail Property Financial Services Group Total
(£'m) (£'m) (£'m) (£'m) (£'m) (£'m) (£'m)
Property, plant & equipment depreciation (34.2) (4.9) (10.2) (49.3) (26.1) (0.5) (75.9)
Property, plant & equipment impairment (3.8) (13.3) (3.1) (20.2) (6.4) - (26.6)
IFRS 16 ROU depreciation (20.0) (2.5) (14.5) (37.0) - - (37.0)
IFRS 16 ROU impairment (6.4) (14.2) (3.0) (23.6) - - (23.6)
IFRS 16 disposal and modification/remeasurement of lease liabilities 1.5 0.7 1.2 3.4 - - 3.4
Intangible amortisation - - (3.3) (3.3) - - (3.3)
Intangible impairment - (20.5) (2.3) (22.8) - (4.7) (27.5)
(1) Prior period numbers have been re-categorised due to changes
in the reporting segments, see Note 1 for further details.
4. INVESTMENT INCOME
26 weeks ended 26 weeks ended
29 October 2023
23 October 2022
(unaudited) (unaudited)
(£m) (£m)
Premium received on equity derivatives 32.9 17.4
Fair value gain on equity derivatives - 8.4
Dividend income 2.0 1.4
34.9 27.2
5. INVESTMENT COSTS
26 weeks ended 26 weeks ended
29 October 2023
23 October 2022
(unaudited) (unaudited)
(£m) (£m)
Fair value loss on equity derivatives 21.9 38.4
Loss on disposal of equity derivatives - 2.0
21.9 40.4
6. FINANCE INCOME
26 weeks ended 26 weeks ended
29 October 2023
23 October 2022
(unaudited) (unaudited)
(£m) (£m)
Bank interest receivable 11.9 3.3
Other finance income 0.4 0.4
Fair value adjustment to derivatives 15.7 21.0
28.0 24.7
7. FINANCE COSTS
26 weeks ended 26 weeks ended
29 October 2023
23 October 2022
(unaudited) (unaudited)
(£m) (£m)
Interest on bank loans and overdrafts 31.7 16.8
Other interest 5.6 3.7
IFRS 16 lease interest 11.6 7.1
Fair value adjustment to derivatives - 8.6
48.9 36.2
The fair value adjustment to derivative financial instruments in the prior
period relates to differences between the fair value of forward foreign
currency contracts and written options that were not designated for hedge
accounting from one period end to the next.
8. EARNINGS PER SHARE ATTRIBUTABLE TO THE EQUITY SHAREHOLDERS
Basic earnings per share is calculated by dividing the earnings attributable
to ordinary shareholders of the parent by the weighted average number of
ordinary shares outstanding during the year.
For diluted earnings per share, the weighted average number of shares,
441,787,344 (23 October 2022: 460,090,844), is adjusted to assume conversion
of all dilutive potential ordinary shares under the Group's share schemes,
being nil (23 October 2022: nil). There is therefore no difference between the
Basic and Diluted EPS calculations for all periods. Shares bought back into
treasury and own shares held are deducted when calculating the weighted
average number of shares below.
BASIC AND DILUTED EARNINGS PER SHARE
26 weeks ended 26 weeks ended 26 weeks ended 26 weeks ended
29 October 2023
23 October 2022
23 October 2022
23 October 2022
(unaudited) (unaudited) (unaudited) (unaudited)
Basic and diluted, total Basic and diluted, continuing operations Basic and diluted, discontinued operations Basic and diluted, total
£m £m £m £m
Profit for the period 234.2 188.7 26.3 215.0
Number in millions Number in millions
Weighted average number of shares 441.8 460.1 460.1 460.1
Pence per share Pence per share Pence per share Pence per share
Earnings per share 53.0 41.0 5.7 46.7
ADJUSTED EARNINGS PER SHARE
The adjusted earnings per share reflects the underlying performance of the
business compared with the prior period and is calculated by dividing adjusted
earnings by the weighted average number of shares for the period. Adjusted
earnings is used by management as a measure of profitability within the Group.
Adjusted earnings is defined as profit for the period attributable to equity
holders of the parent for each financial period but excluding the post-tax
effect of certain non-trading items. Tax has been calculated with reference to
the effective rate of tax for the Group.
The Directors believe that the adjusted earnings and adjusted earnings per
share measures provide additional useful information for shareholders on the
underlying performance of the business and are consistent with how business
performance is measured internally. Adjusted earnings is not a recognised
profit measure under IFRS and may not be directly comparable with adjusted
profit measures used by other companies.
26 weeks ended 26 weeks ended 26 weeks ended 26 weeks ended
29 October 2023
29 October 2023
23 October 2022
23 October 2022
(unaudited) (unaudited) (unaudited) (unaudited)
Basic Diluted Basic Diluted
£m £m £m £m
Profit for the period 234.2 234.2 215.0 215.0
Pre-tax adjustments to profit / (loss) for the period for the following items:
Fair value adjustment to derivatives included within finance (income) (15.7) (15.7) (12.4) (12.4)
Fair value losses on disposal of equity derivatives 21.9 21.9 32.0 32.0
Realised foreign exchange (gain) (21.9) (21.9) (43.8) (43.8)
Share based payments 9.3 9.3 6.7 6.7
Tax adjustments on the above items 9.3 9.3 11.0 11.0
Adjusted profit for the period 237.1 237.1 208.5 208.5
Number in millions Number in millions
Weighted average number of shares 441.8 441.8 460.1 460.1
Pence per share Pence per share
Adjusted earnings per share 53.7 53.7 45.4 45.4
9. TRADE AND OTHER RECEIVABLES
26 weeks ended 26 weeks ended 53 weeks ended
29 October 2023
23 October 2022
30 April 2023
(unaudited) (unaudited)
(audited)
(£m) (£m)
(£m)
Gross credit customer receivables 309.6 355.3 326.0
Allowance for expected credit loss on credit customer receivables (98.1) (115.0) (100.1)
Net credit customer receivables 211.5 240.3 225.9
Trade receivables 117.1 70.4 65.6
Deposits in respect of derivative financial instruments 244.4 389.7 190.1
Amounts owed by related parties 6.8 26.8 4.7
Other receivables 107.6 126.4 122.3
Prepayments 103.3 88.4 111.5
790.7 942.0 720.1
The Directors consider that the carrying amount of trade and other receivables
approximates to their fair value. The maximum exposure to credit risk at the
reporting date is the carrying value of each class of asset above, plus any
cash balances. Other receivables also include unremitted sales receipts.
Deposits in respect of derivative financial instruments are collateral to
cover margin requirements for derivative transactions held with
counterparties. The collateral requirement changes with the market (which is
dependent on share price, interest rates and volatility) and further purchases
/ sales of underlying investments held.
Credit Customer Receivables
Following the acquisition of Frasers Group Financial Services Limited
(formerly known as Studio Retail Limited), credit customer receivables now
make up a significant element of trade and other receivables. Further
disclosure with regards to the credit customer receivables and the associated
allowance for expected credit loss can be found at the end of this note.
Certain of the Group's trade receivables are funded through a securitisation
facility that is secured against those receivables. The finance provider will
seek repayment of the finance, as to both principal and interest, only to the
extent that collections from the trade receivables financed allows and the
benefit of additional collections remains with the Group. At the period end,
receivables of £232.8m (30 April 2023: £256.4m, 23 October 2022: £269.1m)
were eligible to be funded via the securitisation facility, and the facilities
utilised were £146.3m (30 April 2023: £161.6m, 23 October 2022: £134.4m).
Other information
On average, interest is charged at 3.4% (2023: 3.4%) per month on the
outstanding balance.
The Group will undertake a reasonable assessment of the creditworthiness of a
customer before opening a new credit account or significantly increasing the
credit limit on that credit account. The Group will only offer credit limit
increases for those customers that can reasonably be expected to be able to
afford and sustain the increased repayments in line with the affordability and
creditworthiness assessment. There are no customers who represent more than 1%
of the total balance of the Group's trade receivables.
Where appropriate, the Group will offer forbearance to allow customers
reasonable time to repay the debt. The Group will ensure that the forbearance
option deployed is suitable in light of the customer's circumstances (paying
due regard to current and future personal and financial circumstances). Where
repayment plans are agreed, the Group will ensure that these are affordable to
the customer and that unreasonable or unsustainable amounts are not requested.
At the balance sheet date there were 22,291 accounts with total gross balances
of £14.9m (30 April 2023: 21,395 with total gross balances of £14.3m, 23
October 2022: 24,159 with total gross balances of £15.6m) on repayment plans.
Provisions are assessed as detailed above.
During the current period, overdue receivables with a gross value of £16.2m
(30 April 2023: £56.0m, 23 October 2022: £27.2m) were sold to third party
debt collection agencies. As a result of the sales, the contractual rights to
receive the cash flows from these assets were transferred to the purchasers.
Any gain or loss between actual recovery and expected recovery is reflected
within the impairment charge.
Allowance for expected credit loss
The following tables provide information about the exposure to credit risk and
ECLs for trade receivables from individual customers as at 29 October 2023:
(Unaudited) 29 October 2023 (Audited) 30 April 2023 (Unaudited) 23 October 2022
Trade receivables Trade receivables on forbearance arrangements Total Trade receivables Trade receivables on forbearance arrangements Total Trade receivables Trade receivables on forbearance arrangements Total
(£m) (£m) (£m) (£m) (£m) (£m) (£m) (£m) (£m)
Ageing of trade receivables
Not past due 226.8 13.5 240.3 242.5 13.0 255.5 257.2 14.2 271.4
Past due
0 - 60 days 23.3 1.4 24.7 23.4 1.3 24.7 22.9 1.4 24.3
60 - 120 days 8.9 - 8.9 9.6 0.0 9.6 8.9 - 8.9
120+ days 35.7 - 35.7 36.2 - 36.2 50.7 - 50.7
Gross trade receivables 294.7 14.9 309.6 311.7 14.3 326.0 339.7 15.6 355.3
Allowance for expected credit loss (87.7) (10.4) (98.1) (90.2) (9.9) (100.1) (104.2) (10.8) (115.0)
Carrying value 207.0 4.5 211.5 221.5 4.4 225.9 235.5 4.8 240.3
1 May 2023 to 29 October 2023
Stage 1 Stage 2 Stage 3 Total
(£m) (£m) (£m) (unaudited)
(£m)
Consumer credit receivables 161.5 92.8 55.3 309.6
Allowance for doubtful debts:
30 April 2023 (17.2) (37.2) (45.7) (100.1)
Impairment credit/(charge) 29.7 (25.2) (24.0) (19.5)
Utilisation in period 0.5 4.5 16.5 21.5
Closing balance 13.0 (57.9) (53.2) (98.1)
Carrying value 174.5 34.9 2.1 211.5
1 May 2023 to 29 October 2023 25 April 2022 to 30 April 2023 24 April 2022 to 23 October 2022
(unaudited) (audited) (unaudited)
(£m) (£m) (£m)
Impairment charge impacting on provision (19.5) (22.2) -
Recoveries 6.0 9.2 5.0
Other (1.7) (2.5) (1.2)
Impairment (charge)/credit (15.2) (15.5) 3.8
Sensitivity analysis
Management judgement is required in setting assumptions around probabilities
of default, cash recoveries and the weighting of macro-economic scenarios
applied to the impairment model, which have a material impact on the results
indicated by the model.
A 1% increase/decrease in the probability of default would increase/decrease
the provision amount by approximately £2.1m (FY23: £2.3m).
A 1% increase/decrease in the assumed recoveries rate would result in the
impairment provision decreasing/increasing by approximately £1.0m (FY23:
£1.0m).
Changing the weighting of macro-economic scenarios so that the severe-case
scenario's weighting is halved to 10% (with both upside and downside
increasing to 5% and base remaining at 50%) would result in the impairment
provision reducing by approximately £0.5m.
10. PROVISIONS
26 weeks ended 29 October 2023 (unaudited)
Legal and regulatory Property related Financial services related Other Total
(£m) (£m) (£m) (£m) (£m)
At 30 April 2023 123.5 166.7 16.0 0.3 306.5
Amounts provided - 6.0 - - 6.0
Amounts utilised / reversed (9.2) (35.1) (11.1) 2.8 (52.6)
At 29 October 2023 114.3 137.6 4.9 3.1 259.9
26 weeks ended 23 October 2022 (unaudited)
Legal and regulatory Property related Other Total
(£m) (£m) (£m) (£m)
At 24 April 2022 230.2 161.2 41.6 433.0
Acquired through business combinations - 2.3 - 2.3
Amounts provided 0.5 30.8 - 31.3
Amounts utilised / reversed - (30.1) (10.4) (40.5)
At 23 October 2022 230.7 164.2 31.2 426.1
53 weeks ended 30 April 2023 (audited)
Legal and regulatory Property related Financial services related Other Total
(£m) (£m) (£m) (£m) (£m)
At 24 April 2022 230.2 161.2 41.6 - 433.0
Acquired through business combinations - 6.0 - - 6.0
Amounts provided 1.3 69.7 - 0.8 71.8
Amounts utilised / reversed (108.0) (70.2) (25.6) (0.5) (204.3)
At 30 April 2023 123.5 166.7 16.0 0.3 306.5
Financial services related and other provisions are categorised as current
liabilities, while legal and regulatory and property related provisions are
non-current.
Legal and regulatory provisions
Legal and regulatory provisions reflect management's best estimate of the
potential costs arising from the settlement of outstanding disputes of a
commercial and regulatory nature.
A substantial portion of the amounts provided relates to ongoing legal claims
and non-UK tax enquiries. In accordance with IAS37.92, management have
concluded that it would prejudice seriously the position of the Group to
provide further specific disclosures in respect of amounts provided for legal
claims and non-UK tax enquiries.
The timing of the outcome of legal claims and non-UK tax inquiries is
dependent on factors outside the Group's control and therefore the timing of
settlement is uncertain. After taking appropriate legal advice, the outcomes
of these claims are not expected to give rise to material loss in excess of
the amounts provided.
Property related provisions
Included within property related provisions are provisions for dilapidations
and onerous lease contracts in respect of the Group's retail stores and
warehouses. Further details of management's estimates are included in note 2.
Financial services provisions
As a regulated business, Frasers Group Financial Services Limited has an
obligation to proactively review its business to ensure that appropriate
outcomes were delivered to customers. At 24 April 2022, a provision of £41.6m
was recognised in respect of the probable costs of remediating customers who
may have been adversely impacted by legacy decisions. Since the approval of
the prior year's consolidated financial statements, the receipt of new
information which was not available at the point the prior year financial
statements were approved, enabled management to refine the relevant customer
cohorts who were potentially impacted by these legacy decisions and complete
detailed analysis of the financial implications. This enabled a revision to
management's best estimate of the likely costs of remediation and resulted in
a reduction in the amount provided at 30 April 2023 of approximately £25m.
£4.9m remains provided at 29 October 2023 and this is expected to be utilised
within 12 months of the balance sheet date.
Other provisions
Other provisions relate to provisions for restructuring and employment
(non-retirement related).
11. FINANCIAL INSTRUMENTS
(a) Financial assets and liabilities by category and fair value hierarchy
The fair value hierarchy for financial assets and liabilities, which are
principally denominated in Sterling or US Dollars, were as follows:
(Unaudited) Level 1 Level 2 Level 3 Other Total
(£m) (£m) (£m) (£m) (£m)
FINANCIAL ASSETS - 29 October 2023
Amortised cost:
Trade and other receivables* - - - 680.6 680.6
Cash and cash equivalents - - - 266.7 266.7
Amounts owed by related parties - - - 6.8 6.8
FVOCI:
Long Term Financial Assets (Equity Instruments) - designated 410.7 - - - 410.7
Derivative financial assets (FV):
Foreign forward purchase and sales contracts - 63.7 - - 63.7
Derivative financial assets - contracts for difference & equity options - 0.7 - - 0.7
Interest rate swaps - 28.2 - - 28.2
- 92.6 - - 92.6
FINANCIAL LIABILITIES - 29 October 2023
Amortised cost:
Non-current borrowings - - - (864.2) (864.2)
Trade and other payables** - - - (791.7) (791.7)
IFRS 16 lease liabilities - - - (684.2) (684.2)
Derivative financial liabilities (FV):
Foreign forward and written options purchase and sales contracts - unhedged - (15.7) - - (15.7)
Derivative financial liabilities - contracts for difference & equity - (76.4) - - (76.4)
options
- (92.1) - - (92.1)
*Prepayments of £103.3m are not included as a financial asset.
**Other taxes including social security costs of £83.2m are not included as a
financial liability.
(Unaudited) Level 1 Level 2 Level 3 Other Total
(£m) (£m) (£m) (£m) (£m)
FINANCIAL ASSETS - 23 October 2022
Amortised cost:
Trade and other receivables* - - - 826.8 826.8
Cash and cash equivalents - - - 314.8 314.8
Amounts owed by related parties - - - 26.8 26.8
FVOCI:
Long Term Financial Assets (Equity Instruments) - designated 241.4 - - - 241.4
Derivative financial assets (FV):
Foreign forward purchase and sales contracts, and interest rate swaps - 102.1 - - 102.1
Derivative financial assets - contracts for difference & equity options - 1.3 - - 1.3
Interest rate swaps - 28.2 - - 28.2
- 131.6 - - 131.6
FINANCIAL LIABILITIES - 23 October 2022
Amortised cost:
Non-current borrowings - - - (813.9) (813.9)
Trade and other payables** - - - (801.8) (801.8)
IFRS 16 lease liabilities - - - (659.9) (659.9)
Derivative financial liabilities (FV):
Foreign forward and written options purchase and sales contracts - unhedged - (40.4) - - (40.4)
Derivative financial liabilities - contracts for difference & equity - (140.4) - - (140.4)
options
- (180.8) - - (180.8)
*Prepayments of £88.4m are not included as a financial asset.
**Other taxes including social security costs of £37.1m are not included as a
financial liability.
(Audited) Level 1 Level 2 Level 3 Other Total
(£m) (£m) (£m) (£m) (£m)
FINANCIAL ASSETS - 30 April 2023
Amortised cost:
Trade and other receivables* - - - 603.9 603.9
Cash and cash equivalents - - - 332.9 332.9
Amounts owed by related parties - - - 4.7 4.7
FVOCI:
Long Term Financial Assets (Equity Instruments) - designated 289.6 - - - 289.6
Derivative financial assets (FV):
Foreign forward purchase and sales contracts - 49.9 - - 49.9
Foreign currency options - 0.7 - - 0.7
Interest rate swaps - 28.7 - - 28.7
- 79.3 - - 79.3
FINANCIAL LIABILITIES - 30 April 2023
Amortised cost:
Non-current borrowings - - - (749.7) (749.7)
Trade and other payables** - - - (701.5) (701.5)
IFRS 16 lease liabilities - - - (679.9) (679.9)
Derivative financial liabilities (FV):
Foreign forward and written options purchase and sales contracts - unhedged - (22.7) - - (22.7)
Derivative financial liabilities - contracts for difference & equity - (43.8) - - (43.8)
options
- (66.5) - - (66.5)
*Prepayments of £111.5m are not included as a financial asset.
**Other taxes including social security costs of £10.4m are not included as a
financial liability.
(b) Financial assets and liabilities
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair
value of financial instruments by valuation technique:
• Level 1: quoted (unadjusted) prices in active markets for
identical assets or liabilities;
• Level 2: other techniques for which all inputs which have a
significant effect on the recorded fair value are observable, either directly
or indirectly; and
• Level 3: techniques which use inputs which have a significant
effect on the recorded fair value that are not based on observable market
data.
Contracts for difference are classified as Level 2 as the fair value is
calculated using quoted prices for listed shares at contract inception and the
period end.
Foreign forward purchase and sales contracts and options are classified as
Level 2, the Group enters into these derivative financial instruments with
various counterparties, principally financial institutions with investment
grade credit ratings. Foreign exchange forward contracts and options are
valued using valuation techniques, which employ the use of market observable
inputs. The most frequently applied valuation techniques include forward
pricing and swap models using present value calculations. The models
incorporate various inputs including the credit quality of counterparties,
foreign exchange spot and forward rates, and yield curves of the respective
currencies.
Long-term financial assets such as equity instruments are classified as Level
1 as the fair value is calculated using quoted prices.
The fair value of equity derivative agreements are included within the
derivative financial assets balance of £0.7m (23 October 2022: £1.3m, 30
April 2023: £nil) and derivative financial liabilities balance of £76.4m (23
October 2022: £140.4m, 30 April 2022: £43.8m). The derivative financial
assets and derivative financial liabilities as at 29 October 2023 relate to
strategic investments held of between 0.1% and 36.9% of investee share
capital.
Sold options are classified as Level 2 as the fair value is calculated using
other techniques, where inputs are observable.
Trade receivables / payables, amounts owed from related parties, other
receivables / payables, cash and cash equivalents and current / non-current
borrowings are held at amortised cost.
The maximum exposure to credit risk as at 29 October 2023 is the carrying
value of each class of asset in the Balance Sheet, except for amounts owed
from related parties which is the gross carrying amount of £30.0m (23 October
2022: £62.6m, 30 April 2023: £48.7m).
The Group's largest sold put position is in Hugo Boss at approximately 18% of
the equivalent share capital. On 15 December 2023 10.9% of this position
expires, and as at the date of reporting it is anticipated that these will
expire unexercised. Management would anticipate a significant double digit %
decline in the Hugo Boss spot price being required for these sold put options
in December 2023 to exercise.
(c) Derivatives: Foreign currency forward contracts
(c)(i) Hedged currency instruments
The most significant exposure to foreign exchange fluctuations relates to
purchases made in foreign currencies, principally the US Dollar, and online
sales in Euros. The Group's policy is to reduce substantially the risk
associated with foreign currency spot rates by using forward fixed rate
currency purchase contracts, taking into account any foreign currency cash
flows. The Group does not hold or issue derivative financial instruments for
trading purposes, however if derivatives, including both forwards and written
options, do not qualify for hedge accounting they are accounted for as such
and accordingly any gain or loss is recognised immediately in the Income
Statement. Management are of the view that there is a substantive distinct
business purpose for entering into the written options and a strategy for
managing the written options independently of the forward contracts. The
forward and written options contracts are therefore not viewed as one contract
and hedge accounting for the forwards is permitted under IFRS 9.
Hedge effectiveness is determined at inception of the hedge relationship and
at every reporting period end through the assessment of the hedged items and
hedging instrument to determine whether there is still an economic
relationship between the two.
The critical terms of the foreign currency forwards entered into exactly match
the terms of the hedged item. As such the economic relationship and hedge
effectiveness are based on the qualitative factors and the use of a
hypothetical derivative where appropriate. Hedge ineffectiveness may arise
where the critical terms of the forecast transaction no longer meet those of
the hedging instrument, for example if there was a change in the timing of the
forecast sales transactions from what was initially estimated or if the volume
of currency in the hedged item was below expectations leading to over-hedging.
Differences can arise when the initial value on the hedging instrument is not
zero.
The hedged items and the hedging instrument are denominated in the same
currency and as a result the hedging ratio is always one to one.
All derivative financial instruments used for hedge accounting are recognised
initially at fair value and reported subsequently at fair value in the
statement of financial position. To the extent that the hedge is effective,
changes in the fair value of derivatives designated as hedging instruments in
cash flow hedges are recognised in other comprehensive income and included
within the cash flow hedge reserve in equity. Any ineffectiveness in the hedge
relationship is recognised immediately in profit or loss.
At the time the hedged item affects profit or loss, any gain or loss
previously recognised in other comprehensive income is reclassified from
equity to profit or loss and presented as a reclassification adjustment within
other comprehensive income. If a forecast transaction is no longer expected to
occur, any related gain or loss recognised in other comprehensive income is
transferred immediately to profit or loss. If the hedging relationship ceases
to meet the effectiveness conditions, hedge accounting is discontinued, and
the related gain or loss is held in the equity reserve until the forecast
transaction occurs.
The fair value of hedged contracts as at 29 October 2023 was:
29 October 2023 23 October 2022 30 April 2023
(unaudited)
(unaudited)
(audited)
(£m)
(£m) (£m)
Assets
US Dollar purchases - GBP 6.4 41.3 0.7
US Dollar purchases - EUR 4.7 17.0 7.1
Euro sales 35.7 34.4 37.7
Total 46.8 92.7 45.5
Liabilities
US Dollar purchases - GBP - - 2.2
Total - - 2.2
The details of hedged forward foreign currency purchase contracts and
contracted forward rates were as follows:
29 October 2023 (unaudited) 23 October 2022 (unaudited) 30 April 2023 (audited)
Currency (millions) GBP (millions) Rates Currency (millions) GBP (millions) Rates Currency (millions) GBP (millions) Rates
Euro sales (EUR / GBP) 576.0 550.3 0.98 - 1.09 696.0 672.0 0.98 - 1.08 816.0 771.1 0.98 - 1.09
US Dollar purchases (USD / GBP) 390.0 318.2 1.21 - 1.26 240.0 170.2 1.41 380.0 306.5 1.21 - 1.26
US Dollar purchases (USD / EUR) 30.0 22.9 1.31 90.0 60.8 1.26 - 1.31 60.0 40.1 1.31
The timing of the contracts is as follows:
Currency Hedging against Currency value Timing Rates
EUR / GBP Euro sales EUR 576m FY24-FY26 0.98 - 1.09
USD / GBP USD inventory purchases USD 390m FY24 1.21 - 1.26
USD / EUR USD inventory purchases USD 30m FY24 1.31
Hedge ineffectiveness may arise where the critical terms of the forecast
transaction no longer meet those of the hedging instrument, for example if
there was a change in the timing of the forecast sales transactions from what
was initially estimated or if the volume of currency in the hedged item was
below expectations leading to over-hedging.
29 October 2023 23 October 2022 24 April 2023
(unaudited) (unaudited) (audited)
(£m)
(£m) (£m)
Change in the fair value of the currency forward Change in the fair value of the hedged item Change in the fair value of the currency forward Change in the fair value of the hedged item Change in the fair value of the currency forward Change in the fair value of the hedged item
US Dollar purchases - GBP 3.5 (3.5) 25.1 (25.1) (2.7) 2.7
US Dollar purchases - EUR 1.2 (1.2) 7.6 (7.6) 0.8 (0.8)
Euro sales 6.0 (6.0) (8.1) 8.1 7.7 (7.7)
At 29 October 2023 £341.1m of purchase contracts (23 October 2022: £231.0m,
30 April 2023: £346.7m) and £550.3m of forward sales contracts (23 October
2022: £672.0m, 30 April 2023: £771.1m) qualified for hedge accounting and
the gain on fair valuation of these contracts of £10.7m (23 October 2022:
£24.6m, 30 April 2023: £7.2m) has therefore been recognised in other
comprehensive income.
At 29 October 2023, £16.5m hedged purchase contracts had a maturity of
greater than 12 months (23 October 2022: £20.0m, 30 April 2023: £nil) and
£329.4m of hedged sales had a maturity of greater than 12 months (23 October
2022: £550.8m, 30 April 2023: £576.0m).
The movements through the Hedging reserve are:
USD/GBP EUR/GBP USD/EUR Total Hedge Movement Deferred Tax Total Hedging Reserve
As at 24 April 2022 (audited) 33.0 28.9 12.0 73.9 (18.6) 55.3
Recognised 25.1 (8.1) 7.6 24.6 - 24.6
Reclassified in sales - (12.6) - (12.6) - (12.6)
Reclassified in inventory / cost of sales (16.8) - (2.8) (19.6) - (19.6)
Deferred tax - - - - 2.2 2.2
As at 23 October 2022 (unaudited) 41.3 8.2 16.8 66.3 (16.4) 49.9
Recognised (19.0) 15.6 (14.0) (17.4) - (17.4)
Reclassified in sales - (12.0) - (12.0) - (12.0)
Reclassified in inventory / cost of sales (16.2) - (2.7) (18.9) - (18.9)
Deferred tax - - - - 12.4 12.4
As at 30 April 2023 (audited) 6.1 11.8 0.1 18.0 (4.0) 14.0
Recognised 3.5 6.0 1.2 10.7 - 10.7
Reclassified in sales - (1.5) - (1.5) - (1.5)
Reclassified in inventory / cost of sales 1.3 - (3.7) (2.4) - (2.4)
Deferred tax - - - - (2.1) (2.1)
As at 29 October 2023 (unaudited) 10.9 16.3 (2.4) 24.8 (6.1) 18.7
(c)(ii) Unhedged currency instruments
The sterling principal amounts of unhedged forward contracts and written
currency option contracts and the contracted rates were as follows:
29 October 2023 23 October 2022 30 April 2023
(unaudited)
(unaudited)
(audited)
(£m)
(£m) (£m)
US Dollar purchases - GBP 462.9 - 155.1
Contracted rates USD / GBP 1.21 - 1.26 - 1.21 - 1.25
US Dollar purchases - EUR 71.4 60.8 18.6
Contracted rates USD / EUR 1.11 - 1.31 1.26-1.31 1.31
Euro sales 1,116.0 672.0 831.8
Contracted rates EUR / GBP 0.98 - 1.09 0.98-1.08 0.98 - 1.13
The gain on fair value of the written options and swaps of £15.7m has been
included within finance income (23 October 2022: £8.6m loss in finance costs,
30 April 2023: £26.0m gain).
At 29 October 2023, £20.0m of unhedged purchase contracts had a maturity at
inception of greater than 12 months (23 October 2022: £40.0m, 30 April 2023:
£16.3m) and £816.0m of unhedged sales contracts had a maturity at inception
of greater than 12 months (23 October 2022: £550.8m, 30 April 2023:
£831.8m).
These contracts form part of the Treasury management activities, which
incorporates the risk management strategy for areas that are not reliable
enough in timing and amount to qualify for hedge accounting. This includes
acquisitions, disposals of overseas subsidiaries, related working capital
requirements, dividends and loan repayments from overseas subsidiaries and
purchase and sale of overseas property. Written options carry additional risk
as the exercise of the option lies with the purchaser. The options involve the
Group receiving a premium on inception in exchange for accepting that risk and
the outcome is that the bank may require the Group to sell Euros or buy USD.
However, the Group is satisfied that the use of options as a Treasury
management tool is appropriate.
The October 2023 values above excludes short term swaps of USD/EUR of EUR 70m
and EUR/GBP of EUR 120m which are required for Treasury management purposes
only (23 October 2022: GBP/EUR of Euro 70m, 30 April 2023: USD/GBP of USD
70.0m, EUR/USD of EUR 27.0m and EUR/GBP of EUR 180m of EUR 40m short term
swaps).
(d) Interest rate swaps
The Group uses interest rate swaps to manage its exposure to interest rate
movements on its bank borrowings. The Group has two contracts in place that
fix interest payments on variable rate debt. The first contract covers a
notional amount of £250.0m and fixes the interest rate at 0.985% per annum
until 29 May 2026. The second contract covers a notional amount of £100.0m
and fixes the interest rate at 0.45% per annum until 2 September 2024. The
fair value of these interest rate swaps is an asset of £28.2m (30 April 2023:
£28.7m, 23 October 2022: £37.6m). The fair value loss of £0.5m has been
recognised in finance costs classified as fair value adjustments to
derivatives.
Capital Management
The capital structure of the Group consists of equity attributable to the
equity holders of the parent company, comprising issued share capital (less
treasury shares), share premium, retained earnings and cash and borrowings.
It is the Group's policy to maintain a strong capital base so as to maintain
investor, creditor and market confidence and to sustain the development of the
business.
In respect of equity, the Board has decided, in order to maximise flexibility
in the near term with regards to a number of inorganic growth opportunities
under review, not to return any cash by way of a final dividend at this time.
The Board is committed to keeping this policy under review and to looking to
evaluate methods of returning cash to shareholders when appropriate.
The objective of the Share Scheme is to encourage employee share ownership and
to link employee's remuneration to the performance of the Company. It is not
designed as a means of managing capital. From time to time the Board may
initiate share buy back programmes.
In respect of cash and borrowings, the Board regularly monitors the ratio of
net debt to Reported EBITDA (Pre-IFRS 16), the working capital requirements
and forecasted cash flows, however no minimum or maximum ratios are set
outside of maintaining a ratio of net debt to Reported EBITDA (pre IFRS 16)
below 3.0.
Based on this analysis, the Board determines the appropriate return to equity
holders whilst ensuring sufficient capital is retained within the Group to
meet its strategic objectives, including but not limited to, acquisition
opportunities.
The Group allocates capital in the following order:
- The existing business such as automation and infrastructure
- Growth opportunities such as acquisitions and property purchases
- Strategic investments where the Group believes that there is a
mutually beneficial commercial relationship
- Returns to shareholders in the form of share buy backs
These capital management policies have remained unchanged from the prior
period.
12. POST BALANCE SHEET EVENTS
The Group made several transactions to increase its holding in ASOS plc and
Boohoo Group plc bringing the total direct shareholding in ASOS plc to 18.3%
as of 21 November 2023 and the total direct shareholding in Boohoo Group plc
to 17.2% as of 4 December 2023.
On 9 November 2023, the Group confirmed that they had purchased the entire
share capital of LS Castleford Limited for a consideration of £47.0m. The
fair value of assets acquired and liabilities assumed cannot be quantified, as
no fair value exercise has been carried out by the date of this report. Due to
the proximity of this acquisition to the date of issue of these condensed
consolidated financial statements, it is impracticable for the pro forma
revenue and profit to be disclosed and also immaterial to the results of the
Group.
On 7 November 2023, the Group commenced share buyback programmes with the
aggregate purchase price of all shares acquired under these programmes of no
greater than £80m each and the maximum number of shares that may be purchased
under the programmes of 10m ordinary shares each.
On 30 November 2023 the Group agreed an amendment and extension to its banking
facilities. Total committed facilities on the Group' revolving credit facility
now stand at £1,237.5m until 30 November 2025, dropping to £1,177.5m from 1
December 2025 to maturity on 30 November 2026.
13. CAPITAL COMMITMENTS
The Group had capital commitments of £56.5m as at 29 October 2023 (23 October
2022: £111.5m, 30 April 2023 £65.2m) relating to aircraft, other plant and
machinery, and property purchases.
14. PURCHASE OF OWN SHARES
On 31 July 2023 and 21 September 2023, the Group commenced share buyback
programmes with the aggregate purchase price of all shares acquired under
these programmes of no greater than £80m each and the maximum number of
shares that may be purchased under the programmes of 10m ordinary shares each.
The purpose of the programmes was to reduce the share capital of the Company.
14,397,696 ordinary shares at an average price of 711p each for consideration
of £102.3m were acquired through these programmes in the current period.
15. RELATED PARTY TRANSACTIONS
The Group has taken advantage of the exemptions contained within IAS 24 -
"Related Party Disclosures" from the requirement to disclose transactions
between Group companies as these have been eliminated on consolidation.
The Group entered into the following material transactions with related
parties:
26 weeks ended 29 October 2023 (unaudited):
Related party Relationship Sales Purchases Trade and other receivables Trade and other payables
(£m) (£m) (£m) (£m)
Four (Holdings) Limited & subsidiaries((1)) Associate 0.2 25.8 6.8 -
Mash Holdings Limited Parent company - - 0.2 -
Mike Ashley((2)) Majority shareholder 1.1 - - -
Rangers Retail Limited Associate - - - 0.1
Tymit Limited Associate - 0.2 - -
Reath SW Limited Connected persons - 0.3 - 0.1
(1) The outstanding balance with Four (Holdings) Limited
reflects the funding related to Agent Provocateur. Management consider that
the underlying results of Four (Holdings) Limited supports the recoverability
of the receivables balance. The results of Four (Holdings) Limited are not
material on the basis of net assets and profit before tax, subsequently
detailed disclosures have not been presented under IFRS 12.
(2) Use of the Company jet and helicopter are charged at
commercial rates.
26 weeks ended 23 October 2022 (unaudited):
Related party Relationship Sales Purchases Trade and other receivables Trade and other payables
(£m) (£m) (£m) (£m)
Four (Holdings) Limited & subsidiaries((1)) Associate 0.1 36.3 23.0 -
Mash Holdings Limited Parent company - - 0.2 -
Mike Ashley((2)) Majority shareholder 1.1 - - -
Rangers Retail Limited Associate - - - 0.1
Tymit Limited Associate - - 3.6 -
(1) The outstanding balance with Four (Holdings) Limited
reflects the funding related to Agent Provocateur. Management consider that
the underlying results of Four (Holdings) Limited supports the recoverability
of the receivables balance. The results of Four (Holdings) Limited are not
material on the basis of net assets and profit before tax, subsequently
detailed disclosures have not been presented under IFRS 12.
(2) Use of the Company jet and helicopter are charged at
commercial rates.
53 weeks ended 30 April 2023 (audited):
Related party Relationship Sales Purchases Trade and other receivables Trade and other payables
(£m) (£m) (£m) (£m)
Four (Holdings) Limited & subsidiaries ((1)) Associate 0.3 68.2 4.5 -
Mash Holdings Limited Parent company - - 0.2 -
Mike Ashley ((2)) Plc Director 2.6 - - -
Rangers Retail Limited Associate - - - 0.1
Tymit Ltd Associate - 2.1 - -
Reath SW Limited Connected persons - 0.6 - 0.1
(1) The outstanding balance with Four (Holdings) Limited
reflects the funding related to Agent Provocateur. Management consider that
the underlying results of Four (Holdings) Limited supports the recoverability
of the receivables balance. The results of Four (Holdings) Limited are not
material on the basis of net assets and profit before tax, subsequently
detailed disclosures have not been presented under IFRS 12.
(2) Use of the Company jet and helicopter are charged at
commercial rates.
The trade and other receivables balance with Four (Holdings) Limited includes
a loan balance of £30m (gross of amounts recognised in respect of loss
allowance) which attracts interest at a rate of SONIA + 2.5% within current
assets (HY23: £60.0m, FY23: £37.5m). This has been accounted for at
amortised cost in accordance with IFRS 9. The carrying value has been
determined by assessing the recoverability of the receivable balance,
discounted at an appropriate market rate of interest. £nil was recognised in
the period in respect of doubtful debts. The sales amounts in relation to Four
(Holdings) Limited relates to the interest charge on the loan and the
purchases relate to the purchase of clothing products.
At the period end the Group does not have significant influence over, but
holds greater than 20% of the voting rights of Mulberry Group plc and AO World
plc. The latest equity amounts and results are shown below:
Mulberry Group plc AO World plc
6 month period ended Period ended
30 September 2023 30 September 2023
(£m) (£m)
Share Capital 3.0 1.4
Share Premium 12.2 108.5
Retained Earnings & other reserves 18.0 8.8
Total equity 33.2 118.7
Profit / (loss) for the period (13.4) 9.4
The Group does not consider it has the power to participate in the financial
and operating policy decisions of the entity and so management do not consider
the Group to be able to exert significant influence over this entity as per
IAS 28 Investments in Associates and Joint Ventures and IAS 24 Related Party
Disclosures.
APPENDIX - CHANGES TO OPERATING SEGMENTS AND ACCOUTING POLICY FOR INVESTMENT
PROPERTY
Operating segments
Following a review of the Group's operating segments at the start of the
2023/24 financial year, a decision was taken to change the Group's segmental
reporting to more accurately reflect the impact of recent acquisitions and
strategy changes on how management views the business, and to allow a more
granular analysis of the Group's operating base.
Summary of changes
Historically the Group has presented four operating segments:
· UK Sports
This segment included the Group's core sports retail store operations in the
UK, plus all the Group's sports retail online business, Frasers Fitness, the
Group's Shirebrook campus operations, freehold property owning companies
excluding Premium Lifestyle fascia properties, GAME UK stores and online
operations, Frasers Group Financial Services Limited, and retail store
operations in Northern Ireland.
· Premium Lifestyle
This segment included the results of the Group's premium and luxury retail
businesses FLANNELS, Cruise, Van Mildert, Jack Wills, House of Fraser, Gieves
and Hawkes, and Sofa.com along with the related websites, the Missguided and I
Saw it First websites, and freehold property owning companies where trading
was purely from Premium Lifestyle fascias.
· Wholesale & Licensing
This segment included the results of the Group's portfolio of internationally
recognised brands such as Everlast, Karrimor, and Slazenger.
· International
This segment included all of the Group's sports retail stores, management and
operating functions in Europe, Asia and the rest of the world, including the
Group's European Distribution Centres in Belgium and Austria, European
freehold property owning companies, GAME Spain stores and e-commerce offering,
the Baltics & Asia e-commerce offerings, the MySale business in Australia,
and the Group's US retail operations until they were disposed of in 2022.
Following the acquisition of Frasers Group Financial Services Limited
(formerly known as Studio Retail Limited) and the launch of the Group's
consumer credit offering, Frasers Plus, as well as recent acquisitions of
investment property, the Group has decided that its financial services and
property businesses should be disclosed as separate operating segments.
In addition, the Group's wholesale and licensing activities have become less
of an area of focus in recent periods and therefore management judge the
results from these activities no longer warrant separate presentation as an
operating segment.
As a result, the Group will now present five operating segments, with the
creation of new Property and Financial Services segments, and the Wholesale
and Licensing Segment being absorbed into the UK Sports and International
segments:
· UK Sports
This segment now includes the results of the Group's core sports retail store
operations in the UK, plus all the Group's sports retail online business,
other UK-based sports retail and wholesale operations, GAME UK stores and
online operations, retail store operations in Northern Ireland, Frasers
Fitness, and the Group's central operating functions (including the Shirebrook
campus).
· Premium Lifestyle
This segment includes the results of the Group's premium and luxury retail
businesses FLANNELS, Cruise, Van Mildert, Jack Wills, House of Fraser, Gieves
and Hawkes, and Sofa.com along with the related websites, the businesses
acquired from JD Sports Fashion plc in FY23, as well as the results from the I
Saw it First website and the Missguided website until the disposal of the
Missguided intellectual property in October 2023.
· International
This segment includes the results all of the Group's sports retail stores,
management and operating functions in Europe, Asia and the rest of the world,
including the Group's European Distribution Centres in Belgium and Austria,
GAME Spain stores and e-commerce offering, the Baltics & Asia e-commerce
offerings, the MySale business in Australia, the Group's US retail operations
until they were disposed of in 2022, and all non-UK based wholesale and
licensing activities (relating to brands such as Everlast, Karrimor, and
Slazenger).
· Property
This segment includes the results from the Group's freehold property owning
and long leasehold holding property companies that generate third party rental
and other property related income (e.g., car parking, conference and events
income). The results of the Coventry Arena are reported in this segment.
· Financial Services
This segment includes the results of Frasers Group Financial Services. This
includes interest charged on amounts advanced to consumer credit customers,
along with the associated impairment and operating costs.
The changes to the Group's operating segments are summarised in the following
diagram:
The operating performance of each segment will be assessed by reference to
revenue, gross margin, and profit from trading activities after operating
expenses. For the avoidance of doubt, operating costs in the Group's three
retail operating segments include rents payable to third party landlords.
Intra-group rent payments are eliminated on consolidation.
For the property segment, profit from trading activities includes fair value
gains and losses in respect investment properties (see further below) and
gains or losses on disposal of properties since the Group's property
businesses seek to generate income from rentals and capital appreciation of
properties held.
In the Financial Services segment, impairment losses on consumer credit
receivables are disclosed within gross margin, which management deem to be the
appropriate treatment for a financial services business.
Depreciation, amortisation and impairments (net of any reversals) are
disclosed as part of each segment's operating profit.
Net investment and finance income and costs are not split by segment as
management consider that these items relate to the Group as a whole and any
split would not be meaningful.
Change to classification of rental income
As a result of the changes above, management has concluded that is more
appropriate to disclose rental income received from third parties within
revenue from the property segment rather than in other operating income in
various retail segments as was previously disclosed.
The impact of this change is to increase reported revenue in the 26-week
period ended 23 October 2022 by £14.0m and in the 53-week period ended 30
April 2023 by £29.3m, in each case reducing the amounts reported in other
operating income by an equivalent amount.
The changes to our segmental analysis and the reclassification of rental
income have no impact on the Group's results overall.
Change in accounting policy in respect of investment properties
Following the creation of the Property operating segment, management conducted
a review of the accounting treatment of investment properties (properties held
to earn rentals or for capital appreciation or both, rather than for use in
operations) and concluded that it would be more appropriate to adopt the fair
value model set out in paragraphs 33-35 of IAS 40 Investment Property for
remeasuring the value of these properties, rather than on the cost model set
out in paragraph 56 of the standard, which was previously used. As result, in
future, these assets will not be depreciated but held at fair value with
changes in fair value being recorded in the income statement in the period in
which they occur.
Management has considered this voluntary change in accounting policy in
accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and
Errors and concluded that the fair value model results in the financial
statements providing reliable and more relevant information. The changes have
been applied retrospectively and as such prior period figures have been
restated on an equivalent basis to allow for meaningful comparison.
The impact of this change in accounting policy is to increase the carrying
value of the Group's investment properties held on 25 April 2022 by £6.3m,
with a corresponding adjustment being made the Group's opening retained
earnings at this date. The carrying value of these assets as at 24 April 2023
increased by £10.0m vs. the amount previously reported, resulting in an
increase to profit before tax for the 53-week period ended 2023 of £3.7m and
an increase in basic and diluted earnings per share of 0.8p.
The impact on APBT for the 53-week period ended 23 April 2023 is summarised as
follows:
FY23 H1 FY23
Reported APBT £478.1m £267.1m
Impact of change in accounting policy £3.7m £2.6m
Revised APBT £481.8m £269.7m
Management concluded that there was no material difference in the fair value
of investment properties between 25 April 2022 and 23 October 2022.
Consequently, the reported profit after tax for the 26-week period 23 October
2022 increased by £2.6m, reflecting the reversal of depreciation charged
under the cost method previously applied. Basic and adjusted earnings per
share tax for the 26-week period 23 October 2022 increased by 0.6p because of
this change in accounting policy.
This change in accounting policy does not have a material impact on the
reported tax charge in the comparative period, nor on the Group's consolidate
cash flow statement.
Restated financial information
For comparative purposes, the results for the 53-week period ended 30 April
2023 and 26-week period ended 23 October 2022 have been presented below
showing the new basis of presentation. These figures have also been adjusted
to reflect the change in accounting policy in respect of the valuation on
investment properties noted above.
53-week period ended 30 April 2023
UK Sports Premium lifestyle International Retail Property Financial Services Group
Total
(£'m) (£'m) (£'m) (£'m) (£'m) (£'m) (£'m)
Revenue 2,959.1 1,218.1 1,256.2 5,433.4 36.1 125.0 5,594.5
Cost of sales (1,685.7) (741.0) (750.6) (3,177.3) (2.6) (15.5) (3,195.4)
Gross profit 1,273.4 477.1 505.6 2,256.1 33.5 109.5 2,399.1
Gross Margin % 43.0% 39.2% 40.2% 41.5% 92.8% 87.6% 42.9%
Operating costs (830.7) (343.1) (348.8) (1,522.6) (13.1) (43.7) (1,579.4)
Fair value adjustments to investment properties - - - - (6.5) - (6.5)
Gain on disposal of properties - - - - 95.4 - 95.4
Profit from trading 442.7 134.0 156.8 733.5 109.3 65.8 908.6
Depreciation & amortisation (117.8) (41.4) (46.3) (205.5) (36.0) (0.9) (242.4)
Impairments/impairment reversals (25.1) (56.9) (133.8) (215.8) (23.9) - (239.7)
Share-based payments (19.3) (19.3) (19.3)
Foreign exchange realised 35.8 0.1 (4.7) 31.2 31.2
Exceptional items - 55.2 16.9 72.1 - 25.0 97.1
Operating profit 316.3 91.0 (11.1) 396.2 49.4 89.9 535.5
Gain on sale of subsidiaries/discontinued operations 43.9
Net investment income 108.0
Net finance costs (23.0)
Profit before tax 664.4
Exceptional items (97.1)
Fair value adjustment to derivative financial instruments (32.5)
Fair value gains and profit on disposal of equity derivatives (41.1)
Realised FX gain (31.2)
Share-based payments 19.3
Adjusted profit before tax ("APBT") 481.8
26-week period ended 23 October 2022
UK Sports Premium lifestyle International Retail Property Financial Services Group
Total
(£'m) (£'m) (£'m) (£'m) (£'m) (£'m) (£'m)
Revenue 1,473.1 533.5 570.3 2,576.9 14.0 61.1 2,652.0
Cost of sales (890.5) (310.3) (333.3) (1,534.1) - 3.8 (1,530.3)
Gross profit 582.6 223.2 237.0 1,042.8 14.0 64.9 1,121.7
Gross Margin % 39.5% 41.8% 41.6% 40.5% 100.0% 106.2% 42.3%
Operating costs (441.4) (148.2) (163.0) (752.6) (2.4) (18.9) (773.9)
Gain on disposal of properties - - - - 91.2 - 91.2
Profit from trading 141.2 75.0 74.0 290.2 102.8 46.0 439.0
Depreciation & amortisation (52.7) (6.7) (26.8) (86.2) (26.1) (0.5) (112.8)
Impairments net of impairment reversals (10.2) (48.0) (8.4) (66.6) (6.4) (4.7) (77.7)
Share-based payments (4.9) - (1.8) (6.7) - - (6.7)
Foreign exchange realised 47.7 (0.1) (3.8) 43.8 - - 43.8
Operating profit 121.1 20.2 33.2 174.5 70.3 40.8 285.6
Gain on sale of subsidiaries/discontinued operations 26.3
Net investment income (13.2)
Net finance costs (11.5)
Profit before tax 287.2
Fair value adjustment to derivative financial instruments (12.4)
Fair value gains and profit on disposal of equity derivatives 32.0
Realised FX gain (43.8)
Share-based payments 6.7
Adjusted profit before tax ("APBT") 269.7
GLOSSARY
ALTERNATIVE PERFORMANCE MEASURES
Excluding acquisitions, disposals and currency neutral performance measure
reconciliation:
UK Retail Premium Lifestyle International Retail Retail Financial Services Property Group Total
Revenue
FY24 H1 Reported 1,485.0 550.1 645.8 2,680.9 57.3 31.4 2,769.6
Adjustments for acquisitions, disposals and currency neutral - (86.7) (56.7) (143.4) - (10.8) (154.2)
FY24 H1 Excluding acquisitions, disposals and currency neutral 1,485.0 463.4 589.1 2,537.5 57.3 20.6 2,615.4
FY23 H1 Reported 1,473.1 533.5 570.3 2,576.9 61.1 14.0 2,652.0
Adjustments for acquisitions, disposals and currency neutral - (11.6) (47.4) (59.0) - - (59.0)
FY23 H1 Excluding acquisitions, disposals and currency neutral 1,473.1 521.9 522.9 2,517.9 61.1 14.0 2,593.0
% Variance 0.8% (11.2%) 12.7% 0.8% (6.2%) 47.1% 0.9%
Profit from trading
FY24 H1 Reported 246.7 39.9 78.1 364.7 38.3 9.5 412.5
Adjustments for acquisitions, disposals and currency neutral - 11.9 (0.3) 11.6 - 0.9 12.5
FY24 H1 Excluding acquisitions, disposals and currency neutral 246.7 51.8 77.8 376.3 38.3 10.4 425.0
FY23 H1 Reported 141.2 75.0 74.0 290.2 46.0 102.8 439.0
Adjustments for acquisitions, disposals and currency neutral - 6.9 5.2 12.1 - 0.1 12.2
FY23 H1 Excluding acquisitions, disposals and currency neutral 141.2 81.9 79.2 302.3 46.0 102.9 451.2
% Variance 74.7% (36.8%) (1.8%) 24.5% (16.7%) (89.9%) (5.8%)
(1) in the period, the reporting
segments have been re-categorised see Note 1 for further details
Reconciliation of Adjusted PBT performance measure, 5-year record:
26 weeks ended 26 weeks ended 26 weeks ended 26 weeks ended 26 weeks ended 27 October 2019
29 October 2023 23 October 2022((1)) 24 October 2021 25 October 2020
PBT (£'m) PBT (£'m) PBT (£'m) PBT (£'m) PBT (£'m)
REPORTED PBT 310.2 287.2 186.0 106.1 90.2
Exceptional items - - - (3.7) 3.3
Fair value adjustments to derivatives included within Finance (income) / costs (15.7) (12.4) (10.7) 8.6 3.2
Fair value (gains) / losses and profit on disposal of equity derivatives 21.9 32.0 15.6 (2.9) (3.0)
Realised foreign exchange (gain) / loss (21.9) (43.8) (4.5) 7.4 (4.8)
Share scheme 9.3 6.7 6.0 - -
ADJUSTED PBT 303.8 269.7 192.4 115.5 88.9
(1) Restated to reflect the change in accounting policy
regarding the valuation of investment property. Please refer to note 1 of the
condensed consolidated financial statements and the appendix above for
details.
KEY PERFORMANCE INDICATORS
Performance Measure Closest equivalent statutory measure Reconciling items to statutory measure Definition and purpose
Group revenue - - The Board considers that this measure is a key indicator of the Group's
growth.
Reported PBT - - Reported PBT shows both the Group's trading and operational efficiency, as
well as the effects on the Group of external factors as shown in the fair
value movements in Strategic investments and FX.
Adjusted PBT Profit before taxation Adjusting items (see Glossary reconciliation above). The adjusting items are Adjusted PBT shows how well the Group is managing its ongoing trading
those deemed by the Board to be volatile and therefore difficult to forecast. performance and controllable costs and therefore the overall performance of
the Group.
Cash inflow from operating activities before working capital - - Cash inflow from operating activities before working capital is considered an
important indicator for the Business of the cash generated and available for
investment in the Elevation strategy.
Net assets - - The Board considers that this measurement is a key indicator of the Group's
health.
Number of retail stores - - The Board considers that this measure is an indicator of the Group's growth.
The Group's Elevation strategy is replacing older stores and often this can
result in the closure of two or three stores, to be replaced by one larger new
generation store.
Workforce turnover - - The Board considers that this measure is a key indicator of the contentment of
our people.
Electricity consumption on like for like stores improvement vs FY20 - - This measure allows the Board to determine the effectiveness of ongoing
projects in reducing the Group's energy consumption.
Employee Engagement Survey - - The Board considers that this measurement is a key indicator of our impact and
commitment to the best environmental practices.
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