REG - Watches of Switzlnd. - FY24 Results
27/06/2024 07:00
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RNS Number : 0553U Watches of Switzerland Group PLC 27 June 2024
27 June 2024
Watches of Switzerland Group PLC
FY24 Results
for the 52 weeks ended 28 April 2024
Continued market share gains and strategic progress
Re-iterating confidence in FY25 full year guidance and Long Range Plan targets
Brian Duffy, Chief Executive Officer, said:
"I am proud of the performance that our team delivered this year in what was
undoubtedly a more challenging market. We cemented our position as a leading
international luxury watch and jewellery retailer and delivered further market
share gains in both the UK and US, driven by our proven, differentiated
business model. In particular, our US business went from strength to strength,
growing 11% and will soon represent half of Group sales.
"The UK market is starting to show signs of stabilisation. In FY24, UK and
Europe sales were down 5% impacted by significant price increases overall at a
time of reduced consumer confidence influencing discretionary spending, and we
see these pressures easing in FY25.
"During the year, we continued to invest for high-quality growth across
showroom projects and strategic acquisitions including the 15 Ernest Jones
showrooms acquired last November, and the acquisition of Roberto Coin Inc.
post year end, which dramatically accelerates our luxury branded jewellery
strategy.
"We have an impressive programme of showroom developments on both sides of the
Atlantic and our strongest ever pipeline of committed projects, which includes
the flagship Rolex boutique on Old Bond Street, London, Audemars Piguet
Townhouse in Manchester, Rolex boutique in Atlanta, Georgia and a Rolex
anchored multi-brand in Plano, Texas.
"Pre-owned represents a significant opportunity for our Group, with pre-owned
luxury watch sales doubling year-on-year in Q4 FY24. Within this category, the
new Rolex Certified Pre-Owned programme is performing ahead of our
expectations in both the US and UK and is set for further roll-out in FY25
with improved methods of supply in the UK.
"Our strategic momentum underpins our confidence in our FY25 guidance and Long
Range Plan objectives of doubling sales and profit by 2028, capitalising on
our leading market positions and the unique growth opportunities ahead."
52 weeks ended 52 weeks ended YoY change YoY change
£million 28 April 2024 30 April 2023 Reported rates Constant currency(1)
Group revenue 1,538 1,543 -% +2%
US 692 653 +6% +11%
UK and Europe 846 890 -5% -5%
Adjusted EBITDA(1) 179 201 -11%
Adjusted EBITDA margin(1) 11.6% 13.1% -150bps
Adjusted EBIT(1) 135 165 -18%
Adjusted EBIT margin(1) 8.8% 10.7% -190bps
Adjusted EPS(1) (p) 38.0 52.7 -28%
Statutory operating profit 120 179 -33%
Statutory basic EPS (p) 25.0 51.2 -51%
Statutory profit before tax 92 155 -40%
Free cash flow(1) 118 146 -19%
Free cash flow conversion(1) 66% 72% -60bps
Return On Capital Employed(1) 19.5% 27.9% -840bps
Net cash(1) 1 16
FY24 Financial Highlights
· Group revenue of £1,538 million, +2% at constant currency, flat
at reported rates on prior year
o Luxury watches revenue +3% in constant currency, +1% reported, with a
particularly strong performance in the US
§ Luxury watches(2) represents 87% of Group revenue
§ Demand for our key brands, particularly products on the Registration of
Interest lists, continued to be strong and outstripping supply, with
consistent additions and conversions
§ Market share gains in the luxury watch market in both the UK and US as a
result of our differentiated offering and investments
§ Our markets were characterised by significant average selling price
increases in a time of reduced consumer confidence, particularly in the UK
market
o Luxury jewellery(2) revenue -13% in constant currency, -14% reported, but
sequential improvement through the year with Q4 FY24 the best performing
period
§ Luxury branded jewellery significantly outperformed non-branded jewellery
§ Post year end, on 8 May 2024, the Group acquired the entire share capital
of Roberto Coin Inc., the exclusive distributor for Roberto Coin in the USA,
Canada, Central America and Caribbean, for $130 million(3), representing a
significant milestone in the Group's luxury branded jewellery strategy as
outlined in the Long Range Plan
§ Addition of prestigious luxury jewellery brands within the UK and US
portfolios, including the introduction of David Yurman, Pomellato, FRED,
Repossi, Pasquale Bruni and Faberge and expansion with existing brands such as
Messika
o Rolex Certified Pre-Owned launched in the US in July 2023 and the UK in
September 2023
§ Performing ahead of expectations, with further roll out planned in FY25 as
supply conditions in the UK improve
§ Total pre-owned and vintage revenue (including Rolex Certified Pre-Owned)
doubled against the prior year in Q4 FY24 to become the second biggest brand
within the Group
o Excellent progress with showroom expansion and refurbishment programme
§ Expansionary capex(2) of £78 million, with 22 new showrooms opened and 15
showrooms refurbished
FY24 Operating Highlights
· Continued strong momentum in the US, with revenue of £692
million (FY23: £653 million), +11% at constant currency, +6% at reported
rates
o Sustained growth reflecting the success of our model and strength of
client demand
o Showroom development programme continues:
§ New Watches of Switzerland multi-brand showrooms in American Dream, New
Jersey and One Vanderbilt, New York
§ Relocation and expansion of Mayors Dadeland, Florida and Rolex Millenia
mono-brand boutique, Florida
§ Eight mono-brand boutiques opened for Breitling, TAG Heuer and Grand Seiko
§ Secured a new Rolex mono-brand boutique in Lenox, Atlanta; opening in FY25
replacing the existing Mayors multi-brand showroom
§ Significant programme of showroom investment projects agreed with Rolex and
other brands through to FY27
o FY24 ended with 25 multi-brand showrooms (FY23: 24) and 31 mono-brand
boutiques (FY23: 23)
· UK and Europe revenue £846 million, -5%, impacted by
macroeconomic conditions in the UK
o UK performance continues to be driven by a domestic clientele with minimal
return of tourist spending due to lack of VAT free shopping
o Acquisition of 15 luxury watch showrooms from Ernest Jones. Rebranding,
colleague training and system conversions complete. Early trading from these
showrooms is in line with our expectations
o Ecommerce revenue(4) -11% on last year, impacted by the mix of products
through this channel and performance of the UK regional market
o Showroom development programme continues with several projects completed
during the year:
§ Major expansion of the Patek Philippe space in Watches of Switzerland 155
Regent Street, London
§ Continued rollout of the Goldsmiths Luxury concept with seven showrooms
refurbished/expanded in FY24 including Liverpool, Birmingham Bullring and
Manchester Trafford Centre
§ Mappin & Webb contemporary concept launched in Glasgow, York, Guernsey
and Bluewater
§ One multi-brand Goldsmiths showroom opened (Bromley) along with eight
mono-brand boutiques
§ Progress made on important projects, including the flagship Rolex boutique
on Old Bond Street, London, Audemars Piguet Townhouse, Manchester and Mappin
& Webb luxury jewellery boutique, Manchester; all opening in FY25
o In line with our disciplined approach to capital allocation and given the
pipeline of high returning opportunities in the UK and US, the Group intends
to reallocate investment from the European market into these higher returning
regions over the period of the Long Range Plan. We are in negotiations with
our brand partners for the transfer of certain existing European mono-brand
boutiques
o FY24 ended with 99 multi-brand showrooms (FY23: 89) and 68 mono-brand
boutiques (FY23: 57)
Outlook for FY25
· Reiteration of FY25 outlook and guidance provided at Q4 Trading
Update on 16 May 2024:
o Following the more challenging trading conditions of FY24, we are
cautiously optimistic about trading in FY25. The industry as a whole is being
more conservative on production, which we believe is a responsible approach to
the long-term stability of the luxury watch market
o FY25 guidance reflects current visibility of supply from key brands and
confirmed showroom refurbishments, openings and closures, and excludes
uncommitted capital projects and acquisitions
o FY25 guidance includes the annualisation of the Ernest Jones acquisition,
and Roberto Coin Inc. from 9 May 2024
· The Group provides the following FY25 guidance on a pre-IFRS 16
basis, assuming a £/$1.26 exchange rate:
o Revenue: £1.67 - £1.73 billion, growth of 9% - 12% at constant currency
o Adjusted EBIT margin %: +0.2 to +0.6 percentage points expansion from FY24
o Total finance costs: c.£13 million, reflecting additional financing for Roberto Coin Inc.
acquisition
o Underlying tax rate: 28% - 30%
o Capex: £60 - £70 million
o Free cash flow conversion: c.70%
The equivalent guidance on an IFRS 16 basis is:
o Adjusted EBIT margin %: +0.2 to +0.6 percentage points expansion from FY24
o Total finance costs: £37 - £41 million
· The Group is exposed to movements in the £/$ exchange rate when
translating the results of its US operations into Sterling. The Actual average
exchange rate for FY24 was $1.26. FY25 guidance assumes a £/$1.25 exchange
rate, with a five cent move resulting in an adjustment of c.£30 million to
full year Group revenue and c.£4 million on full year Adjusted EBIT, on a
pre-IFRS 16 basis
· The Group has an exciting pipeline of new showroom projects
planned in FY25:
o Flagship Rolex boutique on Old Bond Street, London
o New Audemars Piguet Townhouse, operated as a joint venture, Manchester
o New Mappin & Webb luxury jewellery boutique, Manchester
o New Mappin & Webb, Edinburgh
o New Watches of Switzerland Ross Park, Pittsburgh
o Relocation and addition of Rolex to Watches of Switzerland Legacy West,
Plano, Texas
o Relocation/expansion of Mayors Tampa, Mayors St Johns and Mayors Sarasota,
Florida
o Expansions of Betteridge Greenwich, including enhanced Patek Philippe
space and Betteridge Vail, Colorado
o Conversion of Mayors multi-brand Lenox, Atlanta into a Rolex mono-brand
boutique
Reporting timetable
As the Company enters its sixth year listed on the London Stock Exchange, the
Board has reviewed its reporting schedule and has decided it is in the best
interests of the Company and shareholders to align its reporting calendar more
closely with luxury and non-luxury retail peers. Routine updates will occur as
part of the half year and full year results, normally in December and July
each year, as well as two qualitative trading updates normally in January and
September each year.
Webcast and conference call
A webcast presentation and conference call for analysts and investors will be
held at 9.00am (UK time) today to announce the FY24 results. To join the call,
please use the following details:
Webcast link: https://brrmedia.news/WOSG_FY_24
(https://gbr01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fbrrmedia.news%2FWOSG_FY_24&data=05%7C02%7Cd.garget%40thewosgroup.com%7C8da657c0ae5b4c447eac08dc95b876d1%7C865fd163942a47f0ae7aa481aca11e10%7C0%7C0%7C638549866694100112%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=O%2B1h5W%2FajsupLZcGvuvH8UCMuACbNcQ%2Fozl5IN%2B6tkk%3D&reserved=0)
Conference call dial-in: +44 (0) 33 0551 0200
Password: WOSG FY24
Contacts
The Watches of Switzerland Group
Anders Romberg, CFO
+44 (0) 207 317 4600
Caroline Browne, Group Finance and Investor Relations
Director
+44 (0) 116 281 7420
investor.relations@thewosgroup.com (mailto:investor.relations@thewosgroup.com)
Headland
Lucy Legh / Rob Walker / Joanna Clark
+44 (0) 20 3805 4822
wos@headlandconsultancy.com (mailto:wos@headlandconsultancy.com)
About the Watches of Switzerland Group
The Watches of Switzerland Group is the UK's largest luxury watch retailer,
operating in the UK, US and Europe comprising six prestigious brands; Watches
of Switzerland (UK and US), Mappin & Webb (UK), Goldsmiths (UK), Mayors
(US), Betteridge (US), and Analog:Shift (US) with a complementary jewellery
offering. From 8 May 2024, the Group also owns the exclusive distribution
rights for Roberto Coin in the USA, Canada, Central America and the Caribbean.
As at 28 April 2024, the Watches of Switzerland Group had 223 showrooms across
the UK, US and Europe including 99 dedicated mono-brand boutiques in
partnership with Rolex, OMEGA, TAG Heuer, Breitling, TUDOR, Audemars Piguet,
Grand Seiko, BVLGARI and FOPE and has a leading presence in Heathrow Airport
with representation in Terminals 2, 3, 4 and 5 as well as seven retail
websites.
The Watches of Switzerland Group is proud to be the UK's largest retailer for
Rolex, OMEGA, Cartier, TAG Heuer and Breitling watches.
www.thewosgroupplc.com (http://www.thewosgroupplc.com)
CEO Review
FY24 was a more challenging year for the Group, but despite this we delivered
revenue growth of +2% in constant currency. Profitability was impacted by
the lack of leverage and the headwinds of Interest Free Credit costs. Our US
performance was particularly strong, at +11% in constant currency,
demonstrating the strength and opportunity of the US market. In both the UK
and US markets we have been pleased to see growth in our Registration of
Interest lists for key products in limited supply.
The macroeconomic backdrop in the UK resulted in a more unpredictable year for
the Group, and sales in the UK and Europe declined -5% year on year. The UK
luxury watch market is going through a period of normalisation following the
COVID boom, where consumers had more disposal income to spend on watches and
jewellery. High inflation and interest rates resulted in increased
cost-of-living for the UK consumer and this coupled with significant price
increases, mainly due to the strength of the Swiss Franc, from luxury watch
brands meant that the aspirational customer was more squeezed and inclined to
defer purchases. The UK market is now almost entirely domestic, following the
withdrawal of VAT free shopping for tourists following Brexit, resulting in
very low levels of overseas shoppers.
In both the US and the UK we have continued to gain market share, driven by
our proven, differentiated business model which sets us apart in the industry.
We have continued to drive high quality growth including showroom enhancement,
strategic acquisitions and building infrastructure across our markets but
particularly in our US business, which now makes up 45% of Group sales.
As outlined in our Long Range Plan, luxury branded jewellery has become a key
part of our strategy for growth. We have built strategic partnerships defined
at the Global level to support our ambitious growth plans. We are continuing
to add prestigious luxury jewellery brands to our portfolio, including David
Yurman, Pomellato, FRED, Repossi, Pasquale Bruni and Faberge. In addition we
are expanding key existing brands within our portfolio of Roberto Coin,
Chopard, Messika and Fope. We have also made significant progress with our
Mappin & Webb luxury jewellery boutique in Manchester, which opens in FY25
and includes the first DeBeers mono-brand boutique in the UK outside of
London.
Post year end, we completed our acquisition of Roberto Coin Inc. - the
exclusive North American distributor of Roberto Coin - dramatically
accelerating our luxury jewellery branded strategy, and we see enormous
potential in bringing together this iconic brand with our retailing expertise
and resources. Going forward we will work with our new retail partners to
improve the point-of-sale experience through shop-in-shop design, develop
mono-brand retailing and invest in online and marketing.
This year saw the launch of the Rolex Certified Pre-Owned programme and we are
highly encouraged by the extremely strong performance. During FY25 we will
continue to roll this out to further locations and we expect that our sales
will benefit from dedicated shop-in-shop formats, window displays and
increased marketing. Pre-owned sales of other brands also performed well and
we are extending this offering in our showroom portfolio in FY25.
Over the year, we have continued to invest for high quality growth across
showroom projects and strategic acquisitions, whilst building resources and
infrastructure within our US business. We have made excellent progress on our
showroom expansion and refurbishment programme, with 22 new showrooms opened
and 15 refurbished. Our showroom design is a key part of our client appeal,
where we focus on welcoming, browsable, modern showrooms. In the US we opened
two multi-brand showrooms in American Dream, New Jersey and One Vanderbilt,
New York. We also relocated our Mayors Dadeland, Florida showroom and expanded
the Rolex Millenia mono-brand boutique, Orlando, Florida. In the UK, we
continued our rollout of the Goldsmiths Luxury concept with seven showrooms
either expanded or refurbished including some of our larger showrooms such as
Liverpool, Birmingham Bullring and Manchester Trafford Centre. We expanded our
new Mappin & Webb contemporary concept with refurbishments of Glasgow,
York, Guernsey and Bluewater. This new concept modernises the showroom
environment, whilst maintaining the sense of heritage with the Mappin &
Webb brand. We also completed the major expansion of the Patek Philippe space
in Watches of Switzerland 155 Regents Street, London.
We are excited about the strong pipeline of showroom projects we have planned
in FY25, including the flagship Rolex boutique on Old Bond Street, London,
Audemars Piguet Townhouse, Manchester, introduction of Rolex into Watches of
Switzerland Plano, Texas, relocations of Mayors Tampa, St Johns and Sarasota,
Florida and expansion of Betteridge Vail, Colorado. We have also recently
secured the conversion of our existing multi-brand Mayors Lenox, Atlanta into
a Rolex mono-brand boutique, which will open in FY25 and are expanding the
Patek Philippe space in Betteridge Greenwich, Connecticut.
In November 2023, we completed the acquisition of 15 luxury watch showrooms
from Ernest Jones. The rebranding, colleague training and system conversions
are now complete, and these showrooms are trading in line with our
expectations.
One of our key strengths is client experience, which is underpinned by our
'Xenia' client service programme. Xenia is at the heart of everything that
we do and is based on three pillars: Know Me; WOW Me; Remember Me. This year
we have maintained our focus on embedding these fundamental pillars across our
showrooms and online proposition. We also recognise that client service goes
beyond our external clients, and this year we started to embed Xenia into our
Support Centre, driving client service at the centre of all stakeholder
interactions.
Our partnerships with the most recognised and prestigious luxury watch brands
have continued to strengthen throughout FY24. In 2024, Watches of Switzerland
celebrates its centenary year and with it we have showcased a number of
exclusive products with key brands such as Cartier, Girard-Perregaux and
BVLGARI.
We were delighted to host a Grand Prix d'Horologie De Geneve (GPHG) exhibition
in New York at our Soho flagship for the second year running. This event,
which took place in October 2023, aimed to highlight the most remarkable
contemporary watch designs in the world, while celebrating horology culture
and excellence.
In April 2024, we secured a three-year partnership with Academie Hologere des
Createurs Independants (AHCI), which exists to preserve traditional
watchmaking, support talented watch makers and promote quality, innovation and
creativity. This non-profit organisation provides watchmaking's rising stars
with a platform, as well as support and guidance, as they hone their craft and
begin their careers.
In February 2024, we commenced our new partnership with American Express
Centurion in the US, which offers an exclusive concierge programme to US
Centurion members. The partnership was celebrated with a launch party at the
Amex Centurion Club at One Vanderbilt, New York.
Environmental, Social and Governance
We have continued to stay true to our ESG pillars of people, planet and
product throughout FY24. Highlights during the year include:
· Expanded our repairs and servicing capacity in the UK and US as
part of our focus on the circular economy. This has doubled watchmaking
capability in the UK. We also increased our circularity KPI of the number
watches repaired, serviced or resold as a percentage of new watch sales to 46%
from 44% in the prior year
· UK accredited as Real Living Wage Employer
· Met the recommendations of the FTSE Women Leaders Review and
ranked top 10 for the FTSE 250
· Maintained the recommendations for the Parker Review for the
Board
· Improved our CDP Climate Change score year-on-year from a 'C' to
a 'B'
· Launched a colleague incentive to encourage and reward
eco-friendly behaviours
· Mappin & Webb named as CSR Jewellery Retailer of the Year in
the 2023 Professional Jeweller Awards
· £7.5 million to date donated to The Watches of Switzerland Group
Foundation, the aim of which is to provide essential support to charities
located in the communities in which we operate, focusing on poverty, the
advancement of education and relief to those in need
· We have strengthened our relationship with the Prince's Trust and
the Group was the headline sponsor for the Prince's Trust Palace to Palace
Bike Ride for the second year
· Linked our existing loan facility to the achievement of our
near-term science-based emission reduction targets and circularity goals
Long Range Plan
Looking forward, we remain confident in the LRP targets to more than double
sales and Adjusted EBIT by the end of FY28, from an FY23 base. Going into
FY25, we have the strongest ever pipeline of committed Rolex and other key
brand projects through to FY28. The initial performance of Rolex Certified
Pre-Owned has been ahead of our expectations, and we now expect Rolex
Certified Pre-Owned to outperform the targets previously outlined in the LRP
in November 2023.
The recent acquisition of Roberto Coin Inc. will spearhead our luxury branded
jewellery strategy and we see further potential above and beyond what was
incorporated in our LRP.
In line with our disciplined approach to capital allocation and given the
pipeline of high ROI opportunities in the UK and US, we have announced our
intention to reallocate investment from the European market into these higher
returning regions over the period of the LRP. We are in negotiations with our
brand partners for the transfer of certain existing European mono-brand
boutiques. The additional growth from Rolex Certified Pre-Owned and Roberto
Coin Inc., together with acquisition opportunities in the US, is expected to
offset the reduction from European sales within the life of the LRP.
Guidance for FY25
Following the more challenging trading conditions of FY24, we are cautiously
optimistic about trading in FY25. The industry as a whole is more
conservative on production given the current volatility in the market, which
we believe is a responsible approach to the long-term growth trend of the
luxury watch market. Our FY25 guidance, as issued on 16 May 2024, projects
full year revenue of between £1.67 and £1.73 billion, reflecting constant
currency sales growth of 9% - 12%. We expect Adjusted EBIT margin expansion
of +0.2 to +0.6 percentage points from FY24. We will continue to invest in
our showroom portfolio, with a capex spend of £60 - £70 million.
Given the strength of our model and continued investment in the right areas
for growth, I am confident that our business can come out of a difficult
trading period stronger and well positioned to capitalise when the market
conditions improve. We believe fundamentally in the resilience and long-term
strength of the luxury watch and jewellery markets.
Finally, we have over 2,900 colleagues at the Watches of Switzerland Group and
I would like to thank all of them for their continued hard work and
dedication, which is definitely the key to our success. I would also like to
welcome our new colleagues from Roberto Coin Inc. and look forward to working
with them on the future growth of this iconic brand.
Financial Review
The Group's Consolidated Income Statement is shown below which is presented
including IFRS 16 'Leases' and includes exceptional items.
Income Statement - post-IFRS 16 and exceptional items (£million) 52 weeks ended 52 weeks ended YoY variance
28 April 2024 30 April 2023
Revenue 1,537.9 1,542.8 -%
Operating profit 120.0 178.6 -33%
Net finance cost (27.9) (23.8) -17%
Profit before taxation 92.1 154.8 -40%
Taxation (33.0) (33.0) -%
Profit for the financial period 59.1 121.8 -51%
Basic earnings per share 25.0p 51.2p -51%
Management monitors and assesses the business performance on a pre-IFRS 16 and
exceptional items basis, which is shown below. This aligns to the reporting
used to inform business decisions, investment appraisals, incentive schemes
and debt covenants. A full reconciliation between the pre- and post-IFRS 16
results is shown in the Glossary.
Income Statement - pre-IFRS 16 and exceptional items (£million) 52 weeks ended 52 weeks ended YoY variance
28 April 2024 30 April 2023
Revenue 1,537.9 1,542.8 -%
Net margin(1) 562.2 576.3 -2%
Showroom costs (289.1) (279.2) 4%
4-Wall EBITDA(1) 273.1 297.1 -8%
Overheads (85.3) (84.1) -1%
EBITDA(1) 187.8 213.0 -12%
Showroom opening and closing costs (8.9) (11.6) -24%
Adjusted EBITDA 178.9 201.4 -11%
Depreciation, amortisation and loss on disposal of fixed assets (44.2) (36.3) -22%
Adjusted EBIT (Segment profit) 134.7 165.1 -18%
Net finance costs (5.8) (5.9) -2%
Adjusted profit before taxation(1) 128.9 159.2 -19%
Adjusted earnings per share 38.0p 52.7p -28%
Revenue
Revenue by geography and category
52 weeks ended 28 April 2024 UK and Europe US Total Mix
(£million)
Luxury watches 709.4 635.3 1,344.7 87%
Luxury jewellery 62.1 40.3 102.4 7%
Services/other 74.6 16.2 90.8 6%
Total revenue 846.1 691.8 1,537.9 100%
52 weeks ended 30 April 2023 UK and Europe US Total Mix
(£million)
Luxury watches 749.6 586.5 1,336.1 87%
Luxury jewellery 67.8 51.4 119.2 7%
Services/other 72.5 15.0 87.5 6%
Total revenue 889.9 652.9 1,542.8 100%
Group revenue was flat on last year at £1,537.9 million (+2% on a constant
currency basis).
Group revenue from luxury watches grew by +1% (+3% in constant currency) on
the prior year and made up 87% of revenue in line with the prior year. Demand
for our key brands, particularly products on Registration of Interest lists,
continues to be strong, with consistent additions and conversions. Recent
price increases across luxury watch brands, driven by cost inflation and
foreign currency movements, have impacted affordability for some consumers,
particularly in the UK, where the challenging macroeconomic backdrop was more
pronounced as inflation remained higher through the year. We believe this has
led to a deferral of purchases amongst a certain cohort of consumers.
The Rolex Certified Pre-Owned programme was launched in the US in July 2023
and in the UK in September 2023. Rolex Certified Pre-Owned is currently
available in 19 agencies in the UK and 17 in the US and also available online.
The performance of this programme has exceeded our expectations, and we will
be rolling it into more showrooms during FY25. The sourcing of product for the
UK market has become easier as we have continued to look for opportunities to
grow. Total pre-owned and vintage (including Rolex Certified Pre-Owned) sales
doubled year-on-year by Q4 FY24 and we see pre-owned as being a major growth
factor for the Group.
Group luxury jewellery revenue declined by -14% (-13% in constant currency) on
the prior year. This reflected market trends impacted by overall consumer
sentiment, particularly within the bridal category, although we did see
improving trends in Q4 FY24 with Group luxury jewellery revenue -1%. The
majority of luxury jewellery sold by the Group is retailed under our house
brands of Goldsmiths, Mappin & Webb, Mayors and Betteridge. Our strategy
is to grow our luxury branded jewellery offering, where we partner with other
major luxury jewellery brands. Luxury branded jewellery sales continue to
significantly outperform non-branded jewellery.
Services/other revenue, consisting of servicing, repairs, insurance services
and the sale of fashion and classic watches and other non-luxury jewellery
grew by +4%. During the year we expanded our Manchester servicing and repairs
centre, which is now dedicated to Rolex, and opened a new servicing and
repairs centre in Leicester.
Group ecommerce sales declined by -11% compared to the prior year, impacted by
the mix of products sold through this channel and performance of the UK
market. We continue to be the market leader in ecommerce for luxury watches
and jewellery in the UK and are growing our proposition in the US.
US revenue increased by +6% year-on-year (+11% on a constant currency basis)
and the US business made up 45% of the Group's revenue in FY24 (FY23: 42%).
Underlying growth was strong across all locations with continued consumer
appetite for high demand products. New York and the Wynn Resort, Las Vegas
performed particularly strongly. This was accomplished through a combination
of our quality product offering and superior client experience and backed up
by strong marketing campaigns which had significant reach across offline and
online channels.
During the year, the US opened ten showrooms. This included eight mono-brand
boutiques in three locations: Topanga, California; New Orleans, Louisiana; and
Murray, Utah. A further two multi-brand showrooms were opened, being a
Rolex-anchored multi-brand Watches of Switzerland showroom at American Dream,
New Jersey which was fully completed in October 2023 with the opening of a
large Cartier space, and our third Watches of Switzerland showroom in
Manhattan, at One Vanderbilt in March 2024.
UK and Europe revenue declined by -5% during the year. Sales in the UK were
driven by a domestic clientele and the Group continued to grow market share.
Tourist sales continue to remain low, particularly on account of the removal
of VAT free shopping for tourists. Interest in the category remains high and
showroom colleagues continued to build strong client relationships, but the
overall market was challenging with a reduction in spend across the category.
During the year, we opened eight mono-brand boutiques in the UK, and a further
multi-brand Goldsmiths showroom in Bromley. In November 2023, the Group
completed the acquisition of 15 luxury watch showrooms from Ernest Jones,
comprised of fourteen multi-brand and one mono-brand showrooms. Since
acquisition the showrooms have been rebranded and updated with new systems and
merchandising, with training and marketing taking place to gain the full
beneficial impact of the acquisition in FY25. Six non-core showrooms were
closed giving a net increase of 18 in the UK.
In the period, 15 projects were completed enhancing our existing estate to
further elevate the partner brands we display in those showrooms and advance
our client experience; this included a number of high-turnover Goldsmith
showrooms in the Trafford Centre, Manchester; the Bullring, Birmingham; and
Metrocentre, Newcastle. The new contemporary concept Mappin & Webb
showrooms were opened in York, Guernsey, Bluewater and Glasgow.
Three showrooms were opened in Europe taking the total number to nine. In line
with our disciplined approach to capital allocation and given the pipeline of
high returning opportunities in the UK and US, the Group announced on 16 May
2024 that it intends to reallocate investment from the European market into
these higher returning regions. We are in negotiations with our brand partners
for the transfer of certain existing mono-brand boutiques.
Profitability
Profitability as a % of revenue
Income Statement - pre-IFRS 16 and exceptional items (£million) 52 weeks ended 52 weeks ended YoY variance
28 April 2024 30 April 2023
Net margin 36.6% 37.4% (80bps)
Showroom costs 18.8% 18.1% 70bps
4-Wall EBITDA 17.8% 19.3% (150bps)
Adjusted EBITDA 11.6% 13.1% (150bps)
Adjusted EBIT 8.8% 10.7% (190bps)
Net margin as a % of revenue was 36.6% in the year. This was 80bps lower than
the prior year driven by product mix and the higher cost of Interest Free
Credit due to the annualisation of interest rate rises.
Showroom costs increased by £9.9 million (+3.5%) from the prior year, to
£289.1 million. Showroom costs as a percentage of revenue increased by 70bps
from 18.1% to 18.8%. This reflects the opening of new showrooms, the
annualisation of prior year openings, showroom costs relating to the Ernest
Jones acquisition and annual pay rises to colleagues. This was partly offset
by a reduction in business rates and efficiencies found within showroom
payroll, and digital marketing investment which continues to maximise traffic
and conversion versus cost.
Overheads increased by £1.2 million (+1%) due to IT investment to support
future growth, annual pay rises to colleagues along with the opening of our
new support centre in Leicester. This was partly offset by efficiencies within
marketing and a reduction in colleague incentive payments.
Showroom opening and closing costs include the cost of rent (pre-IFRS 16),
rates and payroll prior to the opening or closing of showrooms, or during
closures when refurbishments are taking place. This cost will vary annually
depending on the scale of expansion in the year. Total costs for the year were
£8.9 million versus £11.6 million in FY23, reflecting the decreased number
of refurbishments and openings undertaken.
Exceptional items
Exceptional items are defined by the Group as those which are significant in
magnitude or are linked to events which are expected to be infrequent in
nature. The majority of the items below do not have a cash impact.
Exceptional items (£million) 52 weeks ended 52 weeks ended
28 April 2024 30 April 2023
Business acquisitions costs 3.3 0.9
Rolex Old Bond Street 2.5 -
European showroom impairment 8.6 -
Showroom impairment
- Impairment of property, plant and equipment 7.2 -
- Impairment of right-of-use assets 13.0 -
- Other onerous contracts 1.0 -
- Reversal of impairment - (0.7)
Reversal of inventory provision created on acquisition (2.4) -
Amortisation of capitalised transaction costs - 0.7
Total exceptional items 33.2 0.9
Of which impacts:
Adjusted EBIT 31.9 0.2
Finance costs 1.3 0.7
Business acquisition costs
Professional and legal expenses and integration costs on business combinations
have been expensed to the Consolidated Income Statement as an exceptional cost
as they are regarded as non-trading, non-underlying costs and are considered
to be material by nature. The total cost shown here also includes expenses
incurred in the year in relation to the Roberto Coin Inc. acquisition which
completed post year end.
Rolex Old Bond street
A new 7,200 sq. ft showroom is being built in partnership with Rolex. This new
flagship will be our largest Rolex showroom and reflects the importance of the
London market and the special relevance of London to the history of Rolex. The
cost shown here is the IFRS 16 depreciation charge and other costs whilst the
showroom is being constructed. They are deemed to be exceptional in nature
given that this unique proposition results in a project size and complexity
significantly outside of a standard build, coupled with documented project
delays outside of the Group's control.
European showroom impairment
The exceptional costs are reflective of both asset write downs and onerous
contracts in relation to the European showrooms. In line with our disciplined
approach to capital allocation and given the pipeline of high returning
opportunities in the UK and US, the Group announced after the year end date,
it intends to reallocate investment from the European market into these higher
returning regions. We are in negotiations with our brand partners for the
transfer of a number of our existing European mono-brand boutiques.
Showroom impairment
The current macroeconomic environment, increased interest rates, and
inflationary trends gave rise to indicators of impairment in the current
period. Consequently, discounted cashflows were performed on all Cash
Generating Units (CGUs) with indicators of impairment. This resulted in a
non-cash impairment charge of £26.2 million of which £16.4 million related
to right-of-use assets (ROU assets). A significant proportion of the ROU
assets impairment arose due to the differences between the interest rates used
to initially recognise the ROU asset and the much higher interest rates in
place at the year-end used in formulating the discount rates to value the
future cash flows. A further provision of £1.0 million relates to the
associated onerous contracts. See note 4 of the Condensed Consolidated
Financial Statements for further details.
Reversal of inventory provision created on acquisition
In the prior period, for the Betteridge acquisition, an estimate was made of
the fair value of inventory acquired with a provision recorded in goodwill.
During the year, the Group achieved higher product margins on a number of
these inventory lines through maximisation of our CRM database. The gain is
deemed to be exceptional in nature.
Adjusted EBIT and statutory operating profit
As a result of the items noted above, Adjusted EBIT was £134.7 million, a
decrease of £30.4 million -18% on the prior year.
After accounting for exceptional costs of £31.9 million and IFRS 16
adjustments of +£17.2 million, statutory operating profit (EBIT) was £120.0
million, a decrease of 33% on the prior year.
Finance costs
Net finance costs (£million) 52 weeks ended 52 weeks ended
28 April 2024 30 April 2023
Pre-IFRS 16 net finance costs, excluding exceptionals 5.8 5.9
IFRS 16 interest on lease liabilities 20.8 17.2
Total net finance costs, excluding exceptionals 26.6 23.1
Interest payable on borrowings increased in the period, reflecting higher
market lending rates and further borrowing to fund the acquisition of 15
showrooms from Ernest Jones. This was offset by higher interest rates earned
on cash balances held, and the ability to be more flexible throughout the year
with the new multicurrency revolving credit facility. The impact was a net
reduction in the pre-IFRS 16 interest charge of £0.1 million to £5.8
million. The IFRS 16 interest on lease liabilities increased by £3.6 million
due to recent additions to the lease portfolio as we continue to invest in
showroom portfolio expansion.
Details of a further £1.3 million of exceptional finance costs are given in
note 4 of the Condensed Consolidated Financial Statements.
Taxation
The pre-IFRS 16 Effective Tax Rate (ETR) for the period before exceptional
items was 30.3%. The increase versus our guided ETR is partly driven by the
impact of the reduced share price on the share based payments charge. Full
detail can be found in note 5 within the Condensed Consolidated Financial
Statements.
The statutory (post-IFRS 16 and including exceptionals) effective tax rate was
35.8%. This is higher than the applicable UK corporation tax rate for the year
of 25.0% as a result of higher chargeable taxes on US profits, the impact of
expenses disallowed for corporation tax, and non-recognition of deferred taxes
in Europe.
Balance Sheet
Balance Sheet (£million)
28 April 2024 30 April 2023
Goodwill and intangibles 215.7 200.4
Property, plant and equipment 191.4 154.4
Right-of-use assets 381.8 359.1
Inventories 393.3 356.0
Trade and other receivables 24.6 19.8
Trade and other payables (216.5) (219.6)
Lease liabilities (460.4) (410.4)
Net cash 0.7 16.4
Other (7.6) (6.8)
Net assets 523.0 469.3
Goodwill increased as a result of the Ernest Jones showroom acquisition in the
year which gave rise to £16.0 million of goodwill, together with a £0.5
million favourable exchange impact. A further £2.4 million of computer
software additions were made in the year as part of ongoing IT developments,
offset by amortisation of £2.8 million.
Property, plant and equipment increased by £37.0 million in the year.
Additions of £87.4 million (including £5.8 million from the Ernest Jones
acquisition) were offset by depreciation of £39.7 million, impairments of
£9.8 million, and a loss on disposal and foreign exchange movements of £0.9
million.
Including software costs, which are disclosed as intangibles, capital
additions (including accruals) were £84.0 million in the year of which £81.3
million (FY23: £73.0 million) was expansionary. Expansionary capex relates to
new showrooms, relocations or major refurbishments (defined as costing over
£0.25 million). In the year, the Group opened 22 new showrooms, and
refurbished 15 showrooms. Investment in our portfolio is paramount to our
strategy and the Group follows a disciplined payback policy when making
capital investment decisions.
Right-of-use assets increased by £22.7 million in the year, to £381.8
million. Additions to the lease portfolio along with lease renewals or other
lease changes were £94.5 million. This has been offset by depreciation of
£56.0 million and impairments of £16.4 million. The remaining movement is a
£0.6 million favourable foreign exchange impact.
Lease liabilities increased by £50.0 million in the year. The portfolio
changes noted above increased the lease liability by £95.5 million. Interest
charged on the lease liability was £22.1 million and there was a £0.5
million adverse foreign exchange impact. Lease payments were £68.1 million,
giving a final lease liability balance of £460.4 million.
Inventory levels increased by £37.3 million (+10%) compared to the prior
year. £25.3 million of inventory was acquired as part of the Ernest Jones
acquisition, and the Group increased pre-owned watches and Rolex Certified
Pre-Owned volume by £26.9 million. This has been offset through a reduction
in underlying inventory to maintain stock turn at appropriate levels. The
inventory obsolescence risk remains low for the Group.
Trade and other receivables increased by £4.8 million compared to FY23.
Overall the balance remains relatively low and represents prepayments, rebate
receivables, rent deposits and other ad hoc receivables such as property
contributions.
Trade and other payables decreased by £3.1 million. The balance remains in
line with FY23 as a result of focus on inventory management and ongoing cost
control.
Other includes taxation balances, defined benefit pension and capitalised
finance costs.
Net cash/debt and financing
Net cash on 28 April 2024 was £0.7 million, a decrease of £15.7 million
since 30 April 2023. The strong free cash flow of £117.6 million being
utilised for £78.0 million of expansionary capex, £44.2 million relating to
the Ernest Jones acquisition and £7.2 million for the purchase of own shares
to satisfy future management incentives.
Net debt post-IFRS 16 was £458.0 million. The value comprises the pre-IFRS 16
net cash of £0.7 million and the £460.4 million lease liability, offset by
capitalised transaction costs of £1.7 million. The balance increased by
£64.0 million (from £394.0 million) in the period, principally driven by
additions to the lease portfolio.
The Group's maximum amount available under its committed facility was £225.0
million at 28 April 2024.
Facility from 9 May 2023 Expiring Amount
(million)
Multicurrency revolving loan facility - UK SONIA +1.50% to +2.55% May 2028 £225.0
During the year, on 9 May 2023, the Group signed a new five-year £225.0
million multicurrency revolving loan facility with lenders. The new facility
uses UK SONIA +1.50% to +2.55%. The existing facilities were repaid and
extinguished on this date. £115.0 million of these facilities were drawn down
at 28 April 2024. Liquidity headroom (defined as unrestricted cash plus
undrawn available facilities) was £209.3 million. Further detail with
regards to covenant tests and liquidity headroom can be found in borrowings
note 7 within the Condensed Consolidated Financial Statements.
Post year-end, the Group drew down on a new loan facility to fund the
acquisition of Roberto Coin Inc. This $115.0 million loan facility has the
same interest rate and covenants as our existing RCF facility and has a term
of one year, with two six-month extension periods taking the maximum term
length to two years. In taking out this additional facility we have
maintained our financial flexibility to pursue further acquisitions in the
future.
Cash Flow
Cash Flow (£million) 52 weeks ended 52 weeks ended
28 April 2024 30 April 2023
Adjusted EBITDA 178.9 201.4
Share-based payments 2.1 3.5
Working capital (20.3) (22.5)
Pension contributions (0.7) (0.7)
Tax (33.5) (26.6)
Cash generated from operating activities 126.5 155.1
Maintenance capex (2.7) (4.6)
Net interest (6.2) (4.7)
Free cash flow 117.6 145.8
Free cash flow conversion 66% 72%
Expansionary capex (78.0) (67.5)
Acquisitions (44.2) (24.9)
Purchase of own shares (7.2) (21.3)
Refinancing costs (2.2) -
Exceptional items - expenses on business acquisitions (2.5) (0.9)
Cash flow (16.5) 31.2
Net repayment of borrowings (5.0) -
Net (decrease)/increase in cash and cash equivalents (21.5) 31.2
Free cash flow decreased by £28.2 million to £117.6 million in the year to
28 April 2024 and free cash flow conversion was 66% compared to 72% in the
prior year.
Cash flow from trading reduced (Adjusted EBITDA decreased by £22.5 million),
in addition to a £20.3 million adverse working capital movement, driven by
the inventory increase in the year as noted above. Tax cash payments increased
to £33.5 million in line with the tax charge in the year.
Expansionary cash capex of £78.0 million was higher than the prior year due
to an increase in new showroom openings and refurbishments. FY24 had a higher
proportion of capex spend in the first half of the year, as we looked to
complete significant projects ahead of the holiday season. Showrooms will
therefore benefit from a full year of opening in FY25.
£7.2 million of shares were purchased in the period to satisfy management
incentive schemes, which will vest in the future periods.
Exceptional cash items of £2.5 million principally relates to professional
and legal expenses in relation to actual and future acquisitions, including
the acquisition of Roberto Coin Inc. which took place post year end.
Return on Capital Employed (ROCE)(1)
52 weeks ended 52 weeks ended
28 April 2024 30 April 2023
ROCE 19.5% 27.9%
FY24 ROCE is 19.5%, a decrease of 840bps in comparison to the prior year. This
is as a consequence of Adjusted EBIT decreasing by -18% compared to the prior
period.
Roberto Coin Inc. Acquisition
On 8 May 2024, the Group signed and completed the acquisition of the entire
share capital of Roberto Coin Inc., the exclusive distributor of Roberto Coin
in the US, Canada, Central America and the Caribbean.
The acquisition completed for a total cash consideration of $130.0 million (of
which $10.0 million is deferred for one year and contingent on the future
profitability of the acquired business), subject to working capital
adjustments.
Roberto Coin Inc. achieved annual revenue of $137.2 million and profit before
taxation of $29.8 million for the audited financial year ended 31 December
2023. Gross assets at that date were $102.4 million.
The acquisition was financed via a new $115.0 million term loan facility. At
the date of the acquisition, the transaction increased the Group's leverage to
c.0.8x Net Debt/Adjusted EBITDA at the year-end date and c0.6x on a pro-forma
basis.
The acquisition will be margin enhancing and EPS accretive from the date of
acquisition.
Capital Allocation
The Group has a clear framework of capital allocation and is focused on
optimising capital deployment for the benefit of all our stakeholders, with a
focus on long-term sustainable growth in the business. It is also important
for the Group to maintain financial and operational flexibility to be able to
react tactically to opportunities, such as strategic acquisitions, at speed.
Our capital allocation framework is as follows:
1. Showroom investments - given the attractive returns from showroom
investments, this is our key focus area to allocate capital to
2. Strategic acquisitions - this is a key pillar of our growth
strategy, as outlined in our Long Range Plan to FY28. Acquisitions must
deliver return on investment in line with our disciplined financial criteria,
within an appropriate timeframe
3. Returns to shareholders - in the event of surplus capital/cash
flow above and beyond the requirements of the business for investment into
showrooms or strategic acquisitions, we would consider returns to shareholders
either through ordinary dividends or share buy backs, with the appropriate
mechanism to be decided at the appropriate time by the Board
Showroom Portfolio
As at the 28 April 2024, the Group had 223 showrooms. The movement in
showroom numbers is included below:
UK multi-brand UK mono-brand Europe mono-brand boutiques Total UK and Europe US multi-brand US mono-brand Total US Total Group
showrooms boutiques showrooms boutiques
30 April 2023 89 51 6 146 24 23 47 193
Openings 1 8 3 12 2 8 10 22
Acquisitions 14 1 - 15 - - - 15
Closures (5) (1) - (6) (1) - (1) (7)
28 April 2024 99 59 9 167 25 31 56 223
Footnote references
(1) This is an Alternative Performance Measure and is shown on a pre-IFRS 16
basis. Refer to the Glossary for definition, purpose and reconciliation to
statutory measures where relevant.
(2) Refer to the Glossary for definition.
(3) $10 million is deferred and contingent on the future profitability of the
business, subject to working capital adjustments
(4) Ecommerce sales are sales which are transacted online.
Certain financial data within this announcement has been rounded. Growth rates
are calculated on unrounded numbers.
Principal and emerging risks and uncertainties
The Group is exposed to a number of risks and uncertainties in its business
which could impact its ability to effectively execute its strategy and cause
actual results to differ materially from expected and/or historical results.
The Board has undertaken a robust assessment of the principal and emerging
risks and uncertainties facing the Group, including those that would threaten
its business model, future performance, solvency or liquidity. The risks
presented in the 2023 Annual Report and Accounts, described as follows, remain
unchanged: Business strategy execution and development; Key suppliers and
supply chain; Client experience and market risks; Colleague talent and
capability; Data protection and cyber security; Business interruption;
Regulatory and compliance; Economic and political; Brand and reputational
damage; Financial and treasury; and Climate change. These are detailed on
pages 116 to 121 of the 2023 Annual Report, a copy of which is available on
the Watches of Switzerland Group PLC (the 'Company') website at
www.thewosgroupplc.com.
A full disclosure of the Group's principal risks and emerging risks and
uncertainties, including the factors which mitigate them, will be set out
within the Strategic Report of the 2024 Annual Report and Accounts.
Disclaimer
This announcement has been prepared by Watches of Switzerland Group PLC (the
'Company'). It includes statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements can be
identified by the use of forward-looking terminology, including the terms
"believes", "estimates", "anticipates", "expects", "intends", "plans", "goal",
"target", "aim", "may", "will", "would", "could" or "should" or, in each case,
their negative or other variations or comparable terminology. They appear in a
number of places throughout this announcement and the information incorporated
by reference into this announcement and may include statements regarding the
intentions, beliefs or current expectations of the Company Directors or the
Group concerning, amongst other things: (i) future capital expenditures,
expenses, revenues, earnings, synergies, economic performance, indebtedness,
financial condition, dividend policy, losses and future prospects; (ii)
business and management strategies, the expansion and growth of the Group's
business operations; and (iii) the effects of government regulation and
industry changes on the business of the Company or the Group.
By their nature, forward-looking statements involve risks and uncertainties
because they relate to events and depend on circumstances that may or may not
occur in the future and may be beyond the Company's ability to control or
predict. Forward-looking statements are not guarantees of future performance.
The Group's actual results of operations, financial condition, liquidity, and
the development of the industry in which it operates may differ materially
from the impression created by the forward-looking statements contained in
this announcement and/or the information incorporated by reference into this
announcement.
Any forward-looking statements made by or on behalf of the Company or the
Group speak only as of the date they are made and are based upon the knowledge
and information available to the Directors on the date of this announcement,
and are subject to risks relating to future events, other risks, uncertainties
and assumptions relating to the Company's operations and growth strategy, and
a number of factors that could cause actual results and developments to differ
materially from those expressed or implied by the forward-looking statements.
Undue reliance should not be placed on any forward-looking statements and,
except as required by law or regulation, the Company undertakes no obligation
to update these forward-looking statements. No statement in this announcement
should be construed as a profit forecast or profit estimate.
Before making any investment decision in relation to the Company you should
specifically consider the factors identified in this document, in addition to
the risk factors that may affect the Company or the Group's operations as
detailed above.
Watches of Switzerland Group PLC
Preliminary results
For the 52 week period ended 28 April 2024
Registered number: 11838443
CONSOLIDATED income STATEMENT
For the 52 weeks ended 28 April 2024
Note 52 week period ended 52 week period ended
28 April 2024 30 April 2023
£m £m
Revenue 2,3 1,537.9 1,542.8
Cost of sales (1,348.5) (1,324.1)
Exceptional cost of sales 4 0.5 -
Gross profit 189.9 218.7
Administrative expenses (37.5) (39.9)
Exceptional (impairment)/reversal of impairment of assets 4 (26.2) 0.7
Exceptional other administrative expenses 4 (6.2) (0.9)
Operating profit 120.0 178.6
Finance costs (29.5) (24.0)
Finance income 2.9 0.9
Exceptional finance costs 4 (1.3) (0.7)
Net finance cost (27.9) (23.8)
Profit before taxation 92.1 154.8
Taxation 5 (33.0) (33.0)
Profit for the financial period 59.1 121.8
Earnings per share
Basic 6 25.0p 51.2p
Diluted 6 24.8p 50.9p
CONSOLIDATED STATEMENT of comprehensive income
For the 52 weeks ended 28 April 2024
52 week period ended 52 week period ended
28 April 2024 30 April 2023
£m £m
Profit for the financial period 59.1 121.8
Other comprehensive income/(expense):
Items that may be reclassified to profit or loss
Foreign exchange gain/(loss) on translation of foreign operations 1.7 (3.1)
Related current tax movements (0.1) 0.1
1.6 (3.0)
Items that will not be reclassified to profit or loss
Actuarial movements on defined benefit pension scheme (0.9) 0.3
Related deferred tax movements 0.2 (0.1)
(0.7) 0.2
Other comprehensive income/(expense) for the period 0.9 (2.8)
Total comprehensive income for the period 60.0 119.0
The notes are an integral part of these Condensed Consolidated Financial
Statements.
CONSOLIDATED balance sheet
as at 28 April 2024
Note 28 April 2024 30 April 2023
£m £m
Assets
Non-current assets
Goodwill 199.3 182.8
Intangible assets 16.4 17.6
Property, plant and equipment 191.4 154.4
Right-of-use assets 381.8 359.1
Deferred tax assets 0.4 6.2
Post-employment benefit asset - 0.1
Trade and other receivables 2.1 2.1
791.4 722.3
Current assets
Inventories 393.3 356.0
Current tax asset 4.5 2.6
Trade and other receivables 22.5 17.7
Cash and cash equivalents 115.7 136.4
536.0 512.7
Total assets 1,327.4 1,235.0
Liabilities
Current liabilities
Trade and other payables (215.4) (218.7)
Current tax liability - (4.9)
Lease liabilities (57.0) (47.4)
Provisions (1.9) (1.8)
(274.3) (272.8)
Non-current liabilities
Trade and other payables (1.1) (0.9)
Deferred tax liabilities (3.4) (3.0)
Lease liabilities (403.4) (363.0)
Borrowings 7 (113.3) (120.0)
Post-employment benefit obligations (0.2) -
Provisions (8.7) (6.0)
(530.1) (492.9)
Total liabilities (804.4) (765.7)
Net assets 523.0 469.3
Equity
Share capital 3.0 3.0
Share premium 147.1 147.1
Merger reserve (2.2) (2.2)
Other reserves (23.4) (18.4)
Retained earnings 394.1 337.0
Foreign exchange reserve 4.4 2.8
Total equity 523.0 469.3
The notes are an integral part of these Condensed Consolidated Financial
Statements.
CONSOLIDATED STATEMENT of changes in equity
as at 28 April 2024
Share Share Merger reserve Other Retained earnings Foreign exchange reserve Total equity attributable to owners
capital premium £m reserves £m £m £m
£m £m £m
Balance at 1 May 2022 3.0 147.1 (2.2) (6.7) 214.3 5.8 361.3
Profit for the financial period - - - - 121.8 - 121.8
Other comprehensive income, net of tax - - - - 0.2 (3.0) (2.8)
Total comprehensive income - - - - 122.0 (3.0) 119.0
Purchase of own shares - - - (14.5) - - (14.5)
Share-based payment charge - - - - 3.5 - 3.5
Share-based payments - - - 2.8 (2.8) - -
Tax on items credited to equity - - - - (0.5) - (0.5)
Tax on vested shares moved to current tax - - - - 0.5 - 0.5
Total other transactions - - - (11.7) 0.7 - (11.0)
Balance at 30 April 2023 3.0 147.1 (2.2) (18.4) 337.0 2.8 469.3
Profit for the financial period - - - - 59.1 - 59.1
Other comprehensive income, net of tax - - - - (0.7) 1.6 0.9
Total comprehensive income - - - - 58.4 1.6 60.0
Purchase of own shares - - - (7.2) - - (7.2)
Share-based payment charge - - - - 2.1 - 2.1
Share-based payments - - - 2.2 (2.2) - -
Tax on items credited to equity - - - - (1.1) - (1.1)
Tax on vested shares moved to current tax - - - - (0.1) - (0.1)
Total other transactions - - - (5.0) (1.3) - (6.3)
Balance at 28 April 2024 3.0 147.1 (2.2) (23.4) 394.1 4.4 523.0
CONSOLIDATED STATEMENT of cash flows
For the 52 weeks ended 28 April 2024
Note 52 week period 52 week period
ended ended
28 April 2024 30 April 2023
£m £m
Cash flows from operating activities
Profit for the period 59.1 121.8
Adjustments for:
Depreciation of property, plant and equipment 39.7 32.3
Depreciation of right-of-use assets 54.8 50.3
Depreciation of right-of-use assets - exceptional items (note 4) 1.2 -
Amortisation of intangible assets 3.6 3.2
Impairment of property, plant and equipment - 0.4
Impairment of right-of-use assets - exceptional items (note 4) 16.4 -
Impairment of property, plant and equipment - exceptional items (note 4) 9.8 -
Reversal of impairment of property, plant and equipment - exceptional items - (0.5)
(note 4)
Reversal of impairment of right-of-use assets - exceptional items (note 4) - (0.2)
Loss on disposal of property, plant and equipment 1.1 0.8
Gain on lease modifications (0.8) (1.3)
Share-based payment charge 2.1 3.5
Finance income (2.9) (0.9)
Finance costs 29.5 24.0
Finance costs - exceptional items (note 4) 1.3 0.7
Taxation 5 33.0 33.0
Increase in inventory (11.3) (51.5)
(Increase)/decrease in debtors (4.4) 1.5
(Decrease)/increase in creditors, provisions and pensions (6.7) 22.1
Cash generated from operations 225.5 239.2
Pension scheme contributions (0.7) (0.7)
Tax paid (33.5) (26.6)
Total net cash generated from operating activities 191.3 211.9
Cash flows from investing activities
Purchase of non-current assets:
Property, plant and equipment additions (81.6) (75.0)
Intangible asset additions (2.4) (2.7)
Movement on capital expenditure accrual 4.1 7.1
Cash outflow from purchase of non-current assets (79.9) (70.6)
Interest received 3.0 -
Acquisition of subsidiaries net of cash acquired (44.2) (24.9)
Total net cash outflow from investing activities (121.1) (95.5)
Cash flows from financing activities
Purchase of own shares (7.2) (21.3)
Repayment of term loan 7 (120.0) -
Proceeds from multicurrency revolving loan facility 7 115.0 -
Costs directly attributable to raising new loan facility 7 (2.2) -
Payment of capital element of leases (46.0) (42.0)
Payment of interest element of leases (22.1) (17.2)
Interest paid (9.2) (4.7)
Net cash outflow from financing activities (91.7) (85.2)
Net (decrease)/increase in cash and cash equivalents (21.5) 31.2
Cash and cash equivalents at the beginning of the period 136.4 105.9
Exchange gains/(losses) on cash and cash equivalents 0.8 (0.7)
Cash and cash equivalents at the end of period 115.7 136.4
Comprised of:
Cash at bank and in hand 93.8 120.7
Cash in transit 21.9 15.7
Cash and cash equivalents at end of period 115.7 136.4
1. Accounting policies
General information
The Condensed Consolidated Financial Statements, which comprise the
Consolidated Income Statement, Consolidated Statement of Comprehensive Income,
Consolidated Balance Sheet, Consolidated Statement of Changes in Equity,
Consolidated Statement of Cash Flows and related notes, do not constitute full
accounts within the meaning of s435 (1) and (2) of the Companies Act 2006. The
auditor has reported on the Group's statutory accounts for the 52 week period
ended 28 April 2024 and 52 week period ended 30 April 2023, which do not
contain any statement under s498 (2) or (3) of the Companies Act 2006 and were
unqualified. The statutory accounts for the 52 week period ended 30 April 2023
have been delivered to the Registrar of Companies and the statutory accounts
for the 52 week period ended 28 April 2024 will be filed with the Registrar in
due course.
This announcement was approved by the Board of Directors on 26 June 2024.
Basis of preparation
Whilst the financial information has been prepared in accordance with the
recognition and measurement criteria of UK adopted international accounting
standards in conformity with the requirements of the Companies Act 2006, this
announcement does not itself contain all the disclosures required to comply
with UK adopted international accounting standards. The accounting policies
adopted in the preparation of the Condensed Consolidated Financial Statements
are the same as those set out in the Group's Annual Financial Statements for
the 52 weeks ended 28 April 2024 and 52 weeks ended 30 April 2023. The Group
has not adopted early any other standard, interpretation or amendment that has
been issued but is not effective.
The Condensed Consolidated Financial Statements have been prepared under the
historical cost convention except for pension assets which are measured at
fair value.
Going concern
On 9 May 2023, the Group signed a new five year £225.0 million multicurrency
revolving loan facility with lenders. The existing facilities were repaid and
extinguished on this date. Further, on 23 February 2024, the Group agreed a
new $115.0 million term facility agreement for use in relation to the Roberto
Coin Inc. acquisition. This facility was drawn down post year end to allow
cash settlement of the acquisition consideration on 8 May 2024. As a result,
the going concern assessment has been carried out taking into account all
facilities now in place.
The key covenant tests attached to the Group's facilities are a measure of net
debt to EBITDA, and the Fixed Charge Cover Ratio (FCCR) at each April and
October. The facility covenants are on a pre-IFRS 16 basis and exclude
share-based payment costs. Net debt to EBITDA is defined as the ratio of total
net debt at the reporting date to the last 12 month Adjusted EBITDA. This
ratio must not exceed 3. The FCCR is the ratio of Adjusted EBITDA plus rent to
the total finance charge and rent for the 12 months to the reporting date.
This ratio must exceed 1.6. At 28 April 2024 the Group comfortably satisfied
the covenant tests with net debt to EBITDA being less than 3 and the FCCR
exceeding 1.6.
At the balance sheet date, the Group had a total of £225.0 million in
available committed facilities, of which £115.0 million was drawn down. Net
cash at this date was £0.7 million with liquidity headroom (defined as
unrestricted cash plus undrawn available facilities) of £209.3 million. The
UK bank facility of £225.0 million is due to expire in May 2028. The new
$115.0 million term facility is a 12-month facility with two six-month
extension options within the Group's control to bring the expiry date to
February 2026. This facility did not increase the year-end liquidity balance
as its use was restricted to the acquisition of Roberto Coin Inc. Further
detail with regards to covenant tests and liquidity headroom can be found in
borrowings note 7 within the Condensed Consolidated Financial Statements.
In assessing whether the going concern basis of accounting is appropriate, the
Directors have reviewed various trading scenarios for the period to 31 October
2025 from the date of this report. These included:
- The base case forecast which used the FY25 budget approved by
the Board in May 2024 and six-months of the Long Range Plan. These included
the following key assumptions:
- The more challenging trading environment of FY24 will continue
into FY25 with improvement into FY26 in line with market sentiment
- Revenue forecast supported by expected luxury watch supply
- Increased cost base in line with macroeconomic environment and
environmental targets
- Inclusion of Roberto Coin Inc. results at historical levels
The budget aligns to the Guidance given in this announcement. Under this
budget, the Group has significant liquidity and complies with all covenant
tests to 31 October 2025. Our Guidance reflects current visibility of supply
from key brands and confirmed showroom refurbishments, openings and closures,
and excludes uncommitted capital projects and acquisitions which would only
occur if expected to be incremental to the business.
- Severe but plausible scenarios of:
- 20% reduction in sales against the budget due to reduced consumer
confidence and lower disposable income due to the cost-of-living challenges.
This scenario did not include cost mitigations which are given below
- The realisation of material risks detailed within the Principal
Risks and Uncertainties (including potential data breaches and non-compliance
with laws and regulations), and also environmental risks
Under these scenarios the net debt to EBITDA and the FCCR covenants would be
complied with.
- Reverse stress-testing of cashflows during the going concern
period was performed. This determined what level of reduced EBITDA and worst
case cash flows would result in a breach of the liquidity or covenant tests.
The likelihood of this level of reduced EBITDA is considered remote taking
into account liquidity and covenant headroom, as well as mitigating actions
within management's control (as noted below), and that this would represent a
significant reduction in sales and margin from prior financial years.
- Should trading be worse than the outlined severe but plausible
scenarios, the Group has the following mitigating actions within management's
control:
- Reduction of marketing spend
- Reduction in the level of inventory holding and purchases
- Restructuring of the business with headcount and showroom
operations savings
- Redundancies and pay freezes
- Reducing the level of planned capex
The directors also considered whether there were any events or conditions
occurring just outside the going concern period that should be considered in
their assessment, including whether the going concern period needed to be
extended. The scenarios modelled by the directors confirmed the ability, under
the base and severe but plausible downsides, for the Group to repay the new
$115.0 million term facility at the end of the going concern period.
As a result of the above analysis, including potential severe but plausible
scenarios and the reverse stress test, the Board believes that the Group and
Company is able to adequately manage its financing and principal risks, and
that the Group and Company will be able to operate within the level of its
facilities and meet the required covenants for the period to 31 October 2025.
For this reason, the Board considers it appropriate for the Group and Company
to adopt the going concern basis in preparing the Condensed Consolidated
Financial Statements.
Climate change
In preparing the Condensed Consolidated Financial Statements management has
considered the impact of climate change, particularly in the context of the
disclosures included in the Strategic Report. These considerations did not
have a material impact on the Condensed Consolidated Financial Statements,
including the Group's going concern assessment to 31 October 2025 and the
viability of the Group over the next three years.
Exceptional items
The Group presents as exceptional items on the face of the Consolidated Income
Statement those items of income and expense which, because of their size,
nature or the expected infrequency of the events giving rise to them, merit
separate presentation to provide a better understanding of the elements of
financial performance in the financial period, so as to assess trends in
financial performance. Further details on exceptional items are given within
note 4.
Alternative performance measures (APMs)
The Group has identified certain measures that it believes will assist the
understanding of the performance of the business. These APMs are not defined
or specified under the requirements of IFRS.
The Group believes that these APMs, which are not considered to be a
substitute for, or superior to, IFRS measures, provide stakeholders with
additional useful information on the underlying trends, performance and
position of the Group and are consistent with how business performance is
measured internally. The APMs are not defined by IFRS and therefore may not be
directly comparable with other companies' APMs.
The key APMs that the Group uses include: Net margin, Adjusted EBITDA,
Adjusted EBIT and Adjusted Earnings Per Share. These APMs are set out in the
Glossary, including explanations of how they are calculated and how they are
reconciled to a statutory measure where relevant.
The Group makes certain adjustments to the statutory profit measures in order
to derive many of these APMs. The Group's policy is to exclude items that are
considered non-underlying and exceptional due to their size, nature or
incidence, and are not considered to be part of the normal operating costs of
the Group. Treatment as an adjusting item provides stakeholders with
additional useful information to assess the year-on-year trading performance
of the Group but should not be considered in isolation of statutory measures.
New standards, amendments and interpretations
The following standards, amendments and interpretations were early adopted by
the Group for the 52-week period ended 28 April 2024:
- Classification of Liabilities as Current or Non-current and Non-current
Liabilities with Covenants - Amendments to IAS 1
This had no material impact on the Group.
The following standards, amendments and interpretations were adopted by the
Group for the 52-week period ended 28 April 2024:
- IFRS 17 Insurance Contracts
- Definition of Accounting Estimates - Amendments to IAS 8
- Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice
Statement 2
- Deferred Tax related to Assets and Liabilities arising from a Single
Transaction - Amendments to IAS 12
- International Tax Reform-Pillar Two Model Rules - Amendments to IAS 12
IFRS 17 Insurance Contracts
In May 2017, the IASB issued IFRS 17 Insurance Contracts, a comprehensive new
accounting standard for insurance contracts covering recognition and
measurement, presentation and disclosure. The overall objective of IFRS 17 is
to provide an accounting model for insurance contracts that is more useful and
consistent for insurers. The amendments did not have a material impact on the
Group's Condensed Consolidated Financial Statements.
Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice
Statement 2
The amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality
Judgements provide guidance and examples to help entities apply materiality
judgements to accounting policy disclosures. The amendments aim to help
entities provide accounting policy disclosures that are more useful by
replacing the requirement for entities to disclose their 'significant'
accounting policies with a requirement to disclose their 'material' accounting
policies and adding guidance on how entities apply the concept of materiality
in making decisions about accounting policy disclosures.
The amendments have had an impact on the Group's disclosures of accounting
policies, but not on the measurement, recognition or presentation of any items
in the Group's Condensed Consolidated Financial Statements.
International Tax Reform-Pillar Two Model Rules - Amendments to IAS 12
The amendments to IAS 12 have been introduced in response to the OECD's BEPS
Pillar Two rules and include:
• A mandatory temporary exception to the recognition and disclosure of
deferred taxes arising from the jurisdictional implementation of the Pillar
Two model rules; and
• Disclosure requirements for affected entities to help users of the
financial statements better understand an entity's exposure to Pillar Two
income taxes arising from that legislation, particularly before its effective
date.
Further amendments to and the interpretation of existing accounting standards
that became effective during the period, did not have a material impact on the
Condensed Consolidated Financial Statements.
Significant accounting estimates, assumptions and judgements
The preparation of consolidated financial information requires the Group to
make estimates and assumptions that affect the application of policies and
reported amounts. Estimates and judgements are continually evaluated and are
based on historical experience and other factors, including expectations of
future events that are reasonable under the circumstances. Actual results may
differ from these estimates.
Significant estimates and assumptions
Estimates and underlying assumptions are reviewed by management on an ongoing
basis, with revisions recognised in the period in which the estimates are
revised and in any future period affected.
The areas involving significant risk resulting in a material adjustment to the
carrying amounts of assets and liabilities within the next financial period
are as follows:
Post-employment benefit obligations
The Group's accounting policy for the defined benefit pension scheme requires
management to make judgements as to the nature of benefits provided by each
scheme and thereby determine the classification of each scheme. For the
defined benefit scheme, management is required to make annual estimates and
assumptions about future returns on classes of scheme assets, future
remuneration changes, employee attrition rates, administration costs, changes
in benefits, inflation rates, life expectancy and expected remaining periods
of service of employees and the determination of the pension cost and defined
benefit obligation of the Group's defined benefit pension scheme depends on
the selection of these assumptions. Differences arising from actual
experiences or future changes in assumptions will be reflected in subsequent
periods.
Net realisable value of inventories
Inventories are stated at the lower of cost and net realisable value, on a
weighted average cost basis. Provisions are recognised where the net
realisable value is assessed to be lower than cost. The calculation of this
provision requires estimation of the eventual sales price and sell-through of
goods to customers in the future. The inventory provision held at the year-end
was £6.4 million (2023: £5.2 million). A 20% reduction in the showroom
sell-through of slow moving stock would impact the net realisable value by
c.£4.4 million.
Impairment of property, plant and equipment and right-of-use assets
Property, plant and equipment and right-of-use assets are reviewed for
impairment if events or changes in circumstances indicate that the carrying
amount may not be recoverable. For the impairment test, the value-in-use
method requires the Group to determine appropriate assumptions (which are
sources of estimation uncertainty) in relation to the cash flow projections
over the strategic plan period, the long-term growth rate to be applied beyond
this period and the risk-adjusted pre-tax discount rate used to discount those
cash flows. The key assumptions relate to sales growth rates and discount
rates used to discount the cash flows. Climate risk and near-term
environmental actions that the Group is taking, have been considered in future
cash flows used in the impairment review. This includes unavoidable future
costs such as price increases, together with the cost of mitigating climate
risks, and consideration of quantified climate-related risks on future cash
flows. Showroom related property, plant and equipment and right-of-use assets
are tested for impairment at a showroom-by-showroom level, including an
allocation of overheads related to showroom operations.
Significant judgements
The following are the critical judgements, apart from those involving
estimations, that the Directors have made in the process of applying the
Group's accounting policies and that have the most significant effect on the
amounts recognised in the Financial Statements:
Classification of exceptional items and presentation of non-GAAP measures
The Directors exercise their judgement in the classification of certain items
as exceptional and outside the Group's underlying results. The determination
of whether an item should be separately disclosed as an exceptional item,
non-underlying or non-trading requires judgement on its size, nature or
expected infrequency, as well as whether it provides clarity on the Group's
underlying trading performance. In exercising this judgement, the Directors
take appropriate regard of IAS 1 'Presentation of financial statements' as
well as guidance from the Financial Reporting Council and the European
Securities Market Authority on the reporting of exceptional items and APMs.
The overall goal of the Directors is to present the Group's underlying
performance without distortion from one-off or non-trading events regardless
of whether they are favourable or unfavourable to the underlying result.
Further details on exceptional items are provided in note 4.
Lease term (IFRS 16)
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.
Where a lease includes the option for the Group to terminate the lease before
the term end, the Group makes a judgement as to whether it is reasonably
certain that the option will or will not be taken.
On entering into a lease, the Group assesses how reasonably certain it is to
exercise these options. The default position is that the Group will determine
that the lease term is to the end of the lease (i.e. will not include
break-clauses or options to extend) unless there is clear evidence to the
contrary.
The lease term of each lease is reassessed if there is specific evidence of a
change in circumstance such as:
- A decision has been made by the business to exercise a break or option
- The trading performance significantly changes
- Planned future capital expenditure suggests that the option to extend will
be taken
Discount rates (IFRS 16)
The discount rate used to calculate the lease liability is the rate implicit
in the lease, if it can be readily determined, or the lessee's incremental
borrowing rate if not. Management uses the rate implicit in the lease in
relation to the Group's 'Other' leases and the lessee's incremental borrowing
rate for all property leases.
Incremental borrowing rates are determined on entering a lease and depend on
the term, country, currency and start date of the lease. The incremental
borrowing rate used is calculated based on a series of inputs including:
The risk-free rate based on country specific swap markets
A credit risk adjustment based on country specific corporate indices; and
A Group specific adjustment to reflect the Group's specific borrowing
conditions
As a result, reflecting the breadth of the Group's lease portfolio, judgements
on the lease terms and the international spread of the portfolio, there are a
large number of discount rates applied to the leases within the range of 2.1%
to 7.7%.
Substantive substitution rights (IFRS 16)
The Group has applied judgement to four (2023: three) contractual agreements
and has judged that they do not meet the definition of a lease under IFRS 16.
In these cases, the Group has judged that the lessor has a substantive right
to substitute the asset and as such, there is no asset identified within the
contract. The Group judges that the lessor has the practical ability to
substitute; the Group cannot prevent the lessor from proposing the
substitution; and the costs of substitution are assessed to be low.
If substituted, the lessor is able to give 14 days written notice to the Group
indicating that the sales area will be changed and the costs incurred to move
the sales area would be low to the lessor. As a result, the Group has deemed
that the lessor has a substantive right to substitute the asset and as such
there is no asset identified within the contract. Given this, the Group does
not recognise lease liabilities or right-of-use assets in relation to these
leases and continues to account for these on a straight-line basis.
2. Segment reporting
The key Group performance measures are Adjusted Earnings Before Interest, Tax,
Depreciation and Amortisation (Adjusted EBITDA) and Adjusted Earnings Before
Interest and Tax (Adjusted EBIT), both shown pre-exceptional items, as
detailed below. The segment profit/loss is disclosed on a pre-IFRS 16 basis
reflecting how results are reported to the Chief Operating Decision Makers
(CODMs) and how they are measured for the purposes of covenant testing. Both
Adjusted EBITDA and Adjusted EBIT are APMs and these measures provide
stakeholders with additional useful information to assess the year-on-year
trading performance of the Group but should not be considered in isolation of
statutory measures.
Adjusted EBITDA represents profit for the period before finance costs, finance
income, taxation, depreciation, amortisation, exceptional items presented in
the Group's Consolidated Income Statement (consisting of exceptional
administrative expenses, exceptional finance costs and exceptional impairment)
on a pre-IFRS 16 basis. UK and Europe operating segments are aggregated into
one reporting segment, which is reflective of the management structure in
place and meets the aggregation criteria of IFRS 8.
52 week period ended 28 April 2024
UK and Europe US Corporate Total
£m £m £m £m
Revenue 846.1 691.8 - 1,537.9
Net margin 307.3 254.9 - 562.2
Less:
Showroom costs (162.6) (126.5) - (289.1)
Overheads (50.2) (32.8) (2.3) (85.3)
Showroom opening and closing costs (5.6) (3.3) - (8.9)
Adjusted EBITDA 88.9 92.3 (2.3) 178.9
Depreciation, amortisation, impairment and loss on disposal of assets (27.6) (15.2) (1.4) (44.2)
Segment profit/(loss)* 61.3 77.1 (3.7) 134.7
Impact of IFRS 16 (excluding interest on leases) 17.2
Net finance costs (26.6)
Exceptional cost of sales (note 4) 0.5
Exceptional administrative expenses (note 4) (6.2)
Exceptional impairment of assets (note 4) (26.2)
Exceptional finance costs (note 4) (1.3)
Profit before taxation for the financial period 92.1
* Segment profit/(loss) is defined as being Earnings Before Interest, Tax,
exceptional items and IFRS 16 adjustments
(Adjusted EBIT).
52 week period ended 30 April 2023
UK and Europe US Corporate Total
£m £m £m £m
Revenue 889.9 652.9 - 1,542.8
Net margin 330.0 246.3 - 576.3
Less:
Showroom costs (153.6) (125.6) - (279.2)
Overheads (47.8) (30.9) (5.4) (84.1)
Showroom opening and closing costs (7.3) (3.4) (0.9) (11.6)
Adjusted EBITDA 121.3 86.4 (6.3) 201.4
Depreciation, amortisation, impairment and loss on disposal of assets (23.2) (13.1) - (36.3)
Segment profit/(loss)* 98.1 73.3 (6.3) 165.1
Impact of IFRS 16 (excluding interest on leases) 13.7
Net finance costs (23.1)
Exceptional administrative expenses (note 4) (0.9)
Exceptional reversal of impairment of assets (note 4) 0.7
Exceptional finance costs (note 4) (0.7)
Profit before taxation for the financial period 154.8
Entity-wide revenue disclosures
52 week period 52 week period
ended ended
28 April 2024 30 April 2023
£m £m
UK and Europe
Luxury watches 709.4 749.6
Luxury jewellery 62.1 67.8
Services/other 74.6 72.5
Total 846.1 889.9
US
Luxury watches 635.3 586.5
Luxury jewellery 40.3 51.4
Services/other 16.2 15.0
Total 691.8 652.9
Group
Luxury watches 1,344.7 1,336.1
Luxury jewellery 102.4 119.2
Services/other 90.8 87.5
Total 1,537.9 1,542.8
'Services/other' consists of the sale of fashion and classic watches and
jewellery, the sale of gifts, servicing, repairs and product insurance.
Information regarding geographical areas, including revenue from external
customers, is disclosed above.
No single customer accounted for more than 10% of revenue in any of the
financial periods noted above.
Entity-wide statutory non-current asset disclosures
28 April 2024 30 April 2023
£m £m
UK and Europe
Goodwill 137.6 121.6
Intangible assets 5.1 5.0
Property, plant and equipment 115.7 100.2
Right-of-use assets 252.3 244.0
Total 510.7 470.8
US
Goodwill 61.7 61.2
Intangible assets 11.3 12.6
Property, plant and equipment 65.2 54.2
Right-of-use assets 124.3 115.1
Total 262.5 243.1
Corporate
Property, plant and equipment 10.5 -
Right-of-use assets 5.2 -
Total 15.7 -
Group
Goodwill 199.3 182.8
Intangible assets 16.4 17.6
Property, plant and equipment 191.4 154.4
Right-of-use assets 381.8 359.1
Total 788.9 713.9
3. Revenue
The Group's disaggregated revenue recognised under contracts with customers
relates to the following categories and operating segments:
52 week period ended 28 April 2024
Sale of goods Rendering of services Total
£m £m £m
UK and Europe 810.6 35.5 846.1
US 678.8 13.0 691.8
Total 1,489.4 48.5 1,537.9
52 week period ended 30 April 2023
Sale of goods Rendering of services Total
£m £m £m
UK and Europe 855.4 34.5 889.9
US 641.2 11.7 652.9
Total 1,496.6 46.2 1,542.8
4. Exceptional items
Exceptional items are those that in the judgement of the Directors need to be
separately disclosed by virtue of their size, nature or incidence, in order to
draw the attention of the reader and to show the underlying business
performance of the Group. Such items are included within the Income Statement
caption to which they relate and are separately disclosed on the face of the
Consolidated Income Statement.
52 week period 52 week period
ended ended
28 April 2024 30 April 2023
£m £m
Exceptional cost of sales
Acquisition integration costs(i) (0.7) -
Rolex Old Bond Street (IFRS 16 depreciation)(ii) (1.2) -
Reversal of inventory provision created on acquisition(iii) 2.4 -
Total exceptional cost of sales 0.5 -
Exceptional Administrative costs
Showroom impairment(iv)
Impairment of property, plant and equipment (7.2) -
Impairment of right-of-use assets (13.0) -
Other onerous contracts (1.0) -
European showroom impairment(v)
Impairment of property, plant and equipment (2.6) -
Impairment of right-of-use assets (3.4) -
Other costs (2.6) -
Reversal of impairment of property, plant and equipment - 0.5
Reversal of impairment of right-of-use assets - 0.2
Professional and legal expenses on actual and prospective business (2.6) (0.9)
acquisitions(vi)
Total exceptional administrative costs (32.4) (0.2)
Exceptional finance costs
Rolex Old Bond Street (IFRS 16 interest)(ii) (1.3) -
Amortisation of capitalised transaction costs - (0.7)
Total exceptional finance costs (1.3) (0.7)
Total exceptional items (33.2) (0.9)
(i) Acquisition integration costs
Costs associated with the integration of Ernest Jones showrooms acquired in
the year are treated as exceptional as they are regarded as non-trading,
non-underlying costs. The costs were incurred in the period between
acquisition and showroom opening.
(ii) Rolex Old Bond Street
A new 7,200 sq. ft showroom is being built in partnership with Rolex. This new
flagship will be Europe's largest Rolex showroom and reflects the importance
of the London market and the special relevance of London to the history of
Rolex. The cost shown here is the IFRS 16 depreciation charge and other costs
whilst the showroom is being constructed. They are deemed to be exceptional in
nature given that this unique proposition results in a project size and
complexity significantly outside of a standard build, coupled with documented
project delays outside of the Group's control.
(iii) Reversal of inventory provision created on acquisition
In the prior period, for the Betteridge acquisition, an estimate was made of
the fair value of inventory acquired with a provision recorded in goodwill.
During the year, the Group achieved higher product margins on a number of
these inventory lines through maximisation of our CRM database. The gain is
deemed to be exceptional in nature.
(iv) Showroom impairment
The current macroeconomic environment, increased interest rates, and
inflationary trends gave rise to indicators of impairment in the current
period. Consequently, discounted cashflows were performed on all Cash
Generating Units with indicators of impairment. This resulted in an impairment
charge of £20.2 million being recorded in the period. This is allocated over
the property, plant and equipment, and the right-of-use assets of those
showrooms as required by IAS 36 Impairment of Assets. A further provision of
£1.0 million relates to associated onerous contracts.
(v) European showroom impairment
The exceptional costs are reflective of both asset write downs and other
onerous costs. As announced after the year end date, the Group intends to
reallocate investment from the European market into the UK and US.
(vi) Professional and legal expenses on actual and prospective business
acquisitions
Professional and legal expenses on business combinations have been expensed to
the Consolidated Income Statement as an exceptional cost as they are regarded
as non-trading, non-underlying costs and are considered to be material by
nature. The total cost shown here also includes expenses incurred in the year
in relation to the Roberto Coin Inc. acquisition which closed post year end.
All of these items are considered exceptional as they are linked to unique
non-recurring events and do not form part of the underlying trading of the
Group.
5. Taxation
The tax charge for the period is shown below. Tax is made up of current and
deferred tax. Current tax is the amount payable on the taxable income in the
period and any adjustments to tax payable in previous periods.
52 week period 52 week period
ended ended
28 April 2024 30 April 2023
£m £m
Current tax:
Current UK tax on profits for the period 8.7 13.0
Current US tax on profits for the period 16.9 16.5
Adjustments in respect of prior periods - UK and Europe 1.1 (1.8)
Adjustments in respect of prior periods - US 0.1 0.2
Total current tax 26.8 27.9
Deferred tax:
Origination and reversal of temporary differences 5.2 5.7
Impact of change in tax rate 0.1 (0.5)
Adjustments in respect of prior periods 0.9 (0.1)
Total deferred tax 6.2 5.1
Tax expense reported in the Income Statement 33.0 33.0
The tax rate for the current period varied from the standard rate of
corporation tax in the UK due to the following factors:
52 week period ended 28 April 2024 52 week period ended 30 April 2023
£m £m
Profit before taxation 92.1 154.8
Notional taxation at standard UK corporation tax rate of 25.0% (2023: 19.5%) 23.0 30.2
Non-deductible expenses - recurring 2.5 1.4
Non-deductible expenses - exceptional items 1.9 -
Overseas tax differentials 1.9 4.6
Deferred tax not recognised - European subsidiaries 1.5 -
Adjustments in respect of prior periods 2.1 (1.7)
Super-deduction on fixed assets - (1.9)
Current/deferred tax rate difference on current year movements - 0.9
Adjustments due to deferred tax rate change 0.1 (0.5)
Tax expense reported in the Income Statement 33.0 33.0
6. Earnings per share (EPS)
52 week period 52 week period
ended ended
28 April 2024 30 April 2023
Basic
EPS 25.0p 51.2p
EPS adjusted for exceptional items 36.8p 51.5p
EPS adjusted for exceptional items and pre-IFRS 16 38.0p 52.7p
Diluted
EPS 24.8p 50.9p
EPS adjusted for exceptional items 36.6p 51.2p
EPS adjusted for exceptional items and pre-IFRS 16 37.7p 52.3p
Basic EPS is based on the profit for the year attributable to the equity
holders of the Parent Company divided by the weighted average number of
shares.
Diluted EPS is calculated by adjusting the weighted average number of shares
used for the calculation of basic EPS as increased by the dilutive effect of
potential ordinary shares.
The following table reflects the profit and share data used in the basic and
diluted EPS calculations:
52 week period 52 week period
ended ended
28 April 2024 30 April 2023
£m £m
Profit after tax attributable to equity holders of the Parent Company 59.1 121.8
adjust for exceptional items:
Exceptional items 33.2 0.9
Tax on exceptional items (5.2) (0.2)
Profit adjusted for exceptional items 87.1 122.5
Pre-exceptional IFRS 16 adjustments, net of tax 2.8 2.7
Profit adjusted for exceptional items and IFRS 16 89.9 125.2
The following table reflects the share data used in the basic and diluted EPS
calculations:
52 week period 52 week period
ended ended
28 April 2024 30 April 2023
Weighted average number of shares: '000 '000
Weighted average number of ordinary shares in issue 236,753 237,641
Weighted average shares for basic EPS 236,753 237,641
Weighted average dilutive potential shares 1,446 1,713
Weighted average shares for diluted EPS 238,199 239,354
The weighted average number of shares takes into account the weighted average
effect of changes in own shares during the period. There have been no
transactions involving ordinary shares or potential ordinary shares between
the reporting date and the date of authorisation of these Condensed
Consolidated Financial Statements.
7. Borrowings
28 April 2024 30 April 2023
£m £m
Non-current
Term loan - (120.0)
Multicurrency revolving loan facility (115.0) -
Associated capitalised transaction costs 1.7 -
Total borrowings (113.3) (120.0)
Analysis of net debt
1 May 2023 Cash flow Non-cash changes1 Foreign exchange 28 April 2024
£m £m £m £m £
m
Cash and cash equivalents 136.4 (21.5) - 0.8 115.7
Term loan (120.0) 120.0 - - -
Multicurrency revolving loan facility - (115.0) - - (115.0)
Net cash/(debt) excluding capitalised transaction costs (pre-IFRS 16) 16.4 (16.5) - 0.8 0.7
Capitalised transaction costs - 2.2 (0.5) - 1.7
Net cash/(debt) (pre-IFRS 16) 16.4 (14.3) (0.5) 0.8 2.4
Lease liabilities (410.4) 68.1 (117.6) (0.5) (460.4)
Total net debt (394.0) 53.8 (118.1) 0.3 (458.0)
1 Non-cash charges are principally a release of capitalised finance
costs and lease liability interest charges, additions and revisions.
Cash and cash equivalents consist of cash at bank and in hand of £93.8
million (2023: £120.7 million) and cash in transit of £21.9 million (2023:
£15.7 million).
On 9 May 2023 the Group signed a new five-year £225.0 million multicurrency
revolving loan facility with lenders. The existing facilities were repaid and
extinguished on this date.
The key covenant tests attached to the Group's facilities are a measure of net
debt to EBITDA and the Fixed Charge Cover Ratio (FCCR) at each April and
October on a pre-IFRS 16 basis. Net debt to EBITDA is defined as the ratio of
total net debt at the reporting date to the last 12 months Adjusted EBITDA.
This ratio must not exceed 3. The FCCR is the ratio of Adjusted EBITDA plus
rent to the total finance charge and rent for the 12 months to the reporting
date. This ratio must exceed 1.6. The covenant tests at October 2023 and April
2024 were fully met.
8. Financial instruments
Categories
28 April 2024 30 April 2023
£m £m
Financial assets - held at amortised cost
Trade and other receivables* 17.4 13.9
Cash and cash equivalents 115.7 136.4
Total financial assets 133.1 150.3
Financial liabilities - held at amortised cost
Interest-bearing loans and borrowings:
Term loan (net of capitalised transaction costs) - (120.0)
Multicurrency revolving loan facility (net of capitalised transaction costs) (113.3) -
Multicurrency revolving loan facility interest payable (1.4) -
Trade and other payables** (188.4) (193.8)
(303.1) (313.8)
Lease liability (IFRS 16) (460.4) (410.4)
Total financial liabilities (763.5) (724.2)
* Excludes prepayments of £7.2 million (2023: £5.9 million) that do
not meet the definition of a financial instrument.
** Trade payables excludes customer deposits of £6.0 million (2023:
£7.9 million) and deferred income of £20.7 million (2023: £17.9 million)
that do not meet the definition of a financial instrument.
Fair values
At 28 April 2024, the fair values of each category of the Group's financial
instruments are materially the same as their carrying values in the Group's
Balance Sheet based on either their short maturity or, in respect of long-term
borrowings, interest being incurred at a floating rate.
9. Business combinations
Ernest Jones Limited and Signet Trading Limited
On 17 November 2023, the Group acquired the trade and assets of 15 showrooms
from retailers' Ernest Jones Limited and Signet Trading Limited for a cash
consideration of £44.2 million. The acquisition further advances the Group's
expansion strategy.
The business contributed revenue of £8.2 million from the 17 November 2023
acquisition date to 28 April 2024. The profit before tax contribution was not
material to the Group result in this initial start up period.
The following table summarises the consideration paid for the acquisition, and
the provisional fair value of assets acquired at the acquisition date:
£m
Total cash consideration 44.2
Initial assessment of values on acquisition
Inventories 25.3
Fixed assets 5.8
Right-of-use asset 14.5
Lease liabilities (18.5)
Deferred tax asset 1.1
Total identifiable net assets 28.2
Goodwill 16.0
Total assets acquired 44.2
An amount of £1.0 million is held with a third-party on retention and is
reported within debtors in these accounts. This will be paid by the Group
within 12 months of the acquisition date.
The goodwill recognised is attributable to the profitability of the acquired
showrooms and is expected to be deductible for tax purposes.
The Group measured the acquired lease liabilities using the present value of
the remaining lease payments at the date of acquisition. The right-of-use
assets were measured at an amount equal to the lease liabilities, with an
adjustment required to reflect the terms of the lease relative to market
terms.
If the business combination had taken place at the beginning of FY24, the
Group's revenue would have been £1,559.9 million. The contribution to profit
before tax is not material to the results of the Group and therefore has not
been disclosed separately.
Acquisition-related costs have been charged to exceptional items in the
Consolidated Income Statement for the 52-week period ended 28 April 2024, as
disclosed in note 4 to these Condensed Consolidated Financial Statements.
The values stated above are the initial assessment of the fair values of
assets and liabilities on acquisition. These will be finalised within 12
months of the acquisition date.
10. Contingent Liabilities
There are a number of contingent liabilities that arise in the normal course
of business, which if realised, are not expected to result in a material
liability to the Group.
11. Post-balance sheet events
Closure of European Division
In line with our disciplined approach to capital allocation and given the
pipeline of high returning opportunities in the UK and US, the Group intends
to reallocate investment from the European market into these higher returning
regions. We are in negotiations with our brand partners for the transfer of a
number of our existing European mono-brand boutiques. The announcement and
decision to exit the showrooms took place post year end, and for this reason
assets have not been re-classified as held-for-sale as at 28 April 2024.
Acquisition of Roberto Coin Inc.
On 8 May 2024, the Group signed and completed the acquisition of the entire
share capital of Roberto Coin Inc., an associate company of Roberto Coin
S.p.A. from Roberto Coin S.p.A., Peter Webster, Co-Founder and President of
Roberto Coin Inc., and Pilar Coin. The acquisition completed for a total cash
consideration of $130.0 million (of which $10.0 million is deferred for one
year and contingent on the future profitability of the acquired business),
subject to working capital adjustments.
The acquisition was financed via a new $115.0 million term loan facility which
expires in February 2026. Covenants are identical to the Group's existing
multicurrency revolving loan facility.
Luxury branded jewellery is a core pillar of the Group's growth strategy and
the acquisition will significantly enhance our strategic positioning in the
luxury branded jewellery category in the US, the world's largest luxury
jewellery market on a per capita basis.
The assets and liabilities acquired principally comprise working capital
balances of inventory, debtors and creditors. Due to the proximity of the
acquisition date to the date of approval these Condensed Consolidated
Financial Statements, the initial accounting for the business combination is
incomplete and the Group is unable to provide a quantification of the fair
values of the assets and liabilities acquired. The Group will include an
acquisition balance sheet within the Group's Interim Financial Statements for
the 26 weeks to 27 October 2024.
No further post balance sheet events have been identified.
GLossary
Alternative performance measures
The Directors use Alternative Performance Measures (APMs) as they believe
these measures provide additional useful information on the underlying trends,
performance and position of the Group. These measures are used for performance
analysis. The APMs are not defined by IFRS and therefore may not be directly
comparable with other companies' APMs. These measures are not intended to be a
substitute for, or superior to, IFRS measures.
The majority of the Group's APMs are on a pre-IFRS 16 basis. This aligns with
the management reporting used to inform business decisions, investment
appraisals, incentive schemes and banking covenants.
4-Wall EBITDA
Net margin less showroom costs.
Why used
4-Wall EBITDA is a direct measure of profitability of the showroom operations.
Reconciliation to IFRS measures
£million FY24 FY23
Revenue 1,537.9 1,542.8
Cost of inventory expensed (981.6) (972.2)
Other inc. supplier incentives 5.9 5.7
Net margin 562.2 576.3
Showroom costs (289.1) (279.2)
4-Wall EBITDA 273.1 297.1
Showroom costs includes rental costs on a pre-IFRS 16 basis (i.e. under IAS
17). Refer to the IFRS 16 reconciliations below for further details.
4-Wall EBITDA, EBITDA, Adjusted EBITDA and Adjusted EBIT Margin
For each of these areas as defined above, the Group shows the measures as a
percentage of Group revenue.
Why used
Profitability as a percentage of Group revenue is shown to understand how
effectively the Group is managing its cost base.
Reconciliation to IFRS measures
£million FY24 FY23
Revenue 1,537.9 1,542.8
4-Wall EBITDA 273.1 297.1
17.8% 19.3%
EBITDA (Unadjusted) 187.8 213.0
12.2% 13.8%
Adjusted EBITDA 178.9 201.4
11.6% 13.1%
Adjusted EBIT 134.7 165.1
8.8% 10.7%
Adjusted Earnings Before Interest and Tax (Adjusted EBIT)
Operating profit before exceptional items and IFRS 16 impact.
Why used
Measure of profitability that excludes one-off exceptional costs and IFRS 16
adjustments to allow for comparability between years.
This measure was linked to management incentives in the financial year.
Reconciliation to IFRS measures
Reconciled in note 2 to the Condensed Consolidated Financial Statements.
Adjusted Earnings Before Interest, Tax, Depreciation and Amortisation
(Adjusted EBITDA)
EBITDA before exceptional items presented in the Group's Consolidated Income
Statement. Shown on a continuing basis and before the impact of IFRS 16.
Why used
Measure of profitability that excludes one-off exceptional and non-underlying
items and IFRS 16 adjustments to allow for comparability between years.
Reconciliation to IFRS measures
Reconciled in note 2 of the Condensed Consolidated Financial Statements.
Adjusted Earnings Per Share (Adjusted EPS)
Basic Earnings Per Share before exceptional items and IFRS 16 impact.
Why used
Measure of profitability that excludes one-off exceptional items and IFRS 16
adjustments to provide comparability between years. This measure was linked to
management incentives in the financial year.
Reconciliation to IFRS measures
Reconciled within note 6 of the Condensed Consolidated Financial Statements.
Adjusted profit before tax (Adjusted PBT)
Profit before tax before exceptional items and IFRS 16 impact.
Why used
Measure of profitability that excludes one-off exceptional items and IFRS 16
adjustments to provide comparability between years.
Reconciliation to IFRS measure
£million FY24 FY23
Segment profit (as reconciled in note 2 of the Financial Statements) 134.7 165.1
Net finance costs excluding exceptional items (26.6) (23.1)
IFRS 16 lease interest 20.8 17.2
Adjusted profit before tax 128.9 159.2
Average selling price (ASP)
Revenue (including sales related taxes) generated in a period from sales of a
product category divided by the total number of units of such products sold in
such period.
Why used
Measure of sales performance.
Reconciliation to IFRS measures
Not applicable.
Constant currency basis
Results for the period had the exchange rates remained constant from the
comparative period.
Why used
Measure of revenue growth that excludes the impact of foreign exchange.
Reconciliation
(£/US$ million)
FY24 Group revenue (£) 1,537.9
FY24 US revenue ($) 870.3
FY24 US revenue (£) @ FY24 exchange rate 691.8
FY24 US revenue (£) @ FY23 exchange rate 723.4
FY24 Group revenue (£) at constant currency 1,569.5
FY24 exchange rate £1: $1.258
FY23 exchange rate £1: $1.203
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA)
EBITDA before exceptional items presented in the Group's Consolidated Income
Statement. Shown on a continuing basis before the impact of IFRS 16 and
showroom opening and closing costs. These costs include rent (pre-IFRS 16),
rates, payroll and other costs associated with the opening or closing of
showrooms, or during closures when refurbishments are taking place.
Why used
Measure of profitability that excludes one-off exceptional and non-underlying
items, IFRS 16 adjustments and showroom opening and closing costs to allow for
comparability between years.
Reconciliation to IFRS measures
£million FY24 FY23
Adjusted EBITDA 178.9 201.4
Showroom opening and closing costs 8.9 11.6
EBITDA 187.8 213.0
Exceptional items
Items that in the judgement of the Directors need to be disclosed by virtue of
their size, nature or incidence, in order to draw the attention of the reader
and to show the underlying business performance of the Group.
Why used
Draws the attention of the reader and to show the items that are significant
by virtue of their size, nature or incidence.
Reconciliation to IFRS measures
Disclosed in note 4 of the Group's Condensed Consolidated Financial
Statements.
Free cash flow
Cash flow shown on a pre-IFRS 16 basis excluding expansionary capex,
acquisitions of subsidiaries, exceptional items, financing activities and the
purchase of own shares.
Why used
Represents the cash generated from operations including maintenance of capital
assets. Demonstrates the amount of available cash flow for discretionary
activities such as expansionary capex, dividends or acquisitions.
Reconciliation to IFRS measures
£million FY24 FY23
Net (decrease)/increase in cash and cash equivalents (21.5) 31.2
Net financing cash flow 91.7 85.2
Interest paid (9.2) (4.7)
Lease payments (68.1) (59.2)
Acquisitions 44.2 24.9
Exceptional costs - professional and legal expenses on actual and prospective 2.5 0.9
business acquisitions
Expansionary capex 78.0 67.5
Free cash flow 117.6 145.8
Free cash flow conversion
Free cash flow divided by Adjusted EBITDA.
Why used
Measurement of the Group's ability to convert profit into free cash flow.
Reconciliation to IFRS measures
Free cash flow of £117.6 million divided by Adjusted EBITDA of £178.9
million shown as a percentage.
Liquidity headroom
Liquidity headroom is unrestricted cash plus undrawn available facilities.
Why used
Liquidity headroom shows the amount of unrestricted funds available to the
Group.
Reconciliation to IFRS measures
£million FY24 FY23
Total facility (RCF) 225.0 170.0
Facility drawn (115.0) (120.0)
Unrestricted cash 99.3 121.6
Total headroom 209.3 171.6
Net cash/(debt)
Total borrowings (excluding capitalised transaction costs) less cash and cash
equivalents and excludes IFRS 16 lease liabilities.
Why used
Measures the Group's indebtedness.
Reconciliation to IFRS measures
Reconciled in note 7 of the Condensed Consolidated Financial Statements.
Net margin
Revenue less inventory recognised as an expense, commissions paid to the
providers of interest-free credit and inventory provision movements.
Why used
Measures the profit made from the sale of inventory before showroom or
overhead costs.
Reconciliation to IFRS measures
Refer to 4-Wall EBITDA.
Return on Capital Employed (ROCE)
Return on Capital Employed (ROCE) is defined as Adjusted EBIT divided by
average capital employed, calculated on a Last Twelve Months (LTM) basis.
Average capital employed is total assets less current liabilities excluding
IFRS 16 lease liabilities.
Why used
ROCE demonstrates the efficiency with which the Group utilises capital. This
measure was linked to management incentives in the financial year.
Reconciliation to IFRS measures
Adjusted EBIT of £134.7 million divided by the average capital employed,
which is calculated as follows:
£million FY24 FY23
Pre-IFRS 16 total assets 958.9 882.6
Pre-IFRS 16 current liabilities (229.7) (231.6)
Capital employed 729.2 651.0
Average capital employed 690.1 591.4
Other definitions
Expansionary capital expenditure/capex
Expansionary capital expenditure relates to new showrooms, offices,
relocations or refurbishments greater than £250,000.
Luxury watches
Watches that have a Recommended Retail Price greater than £1,000.
Luxury jewellery
Jewellery that has a Recommended Retail Price greater than £500.
Showroom maintenance capital expenditure/capex
Capital expenditure which is not considered expansionary.
IFRS 16 Adjustments
The following tables reconcile from pre-IFRS 16 balances to statutory
post-IFRS 16 balances.
FY24 Consolidated Income Statement
£million Pre-IFRS 16 and exceptional items IFRS 16 adjustments Exceptional Statutory
items
Revenue 1,537.9 - - 1,537.9
Net margin 562.2 - 1.7 563.9
Showroom costs (289.1) 64.9 - (224.2)
4-Wall EBITDA 273.1 64.9 1.7 339.7
Overheads (85.3) - (6.2) (91.5)
EBITDA 187.8 64.9 (4.5) 248.2
Showroom opening and closing costs (8.9) 5.3 - (3.6)
Adjusted EBITDA 178.9 70.2 (4.5) 244.6
Depreciation, amortisation, loss on disposal, impairment of fixed assets and (44.2) (53.0) (27.4) (124.6)
lease modifications
Adjusted EBIT (Segment profit) 134.7 17.2 (31.9) 120.0
Net finance costs (5.8) (20.8) (1.3) (27.9)
Adjusted profit before tax 128.9 (3.6) (33.2) 92.1
Adjusted basic Earnings Per Share 38.0p (1.2)p (11.8)p 25.0p
FY24 Balance Sheet
£million Pre-IFRS 16 IFRS 16 adjustments Post-IFRS 16
Goodwill and intangibles 215.7 - 215.7
Property, plant and equipment 193.1 (1.7) 191.4
IFRS 16 right-of-use assets - 381.8 381.8
Inventories 393.3 - 393.3
Trade and other receivables 36.2 (11.6) 24.6
Trade and other payables (263.3) 46.8 (216.5)
IFRS 16 lease liabilities - (460.4) (460.4)
Net cash 0.7 - 0.7
Other (29.2) 21.6 (7.6)
Net assets 546.5 (23.5) 523.0
FY23 Consolidated Income Statement
£million Pre-IFRS 16 and exceptional items IFRS 16 adjustments Exceptional Statutory
items
Revenue 1,542.8 - - 1,542.8
Net margin 576.3 - - 576.3
Showroom costs (279.2) 56.2 - (223.0)
4-Wall EBITDA 297.1 56.2 - 353.3
Overheads (84.1) - (0.9) (85.0)
EBITDA 213.0 56.2 (0.9) 268.3
Showroom opening and closing costs (11.6) 7.1 - (4.5)
Adjusted EBITDA 201.4 63.3 (0.9) 263.8
Depreciation, amortisation, loss on disposal, impairment of fixed assets and (36.3) (49.6) 0.7 (85.2)
lease modifications
Adjusted EBIT (Segment profit) 165.1 13.7 (0.2) 178.6
Net finance costs (5.9) (17.2) (0.7) (23.8)
Adjusted profit before tax 159.2 (3.5) (0.9) 154.8
Adjusted basic Earnings Per Share 52.7p (1.2)p (0.3)p 51.2p
FY23 Balance Sheet
£million Pre-IFRS 16 IFRS 16 adjustments Post-IFRS 16
Goodwill and intangibles 200.4 - 200.4
Property, plant and equipment 159.9 (5.5) 154.4
IFRS 16 right-of-use assets - 359.1 359.1
Inventories 356.0 - 356.0
Trade and other receivables 29.4 (9.6) 19.8
Trade and other payables (259.0) 39.4 (219.6)
IFRS 16 lease liabilities - (410.4) (410.4)
Net cash 16.4 - 16.4
Other (15.3) 8.5 (6.8)
Net assets 487.8 (18.5) 469.3
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