NOTES TO THE FINANCIAL INFORMATION

 

FOR THE 26 WEEKS ENDED 24 OCTOBER 2021

 

1.   BASIS OF PREPARATION

Non-Statutory

 

The results for the first half of the financial year have not been audited or reviewed by external auditors. The financial information in the Group's Annual Report and Financial Statements for the 52 week period ended 25 April 2021 is prepared in accordance with International Financial Reporting Standards in conformity with the requirements of the Companies Act 2006 and in accordance with International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. The Interim Results have been prepared on the basis of the policies set out in the 2021 Annual Report and in accordance with International Accounting Standard (IAS) 34 'Interim Financial Reporting' as adopted by the UK and the Disclosure Guidance and Transparency Rules of the UK's Financial Conduct Authority (DTR). The Interim Results do not include all of the information required for full annual statements and should be read in conjunction with the 2021 Annual Report. In the year to 24 April 2022 the annual financial statements will be prepared in accordance with IFRS as adopted by the UK Endorsement Board. This change in the basis of preparation is required by UK company law for financial reporting as a result of the UK's exit from the European Union on 31 January 2020 and the cessation of the transition period on 31 December 2020. This change does not constitute a change in accounting policy, rather a change in framework which is required to group the use of IFRS in company law. There is no impact on the recognition, measurement or disclosure between the two frameworks in the period reported.

 

The summary of results for the 52 weeks ended 25 April 2021 is an extract from the published Annual Report and Financial Statements which have been reported on by the Group's auditors at the time and delivered to the Registrar of Companies. The audit report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under s498 (2) or s498 (3) of the Companies Act 2006.

 

Going Concern

 

The Group is still operating in the shadow of uncertainty cast by the ongoing Covid-19 pandemic, with restrictions including lockdowns returning to parts of Europe and with the emergence of new variants. There are also supply chain risks which to date we have proven resilient to but which must be factored into our future forecasting given these could continue for some time. On top of this there are the well-publicised macroeconomic factors contributing to a likely cost of living squeeze which could impinge on consumers spending plans heading into the new year. The Directors have reviewed the current financial performance and liquidity of the business, including modelling a number of downside scenarios. The Group is still profitable, highly cash generative and has considerable financial resources. The Group is able to operate within its new banking facilities and covenants, which run until at least November 2024, and is well placed to take advantage of strategic opportunities as they arise. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully despite the continued uncertain economic outlook.

 

Management have, for the purpose of Viability and Going Concern Reporting, forecast and projected a conservative base case scenario and also a number of even more conservative scenarios taking into account assumptions impacting gross profit margins, consumer shift from physical stores to web, impact of direct to consumer, foreign exchange exposure and increases to direct costs. These forecasts and projections show that the Group will be able to operate within the current facility and its covenant requirements (being interest cover and net debt to EBITDA ratios). Management also have a number of mitigating actions which could be taken if required such as putting on hold discretionary spend, liquidating certain assets on the balance sheet and paying down the banking facility.

 

Having thoroughly reviewed the Group's performance and having made suitable enquiries, the Directors are confident that the Group has adequate resources to remain in operational existence for at least 12 months from the date of approval of these financial statements. Trading would need to fall significantly below levels observed during the pandemic, including during the various lockdowns already experienced, to require mitigating actions or a relaxation of covenants. On this basis, the Directors continue to adopt the going concern basis for the preparation of these Unaudited Interim Financial Statements which is a period of at least twelve months from the date of approval of these Unaudited Interim Financial Statements.

 

New accounting standards, interpretations and amendments adopted by the Group

 

The principal accounting policies have remained unchanged from the prior financial information for the 52 weeks ended 25 April 2021. The Group continues to monitor the potential impact of new standards and interpretations which have been or may be endorsed and required adoption by the Group in future reporting period. The Group does not consider that any standards, amendments or interpretation issued by the UK Endorsement Board, but not yet applicable, will have a significant impact on the financial statements.

 

The Group has received government support in the period relating to business rates relief as a result of the Covid-19 pandemic. The amount of business rates relief received by the Group in the period (or equivalent where received in non-UK territories) was approx. £23m (52 weeks to 25 April 2020: approx. £97.5m). Government grants that compensate the Group for expenses incurred are recognised in profit or loss, as a deduction against the related expense, over the periods necessary to match them with the related costs. The amounts quoted have been recognised in Selling, distribution and administrative expenses in the period.

 

Risks and uncertainties

 

The Board has considered the risks and uncertainties for the remaining half of the financial year and determined that the risks presented in the FY21 Annual Report, noted below, also remain relevant for the rest of the financial year:

 

·      Strategy

·      Third-party brand relationships, key suppliers and supply chain management

·      Brexit or global macro-economic conditions, events (pandemic) or political factors

·      Treasury, liquidity and credit risks

·      Customer

·      Legal and regulatory compliance

·      Technology capability and infrastructure renewal

·      Cyber risks, data loss and data privacy

·      Business continuity management and incident response

·      Group entities and extended enterprise

·      People, talent management and succession

·      Environmental, social & governance (ESG)

·      Property

 

Detailed explanations of the principal risks and uncertainties can be found in the Principal Risks and Uncertainties section of the FY21 Annual Report.

 

2.   CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES

 

The critical accounting estimates and judgements made by the Group regarding the future or other key sources of estimation, uncertainty and judgement that may have a significant risk of giving rise to a material adjustment to the carrying values of assets and liabilities within the next financial period are:

 

Key Judgements

 

Determining Related Party Relationships

 

Management determines whether a related party relationship exists by assessing the nature of the relationship by reference to the requirements of IAS 24, Related Party Disclosures. This is in order to determine whether significant influence exists as a result of control, shared directors or parent companies, or close family relationships. The level at which one party may be expected to influence the other is also considered for transactions involving close family relationships.

 

Control And Significant Influence Over Certain Entities

 

Under IAS 28 Investments in Associates and Joint Ventures, if an entity holds 20% or more of the voting power of the investee, it is presumed that the entity has significant influence, unless it can clearly demonstrate that this is not the case. The Group holds greater than 20% of the voting rights of Studio Retail Group Plc and Mulberry Group Plc, whereby management consider that the Group does not have significant influence over these entities for combinations of the following reasons:

 

•    The Group does not have any representation on the board of directors of the investee other than a Frasers Group representative having an observer role on the board of Studio Retail Group Plc. Management have reviewed the terms of the observer arrangement and have concluded that this does not give them the right to participate in or influence the financial or operating decisions of Studio Retail Group Plc. Studio Retail Group Plc can terminate this arrangement at any time, and can determine which parts of the board meetings the representative can be present at and what information they are given access to. It should also be noted that the Frasers Group representative did not attend any board meetings in full or part during the reporting period;

•    There is no participation in decision making and strategic processes, including participation in decisions about dividends or other distributions;

•    There have been no material transactions between the entity and its investee companies;

•    There has been no interchange of managerial personnel;

•    No non-public essential technical management information is provided to the investee.

In assessing the level of control that management have over certain entities, management will consider the various aspects that allow management to influence decision making. This includes the level of share ownership, board membership, the level of investment and funding and the ability of the Group to influence operational and strategic decisions and effect its returns through the exercise of such influence. If management were to consider that the Group does have significant influence over these entities then the equity method of accounting would be used and the percentage shareholding multiplied by the results of the investee in the period would be recognised in profit or loss.

 

The Group holds 49% of the share capital of Four (Holdings) Limited which is accounted for using the equity method. The Group does not have any representation on the board of directors and no participation in decisions about relevant activities such as establishing operating and capital decisions, including budgets, appointing or remunerating key management personnel or service providers and terminating their services or employment. However, in prior periods the Group has provided Four (Holdings) Limited with a significant loan. At the reporting date, the amount owed by Four (Holdings) Limited totalled £60.0m (£21.5m net of amounts recognised in respect of expected credit losses). The Group is satisfied that the existence of these transactions provides evidence that the entity has significant influence over the investee but in the absence of any other rights, in isolation it is insufficient to meet the control criteria of IFRS 10, as the Group does not have power over Four (Holdings) Limited and therefore Four (Holdings) Limited is not equity accounted.

 

 

Cash Flow Hedging

 

The Group uses a range of forward and option contracts that are entered into at the same time, they are in contemplation with one another and have the same counterparty. A judgement is made in determining whether there is an economic need or substantive business purpose for structuring the transactions separately that could not also have been accomplished in a single transaction. Management are of the view that there is a substantive distinct business purpose for entering into the options and a strategy for managing the options independently of the forward contracts. The forward and options contracts are therefore not viewed as one instrument and hedge accounting for the forwards is permitted.

 

Under IFRS 9 in order to achieve cash flow hedge accounting, forecast transactions (primarily Euro denominated sales and USD denominated purchases) must be considered to be highly probable. The hedge must be expected to be highly effective in achieving offsetting changes in cash flows attributable to the hedged risk. The forecast transaction that is the subject of the hedge must be highly probable and must present an exposure to variations in cash flows that could ultimately affect profit or loss. Management have reviewed the detailed forecasts and growth assumptions within them, and are satisfied that forecasts in which the cash flow hedge accounting has been based meet the criteria per IFRS 9 as being highly probable forecast transactions. Should the forecast levels not pass the highly probable test, any cumulative fair value gains and losses in relation to either the entire or the ineffective portion of the hedged instrument would be taken to the Income Statement.

 

Management considers various factors when determining whether a forecast transaction is highly probable. These factors include detailed sales forecasts by channel, geographical area and seasonality, conditions in target markets and the impact of expansion in new areas. Management also consider any change in alternative customer sales channels that could impact on the hedged transaction.

 

If the forecast transactions were determined to be not highly probable and all hedge accounting was discontinued, the Hedging reserve of £29.5m (excluding deferred tax) would be shown in Finance Income.  

 

Key Estimates

 

Provision For Obsolete, Slow Moving or Defective Inventories

The Directors have applied their knowledge and experience of the retail industry in determining the level and rates of provisioning required in calculating the appropriate inventory carrying values. Specific estimates and judgements applied in relation to assessing the level of inventory provisions required are considered in relation to the following areas:

a)     Continuity inventory

b)     Seasonal inventory lines - specifically seasons that have now finished

c)     Third party versus own brand inventory

d)     Ageing of inventory

e)     Sports Retail or Premium Lifestyle

f)     Local economic conditions

g)     Divisional specific factors

h)     Increased cost of inventory and lower margins with the devaluation of the Pound

i)      Over-stock and out of season inventory as a result of Covid-19

Provision estimates are forward looking and are formed using a combination of factors including historical experience, management's knowledge of the industry, group discounting, sales pricing protocols and the overall assessment made by management of the risks in relation to inventory. Management use a number of internally generated reports to monitor and continually re-assess the adequacy and accuracy of the inventory provision. The additional cost of repricing inventory and handling charges in relation to relocating inventory (tunnelling) are considered in arriving at the appropriate percentage provision. The assessment involves significant estimation uncertainty, therefore in order to check that the assumptions applied remain valid, management produces a range of outcomes and the provision is set within this range. 

 

Key assumptions used to create the estimates are:

•    Discounting - Based on historical experience and managements anticipated future discounting including the impact of Covid-19

•    Tunnelling - Cost of handling stock for reworking, repacking and repricing

•    Repricing - Labour cost associated with repricing units of stock

•    Shrinkage - Stock lost through damage and theft

Total Group inventory provision at 24 October 2021 is 16.1% (25 October 2020: 15.9%, 25 April 2021: 16.6%). A 1% change in the total provision would impact adjusted and reported PBT by approx. £14.3m (25 October 2020: £13.6m, 25 April 2021: £13.2m). Management do not consider it appropriate to disclose sensitivities for key assumptions in isolation as in practice changes in one assumption would lead to an offset in another.

 

Property Related Provisions

 

Property related estimates and judgements are continually evaluated and are based on historical experience, external advice and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

 

Dilapidations

 

The Group provides for its legal responsibility for dilapidation costs following advice from chartered surveyors and previous experience of exit costs (including strip out costs and professional fees). Management use a reference estimate of £100,000 (FY21: £100,000) for large leasehold stores, £50,000 (FY21: £50,000) for smaller leasehold stores (£25,000 per store for Game UK and Game Spain stores) and $/€50,000 (FY21: $/€50,000) for non-UK stores. Management do not consider these costs to be capital in nature and therefore dilapidations are not capitalised, except for in relation to the sale and leaseback of Shirebrook in FY20 in which a material dilapidations provision was recognised.

 

A 10% increase per store would result in an approx. £8.0m charge to the income statement.

 

Other Provisions

 

Provisions are made for items where the Group has identified a present legal or constructive obligation arising as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

 

Legal and regulatory provisions relate to management's best estimates of provisions required for legal and regulatory claims and ongoing non-UK tax enquiries. Other provisions relate to management's best estimates of provisions required for restructuring, employment and commercial. Where applicable these are inclusive of any estimated penalties, interest and legal costs.

 

In relation to the non-UK tax enquiries during H1 FY22 management have made a judgement to consider all claims collectively, applying the following key estimates to the gross amounts (excluding re-imbursement assets):

 

•    10% penalty (FY21: 10%). A 5% increase would result in approx. £6.5m increase in the provision.

•    3% interest on the liability (FY21: 3%). A 1% increase would result in approx. £11.5m increase in the provision.

Management are satisfied that the judgement to consider all claims collectively is the only reasonable approach because they are all dependant on the outcome of a court ruling on the interpretation of the non-UK tax enquiries. Management are satisfied that with regard to timing a reasonable range of outcomes are all greater than one year and so are satisfied with including the provisions as non-current.

 

Other Receivables And Amounts Owed By Related Parties

 

Other receivables and amounts owed by related parties are stated net of provision for any impairment. Management have applied estimates in assessing the recoverability of working capital and loan advances made to investee companies. Matters considered include the relevant financial strength of the underlying investee company to repay the loans, the repayment period and underlying terms of the monies advanced, forecast performance of the underlying borrower, and where relevant, the Group's intentions for the companies to which monies have been advanced.

 

IFRS 16

 

The key areas of judgement in relation to property leases recognised under IFRS 16 are below:

 

•    IFRS 16 defines the lease term as the non-cancellable period of a lease together with the options to extend or terminate a lease, if the lessee were reasonably certain to exercise that option. The Group will assess the likelihood of extending lease contracts beyond the break date by taking into account current economic and market conditions, current trading performance, forecast profitability and the level of capital investment in the property.

•    IFRS 16 states that the lease payments shall be discounted using the lessee's incremental borrowing rate where the rate implicit in the lease cannot be readily determined. Accordingly, all lease payments have been discounted using the incremental borrowing rate (IBR). The IBR has been determined by using a synthetic credit rating for the Group which is used to obtain market data on debt instruments for companies with the same credit rating, this is split by currency to represent each of the geographical areas the Group operates within and adjusted for the lease term.

The weighted average discount rates based on incremental borrowing rates used throughout the period across the Group's lease portfolio are shown below. The discount rate for each lease is dependent on lease start date, term and location.

Lease Term	UK	Europe		Rest of World
Up to 5 years	1.4% - 1.8%		0.3% - 0.8%		1.5% - 3.3%
Greater than 5 years and up to 10 years	2.0% - 2.2%		0.5% - 1.2%		2.5% - 3.5%
Greater than 10 years and up to 20 years	2.2% - 2.5%		0.8% - 1.4%		2.9% - 3.7%
Greater than 20 years	2.5% - 2.8%		1.1% - 1.7%		3.5% - 3.8%

 

•    The right of use asset will be reviewed for impairment at each reporting period in line with IAS 36 impairment to review whether the carrying amount exceeds its recoverable amount. For impairment testing purposes the Group has determined that each store is a separate CGU. The recoverable amount is calculated based on the Group's latest forecast cash flows which are then extrapolated to cover the period to the break date of the lease taking into account historic performance and knowledge of the current market, together with the Group's views on future profitability of each CGU. The key assumptions in the calculations are the sales growth rates, gross margin rates, changes in the operating cost base and the pre-tax discount rate derived from the Group's weighted average cost of capital using the capital asset pricing model, the inputs of which include a risk-free rate, equity risk premium and a risk adjustment (Beta). Given the number of assumptions used the assessment involves significant estimation uncertainty. The assumptions used are consistent with those disclosed in the Freehold Land and Buildings and Long-term leasehold section below. Impairments in the period have been recognised for the amount of £55.2m, being £29.5m against the right-of-use asset (£25.0m UK Sports Retail segment, £2.7m Premium Lifestyle segment, £1.0m European Retail segment, and £0.8m Rest of the World Retail segment) and £25.7m against plant & equipment and short-term leasehold improvements (£23.2m UK Sports Retail segment, £2.0 Premium Lifestyle segment, £0.5m European Retail segment). The impairments were due to the ongoing impact of Covid-19 and the challenges in the retail sector on the forecast cash flows of the CGU, including supply chain issues and the anticipated cost of living squeeze on consumers.

The key assumptions, which are equally applicable to each CGU, in the cash flow projections used to support the carrying amount of the right of use asset are consistent with the cashflow projections for the Freehold land and Buildings impairment assessment.

Management have reviewed whether there is any indication that an impairment loss recognised in prior periods relating to IFRS 16 may no longer exist or may have decreased. Management have performed an assessment taking into account the uncertainty cast by the ongoing Covid-19 pandemic, supply chain risks, and macroeconomic factors and are satisfied that there is no indication of impairment loss reversals, and therefore £nil has been recognised in the Consolidated Income Statement (FY21: £nil).

A sensitivity analysis has been performed in respect of sales and margin as these are considered to be the most sensitive of the key assumptions. With regard to the sales and gross margin assumptions, below we have performed a sensitivity for both an improvement and a decline against the existing assumptions used:

Forecast:	Impact of change in assumption:	Impairment increase / (decrease) £m
Sales year 1	5% - improvement	(4.9)
Sales year 1	5% - reduction	9.5
Existing Gross Margin year 1 >40%	100bps - improvement	(0.6)
Existing Gross Margin year 1 >40%	100bps - reduction	1.4

 

Freehold Land and Buildings and Long-term leasehold

Freehold land and buildings and long-term leasehold assets are assessed at each reporting period for whether there is any indication of impairment in line with IAS 36 impairment.

An asset is impaired when the carrying amount exceeds its recoverable amount. IAS 36 defines recoverable amount as the higher of an asset's or cash-generating unit's fair value less costs of disposal and its value in use, the Group has determined that each store is a separate CGU. Impairments in the period have been recognised in the amount of £80.1m due to the ongoing impact of Covid-19 and the challenges in the retail sector on the forecast cash flows of the CGU. This is split £79.9m against freehold land and buildings (£2.8m UK Sports Retail segment, £74.5m Premium Lifestyle segment, £1.4m European Retail segment, £1.2m Rest of World segment) and £0.2m plant and equipment.

Value in use (VIU)

The value in use is calculated based on five year cash flow projections. These are formulated by using the Group's forecast cash flows of each individual CGU excluding any Covid-19 impact, taking into account historic performance of the CGU, and then adjusting for the Group's current views on future profitability of each CGU as a result of Covid-19 and knowledge of the current market. The key assumptions in the calculations are the sales growth rates, gross margin rates, changes in the operating cost base and the pre-tax discount rate derived from the Group's weighted average cost of capital using the capital asset pricing model, the inputs of which include a risk-free rate, equity risk premium and a risk adjustment (Beta). Given the number of assumptions used the assessment involves significant estimation uncertainty.

The key assumptions, which are equally applicable to each CGU, in the cash flow projections used to support the carrying amount of the freehold land and buildings were as follows:

Key assumptions	Year 1	Year 2	Year 3	Year 4	Year 5
Sales decline	-5%	-4%	-3%	-2%	-2%
Existing gross margin > 40%	-175bps	-150bps	-125bps	-100bps	-75bps
Operating costs increase per annum	3%	3%	3%	3%	3%
Discount rate (post tax)	6%	6%	6%	6%	6%
Terminal growth rate of 2%

 

A sensitivity analysis has been performed in respect of sales and margin as these are considered to be the most sensitive of the key assumptions. With regard to the sales and gross margin assumptions, below we have performed a sensitivity for both an improvement and a decline against the existing assumptions used:

Forecast:	Impact of:	Impairment increase / (decrease) £m
Sales year 1	5% - improvement	(1.0)
Sales year 1	5% - reduction	0.6
Existing Gross Margin year 1 > 40%	100bps - improvement	(0.3)
Existing Gross Margin year 1 > 40%	100bps - reduction	0.4

 

Fair value less cost of disposal

For those CGUs where the value in use is less than the carrying value of the asset, the fair value less costs of disposal has been determined using both external and internal market valuations. This fair value is deemed to fall in to Level 3 of the fair value hierarchy as per IFRS 13. The property portfolio consists of vacant, Frasers Group occupied and third party tenanted units, one property can include all three types. The following valuation methodology has been adopted for each:

Scenario	Valuation methodology	Key assumptions
Vacant units	Estimated Rental Value (ERV) and suitable reversionary yield applied to reflect the market to generate a net capital value. A deduction to the capital value generated is then made based on the void period with applicable rates payable for the unit and rent free incentive.	Void period and rent free band - two bands applied depending on circumstances: ·           1 year void, 2 years rent free; or ·           2 years void, 3 years rent free. Yield bands - ranging from 7% - 15%
Frasers Group occupied	Will be assumed the unit is vacant given there is no legally binding Inter-company agreement in place. Therefore, a void and rent free incentive period assumed, the cost amount then deducted from the capital value generated by the ERV and reversionary yield. Although we consider the commercial reality is that fair value less costs to sell will be higher than vacant possession this very conservative assumption is in line with both technical accounting rules and that of our management experts.	Void period and rent free band - two bands applied depending on circumstances: ·           1 year void, 2 years rent free; or ·           2 years void, 3 years rent free. Yield bands - ranging from 7% - 15%
Third party tenanted	An ERV is applied using a percentage band on the passing rent. An appropriate reversionary yield is applied reflecting the risk of tenant and renewal to generate a capital value. This will also provide a net initial yield based off the current passing rent.	ERV bands applied to passing rent -50% Yield bands - ranging from 6.5% - 15%

 

A 10% increase in the market valuation amounts used in the impairment calculations would result in a decrease in impairment of £4.3m.

The total recoverable amount of the assets that were impaired at the period end was £60.3m, with £40.3m of this being based on their fair value less costs of disposal and £20.0m being based on their value in use.

Management have reviewed whether there is any indication that an impairment loss recognised in prior periods relating to freehold land & buildings and Long-term leasehold assets may no longer exist or may have decreased. Management have performed an assessment taking into account the uncertainty cast by the ongoing Covid-19 pandemic, supply chain risks, and macroeconomic factors and are satisfied that there is no indication of impairment loss reversals, and therefore £nil has been recognised in the Consolidated Income Statement (FY21: £nil).

 

3.   SEGMENTAL ANALYSIS

 

Management has determined to present its segmental disclosures consistently with the presentation in the 2021 Annual Report. Management considers operationally that the UK Retail divisions (UK Sports Retail and Premium Lifestyle) are run as one business unit in terms of allocating resources, inventory management and assessing performance. Under IFRS 8 we have not at this reporting date met the required criteria with enough certainty to aggregate these operating segments. We will continually keep this under review at subsequent reporting dates. We continue to monitor the impacts of Covid-19, Brexit, and the continued uncertainties this has brought relating to the political and economic environments, and market and currency volatility in the countries we operate in. European countries have been identified as operating segments and have been aggregated into a single operating segment as permitted under IFRS 8. The decision to aggregate these segments was based on the fact that they each have similar economic characteristics, similar long-term financial performance expectations, and are similar in each of the following respects:

 

•      The nature of the products;

•      The type or class of customer for the products; and

•      The methods used to distribute the products.

 

In accordance with paragraph 12 of IFRS 8 the Group's operating segments have been aggregated into the following reportable segments:

 

1)     UK Retail:

i)      UK Sports Retail - includes core sports retail store operations in the UK, plus all the Group's sports retail online business (excluding Bob's Stores, Eastern Mountain Sports, Malaysia and Baltics), the gyms, the Group's Shirebrook campus operations, freehold property owning companies excluding Premium Lifestyle fascia properties, GAME UK stores and online operations, and retail store operations in Northern Ireland.

ii)     Premium Lifestyle - includes the results of the premium retail businesses Flannels, Cruise, van mildert, Jack Wills, House of Fraser and Sofa.com along with the related websites, and freehold property owning companies where trading is purely from Premium Lifestyle fascias.

 

2)     European Retail - includes all the Group's sports retail stores, management and operations in Europe including the Group's European Distribution Centres in Belgium and Austria, European freehold property owning companies, as well as GAME Spain stores and Baltics online.

 

3)     Rest of World Retail - includes the results of US based retail activities, Asia based retail activities along with their e-commerce offerings.

4)     Wholesale & Licensing - includes the results of the Group's portfolio of internationally recognised brands such as Everlast, Karrimor, and Slazenger.

 

It is management's current intention to run the Group as four operating segments being UK Retail (including UK Sports Retail and Premium Lifestyle), European Retail, Rest of World Retail and Wholesale & Licensing. Management is satisfied that the UK Sports Retail and Premium Lifestyle segments will meet the criteria permitted under IFRS 8 to aggregate as one segment in due course.

 

The FY21 numbers have been re-categorised due to changes in the reporting segments, with freehold property owning companies where trading is purely from Premium Lifestyle fascias being moved from UK Sports Retail to Premium Lifestyle.

 

Segmental information for the 26 weeks ended 24 October 2021 (unaudited):

 

	UK Sports Retail		Premium Lifestyle		UK Retail Total	European Retail		Rest of World Retail		Total Retail	Wholesale & Licensing		Eliminations		Group Total
	(£m)		(£m)		(£m)	(£m)		(£m)		(£m)	(£m)		(£m)		(£m)
Sales to external customers	1,367.1		427.9		1,795.0	399.8		65.6		2,260.4	79.4		-		2,339.8
Sales to other segments	-		-		-	-		-		-	45.0		(45.0)		-
Revenue	1,367.1		427.9		1,795.0	399.8		65.6		2,260.4	124.4		(45.0)		2,339.8
Gross profit	599.0		204.3		803.3	174.8		34.8		1,012.9	33.0		-		1,045.9
Operating profit before foreign exchange, exceptional items and property and other related impairments	174.5		70.2		244.7	65.1		16.6		326.4	4.1		-		330.5
Realised foreign exchange gain / (loss)	0.7		(0.5)		0.2	1.5		(0.4)		1.3	3.2		-		4.5
Property and other related impairments	(51.0)		(79.3)		(130.3)	(3.1)		(1.9)		(135.3)	-		-		(135.3)
Operating profit	124.2		(9.6)		114.6	63.5		14.3		192.4	7.3		-		199.7
Investment income	28.8	-		28.8			-		-	28.8		-		-	28.8
Investment costs	(38.8)	-		(38.8)			-		-	(38.8)		-		-	(38.8)
Finance income	12.6	-		12.6			-		-	12.6		-		-	12.6
Finance costs	(14.0)	(0.6)		(14.6)			(1.1)		(0.4)	(16.1)		(0.2)		-	(16.3)
Profit before taxation	112.8	(10.2)		102.6			62.4		13.9	178.9		7.1		-	186.0
Taxation															(42.3)
Profit for the period															143.7
Total assets	3,470.90	565.6		4,036.5			470.4		79.7	4,586.6		341.7		(1,189.0)	3,739.3
Total liabilities	(2,138.6)	(692.5)		(2,831.1)			(604.9)		(4.6)	(3,440.6)		(120.5)		1,189.0	(2,372.1)
Tangible asset additions	65.0	40.7		105.7			6.0		0.4	112.1		0.6		-	112.7
Right-of-use asset additions	5.0	15.3		20.3			14.7		0.8	35.8		-		-	35.8

 

 

Segmental information for the 26 weeks ended 25 October 2020⁽¹⁾ (unaudited):

 

	UK Sports Retail		Premium Lifestyle	UK Retail Total		European Retail		Rest of World Retail		Total Retail		Wholesale & Licensing		Eliminations		Group Total
	(£m)		(£m)	(£m)		(£m)		(£m)		(£m)		(£m)		(£m)		(£m)
Sales to external customers	1,071.6		320.4	1,392.0		352.0		77.1		1,821.1		72.2		-		1,893.3
Sales to other segments	-		-	-		-		-		-		30.6		(30.6)		-
Revenue	1,071.6		320.4	1,392.0		352.0		77.1		1,821.1		102.8		(30.6)		1,893.3
Gross profit	476.2		150.5	626.7		146.7		30.5		803.9		29.9		-		833.8
Operating profit before foreign exchange, exceptional items and property and other related impairments	171.5		33.7	205.2		34.0		10.6		249.8		7.1		-		256.9
Exceptional	3.7		-	3.7		-		-		3.7		-		-		3.7
Realised foreign exchange (loss)/gain	(13.7)		(0.6)	(14.3)		7.6		(0.1)		(6.8)		(0.6)		-		(7.4)
Property and other related impairments	(107.1)		(6.6)	(113.7)		(14.8)		(0.4)		(128.9)		-		-		(128.9)
Operating profit	54.4		26.5	80.9		26.8		10.1		117.8		6.5		-		124.3
Investment income	40.0	-			40.0		-		-		40.0		-		-	40.0
Investment costs	(37.1)	-			(37.1)		-		-		(37.1)		-		-	(37.1)
Finance income	2.1	-			2.1		0.1		-		2.2		-		-	2.2
Finance costs	(19.4)	(0.8)			(20.2)		(0.4)		(2.5)		(23.1)		(0.2)		-	(23.3)
Profit before taxation	40.0	25.7			65.7		26.5		7.6		99.8		6.3		-	106.1
Taxation																(21.7)
Profit for the period																84.4
Total assets	2,866.9	510.1			3,377.0		459.1		125.9		3,962.0		340.6		(532.3)	3,770.3
Total liabilities	(1,751.5)	(329.0)			(2,080.5)		(615.9)		(185.8)		(2,882.2)		(87.1)		532.3	(2,437.0)
Tangible asset additions	31.5	8.3			39.8		12.5		4.7		57.0		-		-	57.0
Right-of-use asset additions	26.9	13.3			40.2		9.7		-		49.9		-		-	49.9

 

(1)        The FY21 numbers have been re-categorised due to changes in the reporting segments, with freehold property owning companies where trading is purely from Premium Lifestyle fascias being moved from UK Sports Retail to Premium Lifestyle.

 

Sales to other segments are priced at cost plus a 10% mark-up.

 

 

Segmental information for the 52 weeks ended 25 April 2021⁽¹⁾ (audited):

 

	UK Sports Retail		Premium Lifestyle	UK Retail Total		European Retail		Rest of World Retail		Total Retail		Wholesale & Licensing		Eliminations		Group Total
	(£m)		(£m)	(£m)		(£m)		(£m)		(£m)		(£m)		(£m)		(£m)
Sales to external customers	1,968.5		735.6	2,704.1		615.2		152.7		3,472.0		153.3		-		3,625.3
Sales to other segments	-		-	-		-		-		-		95.4		(95.4)		-
Revenue	1,968.5		735.6	2,704.1		615.2		152.7		3,472.0		248.7		(95.4)		3,625.3
Gross profit	829.3		330.3	1,159.6		239.7		64.0		1,463.3		67.5		-		1,530.8
Operating profit before foreign exchange, exceptional items and property and other related impairments	191.0		34.3	225.3		20.5		18.6		264.4		20.2		-		284.6
Exceptional	3.1		(1.6)	1.5		(3.1)		-		(1.6)		-		-		(1.6)
Realised foreign exchange (loss) / gain	(20.2)		(0.2)	(20.4)		0.8		(1.4)		(21.0)		(5.3)		-		(26.3)
Property and other related impairments	(201.9)		(40.9)	(242.8)		(71.6)		(2.6)		(317.0)		-		-		(317.0)
Operating (loss) / profit	(28.0)		(8.4)	(36.4)		(53.4)		14.6		(75.2)		14.9		-		(60.3)
Investment income	103.7	-			103.7		-		-		103.7		-		-	103.7
Investment costs	(7.7)	-			(7.7)		-		-		(7.7)		-		-	(7.7)
Finance income	6.5	-			6.5		2.5		-		9.0		-		-	9.0
Finance costs	(28.1)	(1.2)			(29.3)		(2.7)		(3.8)		(35.8)		(0.4)		-	(36.2)
Profit before taxation	46.4	(9.6)			36.8		(53.6)		10.8		(6.0)		14.5		-	8.5
Taxation																(86.5)
Loss for the period																(78.0)
Total assets	3,305.9	668.0			3,973.9		670.8		158.6		4,803.3		344.7		(1,362.9)	3,785.1
Total liabilities	(2,357.8)	(499.6)			(2,857.4)		(857.0)		(95.1)		(3,809.5)		(127.5)		1,362.9	(2,574.1)
Tangible asset additions	163.4	33.1			196.5		17.4		3.0		216.9		2.5		-	219.4
Right-of-use asset additions	77.5	14.1			91.6		24.3		2.4		118.3		0.5		-	118.8

 

(1)        The FY21 numbers have been re-categorised due to changes in the reporting segments, with freehold property owning companies where trading is purely from Premium Lifestyle fascias being moved from UK Sports Retail to Premium Lifestyle.

 

 

The following table reconciles the reported profit before tax to the Adjusted PBT as it is one of the main measures used by the Chief Operating Decision Maker when reviewing performance:

 

Reconciliation of Reported PBT to Adjusted PBT for the 26 week period ended 24 October 2021 (unaudited):

 

	UK Sports Retail	Premium Lifestyle	UK Retail Total	European Retail	Rest Of World Retail	Total Retail	Wholesale & Licensing	Group Total
	(£m)	(£m)	(£m)	(£m)	(£m)	(£m)	(£m)	(£m)
Reported PBT	112.8	(10.2)	102.6	62.4	13.9	178.9	7.1	186.0
Fair value adjustment to derivative financial instruments	(10.7)	-	(10.7)	-	-	(10.7)	-	(10.7)
Net investment costs / (income)	10.0	-	10.0	-	-	10.0	-	10.0
Realised FX (gain) / loss	(0.7)	0.5	(0.2)	(1.5)	0.4	(1.3)	(3.2)	(4.5)
Share scheme	6.0	-	6.0	-	-	6.0	-	6.0
Adjusted PBT	117.4	(9.7)	107.7	60.9	14.3	182.9	3.9	186.8

 

Reconciliation of Reported PBT to Adjusted PBT for the 26 week period ended 25 October 2020⁽¹⁾ (unaudited):

 

	UK Sports Retail	Premium Lifestyle	UK Retail Total	European Retail	Rest Of World Retail	Total Retail	Wholesale & Licensing	Group Total
	(£m)	(£m)	(£m)	(£m)	(£m)	(£m)	(£m)	(£m)
Reported PBT	40.0	25.7	65.7	26.5	7.6	99.8	6.3	106.1
Exceptional items	(3.7)	-	(3.7)	-	-	(3.7)	-	(3.7)
Fair value adjustment to derivative financial instruments	8.6	-	8.6	-	-	8.6	-	8.6
Net investment (income) / costs	(2.9)	-	(2.9)	-	-	(2.9)	-	(2.9)
Realised FX loss / (gain)	13.6	0.6	14.2	(7.5)	0.1	6.8	0.6	7.4
Adjusted PBT	55.6	26.3	81.9	19.0	7.7	108.6	6.9	115.5

(1)        The FY21 numbers have been re-categorised due to changes in the reporting segments, with freehold property owning companies where trading is purely from Premium Lifestyle fascias being moved from UK Sports Retail to Premium Lifestyle.

 

Reconciliation of Reported PBT to Adjusted PBT for the 52 week period ended 25 April 2021⁽¹⁾ (audited):

 

	UK Sports Retail	Premium Lifestyle	UK Retail Total	European Retail	Rest Of World Retail	Total Retail	Wholesale & Licensing	Group Total
	(£m)	(£m)	(£m)	(£m)	(£m)	(£m)	(£m)	(£m)
Reported PBT	46.4	(9.6)	36.8	(53.6)	10.8	(6.0)	14.5	8.5
Exceptional items	(3.1)	1.6	(1.5)	3.1	-	1.6	-	1.6
Fair value adjustment to derivative financial instruments	4.6	-	4.6	-	-	4.6	-	4.6
Net investment (income) / costs	(96.0)	-	(96.0)	-	-	(96.0)	-	(96.0)
Realised FX loss / (gain)	20.2	0.2	20.4	(0.8)	1.4	21.0	5.3	26.3
Share scheme	1.3	-	1.3	-	-	1.3	-	1.3
Adjusted PBT	(26.6)	(7.8)	(34.4)	(51.3)	12.2	(73.5)	19.8	(53.7)

(1)        The FY21 numbers have been re-categorised due to changes in the reporting segments, with freehold property owning companies where trading is purely from Premium Lifestyle fascias being moved from UK Sports Retail to Premium Lifestyle.

 

 

4.   EXCEPTIONAL ITEMS

 

	26 weeks ended 24 October 2021 (unaudited) (£m)	26 weeks ended 25 October 2020 (unaudited) (£m)	52 weeks ended 25 April 2021 (audited) (£m)
Impairments	-	3.7	9.1
Profit on disposal of intangible assets	-	(7.4)	(7.5)
	-	(3.7)	1.6

 

The prior period impairment relates to goodwill, whereby the discounted present value of future cash flows do not support the full value of the assets. The prior period profit on disposal of intangible assets in the prior period relates to the sale of certain IP relating to the BELONG business.

 

 

5.   INVESTMENT INCOME

 

	26 weeks ended 24 October 2021 (unaudited) (£m)	26 weeks ended 25 October 2020 (unaudited) (£m)	52 weeks ended 25 April 2021 (audited) (£m)
Profit on disposal of financial assets and equity derivative financial instruments	23.2	4.0	27.4
Premium received on derivative financial instruments	5.4	16.9	20.6
Fair value gain on derivative financial instruments	-	18.8	55.2
Dividend income	0.2	0.3	0.5
	28.8	40.0	103.7

 

The profit on disposal of financial assets and equity derivative financial instruments largely relates to Hugo Boss contracts for difference. The premium received on derivative financial instruments largely relates to Hugo Boss options. The fair value gain on derivative financial instruments in the prior period largely relates to Hugo Boss options.

 

 

6.   INVESTMENT COSTS

 

	26 weeks ended 24 October 2021 (unaudited) (£m)	26 weeks ended 25 October 2020 (unaudited) (£m)	52 weeks ended 25 April 2021 (audited) (£m)
Fair value loss on derivative financial instruments	38.8	37.1	7.7
	38.8	37.1	7.7

 

The fair value loss on derivative financial instruments largely relates to Hugo Boss options and contracts for difference.
 

 

7.   FINANCE INCOME

 

	26 weeks ended 24 October 2021 (unaudited) (£m)	26 weeks ended 25 October 2020 (unaudited) (£m)	52 weeks ended 25 April 2021 (audited) (£m)
Bank interest receivable	0.1	-	3.5
Other finance income	-	2.2	5.5
Fair value adjustment to derivative financial instruments	12.5	-	-
	12.6	2.2	9.0

 

The fair value adjustment to derivative financial instruments relates to differences between the fair value of forward foreign currency contracts and written options that were not designated for hedge accounting from one period end to the next. Other finance income largely relates to premiums received on option contracts.
 

 

8.   FINANCE COSTS

 

	26 weeks ended 24 October 2021 (unaudited) (£m)	26 weeks ended 25 October 2020 (unaudited) (£m)	52 weeks ended 25 April 2021 (audited) (£m)
Interest on bank loans and overdrafts	4.8	5.6	11.1
Other interest	4.0	2.6	8.6
Interest on retirement benefit obligations	-	-	0.1
IFRS 16 lease interest	5.7	6.5	11.8
Fair value adjustment to derivate financial instruments	1.8	8.6	4.6
	16.3	23.3	36.2

 

The fair value adjustment to derivative financial instruments relates to differences between the fair value of forward foreign currency contracts and written options that were not designated for hedge accounting from one period end to the next.

 

 

9.   EARNINGS PER SHARE ATTRIBUTABLE TO THE EQUITY SHAREHOLDERS

 

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders of the parent by the weighted average number of ordinary shares outstanding during the year.

 

For diluted earnings per share, the weighted average number of shares, 489,203,650 (25 October 2020: 501,953,439, 25 April 2021: 501,955,281), is adjusted to assume conversion of all dilutive potential ordinary shares under the Group's share schemes, being 10,125 (25 October 2020: 1,239,075, 25 April 2021: 88,605), to give the diluted weighted average number of shares of 489,213,775 (25 October 2020: 503,192,514, 25 April 2021: 502,043,886). For the 52 weeks ended 25 April 2021, as there was a loss for the period the effect of potentially dilutive ordinary shares was anti-dilutive, and therefore the weighted average number of shares for the Diluted EPS calculation was kept the same as for the Basic EPS calculation for that period.

 

BASIC AND DILUTED EARNINGS PER SHARE

 

	26 weeks ended 24 October 2021 (unaudited) Basic	26 weeks ended 24 October 2021 (unaudited) Diluted	26 weeks ended 25 October 2020 (unaudited) Basic	26 weeks ended 25 October 2020 (unaudited) Diluted	52 weeks ended 25 April 2021 (audited) Basic	52 weeks ended 25 April 2021 (audited) Diluted
	£m	£m	£m	£m	£m	£m
Profit / (loss) for the period	138.2	138.2	80.4	80.4	(83.0)	(83.0)
	Number in millions		Number in millions		Number in millions
Weighted average number of shares	489.2	489.2	502.0	503.2	502.0	502.0
	Pence per share		Pence per share		Pence per share
Earnings per share	28.2	28.2	16.0	16.0	(16.5)	(16.5)

 

 

ADJUSTED EARNINGS PER SHARE

 

The adjusted earnings per share reflects the underlying performance of the business compared with the prior period and is calculated by dividing adjusted earnings by the weighted average number of shares for the period. Adjusted earnings is used by management as a measure of profitability within the Group. Adjusted earnings is defined as profit/(loss) for the period attributable to equity holders of the parent for each financial period but excluding the post-tax effect of certain non-trading items. Tax has been calculated with reference to the effective rate of tax for the Group.

 

The Directors believe that the adjusted earnings and adjusted earnings per share measures provide additional useful information for shareholders on the underlying performance of the business and are consistent with how business performance is measured internally. Adjusted earnings is not a recognised profit measure under IFRS and may not be directly comparable with adjusted profit measures used by other companies.

 

 

	26 weeks ended 24 October 2021 (unaudited) Basic	26 weeks ended 24 October 2021 (unaudited) Diluted	26 weeks ended 25 October 2020 (unaudited) Basic	26 weeks ended 25 October 2020 (unaudited) Diluted	52 weeks ended 25 April 2021 (audited) Basic	52 weeks ended 25 April 2021 (audited) Diluted
	£m	£m	£m	£m	£m	£m
Profit / (loss) for the period	138.2	138.2	80.4	80.4	(83.0)	(83.0)
Pre-tax adjustments to profit / (loss) for the period for the following items:
Exceptional items	-	-	(3.7)	(3.7)	1.6	1.6
Fair value adjustment to derivative financial instruments	(10.7)	(10.7)	8.6	8.6	4.6	4.6
Net investment costs / (income)	10.0	10.0	(2.9)	(2.9)	(96.0)	(96.0)
Realised FX (gain) / loss	(4.5)	(4.5)	7.4	7.4	26.3	26.3
Share scheme	6.0	6.0	-	-	1.3	1.3
Tax adjustments on the above items	3.8	3.8	(2.2)	(2.2)	(5.9)	(5.9)
Adjusted profit / (loss) for the period	142.8	142.8	87.6	87.6	(151.1)	(151.1)
	Number in millions		Number in millions		Number in millions
Weighted average number of shares	489.2	489.2	502.0	503.2	502.0	502.0
	Pence per share		Pence per share		Pence per share
Adjusted earnings per share	29.2	29.2	17.5	17.4	(30.1)	(30.1)

 

 

10. PROVISIONS

 

26 weeks ended 24 October 2021 (unaudited)

 

	Legal and regulatory (£m)	Property related (£m)	Other (£m)	Total (£m)
At 25 April 2021	215.8	144.1	1.3	361.2
Amounts provided	3.8	18.7	-	22.5
Amounts utilised / reversed	(1.4)	(29.9)	(0.5)	(31.8)
At 24 October 2021	218.2	132.9	0.8	351.9

 

26 weeks ended 25 October 2020 (unaudited)

 

	Legal and regulatory (£m)	Property related (£m)	Other (£m)	Total (£m)
At 26 April 2020	225.4	107.9	2.7	336.0
Amounts provided	1.5	18.1	-	19.6
Amounts utilised / reversed	(1.4)	(21.8)	(0.6)	(23.8)
At 25 October 2020	225.5	104.2	2.1	331.8

 

52 weeks ended 25 April 2021 (audited)

 

	Legal and regulatory (£m)	Property related (£m)	Other (£m)	Total (£m)
At 26 April 2020	225.4	107.9	2.7	336.0
Amounts provided	7.3	41.5	-	48.8
Amounts utilised / reversed	(16.9)	(5.3)	(1.4)	(23.6)
At 25 April 2021	215.8	144.1	1.3	361.2

 

Legal and regulatory provisions relate to management's best estimate of the potential impact of claims including legal, commercial, regulatory and ongoing non-UK tax enquiries. The timing of the outcome of non-UK tax enquiries and legal claims made against the Group is dependent on factors outside the Group's control and therefore the timing of settlement is uncertain. After taking appropriate legal advice, the outcomes of these claims are not expected to give rise to material loss in excess of the amounts provided.

 

A reimbursement asset of £118.3m (25 April 2021 and 25 October 2020: £118.3m) has been recognised separately within debtors relating to ongoing non-UK tax enquiries.

 

Included within property related provisions are provisions for dilapidations in respect of the Group's retail stores and warehouses. Further details of managements' estimates are included in Note 2.

 

Other provisions relate to provisions for restructuring and employment (non-retirement related).

 

 

11. FINANCIAL INSTRUMENTS

 

(a) Financial assets and liabilities by category and fair value hierarchy

 

The fair value hierarchy for financial assets and liabilities, which are principally denominated in Sterling or US Dollars, were as follows:

(Unaudited)	Level 1 (£m)	Level 2 (£m)	Level 3 (£m)	Other (£m)	Total (£m)
FINANCIAL ASSETS - 24 October 2021
Amortised cost:
Trade and other receivables*	-	-	-	390.1	390.1
Cash and cash equivalents	-	-	-	350.7	350.7
Amounts owed by related parties	-	-	-	24.0	24.0
FVOCI:
Long Term Financial Assets (Equity Instruments) - designated	352.4	-	-	-	352.4
Derivative financial assets (FV):
Foreign forward purchase and sale contracts	-	61.4	-	-	61.4
	-	61.4	-	-	61.4
FINANCIAL LIABILITIES - 24 October 2021
Amortised cost:
Non-current borrowings	-	-	-	(375.0)	(375.0)
Trade and other payables**	-	-	-	(719.7)	(719.7)
IFRS 16 lease liabilities	-	-	-	(684.7)	(684.7)
Derivative financial liabilities (FV):
Foreign forward and written options purchase and sales contracts - unhedged	-	(7.6)	-	-	(7.6)
Derivative financial liabilities - contracts for difference & equity options	-	(20.8)	-	-	(20.8)
	-	(28.4)	-	-	(28.4)

*Prepayments of £76.6m are not included as a financial asset.
**Other taxes including social security costs of £69.7m are not included as a financial liability.

 

(Unaudited)	Level 1 (£m)	Level 2 (£m)	Level 3 (£m)	Other (£m)	Total (£m)
FINANCIAL ASSETS - 25 October 2020
Amortised cost:
Trade and other receivables*	-	-	-	473.5	473.5
Cash and cash equivalents	-	-	-	371.3	371.3
Amounts owed by related parties	-	-	-	35.2	35.2
FVOCI:
Long Term Financial Assets (Equity Instruments) - designated	127.2	-	-	-	127.2
Derivative financial assets (FV):
Foreign forward purchase and sale contracts	-	28.4	-	-	28.4
Derivative financial assets - contracts for difference & equity options	-	36.5	-	-	36.5
	-	64.9	-	-	64.9
FINANCIAL LIABILITIES - 25 October 2020
Amortised cost:
Non-current borrowings	-	-	-	(621.4)	(621.4)
Trade and other payables**	-	-	-	(568.1)	(568.1)
IFRS 16 lease liabilities	-	-	-	(715.6)	(715.6)
Derivative financial liabilities (FV):
Foreign forward and written options purchase and sales contracts - unhedged	-	(6.6)	-	-	(6.6)
Derivative financial liabilities - contracts for difference & equity options	-	(81.8)	-	-	(81.8)
	-	(88.4)	-	-	(88.4)

*Prepayments of £70.1m are not included as a financial asset.
**Other taxes including social security costs of £57.9m are not included as a financial liability.

 

(Audited)	Level 1 (£m)	Level 2 (£m)	Level 3 (£m)	Other (£m)	Total (£m)
FINANCIAL ASSETS - 25 April 2021
Amortised cost:
Trade and other receivables*	-	-	-	435.1	435.1
Cash and cash equivalents	-	-	-	457.0	457.0
Amounts owed by related parties	-	-	-	26.8	26.8
FVOCI:
Long Term Financial Assets (Equity Instruments) - designated	263.3	-	-	-	263.3
Derivative financial assets (FV):
Foreign forward purchase and sale contracts	-	35.3	-	-	35.3
Derivative financial assets - contracts for difference & equity options	-	20.1	-	-	20.1
	-	55.4	-	-	55.4
FINANCIAL LIABILITIES - 25 April 2021
Amortised cost:
Non-current borrowings	-	-	-	(705.9)	(705.9)
Trade and other payables**	-	-	-	(620.1)	(620.1)
IFRS 16 lease liabilities	-	-	-	(722.7)	(722.7)
Derivative financial liabilities (FV):
Foreign forward and written options purchase and sales contracts - unhedged	-	(17.5)	-	-	(17.5)
Derivative financial liabilities - contracts for difference & equity options	-	(1.7)	-	-	(1.7)
	-	(19.2)	-	-	(19.2)

*Prepayments of 84.6m are not included as a financial asset.
**Other taxes including social security costs of £26.2m are not included as a financial liability.

 

(b) Financial assets and liabilities

 

Fair value hierarchy 

 

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

 

•       Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;

 

•       Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly; and

 

•       Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

 

Contracts for difference are classified as Level 2 as the fair value is calculated using quoted prices for listed shares and commodities at contract inception and the period end.

 

Foreign forward purchase and sales contracts and options are classified as Level 2, the Group enters into these derivative financial instruments with various counterparties, principally financial institutions with investment grade credit ratings. Foreign exchange forward contracts and options are valued using valuation techniques, which employ the use of market observable inputs. The most frequently applied valuation techniques include forward pricing and swap models using present value calculations. The models incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates, and yield curves of the respective currencies.

 

Long-term financial assets such as equity instruments are classified as Level 1 as the fair value is calculated using quoted prices.

The fair value of equity derivative agreements are included within the derivative financial assets balance of £nil (25 October 2020: £36.5m, 25 April 2021: £20.1m) and derivative financial liabilities balance of £20.8m (25 October 2020: £81.8m, 25 April 2021: £1.7m). The derivative financial assets and derivative financial liabilities as at 24 October 2021 relate to strategic investments held of between 0.02% and 0.05% of investee share capital.

Sold options are classified as Level 2 as the fair value is calculated using other techniques, where inputs are observable.

Trade receivables / payables, amounts owed from related parties, other receivables / payables, cash and cash equivalents and current / non-current borrowings are held at amortised cost.

The maximum exposure to credit risk as at 24 October 2021 is the carrying value of each class of asset in the Balance Sheet, except for amounts owed from related parties which is the gross carrying amount of £62.4m (25 October 2020: £68.8m, 25 April 2021: £65.2m).

 

 

(c) Derivatives: Foreign currency forward contracts

 

(c)(i) Hedged currency instruments

 

The most significant exposure to foreign exchange fluctuations relates to purchases made in foreign currencies, principally the US Dollar, and online sales in Euros. The Group's policy is to reduce substantially the risk associated with foreign currency spot rates by using forward fixed rate currency purchase contracts, taking into account any foreign currency cash flows. The Group does not hold or issue derivative financial instruments for trading purposes, however if derivatives, including both forwards and written options, do not qualify for hedge accounting they are accounted for as such and accordingly any gain or loss is recognised immediately in the Income Statement. Management are of the view that there is a substantive distinct business purpose for entering into the written options and a strategy for managing the written options independently of the forward contracts. The forward and written options contracts are therefore not viewed as one contract and hedge accounting for the forwards is permitted under IFRS 9.

 

Hedge effectiveness is determined at inception of the hedge relationship and at every reporting period end through the assessment of the hedged items and hedging instrument to determine whether there is still an economic relationship between the two.

 

The critical terms of the foreign currency forwards entered into exactly match the terms of the hedged item. As such the economic relationship and hedge effectiveness are based on the qualitative factors and the use of a hypothetical derivative where appropriate. Hedge ineffectiveness may arise where the critical terms of the forecast transaction no longer meet those of the hedging instrument, for example if there was a change in the timing of the forecast sales transactions from what was initially estimated or if the volume of currency in the hedged item was below expectations leading to over-hedging. Differences can arise when the initial value on the hedging instrument is not zero.

 

The hedged items and the hedging instrument are denominated in the same currency and as a result the hedging ratio is always one to one.

 

All derivative financial instruments used for hedge accounting are recognised initially at fair value and reported subsequently at fair value in the statement of financial position. To the extent that the hedge is effective, changes in the fair value of derivatives designated as hedging instruments in cash flow hedges are recognised in other comprehensive income and included within the cash flow hedge reserve in equity. Any ineffectiveness in the hedge relationship is recognised immediately in profit or loss.

 

At the time the hedged item affects profit or loss, any gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss and presented as a reclassification adjustment within other comprehensive income. If a forecast transaction is no longer expected to occur, any related gain or loss recognised in other comprehensive income is transferred immediately to profit or loss. If the hedging relationship ceases to meet the effectiveness conditions, hedge accounting is discontinued, and the related gain or loss is held in the equity reserve until the forecast transaction occurs.

 

The fair value of hedged contracts as at 24 October 2021 was:

 

	24 October 2021 (unaudited) (£m)	25 October 2020 (unaudited) (£m)	25 April 2021 (audited) (£m)
Assets
US Dollar purchases - GBP	9.6	0.4	2.4
US Dollar purchases - EUR	7.6	4.6	2.3
Euro sales	41.1	23.3	30.7
Total	58.3	28.3	35.4
Liabilities
US Dollar purchases - GBP	2.0	-	7.3
US Dollar purchases - EUR	-	-	0.1
Total	2.0	-	7.4

 

The details of hedged forward foreign currency purchase contracts and contracted forward rates were as follows:

 

	24 October 2021 (unaudited)			25 October 2020 (unaudited)			25 April 2021 (audited)
	Currency (millions)	GBP (millions)	Rates	Currency (millions)	GBP (millions)	Rates	Currency (millions)	GBP (millions)	Rates
US Dollar purchases (USD / GBP)	720.0	516.8	1.36 - 1.41	160.0	122.1	1.31	720.0	523.1	1.36 - 1.41
US Dollar purchases (USD / EUR)	150.0	104.0	1.21 - 1.31	60.0	40.0	1.32	120.0	83.9	1.21 - 1.31
Euro sales (EUR / GBP)	(360.0)	(353.1)	0.99 - 1.08	(390.0)	(381.1)	0.99 - 1.09	(240.0)	(242.4)	0.99

 

The timing of the contracts is as follows:

Currency	Hedging against	Currency value	Timing	Rates
USD / GBP	USD inventory purchases	USD 720m	FY22 - FY23	1.36 - 1.41
USD / EUR	USD inventory purchases	USD 150m	FY22 - FY24	1.21 - 1.31
EUR / GBP	Euro sales	EUR 360m	FY23, FY25	0.99 - 1.08

 

 

Hedge ineffectiveness may arise where the critical terms of the forecast transaction no longer meet those of the hedging instrument, for example if there was a change in the timing of the forecast sales transactions from what was initially estimated or if the volume of currency in the hedged item was below expectations leading to over-hedging.

 

	24 October 2021 (unaudited) (£m)		25 October 2020 (unaudited) (£m)		25 April 2021 (audited) (£m)
	Change in the fair value of the currency forward	Change in the fair value of the hedged item	Change in the fair value of the currency forward	Change in the fair value of the hedged item	Change in the fair value of the currency forward	Change in the fair value of the hedged item
US Dollar purchases - GBP	9.0	(9.0)	(0.4)	0.4	(4.8)	4.8
US Dollar purchases - EUR	5.4	(5.4)	(3.9)	3.9	2.1	(2.1)
Euro sales	7.2	(7.2)	(11)	11	3.1	(3.1)

 

At 24 October 2021 £620.8m of purchase contracts (25 October 2020: £167.6m, 25 April 2021: £607.0m) and £353.1m of forward sales contracts (25 October 2020: £381.1m, 25 April 2021: £242.4m) qualified for hedge accounting and the gain on fair valuation of these contracts of £21.6m (25 October 2020: £15.3m, 25 April 2021: £0.4m) has therefore been recognised in other comprehensive income.

 

At 24 October 2021, £231.5m hedged purchase contracts had a maturity of greater than 12 months (25 October 2020: £nil, 25 April 2021: £210.5m) and £231.9m of hedged sales had a maturity of greater than 12 months (25 October 2020: £242.0m, 25 April 2021: £242.4m).

 

The movements through the Hedging reserve are:

 

	USD/GBP	EUR/GBP	USD/EUR	Total Hedge Movement	Deferred Tax	Total Hedging Reserve
As at 26 April 2020 (audited)	-	16.6	17.2	33.8	(5.8)	28.0
Recognised	(0.4)	(11.0)	(3.9)	(15.3)	-	(15.3)
Reclassified in sales	-	(1.3)	-	(1.3)	-	(1.3)
Reclassified in inventory / cost of sales	-	-	(8.7)	(8.7)	-	(8.7)
Deferred tax	-	-	-	-	4.3	4.3
As at 25 October 2020 (unaudited)	(0.4)	4.3	4.6	8.5	(1.5)	7.0
Recognised	(4.5)	14.2	6.0	15.7	-	15.7
Reclassified in sales	-	(1.5)	-	(1.5)	-	(1.5)
Reclassified in inventory / cost of sales	-	-	(8.4)	(8.4)	-	(8.4)
Deferred tax	-	-	-	-	(1.3)	(1.3)
As at 25 April 2021 (audited)	(4.9)	17.0	2.2	14.3	(2.8)	11.5
Recognised	9.0	7.2	5.4	21.6	-	21.6
Reclassified in inventory/ cost of sales	3.6	-	-	3.6	-	3.6
Deferred tax	-	-	-	-	(7.2)	(7.2)
As at 24 October 2021 (unaudited)	7.7	24.2	7.6	39.5	(10.0)	29.5

 

 

 

(c)(ii)  Unhedged currency instruments

 

The sterling principal amounts of unhedged written currency option contracts and swaps and the contracted rates were as follows:

 

	24 October 2021 (unaudited) (£m)	25 October 2020 (unaudited) (£m)	25 April 2021 (audited) (£m)
US Dollar swaps - GBP	72.3	-	-
Contracted rates USD / GBP	1.37-1.42	-	-
US Dollar purchases - EUR	82.2	-	40.3
Contracted rates USD / EUR	1.26-1.31	-	1.31
Euro sales	(494.5)	(457.5)	(383.8)
Contracted rates EUR / GBP	0.99-1.08	0.99-1.09	0.99

 

The loss on fair value of the written options and swaps of £1.8m has been included within finance costs (25 October 2020: £8.6m, 25 April 2021: £4.6m).

 

At 24 October 2021, £61.3m of unhedged purchase contracts had a maturity at inception of greater than 12 months (25 October 2020: £nil, 25 April 2021: £nil) and £231.9m of unhedged sales contracts had a maturity at inception of greater than 12 months (25 October 2020: £242.0m, 25 April 2021: £335.4m).

 

These contracts form part of the Treasury management activities, which incorporates the risk management strategy for areas that are not reliable enough in timing and amount to qualify for hedge accounting. This includes acquisitions, disposals of overseas subsidiaries, related working capital requirements, dividends and loan repayments from overseas subsidiaries and purchase and sale of overseas property. Written options carry additional risk as the exercise of the option lies with the purchaser. The options involve the group receiving a premium on inception in exchange for accepting that risk and the outcome is that the bank may require the group to sell Euros or buy USD. However, the Group is satisfied that the use of options as a Treasury management tool is appropriate.

 

The FY22 H1 value excludes short term swaps of GBP/USD of USD 100m which are required for Treasury management purposes only (25 October 2020: EUR/USD of EUR 100.0m, 25 April 2021: £nil short term swaps).

 

 

Capital Management

 

The capital structure of the Group consists of equity attributable to the equity holders of the parent company, comprising issued share capital (less treasury shares), share premium, retained earnings and cash and borrowings.

It is the Group's policy to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain the development of the business.

 

In respect of equity, the Board has decided that, in order to maximise flexibility in the near term with regards to a number of inorganic growth opportunities under review, not to return any cash by way of a dividend at this time.

 

The Board is committed to keeping this policy under review and to evaluating alternative methods of returning cash to shareholders when appropriate.

The objective of Group Share Schemes is to encourage employee share ownership and to link employee's remuneration to the performance of the Company. It is not designed as a means of managing capital.

 

In respect of cash and borrowings, the Board regularly monitors the ratio of net debt to LTM Reported EBITDA⁽¹⁾, as part of covenant compliance (the objective is to keep this figure below 3.0), the working capital requirements and forecasted cash flows, however no minimum or maximum ratios are set outside of covenant compliance.

(1)	LTM EBITDA is the last twelve months historic Reported EBITDA excluding IFRS 16.

Based on this analysis, the Board determines the appropriate return to equity holders whilst ensuring sufficient capital is retained within the Group to meet its strategic objectives, including but not limited to, acquisition opportunities.

These capital management policies have remained unchanged from the prior year.

 

 

12. CASH INFLOW FROM OPERATING ACTIVITIES

 

	26 weeks ended 24 October 2021 (unaudited) (£m)	26 weeks ended 25 October 2020 (unaudited) (£m)	52 weeks ended 25 April 2021 (audited) (£m)
Profit before taxation	186.0	106.1	8.5
Net finance costs	3.7	21.1	27.2
Net investment costs / (income)	10.0	(2.9)	(96.0)
Operating profit	199.7	124.3	(60.3)
Depreciation & impairment of property, plant and equipment	251.8	247.3	615.5
Depreciation on investment properties	1.3	0.7	1.9
Gain on disposal of lease liabilities	(5.9)	(19.3)	(27.7)
Amortisation of intangible assets	3.4	4.1	7.1
Impairment of intangible assets	4.4	3.7	9.1
Profit on disposal of property, plant and equipment	(0.6)	-	(9.7)
Profit on disposal of intangibles	-	(7.4)	(7.5)
Gain on bargain purchase	-	-	(3.1)
Operating cash inflow before changes in working capital	454.1	353.4	525.3
Decrease / (increase) in receivables	79.6	(141.7)	(136.6)
(Increase) / decrease in inventories	(109.7)	92.0	99.3
Increase in payables	143.5	31.0	64.9
(Decrease) / increase in provisions	(7.7)	(4.2)	25.4
Cash inflows from operating activities	559.8	330.5	578.3

 

13. POST BALANCE SHEET EVENTS

 

On 30 November 2021 the Group refinanced its existing borrowings and entered into a combined term loan and revolving credit facility of £930.0m for a period of 3 years, with the possibility to extend this by a further 2 years.

 

On 4 October 2021 the Group commenced a share buyback programme with the purpose to reduce the share capital of the Company. Up to 24 October 2021, 2,522,661 ordinary shares of 10p each were acquired for consideration of £15.8m. The programme became irrevocable on 5 November 2021. The programme has a maximum number of ordinary shares of 10,000,000 and the aggregate purchase price of all shares acquired will be no greater than £70.0m. In total 6,564,523 ordinary shares of 10p each for consideration of £43.1m have been acquired through this programme.

 

14. CAPITAL COMMITMENTS

At the period end, the Group had capital commitments of £nil relating to property purchases (25 October 2020: £10.6m, 25 April 2021: £nil) and £68.5m relating to warehouse development (25 October 2020: £48.0m, 25 April 2021: £87.1m).

 

15. PURCHASE OF OWN SHARES

 

On 4 May 2021 the Group commenced a share buyback programme with the purpose to reduce the share capital of the Company. 3,895,385 ordinary shares of 10p each for consideration of £22.4m were acquired through this programme.

 

On 21 June 2021 the Group commenced an irrevocable non-discretionary share buyback programme to purchase the Group's shares with the purpose to reduce the share capital of the Company. 2,024,127 ordinary shares of 10p each for consideration of £12.0m were acquired through this programme.

 

On 6 August 2021 the Group commenced a share buyback programme with the purpose to reduce the share capital of the Company. 4,309,458 ordinary shares of 10p each for consideration of £28.3m were acquired through this programme.

 

On 4 October 2021 the Group commenced a share buyback programme with the purpose to reduce the share capital of the Company. Up to 24 October 2021, 2,522,661 ordinary shares of 10p each were acquired for consideration of £15.8m.

 

16. RELATED PARTY TRANSACTIONS

The Group has taken advantage of the exemptions contained within IAS 24 - "Related Party Disclosures" from the requirement to disclose transactions between Group companies as these have been eliminated on consolidation.

 

The Group entered into the following material transactions with related parties:

 

26 weeks ended 24 October 2021 (unaudited):

Related party	Relationship	Sales (£m)	Purchases (£m)	Trade and other receivables (£m)	Trade and other payables (£m)
Four (Holdings) Limited & subsidiaries(1)	Associate	0.3	32.1	23.7	-
Mash Holdings Limited	Parent company	-	-	0.2	-
Mike Ashley(2)	Plc Director	0.7	-	-	-
N M Design London Limited	Connected persons	-	0.2	-	-
Rangers Retail Limited	Associate	-	-	-	0.1

(1)        The outstanding balance with Four (Holdings) Limited reflects the funding related to Agent Provocateur. Management consider that the underlying results of Four (Holdings) Limited supports the recoverability of the receivables balance.

(2)        Use of the Company jet and helicopter are charged at commercial rates.

 

26 weeks ended 25 October 2020 (unaudited):

Related party	Relationship	Sales (£m)	Purchases (£m)	Trade and other receivables (£m)	Trade and other payables (£m)
Four (Holdings) Limited & subsidiaries(1)	Associate	1.0	22.6	34.8	1.2
Mash Holdings Limited	Parent company	-	-	0.2	-
Mike Ashley(2)	Plc Director	0.4	-	-	-
N M Design London Limited	Connected persons	-	0.1	-	-
Rangers Retail Limited	Associate	-	-	-	0.1
Newcastle United Football Club & St James Holdings Limited(3)	Connected persons	0.1	-	0.2	2.0

(1)        The outstanding balance with Four (Holdings) Limited reflects the funding related to Agent Provocateur. Management consider that the underlying results of Four (Holdings) Limited supports the recoverability of the receivables balance

(2)        Use of the Company jet and helicopter are charged at commercial rates.

(3)        The sales relate to inventory.

 

52 weeks ended 25 April 2021 (audited):

Related party	Relationship	Sales (£m)	Purchases (£m)	Trade and other receivables (£m)	Trade and other payables (£m)
Four (Holdings) Limited & subsidiaries(1)	Associate	2.2	41.1	26.5	0.1
Mash Holdings Limited	Parent company	-	-	0.2	-
Mike Ashley(2)	Plc Director	1.3	-	-	-
N M Design London Limited	Connected persons	-	0.1	-	-
MM Prop Consultancy Limited	Connected persons	-	2.5	-	2.5
Newcastle United Football Club & St James Holdings Limited(3)	Connected persons	0.2	(1.9)	0.1	-
Rangers Retail Limited	Associate	-	-	-	0.1

(1)        The outstanding balance with Four (Holdings) Limited reflects the funding related to Agent Provocateur. Management consider that the underlying results of Four (Holdings) Limited supports the recoverability of the receivables balance.

(2)        Use of the Company jet and helicopter are charged at commercial rates.

(3)        The sales relate to inventory and purchases include the reversal of the FY20 advertising charge.

 

An agreement has been entered into with Double Take Limited, a company owned by Mash Holdings Limited and in which Matilda Ashley, Mike Ashley's daughter, is a director. Under the agreement, Double Take Limited licenses the Group the exclusive rights to the cosmetic brand SPORT FX. During the period a review has been undertaken and no royalties or other fees are expected to be payable to Double Take Limited for these rights until at least September 2022, the fee arrangement will continue to be reviewed on an ongoing basis, no provision is required in the financial statements. It should be noted that the Group (rather than Double Take Limited) owns the rights to SPORT FX for clothing, footwear and sports equipment.

N M Design London Limited is a company in which Nicola Murray, Michael Murray's mother, is a director. N M Design London Limited perform design work for the Group in relation to some of the Group's sites.

The trade and other receivables balance with Four (Holdings) Limited includes a loan balance of £60.0m (gross of amounts recognised in respect of loss allowance) which attracts interest at a rate of 3% within current assets (25 October 2020: £67.5m, 25 April 2021: £60.0m). This has been accounted for at amortised cost in accordance with IFRS 9. The carrying value has been determined by assessing the recoverability of the receivable balance, discounted at an appropriate market rate of interest. £nil was recognised in the period in respect of doubtful debts. The sales amounts in relation to Four (Holdings) Limited relates to the interest charge on the loan and the purchases relate to the purchase of clothing products.

The sales amount in relation to Four (Holdings) Limited relates to the interest charge on the loan and the purchases relate to the purchase of clothing products.

At the period end the Group does not have significant influence over, but holds greater than 20% of the voting rights of Studio Retail Group plc and Mulberry Group plc. Studio Retail Group plc have disclosed transactions with the Group as a related party within their most recent Financial Statements. Transactions between Studio Retail Group plc and the Group related to normal commercial trading arrangements and are not considered material to the results of the Group. The latest equity amounts and results are shown below:

	Mulberry Group plc	Studio Retail Group plc
	26 weeks ended 25 September 2021 (£m)	26 weeks ended 24 September 2021 (£m)
Share Capital	3.0	48.7
Share Premium	12.2	-
Other Reserves	0.1	1.0
Retained Earnings	14.5	49.6
Total equity	29.8	99.3
Profit for the period	7.3	15.4

 

The Group does not consider it has the power to participate in the financial and operating policy decisions of the entities and so management do not consider the Group to be able to exert significant influence over these entities as per IAS 28 Investments in Associates and Joint Ventures and IAS 24 Related Party Disclosures.

MM Prop Consultancy Limited, a company owned and controlled by Michael Murray, who is a member of key management personnel as per IAS 24, continues to provide property consultancy services to the Group. MM Prop Consultancy Limited is primarily tasked with finding and negotiating the acquisition of new sites, and implementing developments, and disposals, in the UK, Europe and Rest of the World for both our larger format stores and our combined retail and gym units but it also provides advice to the Company's in-house property team in relation to existing sites in the UK, Europe and Rest of the World.

During the reporting period all properties are assessed and those that are considered by the Group's independent non-executive directors to be eligible, and which have completed development and/or been disposed of at the period-end, are assessed and if required valued by an independent valuer who confirms the value created by MM Prop Consultancy Limited. The Group's independent non-executive directors then review and agree the value created and have full discretion to approve a payment to MM Prop Consultancy Limited of up to 25% of the value created. There is a continuous pipeline of properties that may be eligible to be assessed both positively and negatively by the Group's Non-executive directors in future.

At period end £nil has been accrued (25 April 2021: £2.5m accrued based on crystalised gains and subsequently paid in FY22, 25 October 2020: £nil) as payable to MM Prop Consultancy. In the 26 weeks to 24 October 2021 there were no property disposals within scope to be assessed. Due to the resurgent market uncertainty, including but not limited to risks associated with Covid-19 including the return of restrictions, the independent non-executive directors consider any potential value created at period end to be unreliable at this time and hence no accrual has currently been recognised.

During FY21 the Group entered into an agreement with M.P.M Elevation Limited, a company owned and controlled by Michael Murray in relation to elevation strategy services. M.P.M Elevation Limited will be paid an annual fee of £0.1m in relation to the provision of elevation strategy services.

 

 

GLOSSARY

ALTERNATIVE PERFORMANCE MEASURES

Excluding acquisitions and currency neutral performance measure reconciliation:

 

	UK Sports Retail	Premium Lifestyle	European Retail	Rest Of World Retail	Wholesale & Licensing	Group Total
	Revenue
FY22 H1 Reported	1,367.1	427.9	399.8	65.6	79.4	2,339.8
Adjustments for acquisitions and currency neutral	(12.4)	-	-	-	-	(12.4)
FY22 H1 Excluding acquisitions and currency neutral	1,354.7	427.9	399.8	65.6	79.4	2,327.4
FY21 H1 Reported	1,071.6	320.4	352.0	77.1	72.2	1,893.3
Adjustments for acquisitions and currency neutral	(4.7)	-	(14.2)	(6.0)	-	(24.9)
FY21 H1 Excluding acquisitions and currency neutral	1,066.9	320.4	337.8	71.1	72.2	1,868.4
% Variance	27.0%	33.6%	18.4%	(7.7%)	10.0%	24.6%
	Adjusted PBT
FY22 H1 Reported	117.4	(9.7)	60.9	14.3	3.9	186.8
Adjustments for acquisitions and currency neutral	29.1	-	-	-	-	29.1
FY22 H1 Excluding acquisitions and currency neutral	146.5	(9.7)	60.9	14.3	3.9	215.9
FY21 H1 Reported(1)	55.6	26.3	19.0	7.7	6.9	115.5
Adjustments for acquisitions and currency neutral	0.6	-	(0.8)	(0.6)	(0.1)	(0.9)
FY21 H1 Excluding acquisitions and currency neutral	56.2	26.3	18.2	7.1	6.8	114.6
% Variance	160.7%	(136.9%)	234.6%	101.4%	(42.6%)	88.4%

(1)        The FY21 numbers have been re-categorised due to changes in the reporting segments, with freehold property owning companies where trading is purely from Premium Lifestyle fascias being moved from UK Sports Retail to Premium Lifestyle.

    Reconciliation of Adjusted PBT performance measure, 5 year record:

 

	26 weeks ended 24 October 2021	26 weeks ended 25 October 2020	26 weeks ended 27 October 2019	26 weeks ended 28 October 2018	26 weeks ended 29 October 2017
	PBT (£'m)	PBT (£'m)	PBT (£'m)	PBT (£'m)	PBT (£'m)
REPORTED	186.0	106.1	90.2	74.4	45.8
Exceptional items	-	(3.7)	3.3	-	5.0
Fair value adjustment to derivative financial instruments	(10.7)	8.6	3.2	5.9	36.3
Net investment costs / (income)	10.0	(2.9)	(3.0)	1.8	32.5
Realised FX (gain) / loss	(4.5)	7.4	(4.8)	(17.6)	(15.1)
Share scheme	6.0	-	-	-	-
ADJUSTED	186.8	115.5	88.9	64.5	104.5

 

 

KEY PERFORMANCE INDICATORS

 

Performance Measure	Closest equivalent statutory measure	Reconciling items to statutory measure	Definition and purpose
Group revenue	-	-	Total revenue for the Group. The Board considers that this measure is a key indicator of the Group's growth
Adjusted PBT	Profit before taxation	Adjusting items (see Glossary reconciliation above)	Adjusted PBT shows how well the Group is managing its trading and operational efficiency, and its investment in its elevation strategy, and therefore the overall performance of the Group
Group gross margin	-	-	The Board considers that this measure is a key indicator of the Group's trading profitability
Underlying basis earnings per share (EPS)	Earnings per share	Adjusting items (see note 9)	Underlying basis EPS is a measure of adjusted total shareholder return and ultimately an indicator to our shareholders of the success of our elevation strategy
Cash inflow from operating activities	-	-	Cash inflow from operating activities is considered an important indicator for the business of the cash generated from the trading business for further investment in the elevation strategy
Net debt	None	Lease liabilities	Net debt is borrowings excluding IFRS 16 lease liabilities less cash and cash equivalents. Net debt is an indicator of both the Group's investment in the elevation strategy and its covenant headroom which is a key component of the Group's going concern considerations
Number of retail stores	-	-	The Board considers that this measure is an indicator of the Group's growth. The Group's elevation strategy is replacing older stores and often this can result in the closure of two or three stores to be replace by one larger new generation store