Final results for the year ended 28 February 2022
4 May 2022
The information contained within this announcement is deemed by the company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of the domestic law of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018 (as amended) ("UK MAR"). Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.
boohoo group plc - final results for the year ended 28 February 2022
"Leading the fashion eCommerce market"
Investing for the future
· Significantly increased market share in the UK and US since FY2020. Total group sales +61% since FY2020
· Extended target addressable market through acquisitions, with up to 500 million potential customers
· Increased warehousing and distribution capacity, capable of supporting over £4 billion of net sales
· Plans on track for automation of Sheffield warehouse going live in FY2023, driving material efficiencies, and opening of new distribution centre in the USA in FY2024, transforming delivery proposition
· Strong revenue growth in the UK of 27% YOY, with product, price and proposition resonating with customers
· £125 million of Adjusted EBITDA, down 28% vs. last year, and broadly flat vs two years ago, despite significant freight and logistics cost inflation and record investments across multi-brand platform
· Capital expenditure of £261.5 million, funded using existing cash reserves, including freehold properties and the expansion and automation of the distribution network
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2022 £ million |
2021 £ million |
Change on 2021 |
2020 £ million |
Change on 2020(1) |
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Revenue |
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1,982.8 |
1,745.3 |
+14% |
1,234.9 |
+61% |
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Gross profit |
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1,041.1 |
945.2 |
+10% |
666.3 |
+56% |
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Gross margin |
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52.5% |
54.2% |
-170bps |
54.0% |
-150bps |
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Adjusted measures(3): |
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Adjusted EBITDA(4) |
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125.1 |
173.6 |
-28% |
126.6 |
-1% |
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% of revenue |
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6.3% |
10.0% |
-370bps |
10.2% |
-390bps |
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Adjusted EBIT(5) |
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84.1 |
149.3 |
-44% |
107.0 |
-21% |
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% of revenue |
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4.2% |
8.6% |
-440bps |
8.7% |
-450bps |
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Adjusted profit before tax(6) |
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82.5 |
149.9 |
-45% |
108.3 |
-24% |
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Adjusted diluted earnings per share(7) |
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4.39p |
8.67p |
-49% |
5.88p |
-25% |
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Statutory measures: |
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Profit before tax |
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7.8 |
124.7 |
-94% |
92.2 |
-92% |
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Diluted (loss)/earnings per share |
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(0.32)p |
7.25p |
-104% |
5.35p |
-106% |
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Net cash(2) at year-end |
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1.3 |
276.0 |
-£275m |
240.6 |
-£239m |
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John Lyttle, Group CEO, commented:
"Over the past two years, we have significantly increased market share in our core geographies of the UK and the US, and we have grown active customer numbers by 43% across the group to 20 million. Our focus over the past two years has been on investing to build a strong platform, with the right infrastructure, supported by increased capacity to better serve our customers. In the year ahead we are focussed on optimising our operations through increasing flexibility within our supply chain, landing key efficiency projects and progressing strategic initiatives such as wholesale and our US distribution centre. This will ensure that the group is well-positioned to rebound strongly as pandemic-related headwinds ease."
Summary of FY2022 performance
The group has delivered further revenue growth, with revenues up 14% vs. last year, and 61% compared to FY2020, at a time when apparel markets globally remain below pre-pandemic levels. In our largest market, the UK, growth has remained strong, compounding on the exceptional growth delivered in the previous year. This demonstrates the strength of the group's business model when product, pricing and proposition are all strong, and is reflected in our strong customer KPIs.
Growth has however been impacted by three factors: firstly, returns rates increased significantly in the second half of the year ahead of both expectations and pre-pandemic levels; secondly, consumer demand has been subdued as a result of lockdowns in key markets throughout the year; and thirdly, our proposition internationally has been negatively impacted as a result of extended delivery times.
The group has continued to invest significantly through the last year, including rebuilding and relaunching four new brands in FY2022, incurring costs that will be leveraged in the coming years as the brands scale. Our distribution network has been extended through the opening of two new distribution centres and progress on our automation project in Sheffield, expected to go live in the new financial year, continues apace. We have also announced our intention to open a distribution centre in the USA to transform our customer proposition.
Adjusted EBITDA, at £125 million, has remained broadly flat compared to pre-pandemic levels and has declined compared to the excellent results delivered in FY2021, due to lower growth than anticipated, a significant increase in outbound carriage costs due to a lack of airfreight capacity and inbound shipping costs rising equally steeply, collectively impacting EBITDA by £60 million, as well as higher marketing costs as we invest in our newly acquired brands.
Financial highlights
· Revenue £1.983 billion, up 14% (14% CER(8)), and up 61% on 2020
o UK growth at 27% emphasises good brand positioning and strength of brand portfolio
o International performance impacted by COVID-19 challenges, down 3%
· Growth of 14% achieved while set against exacerbated comparative year, highlighting very strong two-year performance: UK up 77%; international up 40%
· International revenue is now 39% of total (2021: 46%), reflecting strong organic UK growth and mix impact from brands acquired in the last two years
· Gross margin 52.5%, down 170bps from 54.2% (2020: down 150bps)
· Adjusted EBITDA £125.1 million down 28%, with Adjusted EBITDA margin of 6.3% (2021: 10.0%; 2020: 10.2%), after £60 million of pandemic-related shipping cost headwinds and investment in launching our new brands
· £261.5 million capital expenditure investment, building infrastructure for growth, including freehold properties and significant expansion and automation of distribution network
· Strong balance sheet with net cash of £1.3 million (2021: £276.0 million; 2020: £240.6 million). Operating cash flow of £10.3 million (2021: £201.1 million; 2020: £127.3 million). New £325 million RCF agreed in March 2022, underpinning the group's investment programme
Operational highlights
· Significant investment into broadening our operational and warehouse capacity, ensuring global infrastructure is fit for the future and ready for sustained growth, and to support over £4 billion of net sales
· 20 million active customers, up 10%, and up 43% on 2020
· Two new UK distribution centres, Daventry and Wellingborough, launched and now fully operational
· Automation fit-out of Sheffield warehouse commenced with expected completion in September 2022, unlocking additional operational efficiencies and multiple service enhancements
· Announcement of plans for US distribution centre in 2023, supporting the group's next phase of growth
· Relaunch of Debenhams, adding a new dimension of a digital department store to the group's portfolio and extending the group's target addressable market
· Integration and relaunch of the newly acquired Dorothy Perkins, Wallis and Burton brands, complementary additions to the group's scalable, multi-brand platform
· Purchase of new offices in the heart of London's West End, housing the group's London-based brands and their employees
Sustainability and governance highlights
· Agenda for Change process completed, with action items established into business as usual operations, following publication of fifth Leveson report in March 2022
· Economic Impact Assessment conducted. Commitment to investing over £500 million and creating over 5,000 jobs over five years, highlighting the group's significant ongoing contribution to the UK economy
· Board strengthened with appointment of two non-executive directors, including one to chair the newly constituted ESG Committee
· Publication of the group's sustainability strategy, further establishing ongoing commitment to transparency. Significant progress made against our 2021 goals
Outlook and Guidance
Heading into the new financial year, the group is planning the business on the basis that the pandemic-related external factors impacting performance in FY2022 will continue for the year ahead. The group's priorities therefore are focussing on optimising its operations, including:
· Sourcing and freight
Targeting increased sourcing from near-shore markets, leveraging the flexibility that exists in the group's diverse supplier base to reduce lead times that have been negatively impacted through global supply chain challenges in FY2022 and exposure to fluctuating inbound freight costs that remain elevated
· Stock management and returns
Operating with lower levels of inventory through tighter stock management and increased levels of open to buy, giving greater flexibility to react to changes in demand mid-season. Whilst returns rates are expected to remain around current levels during FY2023, the group will annualise material increases in return rates in the first half of the new financial year.
· Cost management
The group has commenced a cost efficiency programme, and by scaling recent acquisitions that have already received significant investment, overheads across the group can be leveraged.
· Unlocking strategic enablers
Focusing resources and capital investment into key projects to support strategic growth, including: onboarding new wholesale partnerships; upgrading the Debenhams technology platform; going live with automation in our Sheffield distribution centre; and progressing our US distribution centre ahead of go-live in 2023
By focusing on these areas, the group will be in a position of greater financial and operational strength, and well-positioned to rebound strongly as pandemic-related headwinds ease, allowing it to capitalise on its significantly expanded target addressable market, returning towards normalised growth rates of 25% per annum post-pandemic and adjusted EBITDA margin rebuilding back to 10%.
For the financial year ending 28 February 2023, the group is focussed on retaining the significant market share gains that it has made over the course of the last two years. With current short-term cost inflation impacting consumers, the group intends to maximise efficiencies in its operating model and mitigate where possible before passing prices onto consumers.
It is anticipated that revenue percentage growth will be low-single digits, and adjusted EBITDA margins for the year are expected to be between 4% to 7% as the group expects to continue to be impacted by pandemic-related factors that negatively impact costs within its supply chain and international competitive proposition.
In the first half of the financial year, the trends impacting performance in the second half of FY2022 are expected to continue, including: uncertain consumer demand; tough comparatives as well as reduced levels of net sales growth due to the annualisation of elevated returns rates year on year; and sustained freight-related headwinds. As a result, the group currently expects revenue growth to be broadly flat in the first half of FY2023, as relatively higher returns rates lead to net sales being down year on year in the first quarter, with a return to growth in the second quarter. For the first half of FY2023, Adjusted EBITDA margins are expected to improve from the level achieved in the second half of H2 FY2022.
Performance is expected to improve in the second half of the year with sales growth accelerating as the group annualises high returns rates and normalising consumer demand, with profitability improving as it benefits from key strategic initiatives and leveraging of overheads.
Other financial guidance for FY2023 is outlined below:
· Underlying depreciation and amortisation of approximately £60 million
· Net interest charge of £7million to £8 million
· Effective tax rate of circa 28%, above the rate of UK Corporation Tax due to disallowable expenditure
· Capital expenditure of £100 million to £120 million, primarily relating to investments in our distribution network expansion and automation as well as the group's technology platform; and
· Adjusting items of approximately £60 million, of which around £45 million relates to non-cash items, including: share-based pay, acquisition intangible amortisation, exceptional costs of Sheffield automation and warehouse commissioning costs
Longer-term competitive positioning and opportunity to take market share unchanged
The group expects to emerge from the pandemic in a far stronger position compared to two years ago. Reflecting significant and ongoing investments in its platform, brands, distribution and people, the group has:
· A broader portfolio of brands and a significantly larger target addressable market with 500 million potential customers across key markets
· Greater infrastructure capacity capable of supporting in excess of £4 billion of net sales, with automation investments driving future efficiencies
· Committed to opening a new distribution centre in the USA, significantly strengthening the customer proposition
· 20 million customers globally
· Numerous growth opportunities through the group's direct to consumer proposition, Debenhams and strategic partnerships with select partners globally.
We remain extremely confident in the group's future growth prospects, and as short-term demand uncertainty and material cost headwinds as a result of the pandemic unwind, the group's belief that it continues to be capable of executing its strategy aimed at leading the fashion e-commerce market remains unchanged.
Investor and analyst meeting
A meeting for analysts will be held at 9am (UK time) today at the offices of boohoo, 10 Great Pulteney Street, London, W1F 9NB. A live video webcast for analysts and investors at 9am (UK time) via the following link: https://webcasting.buchanan.uk.com/broadcast/624d820de1d0d456b32a3ef1
A replay will subsequently be available the same day via the same link.
boohoo group plc's results are available at www.boohooplc.com .
Enquiries |
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boohoo group plc |
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Neil Catto, Chief Financial Officer | Tel: +44 (0)161 233 2050 | ||
Alistair Davies, Investor Relations | Tel: +44 (0)161 233 2050 | ||
Clara Melia, Investor Relations | Tel: +44 (0)20 3289 5520 | ||
Mark Mochalski, Investor Relations | Tel: +44 (0)20 3239 6289 | ||
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Zeus Capital - Nominated adviser and joint broker |
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Nick Cowles / Andrew Jones | Tel: +44 (0)161 831 1512 | ||
Benjamin Robertson | Tel: +44 (0)20 3829 5000 | ||
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Jefferies - Joint broker |
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Philip Noblet / Max Jones | Tel: +44 (0)20 7029 8000 | ||
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Buchanan - Financial PR adviser | boohoo@buchanan.uk.com | ||
Richard Oldworth / Kim Looringh-van Beeck / Toto Berger / Sophie Wills | Tel: +44 (0)20 7466 5000 | ||
Notes:
(1) Change on 2020, two years ago, compares current trading to the pre-pandemic period to give a better understanding of performance when compared to the unusual growth and characteristics of trade in 2021.
(2) Net cash is cash less borrowings, excluding lease liabilities.
(3) Adjusted items, which are not statutory measures, show the underlying performance of the group excluding large, non-cash and exceptional items.
(4) Adjusted EBITDA is calculated as profit before tax, interest, depreciation, amortisation, share-based payment charges and exceptional items.
(5) Adjusted EBIT is calculated as profit before tax, interest, amortisation of acquired intangible assets, share-based payment charges and exceptional items.
(6) Adjusted profit before tax is calculated as profit before tax, excluding amortisation of acquired intangible assets, share-based payment charges and exceptional items.
(7) Adjusted diluted earnings per share is calculated as diluted earnings per share, adding back amortisation of acquired intangible assets, share-based payment charges and exceptional items.
(8) CER designates Constant Exchange Rate translation of foreign currency revenue, which gives a truer indication of the performance in international markets by removing year-to-year exchange rate movements when local currency sales are converted to sterling.
About boohoo group plc
"Leading the fashion eCommerce market"
Founded in Manchester in 2006, boohoo is an inclusive and innovative global brand targeting young, value-orientated customers, pushing boundaries to bring its customers up-to-date and inspirational fashion, 24/7.
In 2017, the group extended its customer offering through the acquisitions of the vibrant fashion brand PrettyLittleThing and free-thinking brand Nasty Gal. In March 2019, the group acquired the MissPap brand, in August 2019 the Karen Millen and Coast brands and in June 2020 the Warehouse and Oasis brands, all complementary to the group's scalable, multi-brand platform. In January 2021, the group acquired the intellectual property assets of Debenhams, with the goal of transforming a leading UK fashion and beauty retailer into a digital department store and marketplace through a new capital-light and low-risk operating model. In February 2021, the group acquired the intellectual property assets of UK brands Dorothy Perkins, Wallis and Burton. As at 28 February 2022, the boohoo group had 20 million active customers across all its brands around the world.
Cautionary Statement
Certain statements included or incorporated by reference within this announcement may constitute "forward-looking statements" in respect of the group's operations, performance, prospects and/or financial condition. Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words and words of similar meaning as "anticipates", "aims", "due", "could", "may", "will", "should", "expects", "believes", "intends", "plans", "potential", "targets", "goal" or "estimates". By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions and actual results or events may differ materially from those expressed or implied by those statements. Accordingly, no assurance can be given that any particular expectation will be met and reliance should not be placed on any forward-looking statement. Additionally, forward-looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. No responsibility or obligation is accepted to update or revise any forward-looking statement resulting from new information, future events or otherwise. Nothing in this announcement should be construed as a profit forecast. This announcement does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase any shares or other securities in the Company, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or commitment or investment decisions relating thereto, nor does it constitute a recommendation regarding the shares or other securities of the Company. Past performance cannot be relied upon as a guide to future performance and persons needing advice should consult an independent financial adviser. Statements in this announcement reflect the knowledge and information available at the time of its preparation. Liability arising from anything in this announcement shall be governed by English law. Nothing in this announcement shall exclude any liability under applicable laws that cannot be excluded in accordance with such laws.
Agenda for Change
A stronger more sustainable future
In September 2020, the group announced its Agenda for Change programme: a series of commitments designed to strengthen corporate governance, purchasing practices and entrench the group's support for the UK garment manufacturing sector more broadly.
The programme encompassed 17 commitments recommended by Alison Levitt QC in her independent report, with the commitments broken down into the 34 deliverables that formed the Agenda for Change.
Progress and the validity of completion against each of the commitments was overseen, scrutinised and examined by two independent parties: Sir Brian Leveson, whose reports the group made available publicly in line with its transparency; and experts at KPMG.
We have faced into these issues and are proud of the significant progress that we have made, which in turn is influencing sustainable change in British apparel manufacturing, impacting the people who make the products that we sell and the wider garment sector.
In March 2022, KPMG formally recognised the completion of all aspects of the group's Agenda for Change programme. However, the group remains focused on driving continual improvement and has embedded future actions within the various streams of its board-led committees, including the Risk Committee, Supply Chain Compliance Committee and the new ESG Committee.
We have implemented both procedural and cultural change, driven internally by our own teams and informed by the extensive work that we have done through working in partnership with multiple external stakeholder and NGO groups.
After 18 months of dedicated and hard work by our talented teams, the boohoo group is a stronger and more sustainable business that is looking to the future. We are working side by side with approved suppliers who share our values to support our aim of backing British manufacturing.
Review of the business
Performance during the year
Overview
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| 2022 £ million | 2021 £ million | 2022 change on 2021 | 2020 £ million | 2022 change on 2020(1) | |
Revenue |
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| 1,982.8 | 1,745.3 | +14% | 1,234.9 | +61% | |
Gross profit |
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| 1,041.1 | 945.2 | +10% | 666.3 | +56% | |
Gross margin |
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| 52.5% | 54.2% | -170bps | 54.0% | -150bps | |
Profit before tax |
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| 7.8 | 124.7 | -94% | 92.2 | -92% | |
Diluted (loss)/earnings per share |
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| (0.32)p | 7.25p | -104% | 5.35p | -106% | |
Net cash(2) at year-end |
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| 1.3 | 276.0 | -£275m | 240.6 | -£239m | |
Adjusted measures(3): |
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Adjusted EBITDA(4) |
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| 125.1 | 173.6 | -28% | 126.6 | -1% | |
% of revenue |
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| 6.3% | 10.0% | -370bps | 10.2% | -390bps | |
Adjusted EBIT(5) |
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| 84.1 | 149.3 | -44% | 107.0 | -21% | |
% of revenue |
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| 4.2% | 8.6% | -440bps | 8.7% | -450bps | |
Adjusted profit before tax(6) |
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| 82.5 | 149.9 | -45% | 108.3 | -24% | |
Adjusted diluted earnings per share(7) |
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| 4.39p | 8.67p | -49% | 5.88p | -25% | |
Notes:
(1) 2022 change on 2020, two years ago, compares current trading to the pre-pandemic period to give a better understanding of performance when compared to the unusual growth and characteristics of trade in 2021.
(2) Net cash is cash less borrowings, excluding lease liabilities.
(3) Adjusted items, which are not statutory measures, show the underlying performance of the group excluding large, non-cash and exceptional items (Note 1).
(4) Adjusted EBITDA is calculated as profit before tax, interest, depreciation, amortisation, share-based payment charges and exceptional items.
(5) Adjusted EBIT is calculated as profit before tax, interest, amortisation of acquired intangible assets, share-based payment charges and exceptional items.
(6) Adjusted profit before tax is calculated as profit before tax, excluding amortisation of acquired intangible assets, share-based payment charges and exceptional items.
(7) Adjusted diluted earnings per share is calculated as diluted earnings per share, adding back amortisation of acquired intangible assets, share-based payment charges and exceptional items.
Group overview
Group revenue for the year increased by 14% (14% CER) to £1.983 billion from £1.745 billion in 2021 and over the two-year period increased by 61% from £1.235 billion in 2020, at a time when apparel markets globally remain below pre-pandemic levels. International revenue growth was dampened by the continued impacts of the pandemic, due to extended delivery times and weaker consumer demand. Growth in the UK, however, was very strong, supported by organic growth in the existing brands and augmented by the newer acquisitions. Return rates climbed to pre-pandemic levels, following the exceptionally low levels in the previous year, which impacted net sales growth in the second half of the financial year.
Adjusted EBITDA was £125.1 million (2021: £173.6 million; 2020: £126.6 million), a decrease of 28% on the previous year and 1% on 2020. Gross product margin was maintained at a level only 170bps lower than in the prior year at 52.5%, despite inbound shipping expenses rising substantially due to the shortage of shipping containers and lack of airfreight capacity, which, after mitigation, presented approximately £22 million of headwind. Relative to 2020 rates, volume-adjusted marketing costs have been higher by £22 million in the face of weaker demand and investment in the newer brands. Outbound carriage expenses continued to be elevated, and represented a £38 million increase above pre-pandemic rates. These headwinds together have reduced profitability and resulted in Adjusted EBITDA margin of 6.3% (2021: 10.0%; 2020: 10.2%). Profit before tax was £7.8 million (2021: £124.7 million; 2020: £92.2 million), a decrease of 94% on 2021 and 92% on 2020. Adjusted diluted earnings per share was 4.39p, down 49% on the prior year and 25% on 2020. Diluted (loss)/earnings per share was (0.32)p, a decrease of 104% (2021: 7.25p; 2020: 5.35p).
During the year, the group incurred a number of significant, non-recurring costs, which have been shown as exceptional items in the financial statements and have not been included in the adjusted performance measures. These items relate to: dual running and inefficiency costs within warehouses; legal expenses and redundancy costs associated with the acquisition of the new brands in February 2021; additional costs of working at the Sheffield warehouse during the automation installation; and irrecoverable sales taxes on customer returns from the EU during the period after Brexit and before simplified procedures in the EU became operational. These exceptional items amounted to £35.8 million and are detailed in note 1 of the financial statements.
Cash generation was lower than prior years due to the inventory build to service the brand portfolio and to the longer product lead times caused by the global issue of lengthy shipping times and the expansion of the supplier base that included a larger overseas element, reflecting the group's larger portfolio of brands. Operating cash flow was £10.3 million (2021: £201.1 million; 2020: £127.3 million). Net cash flow was down £174.7 million (2021: £30.6 million; 2020: £47.6 million), following significant infrastructure capital expenditure of £261.5 million. Our net cash balance at the year-end reduced to £1.3 million (net cash, 2021: £276.0 million; 2020: £240.6 million), with total liquidity of £101.3 million. After the year-end, the group secured a new £325 million rolling capital facility, increasing from the previous £100 million facility, which was fully drawn at the year-end.
The group has invested heavily in preparation for growth from both its existing brands and more recent acquisitions. Two new distribution centres have been opened and become operational in Wellingborough and Daventry and the automation of the Sheffield distribution centre has commenced, with an estimated completion date of September 2022. Capital expenditure on these facilities has amounted to £120.3 million. The acquisition of our London office was completed in April 2021 and additional studio facilities in London were acquired in September 2021 for a combined £88 million. We have also invested in our IT systems, with £32.0 million of expenditure that enhances both platform stability and additional operating abilities, such as marketplace.
Active customer numbers in the last 12 months increased by 10% to 19.9 million and have increased 43% over the last two years as a result of organic growth from our brands and extension of our target addressable market through brand acquisitions. Order frequency increased marginally from 3.03 to 3.14 times p.a. and average order value increased by 8% to £48.16. The number of items per basket decreased from 3.34 to 3.04, driven partly by the addition of the new brands with lower basket sizes and partly to a return to closer to pre-pandemic basket sizes in our established brands.
Performance by market
UK
The UK market continues to be the largest for the group, accounting for 61% of revenue (2021: 54%). Overall growth across all brands was strong, up 27% on 2021 and up 77% on 2020, driven by the success of our multi-brand strategy. Return rates have increased back to pre-pandemic levels, being 9.8%pts above the prior year at 33.7%. This is partly attributable to the change in the product mix from more casual items to occasion wear and to the introduction of the newer, higher price point brands, which all have higher return rates.
Gross margin reduced slightly from 50.9% to 49.4%, despite the substantial increases in inbound shipping. Prices were raised across some product lines to offset the increased logistics costs, where we were unable to change sourcing to alternative geographic regions to reduce the impact of these cost increases. Nevertheless, we are greatly encouraged by the progress we are making in growing our market share in the UK.
Rest of Europe
Our revenue in the rest of Europe decreased by 10% over 2021, although increased by 16% on 2020, as the effect of continued lockdowns has hampered the recovery of demand together with the longer delivery times. Return rates were only marginally higher than in the prior year. Gross margin remained healthy at 54.5%, down 1.7%pts on the prior year.
USA
Growth in the USA was 4% up on 2021 and up 71% on 2020. Return rates increased marginally, but the continued extended delivery times, driven by reduced airfreight capacity, have subdued demand on the group's established brands. Menswear has grown strongly as it gains market share and gathers momentum, as have the newer brands, albeit from a low base. Gross margin decreased slightly by 0.1%pts to 59.8%.
Rest of world
Revenue in the rest of the world has decreased by 10% on the prior year to £109.2 million (increased by 5% on 2020), impacted undoubtedly by the delays in the distribution network caused by greatly reduced airfreight capacity. Gross margin declined slightly from 54.9% to 52.5%, a relatively small reduction given the challenging conditions in overseas territories brought about by the pandemic.
Airfreight capacity constraints, caused by the pandemic, also kept distribution costs to the more distant markets high and these are expected to continue for some time to come. Nevertheless, the region delivered growth in the fourth quarter as a result of the positive contribution from wholesale.
Agenda for Change
Progress continued at pace in the Agenda for Change, with the publication of the full UK manufacturer list in March 2021 and the international manufacturer list in September 2021. Sir Brian Leveson's fifth and final report on Agenda for Change was published in March 2022 and highlighted, in particular, the strengthening of the product compliance, sourcing, sustainability and quality assurance teams and completion of the actionable items contained in the Levitt Review.
Corporate governance
The group has delivered on its commitment to strengthen its corporate governance with the appointment of two new and independent non-executive directors. Tim Morris joined the board in May 2021 and brings a wealth of experience built on his career in legal services and in business entrepreneurship, which will be invaluable as he focuses on the oversight of risk and corporate governance. Additionally, Kirsty Britz joined the board in October 2021. Kirsty has spent a large part of her career on sustainability and professional standards and brings expertise that will assist the group in defining and executing its sustainability practices. The group has recently constituted an ESG Committee, which will oversee its ESG strategy and provide recommendations to the Executive ESG group. These enhancements ensure that key ESG matters are considered by leaders and decision-makers, who are appraised of the relevant information, at the appropriate time.
With the completion of the Agenda for Change programme, we are embedding the core themes of the programme - corporate governance, purchasing practices and our support for the garment sector - into sustainability KPIs across our business that we monitor monthly.
Sustainability
We recognise the environmental impact of fashion and our responsibility to reduce the negative aspects of production, waste and poor longevity of apparel. We have built a sustainability function in our business and have developed a strategy to target three material areas of focus: clothes made smarter; suppliers on better terms; and our business taking action. The ESG function is overseen by a non-executive director with expertise in the subject. Full details on our sustainability strategy and our results to date can be found within our published documents on our corporate website.
In the last year, the group published its sustainability strategy, UP.FRONT, with three pillars:
1) Clothes made smarter;
2) Suppliers on better terms; and
3) Our business taking action.
Clothes made smarter: the group is targeting increases in products made from more sustainable materials (targeting all polyester and cotton to be more recycled or sustainably sourced by 2025); improvements in sustainably-designed products; the introduction of resale and recycling offers across our brands by 2023 (with the PLT resale marketplace due to launch in FY2023); and increases in recycled content in our labelling and packaging.
Suppliers on better terms: focuses on transparency, standards and programmes. Global supplier and factory lists have been published, as well as our responsible purchasing practices. More robust supplier standards and a rigorous management programme have been implemented by our sourcing teams, supported by improved systems to order, monitor and track products ordered from our suppliers. The group also became a member of Fast Forward, and by September 2022 will have completed the Fast Forward audit programme in its UK supply chain. In the last year, the group has also set up and donated £1 million to the Garment and Textile Works Trust in Leicester and recently opened its manufacturing centre of excellence in Thurmaston Lane.
Our business taking action: the group has made progress in the last year under its third sustainability pillar; embedding sustainability risks and opportunities into decision-making and KPIs (and the constitution of a dedicated ESG Risk Committee). The group has set out climate change targets based on the Science-Based Targets Initiative, with the goal of achieving carbon reductions across our value chain that areequivalent to 52% reduction in emissions relative to our growth by 2030.
Continued profitable growth
Financial review
Revenue by geographical market
| 2022 £ million | 2021 £ million | 2022 change on 2021 | 2022 change on 2021 CER | 2020 £million | 2022 change on 2020 |
UK | 1,202.8 | 945.1 | +27% | +27% | 679.4 | +77% |
Rest of Europe | 219.2 | 244.7 | -10% | -9% | 188.4 | +16% |
USA | 451.6 | 435.1 | +4% | +4% | 263.6 | +71% |
Rest of world | 109.2 | 120.4 | -9% | -10% | 103.5 | +6% |
| 1,982.8 | 1,745.3 | +14% | +14% | 1,234.9 | +61% |
KPIs
| 2022 | 2021 | 2022 change on 2021 | |
Active customers(1) | 19.9 million | 18.0 million | +10% | |
Number of orders | 62.4 million | 54.7 million | +14% | |
Order frequency(2) | 3.14 | 3.03 | +4% | |
Conversion rate to sale (3) | 2.76% | 2.72% | +4bps | |
Average order value(4) | £48.16 | £44.59 | +8% | |
Number of items per basket | 3.04 | 3.34 | -9% | |
(1) Defined as having shopped in the last 12 months on the website and app, including marketplace
(2) Defined as number of website and app orders in last 12 months divided by number of active customers
(3) Defined as the percentage of website and app orders taken to internet sessions
(4) Calculated as gross sales including sales tax divided by the number of orders
Note: 2020 data not available due to improved data gathering introduced in 2021 and 2022
Consolidated income statement
| 2022 £ million | 2021 £ million | 2022 change on 2021 | 2020 £ million | 2022 change on 2020 |
Revenue | 1,982.8 | 1,745.3 | +14% | 1,234.9 | +61% |
Cost of sales | (941.7) | (800.1) | +18% | (568.6) | +66% |
Gross profit | 1,041.1 | 945.2 | +10% | 666.3 | +56% |
Gross margin | 52.5% | 54.2% | -170bps | 54.0% | -150bps |
|
|
|
|
|
|
Operating costs | (916.1) | (772.6) |
| (539.9) |
|
Other income | 0.1 | 1.0 |
| 0.2 |
|
Adjusted EBITDA | 125.1 | 173.6 | -28% | 126.6 | -1% |
Adjusted EBITDA margin % | 6.3% | 10.0% | -360bps | 10.2% | -400bps |
|
|
|
|
|
|
Depreciation | (32.0) | (20.1) |
| (16.6) |
|
Amortisation of other intangible assets | (9.0) | (4.2) |
| (3.0) |
|
Adjusted EBIT | 84.1 | 149.3 | -44% | 107.0 | -21% |
Adjusted EBIT margin % | 4.2% | 8.6% | -440bps | 8.7% | -450bps |
|
|
|
|
|
|
Adjusting items: |
|
|
|
|
|
Amortisation of acquired intangible assets | (12.8) | (5.5) |
| (5.1) |
|
Equity-settled share-based payment charges | (26.1) | (19.7) |
| (11.0) |
|
Exceptional items | (35.8) | - |
| - |
|
Operating profit | 9.4 | 124.1 | -92% | 90.9 | -90% |
|
|
|
|
|
|
Finance income | - | 0.9 |
| 1.7 |
|
Finance expense | (1.6) | (0.3) |
| (0.4) |
|
Profit before tax | 7.8 | 124.7 | -94% | 92.2 | -92% |
Tax | (11.8) | (31.3) |
| (19.3) |
|
(Loss)/profit after tax for the year | (4.0) | 93.4 | -104% | 72.9 | -105% |
|
|
|
|
|
|
Diluted (loss)/earnings per share | (0.32)p | 7.25p | -104% | 5.35p | -106% |
|
|
|
|
|
|
Adjusted profit after tax for the year | 56.3 | 113.8 | -51% | 86.0 | -35% |
Amortisation of acquired intangible assets | (12.8) | (5.5) |
| (5.1) |
|
Share-based payment charges | (26.1) | (19.7) |
| (11.0) |
|
Exceptional items | (35.8) | - |
| - |
|
Adjustment for tax | 14.4 | 4.8 |
| 3.0 |
|
(Loss)/profit after tax for the year | (4.0) | 93.4 |
| 72.9 |
|
|
|
|
|
|
|
Adjusted profit for the year attributable to shareholders of the company | 56.3 | 108.5 | -48% | 69.9 | -19% |
Adjusted diluted earnings per share | 4.39p | 8.67p | -49% | 5.88p | -25% |
Revenue in the financial year grew 14% (up 61% on a two-year basis), with strong growth in the UK partly offset by weaker demand in overseas markets due largely to extended delivery timeframes, which negatively impacted the group's international proposition to customers. Gross margin declined 170bps year-on-year, as a consequence of elevated inbound shipping costs arising from the pandemic
Operating costs, comprising distribution costs and administrative expenses excluding depreciation and amortisation, have increased by 190bps to 46.2% of revenue, driven by higher marketing costs and continued high levels of overseas distribution costs caused by the pandemic.
Adjusted EBITDA, which is not a statutory measure, represents earnings before interest, tax, depreciation, amortisation, non-cash share-based payments charges and exceptional items. It provides a useful measure of the underlying profitability of the business. Adjusted EBITDA decreased by 28% from £173.6 million to £125.1 million and, as a percentage of revenue, decreased from 10.0% to 6.3%.
Adjusted profit after tax, as with Adjusted EBITDA, provides another more consistent measure of the underlying profitability of the business by removing non-cash amortisation of intangible assets relating to the acquisition of new brands (being their trademarks and customer lists), share-based payment charges and exceptional items.
Exceptional items relate to: dual running and inefficiency costs of the warehouses; legal expenses and redundancy costs of some employees associated with the acquisition of the new brands in February 2021; additional costs of working at the Sheffield warehouse during the automation installation; and irrecoverable sales taxes on customer returns from the EU during the period after Brexit and before simplified procedures in the EU became operational. These exceptional items amounted to £35.8 million. Exceptional items are shown in more detail in note 1 of the financial statements below.
Taxation
The effective rate of tax for the year was 151.3% (2021: 25.1%), which is higher (2021: higher) than the UK statutory rate of tax for the year of 19.0% (2021: 19.0%), due to the revaluation of deferred tax liabilities in line with the increase in corporation tax rates to 25%, expenditure not deductible for tax purposes, being principally depreciation on buildings and fit-out, disallowable legal claims and share-based payment charges on growth shares.
Consolidated statement of financial position
|
| 2022 | 2021 | 2020 |
|
| £ million | £ million | £ million |
Intangible assets |
| 128.5 | 118.3 | 42.3 |
Property, plant and equipment |
| 349.2 | 141.6 | 119.2 |
Right-of-use assets |
| 49.7 | 16.7 | 14.6 |
Financial assets |
| 2.8 | 13.1 | 4.5 |
Deferred tax asset |
| 7.5 | 3.2 | 6.0 |
Non-current assets |
| 537.7 | 292.9 | 186.6 |
|
|
|
|
|
Working capital |
| (12.7) | (90.9) | (63.9) |
Lease liabilities |
| (51.9) | (18.3) | (16.2) |
Net financial assets/(liabilities) |
| 7.4 | 12.6 | (9.0) |
Cash and cash equivalents |
| 101.3 | 276.0 | 245.4 |
Interest-bearing loans and borrowings |
| (100.0) | - | (4.8) |
Deferred tax liability |
| (25.3) | (4.2) | (3.6) |
Net current tax asset/(liability) |
| 7.8 | 4.4 | (6.6) |
Net assets |
| 464.3 | 472.5 | 327.9 |
There has been a substantial investment in property and distribution centres to facilitate our next growth phase, which has been partly funded out of cash resources and partly from the fully drawn rolling capital facility of £100 million. Working capital has increased largely because of the build in inventory to service the new brands along with the growth of the business in general.
Intangible and fixed asset additions
|
| 2022 | 2021 | 2020 |
|
| £ million | £ million | £ million |
Purchased intangible and fixed assets |
|
|
|
|
Intangible assets |
|
|
|
|
Trademarks and customer lists |
| - | 73.4 | 19.4 |
Software |
| 32.0 | 12.3 | 3.8 |
|
| 32.0 | 85.7 | 23.2 |
Tangible fixed assets |
|
|
|
|
Distribution centres |
| 120.3 | 16.9 | 15.4 |
Offices, office equipment, fixtures and fit-outs |
| 109.0 | 20.0 | 6.6 |
Motor vehicles |
| 0.2 | 0.1 | 0.4 |
|
| 229.5 | 37.0 | 22.4 |
|
|
|
|
|
Total intangible and fixed asset additions |
| 261.5 | 122.7 | 45.6 |
Liquidity and financial resources
Operating cash flow was £10.3 million compared to £201.1 million in the previous year and free cash outflow after tax was £251.2 million compared to an outflow of £121.8 million in the previous financial year. Capital expenditure and intangible asset purchases were £261.5 million, which includes a £120.3 million investment in our distribution centres to support projected growth in the business. The closing cash balance for the group was £101.3 million and the net cash balance £1.3 million. In March 2022, a new £325 million rolling capital facility was secured.
Consolidated cash flow statement |
|
| ||||
| 2022 | 2021 | 2020 | |||
| £ million | £ million | £ million | |||
|
|
|
| |||
(Loss)/profit after tax for the year | (4.0) | 93.4 | 72.9 | |||
|
|
|
| |||
Share-based payments charge | 26.1 | 19.7 | 11.0 | |||
Depreciation charges and amortisation | 53.8 | 29.8 | 24.7 | |||
Finance income | - | (0.9) | (1.7) | |||
Finance expense | 1.6 | 0.3 | 0.4 | |||
Loss on sale of fixed assets | - | - | 0.2 | |||
Tax expense | 11.8 | 31.3 | 19.3 | |||
Increase in inventories | (134.5) | (45.8) | (32.3) | |||
Increase in trade and other receivables | (17.7) | (8.8) | (9.4) | |||
Increase in trade and other payables | 73.2 | 82.1 | 42.2 | |||
Operating cash flow | 10.3 | 201.1 | 127.3 | |||
Capital expenditure and intangible asset purchases | (261.5) | (49.3) | (26.2) | |||
Acquisition of new brands | - | (73.4) | (19.4) | |||
Acquisition of non-controlling interest in PrettyLittleThing | - | (161.9) | - | |||
Tax paid | - | (38.3) | (11.6) | |||
Free cash outflow after tax | (251.2) | (121.8) | 70.1 | |||
|
|
|
| |||
Net proceeds from the issue of ordinary shares | 6.8 | 201.4 | 2.7 | |||
Purchase of own shares by EBT | (19.2) | (39.4) | (14.9) | |||
Finance income received | - | 1.2 | 1.8 | |||
Finance expense paid | (0.9) | (0.1) | (0.3) | |||
Dividend paid to non-controlling interests | - | - | (3.4) | |||
Lease payments | (10.2) | (5.9) | (6.0) | |||
Increase in/(repayment) of borrowings | 100.0 | (4.8) | (2.4) | |||
Net cash (out)flow | (174.7) | 30.6 | 47.6 | |||
|
|
|
| |||
Cash and cash equivalents at beginning of year | 276.0 | 245.4 | 197.8 | |||
Cash and cash equivalents at end of year | 101.3 | 276.0 | 245.4 | |||
|
|
|
| |||
Trends and factors likely to affect future performance
The global market for online fashion is forecast to continue to grow, which provides a favourable backdrop for the group with much opportunity for further growth. Customers throughout the world are seeking a wide choice of quality fashion forward products at value prices, generally lower than those available on the high street, with the convenience of home delivery. The group's target market has a high propensity to spend on fashion and the market has proven to be quite resilient to external macroeconomic factors.
The pandemic has impacted our business and is most significantly seen in the unpredictability of customer demand, the rate of customer returns, the increase in shipping times and the cost of shipping on both inbound and outbound products. Some of these factors, such as the rate of customer returns, have already reverted from the low rates during the pandemic to rates seen before the pandemic, while other factors such as the shipping cost increases are taking longer to move towards pre-pandemic levels. We expect shipping costs to continue at elevated levels during FY2023. Wage costs have also risen, given heightened levels of inflation, and in the UK the group will incur a 1.25% increase in National Insurance and a 6.6% increase in the National Living Wage expected from April 2022. Higher levels of inflation have also been seen in materials and the group will work to mitigate these costs across labour and materials where possible.
Consolidated statement of comprehensive income
for the year ended 28 February 2022
| Note | 2022 pre-exceptional items | 2022 exceptional items(1) | 2022 total(2) | 2021 | ||
|
| £ million | £ million | £ million | £ million | ||
Revenue | 2 | 1,982.8 | - | 1,982.8 | 1,745.3 | ||
Cost of sales |
| (941.7) | - | (941.7) | (800.1) | ||
Gross profit |
| 1,041.1 | - | 1,041.1 | 945.2 | ||
|
|
|
|
|
| ||
Distribution costs |
| (488.1) | (28.4) | (516.5) | (422.0) | ||
Administrative expenses |
| (507.9) | (7.4) | (515.3) | (400.1) | ||
Amortisation of acquired intangibles |
| (12.8) | - | (12.8) | (5.5) | ||
Other administrative expenses |
| (495.1) | (7.4) | (502.5) | (394.6) | ||
|
|
|
|
|
| ||
Other income | 3 | 0.1 | - | 0.1 | 1.0 | ||
Operating profit/(loss) |
| 45.2 | (35.8) | 9.4 | 124.1 | ||
|
|
|
|
|
| ||
Finance income | 4 | - | - | - | 0.9 | ||
Finance expense |
| (1.6) | - | (1.6) | (0.3) | ||
Profit/(loss) before tax | 6 | 43.6 | (35.8) | 7.8 | 124.7 | ||
|
|
|
|
|
| ||
Taxation | 10 | (18.6) | 6.8 | (11.8) | (31.3) | ||
|
|
|
|
|
| ||
Profit/(loss) for the year |
| 25.0 | (29.0) | (4.0) | 93.4 | ||
|
|
|
|
|
| ||
Profit/(loss) for the year attributable to: |
|
|
|
|
| ||
Owners of the parent company |
| 25.0 | (29.0) | (4.0) | 90.7 | ||
Non-controlling interests |
| - | - | - | 2.7 | ||
|
| 25.0 | (29.0) | (4.0) | 93.4 | ||
|
| ||||||
Total other comprehensive income/(loss) for the year | |||||||
(Gain)/loss reclassified to profit and loss during the year |
| (14.8) | - | (14.8) | 9.0 | ||
Fair value (loss)/gain on cash flow hedges during the year (3) |
| (0.7) | - | (0.7) | 21.2 | ||
Total comprehensive income/(loss) for the year | 9.5 | (29.0) | (19.5) | 123.6 | |||
Total comprehensive income/(loss) attributable to: | |||||||
Owners of the parent company |
| 9.5 | (29.0) | (19.5) | 120.9 | ||
Non-controlling interests |
| - | - | - | 2.7 | ||
|
| 9.5 | (29.0) | (19.5) | 123.6 | ||
Earnings/(loss) per share | 7 |
|
|
|
| ||
Basic |
|
|
| (0.32)p | 7.43p | ||
Diluted |
|
|
| (0.32)p | 7.25p | ||
1. See Note 1, exceptional items
2. 2022 total is the IFRS-compliant measure for the consolidated statement of comprehensive income
3. Net fair value gains on cash flow hedges will be reclassified to profit or loss during the three years to 28 February 2025.
Consolidated statement of financial position
at 28 February 2022
|
|
Note |
|
2022 |
2021 |
|
|
|
|
£ million |
£ million |
|
Assets |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Intangible assets |
11 |
|
128.5 |
118.3 |
|
Property, plant and equipment |
12 |
|
349.2 |
141.6 |
|
Right-of-use assets |
13 |
|
49.7 |
16.7 |
|
Financial assets |
22 |
|
2.8 |
13.1 |
|
Deferred tax |
14 |
|
7.5 |
3.2 |
|
|
|
|
537.7 |
292.9 |
|
Current assets |
|
|
|
|
|
Inventories |
15 |
|
279.4 |
144.9 |
|
Trade and other receivables |
16 |
|
58.0 |
40.6 |
|
Financial assets |
22 |
|
14.2 |
17.1 |
|
Current tax asset |
|
|
7.8 |
4.4 |
|
Cash and cash equivalents |
187 |
|
101.3 |
276.0 |
|
Total current assets |
|
|
460.7 |
483.0 |
|
|
|
|
|
|
|
Total assets |
|
|
998.4 |
775.9 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
18 |
|
(296.6) |
(222.9) |
|
Provisions |
19 |
|
(53.5) |
(53.5) |
|
Interest-bearing loans and borrowings |
20 |
|
(100.0) |
- |
|
Lease liabilities |
21 |
|
(7.9) |
(6.7) |
|
Financial liabilities |
22 |
|
(3.7) |
(2.6) |
|
Total current liabilities |
|
|
(461.7) |
(285.7) |
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
Lease liabilities |
21 |
|
(44.0) |
(11.6) |
|
Financial liabilities |
22 |
|
(3.1) |
(1.9) |
|
Deferred tax |
14 |
|
(25.3) |
(4.2) |
|
Total liabilities |
|
|
(534.1) |
(303.4) |
|
|
|
|
|
|
|
Net assets |
|
|
464.3 |
472.5 |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
Share capital |
23 |
|
12.7 |
12.6 |
|
Shares to be issued |
24 |
|
31.9 |
31.9 |
|
Share premium |
|
|
922.8 |
916.2 |
|
Hedging reserve |
|
|
10.2 |
25.7 |
|
EBT reserve |
|
|
(75.6) |
(56.5) |
|
Other reserves |
25 |
|
(795.5) |
(795.2) |
|
Retained earnings |
|
|
357.8 |
337.8 |
|
Total equity |
|
|
464.3 |
472.5 |
Consolidated statement of changes in equity
|
|
Share capital |
Shares to be issued |
Share premium |
Hedging reserve |
EBT reserve |
Other reserves |
Non-controlling interest |
Retained earnings |
Total equity |
|
|
£ million |
£ million |
£ million |
£ million |
£ million |
£ million |
£ million |
£ million |
£ million |
|
Balance at 29 February 2020 |
11.7 |
- |
608.4 |
(4.5) |
(17.1) |
(515.2) |
17.3 |
227.3 |
327.9 |
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year |
- |
- |
- |
- |
- |
- |
2.7 |
90.7 |
93.4 |
|
Other comprehensive income/(expense): |
|
|
|
|
|
|
|
|
|
|
Loss reclassified to profit and loss in revenue |
- |
- |
- |
9.0 |
- |
- |
- |
- |
9.0 |
|
Fair value gain on cash flow hedges during the year |
- |
- |
- |
21.2 |
- |
- |
- |
- |
21.2 |
|
Total comprehensive income for the year |
- |
- |
- |
30.2 |
- |
- |
2.7 |
90.7 |
123.6 |
|
Issue of shares |
0.6 |
- |
169.8 |
- |
(39.4) |
0.8 |
(0.2) |
- |
131.6 |
|
Share-based payments credit |
- |
- |
- |
- |
- |
- |
0.5 |
19.2 |
19.7 |
|
Excess taxation on share-based payments |
- |
- |
- |
- |
- |
- |
0.1 |
0.6 |
0.7 |
|
Acquisition of non-controlling interest (see note 1) |
0.3 |
31.9 |
138.0 |
- |
- |
(281.3) |
(20.4) |
- |
(131.5) |
|
Translation of foreign operations |
- |
- |
- |
- |
- |
0.5 |
- |
- |
0.5 |
|
Balance at 28 February 2021 |
12.6 |
31.9 |
916.2 |
25.7 |
(56.5) |
(795.2) |
- |
337.8 |
472.5 |
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the year |
- |
- |
- |
- |
- |
- |
- |
(4.0) |
(4.0) |
|
Other comprehensive income/(expense): |
|
|
|
|
|
|
|
|
|
|
Gain reclassified to profit and loss in revenue |
- |
- |
- |
(14.8) |
- |
- |
- |
- |
(14.8) |
|
Fair value loss on cash flow hedges during the year |
- |
- |
- |
(0.7) |
- |
- |
- |
- |
(0.7) |
|
Total comprehensive income for the year |
- |
- |
- |
(15.5) |
- |
- |
- |
(4.0) |
(19.5) |
|
Issue of shares |
0.1 |
- |
6.6 |
- |
(19.1) |
- |
- |
- |
(12.4) |
|
Share-based payments credit |
- |
- |
- |
- |
- |
- |
- |
26.1 |
26.1 |
|
Excess taxation on share-based payments |
- |
- |
- |
- |
- |
- |
- |
(2.1) |
(2.1) |
|
Translation of foreign operations |
- |
- |
- |
- |
- |
(0.3) |
- |
- |
(0.3) |
|
Balance at 28 February 2022 |
12.7 |
31.9 |
922.8 |
10.2 |
(75.6) |
(795.5) |
- |
357.8 |
464.3 |
Consolidated cash flow statement
for the year ended 28 February 2022
|
|
Note |
|
2022 |
2021 |
|
|
|
|
£ million |
£ million |
|
Cash flows from operating activities |
|
|
|
|
|
(Loss)/profit for the year |
|
|
(4.0) |
93.4 |
|
Adjustments for: |
|
|
|
|
|
Share-based payments charge |
|
|
26.1 |
19.7 |
|
Depreciation charges and amortisation |
|
|
53.8 |
29.8 |
|
Finance income |
|
|
- |
(0.9) |
|
Finance expense |
|
|
1.6 |
0.3 |
|
Tax expense |
|
|
11.8 |
31.3 |
|
|
|
89.3 |
173.6 |
|
|
|
|
|
|
|
|
Increase in inventories |
15 |
|
(134.5) |
(45.8) |
|
Increase in trade and other receivables |
16 |
|
(17.7) |
(8.8) |
|
Increase in trade and other payables |
18 |
|
73.2 |
82.1 |
|
Cash generated from operations |
|
|
10.3 |
201.1 |
|
|
|
|
|
|
|
Tax paid |
|
|
- |
(38.3) |
|
Net cash generated from operating activities |
|
|
10.3 |
162.8 |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
Acquisition of intangible assets |
11 |
|
(32.0) |
(85.7) |
|
Acquisition of property, plant and equipment |
12 |
|
(229.5) |
(37.0) |
|
Acquisition of non-controlling interest in PrettyLittleThing |
|
|
- |
(161.9) |
|
Finance income received |
|
|
- |
1.2 |
|
Net cash used in investing activities |
|
|
(261.5) |
(283.4) |
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
Proceeds from the issue of ordinary shares |
|
|
6.8 |
204.9 |
|
Share issue costs written off to share premium |
|
|
- |
(3.5) |
|
Purchase of own shares by EBT |
|
|
(19.2) |
(39.4) |
|
Finance expense paid |
|
|
(0.9) |
(0.1) |
|
Lease payments |
|
|
(10.2) |
(5.9) |
|
Increase in/(repayment) of borrowings |
20 |
|
100.0 |
(4.8) |
|
Net cash generated from financing activities |
|
|
76.5 |
151.2 |
|
|
|
|
|
|
|
(Decrease)/increase in cash and cash equivalents |
|
|
(174.7) |
30.6 |
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of year |
|
|
276.0 |
245.4 |
|
Cash and cash equivalents at end of year |
|
|
101.3 |
276.0 |
Notes to the financial statements
(forming part of the financial statements)
1 Accounting policies
General information
The boohoo group plc operates as a multi-brand online retailer, based in the UK and is a public limited company incorporated and domiciled in Jersey and listed on the Alternative Investment Market (AIM) of the London Stock Exchange. Its registered office address is 12 Castle Street, St Helier, Jersey, JE2 3RT. The company was incorporated on 19 November 2013.
Basis of preparation
This condensed consolidated financial information for the year ended 28 February 2021 has been prepared in accordance with the recognition and measurement criteria of UK-adopted International Financial Reporting Standards and the Companies (Jersey) Law 1991.
The financial information contained in this preliminary announcement for the years ended 28 February 2022 and 28 February 2021 does not comprise the group's statutory financial statements within the meaning of Companies (Jersey) Law 1991. Statutory accounts for the year ended 28 February 2022 will be filed with the Jersey Companies Registry in due course. The auditors' reports on the statutory accounts for each of the years ended 28 February 20212 and 28 February 2021 are unqualified, do not draw attention to any matters by way of emphasis and do not contain any statement under any matters that are required to be reported by exception under Companies (Jersey) Law 1991.
The financial statements have been approved on the assumption that the group and company remain a going concern. The continued impact of the COVID-19 crisis on the group is not expected to change materially over the next year, provided that governments' actions in controlling the virus and its variants continue to be effective. Trading during the year to February 2022 has shown that on-line sales have some resilience during lockdowns in many countries. The group has cash resources and credit facilities sufficient to continue solvent trading in the face of an unforeseen downturn in demand.
New and amended standards adopted by the group
The following new standards, and amendments to standards, have been adopted by the group for the first time during the year commencing 1 March 2021:
· Amendments to IFRS 3 business combinations
Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the group and/or company
The following standards have been published for accounting periods beginning after 1 March 2021 but have not been adopted by the UK and have not been early adopted by the group or company and could have an impact on the group and company financial statements:
· Amendments to IAS 16 property, plant and equipment
· Amendments to IAS 37 provisions, contingent liabilities and contingent assets
Measurement convention
The consolidated financial statements have been prepared under the historical cost convention, excluding financial assets and financial liabilities (including derivative instruments) held at fair value through profit or loss and excluding assets and liabilities acquired through acquisitions and held at fair value. The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Exceptional items
Exceptional items are those of significant size and of a non-recurring nature that require disclosure in order that the underlying business performance can be identified. The exceptional costs in these financial statements include: redundancy costs in temporary warehouse facilities that were operated in the period between acquisition of the new brands and integration into new warehouses; the costs of moving inventory from one warehouse to another; additional disruption costs associated with the installation of the automation in the Sheffield facility; legal expenses associated with the acquisitions; irrecoverable sales taxes on customer returns from the EU during the period after Brexit and before simplified procedures (IOSS) in the EU became operational; and additional costs of working during transitional administrative and warehousing operations subsequent to the acquisitions of the brands in February 2021. The latter additional costs have been calculated as the difference between the medium-term operating costs incurred in the new warehouse facilities and the set-up and initial operating costs. Such additional costs do require estimation by management.
|
Exceptional costs |
£ million |
|
Selling and distribution costs |
|
|
Sheffield automation disruption costs |
10.6 |
|
Dual warehouse operating costs |
9.4 |
|
Irrecoverable EU sales tax on returns pre IOSS |
5.1 |
|
Redundancy costs |
3.3 |
|
|
28.4 |
|
Administration expenses |
|
|
Dual administrative costs during transition of new brands from sellers |
3.9 |
|
Acquisition and restructuring costs |
3.1 |
|
Redundancy costs |
0.4 |
|
|
7.4 |
|
Total before tax |
35.8 |
|
Tax |
(6.8) |
|
Total after tax |
29.0 |
2 Segmental analysis
IFRS 8, 'Operating Segments', requires operating segments to be determined based on the group's internal reporting to the chief operating decision maker. The chief operating decision maker is considered to be the executive board, which has determined that the primary segmental reporting format of the group for the year ending February 2022 is by geographic region. This is because the group is multi-brand and now focuses on geographic performance at a group level and not on individual brand performance. The group strategy is to increase market share in each territory using the optimum mix of brands that is appropriate for each market, taking into account factors such as consumer preference, established presence and brand appeal.
|
|
|
|
Year ended 28 February 2022 |
||||
|
|
|
UK |
Rest of Europe |
USA |
Rest of world |
Total |
|
|
|
|
£ million |
£ million |
£ million |
£ million |
£ million |
|
|
Revenue |
|
1,202.8 |
219.2 |
451.6 |
109.2 |
1,982.8 |
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
(608.6) |
(99.7) |
(181.5) |
(51.9) |
(941.7) |
|
|
Gross profit |
|
594.2 |
119.5 |
270.1 |
57.3 |
1,041.1 |
|
|
|
|
|
|
|
|
|
|
|
Distribution costs |
|
- |
- |
- |
- |
(516.5) |
|
|
Administrative expenses - other |
|
- |
- |
- |
- |
(502.5) |
|
|
Amortisation of acquired intangibles |
|
- |
- |
- |
- |
(12.8) |
|
|
Other income |
|
- |
- |
- |
- |
0.1 |
|
|
Operating profit |
|
- |
- |
- |
- |
9.4 |
|
|
|
|
|
|
|
|
|
|
|
Finance income |
|
- |
- |
- |
- |
- |
|
|
Finance expense |
|
- |
- |
- |
- |
(1.6) |
|
|
Profit before tax |
|
- |
- |
- |
- |
7.8 |
|
|
|
|
|
Year ended 28 February 2021 |
||||
|
|
|
UK |
Rest of Europe |
USA |
Rest of world |
Total |
|
|
|
|
£ million |
£ million |
£ million |
£ million |
£ million |
|
|
Revenue |
|
945.1 |
244.7 |
435.1 |
120.4 |
1,745.3 |
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
(464.2) |
(107.1) |
(174.5) |
(54.3) |
(800.1) |
|
|
Gross profit |
|
480.9 |
137.6 |
260.6 |
66.1 |
945.2 |
|
|
|
|
|
|
|
h |
|
|
|
Distribution costs |
|
- |
- |
- |
- |
(422.0) |
|
|
Administrative expenses - other |
|
- |
- |
- |
- |
(394.6) |
|
|
Amortisation of acquired intangibles |
|
- |
- |
- |
- |
(5.5) |
|
|
Other income |
|
- |
- |
- |
- |
1.0 |
|
|
Operating profit |
|
- |
- |
- |
- |
124.1 |
|
|
|
|
|
|
|
|
|
|
|
Finance income |
|
- |
- |
- |
- |
0.9 |
|
|
Finance expense |
|
- |
- |
- |
- |
(0.3) |
|
|
Profit before tax |
|
- |
- |
- |
- |
124.7 |
|
Due to the nature of its activities, the group is not reliant on any individual customers.
No analysis of the assets and liabilities of each operating segment is provided to the chief operating decision maker in the monthly management accounts; therefore, no measure of segmental assets or liabilities is disclosed in this note. Non-current assets located outside the UK comprise offices in the USA with a net book value of £2.5 million.
3 Other income
|
|
|
2022 |
2021 |
|
|
|
£ million |
£ million |
|
Property rental income |
|
0.1 |
1.0 |
4 Finance income and expense
|
|
|
2022 |
2021 |
|
|
|
£ million |
£ million |
|
Finance income: Bank interest received |
|
- |
0.9 |
|
|
|
|
|
|
Finance expense: Loan interest paid |
|
(0.8) |
(0.1) |
|
Finance expense: IFRS 16 lease interest |
|
(0.8) |
(0.2) |
|
|
|
(1.6) |
(0.3) |
5 Auditors' remuneration
| 2022 | 2021 |
| £ million | £ million |
Audit of these financial statements | 0.5 | 0.4 |
Disclosure below based on amounts receivable in respect of services to the group | ||
Amounts receivable by auditors and their associates in respect of: | ||
Audit of financial statements of subsidiaries pursuant to legislation | - | - |
| 0.5 | 0.4 |
6 Profit before tax
Profit before tax is stated after charging: | 2022 | 2021 |
| £ million | £ million |
Short-term operating lease rentals for buildings | 0.6 | 0.2 |
Equity-settled share-based payment charges | 26.1 | 19.7 |
Exceptional items (note 1) | 35.8 | - |
Depreciation of property, plant and equipment | 22.0 | 14.4 |
Depreciation of right-of-use assets | 10.0 | 5.7 |
Amortisation of intangible assets | 9.0 | 4.2 |
Amortisation of acquired intangible assets | 12.8 | 5.5 |
7 Earnings per share
Basic earnings per share is calculated by dividing profit after tax attributable to members of the holding company by the weighted average number of shares in issue during the year. Own shares held by the Employee Benefit Trust are eliminated from the weighted average number of shares. Diluted earnings per share is calculated by dividing the profit after tax attributable to members of the holding company by the weighted average number of shares in issue during the year, adjusted for potentially dilutive share options, except when there is a loss, in which case the basic measure is used.
|
| 2022 | 2021 |
Weighted average shares in issue for basic earnings per share |
| 1,235.3 | 1,220.7 |
Dilutive share options |
| 48.2 | 31.4 |
Weighted average shares in issue for diluted earnings per share |
| 1,283.5 | 1,252.1 |
|
|
|
|
(Loss)/earnings (£ million) |
| (4.0) | 90.7 |
Basic (loss)/earnings per share |
| (0.32)p | 7.43p |
Diluted (loss)/earnings per share |
| (0.32)p | 7.25p |
|
|
|
|
(Loss)/earnings (£ million) |
| (4.0) | 90.7 |
Adjusting items: |
|
|
|
Amortisation of intangible assets arising on acquisitions |
| 12.8 | 5.5 |
Share-based payments charges |
| 26.1 | 19.7 |
Share-based payment charge adjustment for non-controlling interests |
| - | (0.7) |
Exceptional items |
| 35.8 | - |
Adjustment for tax |
| (14.4) | (4.8) |
Pro-forma non-controlling interest adjustment to 34% |
| - | (1.9) |
Adjusted earnings |
| 56.3 | 108.5 |
Adjusted basic earnings per share |
| 4.56p | 8.89p |
Adjusted diluted earnings per share |
| 4.39p | 8.67p |
|
|
|
|
Adjusted earnings and adjusted earnings per share gives a more consistent measure of the underlying performance of the business excluding non-cash accounting charges relating to the amortisation of intangible assets valued upon acquisitions and non-cash share-based payment charges.
8 Staff numbers and costs
The average monthly number of persons employed by the group (including directors) during the year, analysed by category, was as follows:
| Number of employees | |
| 2022 | 2021 |
Administration | 2,462 | 1,767 |
Distribution | 2,888 | 1,275 |
| 5,350 | 3,042 |
The aggregate payroll costs of these persons were as follows:
| 2022 | 2021 |
| £ million | £ million |
Wages and salaries | 174.8 | 106.6 |
Social security costs | 14.3 | 9.2 |
Post-employment benefits | 3.8 | 2.5 |
Equity-settled share-based payment charges | 26.1 | 19.7 |
| 219.0 | 138.0 |
9 Directors' and key management compensation
| 2022 | 2021 |
| £ million | £ million |
Short-term employee benefits | 25.3 | 17.6 |
Post-employment benefits | 0.3 | 0.2 |
Equity-settled share-based payment charges | 3.4 | 2.7 |
| 29.0 | 20.5 |
Directors' and key management compensation comprises the group directors and executive committee members.
10 Taxation
| 2022 | 2021 |
| £ million | £ million |
Analysis of charge in year |
|
|
|
|
|
Current tax on income for the year | (1.9) | 27.0 |
Adjustments in respect of prior year taxes | (0.1) | 1.1 |
Deferred taxation (note 15) | 13.8 | 3.2 |
Tax on profit | 11.8 | 31.3 |
|
|
|
Income tax expense computations are based on the jurisdictions in which taxable profits were earned at prevailing rates in those jurisdictions. The company is subject to Jersey income tax at the standard rate of 0%. The reconciliation below relates to tax incurred in the UK where the group is tax resident. The total tax charge differs from the amount computed by applying the UK rate of 19.0% for the year (2021: 19.0%) to profit before tax as a result of the following: | ||
|
|
|
Profit before tax | 7.8 | 124.7 |
Profit before tax multiplied by the standard rate of corporation tax of the UK of 19.0% (2021: 19.0%) | 1.5 | 23.7 |
Effects of: |
|
|
Expenses not deductible for tax purposes | 3.5 | 5.8 |
Change in deferred tax rate | 5.9 | - |
Adjustments in respect of prior year taxes | (0.1) | 1.1 |
Overseas tax differentials | 0.5 | 0.2 |
R&D tax credits | 0.1 | - |
Depreciation on ineligible assets | 0.4 | 0.5 |
Tax on profit | 11.8 | 31.3 |
Tax recognised in the statement of changes in equity |
|
|
|
|
|
Deferred tax debit on movement in tax base of share options | (3.0) | (0.2) |
No current tax was recognised in other comprehensive income (2021: £nil).
11 Intangible assets
| Patents and licences | Trademarks | Customer lists | Computer software | Total |
| £ million | £ million | £ million | £ million | £ million |
Cost |
|
|
|
|
|
Balance at 29 February 2020 | 0.6 | 44.2 | 6.1 | 14.6 | 65.5 |
Additions | - | 71.4 | 2.0 | 12.3 | 85.7 |
Disposals | - | - | - | (3.4) | (3.4) |
Balance at 28 February 2021 | 0.6 | 115.6 | 8.1 | 23.5 | 147.8 |
Additions | - | - | - | 32.0 | 32.0 |
Disposals | - | - | - | (2.3) | (2.3) |
Balance at 28 February 2022 | 0.6 | 115.6 | 8.1 | 53.2 | 177.5 |
|
|
|
|
|
|
Accumulated amortisation |
|
|
|
|
|
Balance at 29 February 2020 | 0.4 | 8.6 | 5.9 | 8.3 | 23.2 |
Amortisation for year | 0.1 | 5.3 | 0.2 | 4.1 | 9.7 |
Disposals | - | - | - | (3.4) | (3.4) |
Balance at 28 February 2021 | 0.5 | 13.9 | 6.1 | 9.0 | 29.5 |
Amortisation for year | 0.1 | 12.1 | 0.7 | 8.9 | 21.8 |
Disposals | - | - | - | (2.3) | (2.3) |
Balance at 28 February 2022 | 0.6 | 26.0 | 6.8 | 15.6 | 49.0 |
|
|
|
|
|
|
Net book value |
|
|
|
|
|
At 29 February 2020 | 0.2 | 35.6 | 0.2 | 6.3 | 42.3 |
At 28 February 2021 | 0.1 | 101.7 | 2.0 | 14.5 | 118.3 |
At 28 February 2022 | - | 89.6 | 1.3 | 37.6 | 128.5 |
Within the statement of comprehensive income, amortisation of acquired intangible assets (trademarks and customer lists) of £12.8 million (2021: £5.5 million) is shown separately. The amount of amortisation of the other intangible assets included in distribution costs is £0.2 million (2021: £0.2 million) and in administrative expenses is £8.8 million (2021: £4.1 million).
12 Property, plant and equipment
| Short leasehold alterations | Fixtures and fittings | Computer equipment | Motor vehicles | Land & buildings | Total |
| £ million | £ million | £ million | £ million | £ million | £ million |
Cost |
|
|
|
|
|
|
Balance at 29 February 2020 | 9.1 | 86.9 | 6.3 | 0.9 | 40.8 | 144.0 |
Additions | 10.2 | 16.1 | 3.6 | 0.1 | 7.0 | 37.0 |
Exchange differences | - | - | - | - | (0.2) | (0.2) |
Disposals | - | (0.6) | (0.8) | - | - | (1.4) |
Balance at 28 February 2021 | 19.3 | 102.4 | 9.1 | 1.0 | 47.6 | 179.4 |
|
|
|
|
|
|
|
Additions | 7.3 | 129.0 | 4.4 | 0.2 | 88.6 | 229.5 |
Exchange differences | - | - | - | - | 0.1 | 0.1 |
Disposals | (0.1) | (0.9) | (1.2) | (0.2) | - | (2.4) |
Balance at 28 February 2022 | 26.5 | 230.5 | 12.3 | 1.0 | 136.3 | 406.6 |
|
|
|
|
|
|
|
Accumulated depreciation |
|
|
|
|
|
|
Balance at 29 February 2020 | 2.7 | 16.0 | 3.5 | 0.3 | 2.3 | 24.8 |
Depreciation charge for the year | 2.0 | 9.1 | 2.1 | 0.3 | 0.9 | 14.4 |
Disposals | - | (0.6) | (0.8) | - | - | (1.4) |
Balance at 28 February 2021 | 4.7 | 24.5 | 4.8 | 0.6 | 3.2 | 37.8 |
|
|
|
|
|
|
|
Depreciation charge for the year | 2.1 | 14.4 | 2.9 | 0.2 | 2.4 | 22.0 |
Disposals | (0.1) | (0.9) | (1.2) | (0.2) | - | (2.4) |
Balance at 28 February 2022 | 6.7 | 38.0 | 6.5 | 0.6 | 5.6 | 57.4 |
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
|
At 29 February 2020 | 6.4 | 70.9 | 2.8 | 0.6 | 38.5 | 119.2 |
At 28 February 2021 | 14.6 | 77.9 | 4.3 | 0.4 | 44.4 | 141.6 |
At 28 February 2022 | 19.8 | 192.5 | 5.8 | 0.4 | 130.7 | 349.2 |
The amounts of depreciation included in the statement of comprehensive income in distribution costs is £13.1 million (2021: £8.7 million) and in administrative expenses is £8.9 million (2021: £5.7 million).
13 Right-of-use assets
|
|
|
|
| Short leasehold properties |
|
|
|
|
| £ million |
Cost |
|
|
|
|
|
Balance at 29 February 2020 |
|
|
|
| 27.1 |
Additions |
|
|
|
| 7.8 |
Balance at 28 February 2021 |
|
|
|
| 34.9 |
Additions |
|
|
|
| 43.0 |
Balance at 28 February 2022 |
|
|
|
| 77.9 |
|
|
|
|
|
|
Accumulated depreciation |
|
|
|
|
|
Balance at 29 February 2020 |
|
|
|
| 12.5 |
Depreciation for year |
|
|
|
| 5.7 |
Balance at 28 February 2021 |
|
|
|
| 18.2 |
Depreciation for year |
|
|
|
| 10.0 |
Balance at 28 February 2022 |
|
|
|
| 28.2 |
|
|
|
|
|
|
Net book value |
|
|
|
|
|
At 29 February 2020 |
|
|
|
| 14.6 |
At 28 February 2021 |
|
|
|
| 16.7 |
At 28 February 2022 |
|
|
|
| 49.7 |
14 Deferred tax
Assets
| Unused tax losses | Depreciation in excess of capital allowances | Share-based payments | Total |
| £ million | £ million | £ million | £ million |
Asset at 29 February 2020 | - | 0.3 | 5.7 | 6.0 |
Recognised in statement of comprehensive income | - | 0.3 | (2.9) | (2.6) |
Debit in equity | - | - | (0.2) | (0.2) |
Asset at 28 February 2021 | - | 0.6 | 2.6 | 3.2 |
Recognised in statement of comprehensive income | 7.5 | (0.6) | (0.1) | 6.8 |
Debit in equity | - | - | (2.5) | (2.5) |
Asset at 28 February 2022 | 7.5 | - | - | 7.5 |
Liabilities
| Business combinations | Capital allowances in excess of depreciation | Share-based payments | Total |
| £ million | £ million | £ million | £ million |
Liability at 29 February 2020 | (1.2) | (2.4) | - | (3.6) |
Recognised in statement of comprehensive income | 0.2 | (0.8) | - | (0.6) |
Liability at 28 February 2021 | (1.0) | (3.2) | - | (4.2) |
Recognised in statement of comprehensive income | 0.2 | (19.3) | (1.5) | (20.6) |
Debit in equity | - | - | (0.5) | (0.5) |
Liability at 28 February 2022 | (0.8) | (22.5) | (2.0) | (25.3) |
Recognition of the deferred tax assets is based upon the expected generation of future taxable profits. The deferred tax liability will reverse in more than one year's time as the intangible assets are amortised. Deferred tax is calculated at 25% as enacted from April 2023 by the UK Government.
15 Inventories
| 2022 | 2021 |
| £ million | £ million |
Finished goods | 262.4 | 133.5 |
Finished goods - returns | 17.0 | 11.4 |
| 279.4 | 144.9 |
The value of inventories included within cost of sales for the year was £939.1 million (2021: £791.7 million). The finished goods returns is the estimated value of stock at customers but expected to be returned. An impairment provision of £18.4 million (2021: £15.8 million) was charged to the statement of comprehensive income. There were no write-backs of prior period provisions during the year.
16 Trade and other receivables
| 2022 | 2021 |
| £ million | £ million |
Trade receivables | 34.6 | 18.3 |
Prepayments | 21.3 | 10.4 |
Accrued income | 2.1 | 0.3 |
Taxes and social security receivable | - | 11.6 |
| 58.0 | 40.6 |
Trade receivables represent amounts due from wholesale customers and advance payments to suppliers.
The fair value of trade and other receivables is not materially different from the carrying value.
Where specific trade receivables are not considered to be at risk and requiring a provision, the trade receivables impairment provision is calculated using the simplified approach to the expected credit loss model, based on the following percentages:
|
| 2022 | 2021 |
Age of trade receivable |
| % | % |
60 - 90 days past due |
| 1 | 1 |
91 - 120 days past due |
| 5 | 5 |
Over 121 days past due |
| 90 | 90 |
The provision for impairment of receivables is charged to administrative expenses in the statement of comprehensive income. The maturing profile of unsecured trade receivables and the provisions for impairment are as follows:
| 2022 | 2021 |
| £ million | £ million |
Due within 30 days | 25.1 | 18.3 |
Provision for impairment | (0.1) | (2.4) |
|
|
|
Due in 31 to 90 days | 10.7 | 3.6 |
Provision for impairment | (2.4) | (1.4) |
|
|
|
Past due | 1.3 | 0.2 |
Provision for impairment | - | - |
Total amounts due and past due | 37.1 | 22.1 |
Total provision for impairment | (2.5) | (3.8) |
| 34.6 | 18.3 |
17 Cash and cash equivalents
| 2022 | 2021 |
| £ million | £ million |
At start of year | 276.0 | 245.4 |
Net movement during year | (174.5) | 30.8 |
Effect of exchange rates | (0.2) | (0.2) |
At end of year | 101.3 | 276.0 |
There is no material credit risk associated with the cash at bank due to the healthy credit ratings of the banks of BBB+ and higher.
18 Trade and other payables
| 2022 | 2021 |
| £ million | £ million |
Trade payables | 97.5 | 47.9 |
Other creditors | 6.6 | 6.4 |
Accruals | 152.4 | 144.0 |
Deferred income | 16.7 | 10.2 |
Taxes and social security payable | 23.4 | 14.4 |
| 296.6 | 222.9 |
The fair value of trade payables is not materially different from the carrying value.
19 Provisions
| Dilapidations | Returns | Claims | Total |
| £ million | £ million | £ million | £ million |
Provision at 28 February 2021 | 5.9 | 24.2 | 23.4 | 53.5 |
Movements in provision charged/(credited) to income statement: |
|
|
|
|
Prior year provision utilised | (2.2) | (24.2) | (5.6) | (32.0) |
Increase in provision in current year | - | 32.0 | - | 32.0 |
Provision at 28 February 2022 | 3.7 | 32.0 | 17.8 | 53.5 |
The dilapidation provision represents the estimated exit cost of leased premises; the returns provision represents the revenue reduction of estimated customer returns which occur over the two to three months after the date of sale; and the claims represents the estimate of claims against the group that are expected to settle in the period within nine to twelve months after the year-end.
20 Interest-bearing loans and borrowings
This note provides information about the contractual terms of the group's interest-bearing loans and borrowings, which are measured at amortised cost.
Terms and debt repayment schedule
|
|
|
| Nominal |
|
|
|
|
|
|
| interest | Year of | 2022 | 2021 |
|
|
| Currency | rate | maturity | £ million | £ million |
Revolving credit facility |
|
| GB£ | SONIA CIA | 2022 | 100.0 | - |
Movement in interest-bearing loans and borrowings
| 2022 | 2021 |
| £ million | £ million |
Opening balance | - | 4.8 |
Increase of borrowings | 100.0 | - |
Interest accrued | 0.8 | 0.1 |
Interest paid | (0.8) | (0.1) |
Capital paid | - | (4.8) |
Closing balance | 100.0 | - |
A new revolving credit facility of £325 million with a three-year term was agreed after the year-end in March 2022 to support the group's liquidity requirements and provide a greater degree of headroom.
Reconciliation of movements in cash flows from financing activities to movements in liabilities:
| Balance 28 February 2021 | Cash flow from financing activities | Additions | Statement of comprehensive income | Movement in retained earnings and other reserves | Balance at 28 February 2022 |
| £ million | £ million | £ million | £ million | £ million | £ million |
Equity | 472.5 | (12.4) | - | (19.5) | 23.7 | 464.3 |
Leases | 18.3 | (10.2) | 43.0 | 0.8 | - | 51.9 |
Bank borrowings | - | 99.1 | - | 0.9 | - | 100.0 |
| 490.8 | 76.5 | 43.0 | (17.8) | 23.7 | 616.2 |
21 Lease liabilities
Minimum lease payments due | Within 1 year | 1-2 years | 2-5 years | 5-10 years | More than 10 years | Total |
| £ million | £ million | £ million | £ million | £ million | £ million |
28 February 2022 |
|
|
|
|
|
|
Lease payments | 8.8 | 5.9 | 7.7 | 13.1 | 24.4 | 59.9 |
Finance charges | (0.9) | (0.7) | (2.0) | (2.5) | (1.9) | (8.0) |
Net present value | 7.9 | 5.2 | 5.7 | 10.6 | 22.5 | 51.9 |
| 2022 | 2021 |
| £ million | £ million |
Current lease liability | 7.9 | 6.7 |
Non-current lease liability | 44.0 | 11.6 |
Total | 51.9 | 18.3 |
Movement in lease liabilities:
| 2022 | 2021 |
| £ million | £ million |
Opening balance | 18.3 | 16.2 |
Interest accrued | 0.8 | 0.2 |
Cash flow lease payments | (10.2) | (5.9) |
Additions | 43.0 | 7.8 |
Closing balance | 51.9 | 18.3 |
22 Financial instruments
(a) Fair values of financial instruments
Trade and other receivables
The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date if the effect is material.
Trade and other payables
The fair value of trade and other payables is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date if the effect is material.
Cash and cash equivalents
The fair value of cash and cash equivalents is estimated as its carrying amount where the cash is repayable on demand. Where it is not repayable on demand then the fair value is estimated at the present value of future cash flows, discounted at the market rate of interest at the reporting date.
Interest-bearing borrowings
Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date.
Cash flow hedges
Fair value is calculated using forward interest rate points to restate the hedge to fair market value.
Fair values
| 2022 | 2021 |
| £ million | £ million |
Financial assets |
|
|
Cash and cash equivalents | 101.3 | 276.0 |
Cash flow hedges | 17.0 | 30.2 |
Trade receivables | 34.6 | 18.3 |
Accrued income | 2.1 | 0.3 |
| 155.0 | 324.8 |
| 2022 | 2021 |
| £ million | £ million |
Financial liabilities |
|
|
Cash flow hedges | 6.8 | 4.5 |
Trade payables | 97.5 | 47.9 |
Other creditors | 6.6 | 6.4 |
Accruals | 152.4 | 144.0 |
Provisions | 53.5 | 53.5 |
Interest-bearing loans and borrowings | 100.0 | - |
Lease liabilities | 51.9 | 18.3 |
| 468.7 | 274.6 |
23 Share capital
| 2022 | 2021 |
| £ million | £ million |
1,267,634,949 authorised and fully paid ordinary shares of 1p each (2021: 1,263,255,457) | 12.7 | 12.6 |
During the year, a total of 4.4 million shares were issued under the share incentive plans (2021: 5.2 million). On 21 February 2022, 63,761 (2021: 14,276) new ordinary shares were issued to non-executive directors as part of their annual remuneration.
The directors do not recommend the payment of a dividend so that cash is retained in the group for capital expenditure projects that are required for the rapid growth and efficiency improvements of the business and for suitable business acquisitions (2021: £nil).
24 Shares to be issued
| 2022 | 2021 |
| £ million | £ million |
| 31.9 | 31.9 |
The shares to be issued represents the fair value of the contingent shares to be issued to the non-controlling interests of PrettyLittleThing.com Limited, in accordance with the acquisition agreement entered into and announced on 28 May 2020. Under this agreement, 16,112,331 Ordinary Shares in boohoo group plc are to be issued subject to the group's share price averaging 491 pence per share over a six-month period, up until a longstop date of 14 March 2024. If this condition is not met, the consideration will lapse.
25 Reserves
| 2022 | 2021 |
| £ million | £ million |
Translation reserve | 0.2 | 0.5 |
Capital redemption reserve | 0.1 | 0.1 |
Reconstruction reserve | (515.3) | (515.3) |
Acquisition of non-controlling interest in PrettyLittleThing.com Limited | (281.3) | (281.3) |
Proceeds from issue of growth shares in boohoo holdings Limited | 0.8 | 0.8 |
| (795.5) | (795.2) |
The translation reserve arises from the movement in the revaluation of subsidiary balance sheets in foreign currencies; the capital redemption reserve arose from a capital reconstruction in 2014; the reconstruction reserve arose on the impairment of the carrying value of the subsidiary company in 2014 at that date; and the acquisition of the non-controlling interest in PrettyLittleThing is the excess of consideration paid over the carrying value of the non-controlling interest as at the date of acquisition in May 2020, written off to reserves.
26 Capital commitments
Capital expenditure contracted for at the end of the reporting year but not yet incurred is as follows:
| 2022 | 2021 |
| £ million | £ million |
Property, plant and equipment | 21.8 | 5.5 |
27 Contingent liabilities
From time to time, the group can be subject to various legal proceedings and claims that arise in the ordinary course of business, which may include cases relating to the group's brand and trading name. All such cases brought against the group are robustly defended and a liability is recorded only when it is probable that the case will result in a future economic outflow and that the outflow can be reliably measured.
Appendices
Growth rates on prior period revenue by region
Revenue by period for the year to 28 February 2022 (FY22)
£m | 4m to 31 December | 2m to 28 February | 12m to 28 February | |||||||||
| FY22 | FY21 | yoy % | yoy % CER | FY22 | FY21 | yoy % | yoy % CER | FY22 | FY21 | yoy %
| yoy % CER |
Total | 714.5 | 660.8 | 8% | 9% | 292.5 | 268.0 | 9% | 9% | 1,982.8 | 1,745.3 | 14% | 14% |
Revenue by region |
|
|
|
|
|
|
|
| ||||
UK | 451.0 | 356.7 | 26% | 26% | 182.3 | 158.3 | 15% | 15% | 1,202.8 | 945.1 | 27% | 27% |
ROE | 79.9 | 90.3 | -11% | -11% | 34.9 | 30.5 | 14% | 13% | 219.2 | 244.7 | -10% | -9% |
USA | 145.8 | 168.2 | -13% | -12% | 55.4 | 64.6 | -14% | -13% | 451.6 | 435.1 | 4% | 4% |
ROW | 37.8 | 45.6 | -17% | -16% | 19.8 | 14.6 | 36% | 34% | 109.2 | 120.4 | -10% | -8% |
£m | 3m to 31 May | 3m to 31 August | 6m to 31 August | |||||||||
| FY22 | FY21 | yoy % | yoy % CER | FY21 | FY20 | yoy % | yoy % CER | FY21 | FY20 | yoy %
| yoy % CER |
Total | 486.1 | 367.8 | 32% | 32% | 489.8 | 448.7 | 9% | 10% | 975.9 | 816.5 | 20% | 20% |
Revenue by region |
|
|
|
|
|
|
|
| ||||
UK | 274.5 | 183.0 | 50% | 50% | 294.9 | 247.2 | 19% | 19% | 569.4 | 430.2 | 32% | 32% |
ROE | 54.4 | 63.4 | -14% | -12% | 50.0 | 60.3 | -17% | -16% | 104.4 | 123.7 | -16% | -14% |
USA | 131.9 | 92.0 | 43% | 40% | 118.6 | 110.2 | 8% | 9% | 250.5 | 202.2 | 24% | 23% |
ROW | 25.2 | 29.4 | -15% | -10% | 26.3 | 31.0 | -15% | -18% | 51.5 | 60.4 | -15% | -14% |
Revenue by period for the year to 28 February 2021 (FY21)
£m | 4m to 31 December | 2m to 28 February | 12m to 28 February | |||||||||
| FY21 | FY20 | yoy % | yoy % CER | FY21 | FY20 | yoy % | yoy % CER | FY21 | FY20 | yoy %
| yoy % CER |
Total | 660.8 | 473.7 | 40% | 40% | 268.0 | 196.3 | 37% | 36% | 1,745.3 | 1,234.9 | 41% | 41% |
Revenue by region |
|
|
|
|
|
|
|
| ||||
UK | 356.7 | 255.8 | 39% | 39% | 158.3 | 108.5 | 46% | 46% | 945.1 | 679.4 | 39% | 39% |
ROE | 90.3 | 69.6 | 30% | 32% | 30.5 | 31.4 | (3)% | (1)% | 244.7 | 188.4 | 30% | 30% |
USA | 168.2 | 110.6 | 52% | 51% | 64.6 | 42.3 | 53% | 46% | 435.1 | 263.6 | 65% | 63% |
ROW | 45.6 | 37.7 | 20% | 24% | 14.6 | 14.1 | 3% | 11% | 120.4 | 103.5 | 16% | 19% |
£m | 3m to 31 May | 3m to 31 August | 6m to 31 August | |||||||||
| FY21 | FY20 | yoy % | yoy % CER | FY21 | FY20 | yoy % | yoy % CER | FY21 | FY20 | yoy %
| yoy % CER |
Total | 367.8 | 254.3 | 45% | 45% | 448.7 | 310.5 | 44% | 44% | 816.5 | 564.9 | 45% | 44% |
Revenue by region |
|
|
|
|
|
|
|
| ||||
UK | 183.0 | 140.6 | 30% | 30% | 247.2 | 174.4 | 42% | 42% | 430.2 | 315.0 | 37% | 37% |
ROE | 63.4 | 38.2 | 66% | 65% | 60.3 | 49.2 | 23% | 21% | 123.7 | 87.5 | 41% | 40% |
USA | 92.0 | 51.3 | 79% | 83% | 110.2 | 59.4 | 86% | 83% | 202.2 | 110.7 | 83% | 83% |
ROW | 29.4 | 24.2 | 22% | 22% | 31.0 | 27.5 | 12% | 14% | 60.4 | 51.7 | 17% | 18% |
CER in this appendix for the year ended 28 February 2021 is calculated using exchange rates prevailing during the year ending 28 February 2021. Nomenclature: ROE - rest of Europe; ROW - rest of world; yoy - year-on-year; CER - constant exchange rate
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