Superdry plc (SDRY) Superdry plc: IR-Half-yearly Results
27-Jan-2023 / 07:00 GMT/BST Dissemination of a Regulatory
Announcement that contains inside information in accordance with
the Market Abuse Regulation (MAR), transmitted by EQS Group. The
issuer is solely responsible for the content of this
announcement.
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SuperdryPlc
("Superdry" or "the Company")
27 January 2023
Interim Results for the 26-week period ending 29 October
2022
Strong Christmas trading; cautious on remainder of FY23
Superdry announces its Interim Results covering the 26-week
period from 1 May 2022 to 29 October 2022 ("H1 23") and a trading
update covering the 9-week period from 30 October 2022 to 31
December 2022.
-- Brand recovery on track, with strong momentum for AW221
collection and new leading categories.
-- Stores revenue +14.3% to GBP117.7m as customers returned to
high streets, with strong demand forwomenswear, denim, and
jackets.
-- Wholesale declined 5.2%, due to a lagged recovery after Covid
and shipment timing.
-- The return to a normalised cost base coupled with the slow
start to Q1 in Europe, and the delayedrecovery of Wholesale have
all impacted first half profits, despite underlying recovery.
-- Adjusted Loss Before Tax2 of GBP(13.6)m, includes foreign
exchange gains of GBP17.2m (H1 22 FX loss ofGBP1.1m).
-- Awarded a Climate Disclosure Project ("CDP") A rating, one of
only two British fashion brands in the 'AList'.
-- Over the Christmas period, demand continued to strengthen,
with stores back to 2019 levels in Decemberand Retail3 revenue up
24.9% in 9 weeks to 31 December 2022.
-- Due to underperformance of Wholesale and increasing
uncertainty on Q4, we have revised our outlook forFY23 adjusted
profit before tax to be broadly breakeven (previously GBP10 -
20m).
GBPm H1 23 H1 22 Vs H1 22
Group Revenue GBP287.2m GBP277.2m 3.6%
Gross Margin Rate 52.1% 55.2% (3.2)%pts
Adjusted loss before tax2 GBP(13.6)m GBP(2.8)m 385.7%
Adjusting items2 GBP(4.1)m GBP6.8m n/a
Statutory profit/(loss) before tax GBP(17.7)m GBP4.0m n/a
Adjusted basic loss per share2 (11.2)p (3.8)p 194.7%
Basic profit/(loss) per share (15.0)p 3.0p n/a
Net working capital2 GBP119.3m GBP120.6m (1.1)%
Net (debt)/cash position2 GBP(38.0)m GBP(3.9)m n/a
Julian Dunkerton, Founder and Chief Executive Officer, said:
"The Superdry brand has real momentum and I'm delighted by how our
retail trading continues to strengthen. We've done this against a
difficult macroeconomic backdrop by delivering well-designed,
affordable, and responsibly sourced products which have resonated
well with customers. Our coats performed really well in the run up
to Christmas, and womenswear continues to be a highlight for us.
Stores continued to recover strongly and online had its biggest
ever week over Black Friday, helped by our new ecommerce platform
which is delivering real benefits.
We continued to receive positive recognition for our efforts to
make Superdry the '#1 Sustainable Style Destination', and this year
CDP awarded us an A rating, one of only two British fashion brands
on this year's 'A List'.
Despite the underlying brand recovery, our profits in the first
half fell short of expectations mainly due to the underperformance
of Wholesale. We reorganised our team and our approach to support
our Wholesale partners and expect to see their confidence return
following the retail success of AW22. Whilst we did trade well
through November and December, the outlook for the remainder of the
year is uncertain and as a result, we are moderating our profit
outlook to broadly breakeven. We don't expect market conditions to
become easier any time soon, but with a new financing package in
place and the brand in great health, we approach the year ahead
with optimism."
H1 23 Financial overview
-- Revenue increased 3.6% year-on-year with retail channels
growing 9.5% due to a strong return to physicalretail whilst
ecommerce growth of 1.6% was more modest as customer returned to
shopping in stores. This was offsetby both the slower rate of buy
in Wholesale, given some stock overhang, which continued to be
adversely affected bystock overhangs from Covid, and a later
dispatch profile for AW221 product.
-- Gross margin contracted by 3.1%pts with the strong delivery
of our full-price stance during a period ofrising costs being
offset by the delayed Wholesale price increases and additional
stock clearance through theWholesale channel.
-- Adjusted loss before tax fell to GBP(13.6)m (H1 22
GBP(2.8)m), impacted both by the performance of Wholesaleand a
return to normal business rents and rates following a period of
Covid-relief, offset by gains from cashmargin hedges against
exchange rate movements of GBP10.3m (H1 22 GBP(1.2) m) and a
revaluation of foreign currencyassets of GBP6.9m (H1 22
GBP0.1m).
-- Statutory loss before tax was GBP(17.7)m, a GBP21.7m decrease
from a profit of GBP4.0m in H1 22.
-- Working capital showed a reduction of GBP1.3m year-on-year
driven by a combination of increased inventoryof GBP13.2m and
receivables of GBP15.9m, offset by a rise in payables by GBP30.4m,
all significantly affected by thetiming of stock intake and
wholesale dispatches.
-- We ended the half with GBP38.0m net debt2 as we entered our
seasonal working capital high, exacerbated by aperiod of slower
sales in October due to the warmer weather. As noted in our 22
December trading update, our cashposition has continued to improve
during the peak trading period, with net debt of GBP9.8m as of 31
December 2022.
Christmas Trading (9 weeks from 30 October 2022 to 31 December
2022)
The table below shows the revenue change on a one-year basis for
the 9-week period ending 31 December 2022:
GBPm Christmas Trading Year-to-date
(9 weeks) (35 weeks)
Group Revenue 4.5% 3.9%
Stores 18.8% 16.1%
Ecommerce 33.4% 15.3%
Retail (Stores and Ecommerce) 24.9% 15.7%
Wholesale* (57.4)% (18.0)%
* Over short trading periods, wholesale is always subject to
material timing differences year-on-year and the longer-term trends
are more indicative of overall performance.
Over the 9-week period, group revenue was up 4.5% versus FY22 as
physical store trading continued to recover, offsetting a material
reduction in Wholesale dispatches. Retail revenue grew by 24.9%,
reflecting both a strong recovery in stores, with more seasonal
weather re-igniting strong demand for our outerwear. This was
supported by a more strategic and well-executed Black Friday and
end-of-season sale. Importantly, we saw a recovery in our Store
sales beyond pre-Covid levels during a robust holiday trading
period.
The Black Friday event, our first major promotion in nine
months, pulled a high volume of traffic into our stores and onto
our Ecommerce site and kickstarted the successful Christmas trading
period after the unseasonal weather in October. Our post-Christmas
Sale then cleared stock at attractive rates for our customers - on
better margins than our alternative clearance channels - helping to
reduce our excess inventory, whilst having a small impact on gross
margin.
Wholesale has proved more challenging with revenue down 18.0%
year-to-date, in part driven by the impact of shipment timings,
some of which will reverse in the second half. However, there is
still a Covid-related confidence lag in Wholesale, which we expect
to close as our partners see how successful our AW221 range has
performed through our own channels, giving them confidence to buy
for future seasons.
We continued to deliver on our unit inventory reduction
programme, with a further reduction from 12.4m at period end to
11.8m. As of 31 December 2022, the Company had GBP9.8m net debt2,
supported by solid holiday trading.
Gross margin for the 9 weeks is down 60 basis points on the
prior year, largely driven by the continuing weakness in Wholesale
along with the Black Friday and end-of-season clearance events.
Outlook
While the global macroeconomic outlook remains challenging, we
have gained confidence from our recent robust retail performance
and the strong demand for our brand across all geographies and
platforms. We believe that our honest approach to high quality
products for a great price has resonated well with consumers under
pressure and we can see that reflected in our sales numbers. The
more recent trading performance through the holiday period supports
our view that the brand is resonating with consumers and continues
to strengthen.
That said, we are mindful of the challenges facing the consumer
as we head into 2023 and remain very cautious about the potential
for a soft spring. s a management team we are taking action to seek
costs savings initiatives to support our performance. When combined
with current margin run-rates and the underperformance of our
Wholesale division, we believe it appropriate to amend our adjusted
profit before tax guidance to broadly breakeven (previously GBP10 -
20m).
Notes 1. Autumn/Winter22 defined as week 19, commencing 4
September 2022 through to week 44, commencing 26February 2023. 2.
'Adjusted', 'Adjusting', Net working capital and 'Net (Debt)/Cash'
are used as alternative performancemeasures ('APMs'). Definition of
APMs and how they are calculated are disclosed in the financial
statements in Note18 and 22 'Net working capital' has been
reconciled within the Finance Review. 3. Retail is a combination of
both the Stores and Ecommerce segments. 4. Where commented upon,
Full Price Mix is Net full price sales from full price channels,
excludingmark-down product but including basket-building mechanics
(e.g., 3 for 2 offers) as a proportion of total channelsales.
Market briefing
A webcast for analysts and investors will be held today starting
at 9:00, followed by a Q&A with management. The webcast will be
available to join live, but questions will be limited to analysts.
If you would like to register, please go to
https://secure.emincote.com/client/superdry/superdry012. A
recording of the event will also be available on our corporate
website shortly afterwards.
A separate meeting with an opportunity for retail investors to
ask questions will be held at 13:00 through the 'Investor Meets
Company' platform, register here
(https://www.investormeetcompany.com/superdry-plc/register-investor).
For further information:
Superdry:
Shaun Wills shaun.wills@superdry.com +44 (0) 1242 586747
Chris MacDonald investor.relations@superdry.com +44 (0) 1242 586747
Peel Hunt: +44 (0) 2074 188900
George Sellar
Michael Burke
+44 (0) 2031 002000
Liberum:
John Fishley
Media enquiries
Tim Danaher superdry@brunswickgroup.com +44 (0) 207 4045959
Notes to Editors
Our mission is "To be the #1 sustainable style destination"
through our distinct collections, defined by consumer style
choices. We design affordable, premium quality clothing,
accessories and footwear which are sold around the world. We have a
clear strategy for delivering continued growth via a multi-channel
approach combining Stores, Ecommerce, and Wholesale.
Superdry has 219 physical stores and around 450 franchisees and
licensees. We operate in over 50 countries and have over 4,100
colleagues globally.
Cautionary Statement
This announcement contains certain forward-looking statements
with respect to the financial condition and operational results of
Superdry Plc. These statements and forecasts involve risk,
uncertainty, and assumptions because they relate to events and
depend upon circumstances that will occur in the future. There are
a number of factors that could cause actual results or developments
to differ materially from those expressed or implied by these
forward-looking statements. These forward-looking statements are
made only as at the date of this announcement. Nothing in this
announcement should be construed as a profit forecast. Except as
required by law, Superdry Plc has no obligation to update the
forward-looking statements or to correct any inaccuracies
therein.
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/ 2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR").
CEO Review
Against a challenging national and global macroeconomic
backdrop, the brand turnaround continues to gain momentum and I am
pleased with the progress we have made in the first half of this
year as we continue with our mission to make Superdry the '#1
Sustainable Style Destination'. Presenting our Autumn ranges early
and with authority resulted in a successful lead on AW221
outerwear, and delivered strong results, notably in stores where we
have seen footfall rising through the period and revenue up 14.3%
in the first half, and on third party websites, where we are
attracting new customers to the brand. Significantly, this trend
has continued and in December we saw retail revenue above pre-Covid
levels.
Our store revenue growth was greatest in the UK and the US,
where the post-pandemic recovery has been fastest: up 19%. In some
of our larger European markets, notably Belgium and Germany, the
recovery hasn't been as quick, with revenue in Europe up only 6.7%.
The growth in Ecommerce revenue slowed to 1.6% as consumers
reverted to physical retail, but this trend was more than offset by
the strong performance of our partner program, which has seen
Zalando's total migration away from Wholesale and this partner
platform also completed during the period.
Whilst we have seen a recovery in retail, our Wholesale business
has declined by 5.2% during the period. This has been partly driven
by the impact of shipment timings, some of which will reverse in
the second half. However, there is still a Covid related confidence
lag in Wholesale, which we expect to close as our partners see how
successful our AW22 1 range has been through our own channels,
giving them confidence to buy for future seasons.
The half-year adjusted loss before tax increased to GBP(13.6)m
in the period, with a return to normal levels of rent and business
rates, which was ahead of the sales recovery from OMICRON,
particularly in the European markets.
Style and sustainability continue to be the overarching focus in
everything we do. Reflecting this, we have simplified our mission
further: "To be the #1 Sustainable Style Destination". To achieve
this, we are continuing to focus on our four strategic
objectives:
-- Inspire through product & style
-- Engage through social
-- Lead through sustainability
-- Strong operational foundations to 'Make it happen'.
Inspire Through Product & Style
We continue to deliver a high-quality branded product at great
value, and this led to our AW221 collection being very well
received, with outerwear delivering strong growth on last year's
performance. This was by bringing in our comprehensive range of
jackets earlier than last year left us well prepared for the early
cold snap in September, which saw strong demand for our
jackets.
The new product has also been successful on third party sites
across Europe, where we know we reach new customers. This success
is supporting additional conversations with potential third
parties, as we seek to expand our brand awareness and our partner
program further.
Our womenswear range, in particular our dress collection and
teenage product, has excelled. This is due to a refreshed
collection promoted through a well-targeted influencer marketing
program. We are excited by the results, with both new and returning
customers finding joy in our range, notably our new party dresses,
which were a viral hit online in the months leading into the
holidays. In addition, whilst traditionally not one of our
strongest areas, this season's denim range has impressed with the
category up 34%, driven by women's denim up 108% year-on-year.
Engage Through Social
We continue to expand our social media position to recruit new
customers into the brand. Launched in September 2021, our Tiktok
channel now has over 550k followers with over 4.1m likes across our
videos. All our Tiktok content is exclusively influencer generated,
letting them do the talking for us. We direct over 60% of our
social budget to generating content from our 2,670 influencers,
resulting in organic content that is connecting with our customers
where the conversation is happening; over 60 videos now have more
than 1m views.
Our party dresses also worked well in viral videos, which helped
drive sales up 31% for the category, a disruptive area for us and a
key anchor as we recruit new and win-back lapsed customers.
Our AW221 jackets campaign did extremely well towards the end of
the first half and beyond. We launched a comprehensive range early
and lead with a strong push across both social and traditional
marketing channels, helping deliver two of our biggest ever
September sales weeks on Ecommerce.
Lead Through Sustainability
Our ambition to be the leading sustainable style destination
starts with our product but continues through everything we do. We
aim to move all our pure-cotton garments to organic cotton by 2025,
and, on that journey, we are helping others with support for over
7,500 farmers - supplying a third of our organic cotton - during
the first half. Our push to renewable energy also continues, with
91% of our retail stores, offices, and distribution centres powered
by renewables, on track for our 100% target by 2025. During the
period we continued to sell more sustainable garments than ever
before, with 52% of sales in the half being sustainably sourced
product, up from 32% in the prior period.
We continue to see improvement in our Carbon Disclosure Project
rating, up from A- to A. Among our peers, we are the only brand to
have improved our grade consistently each year for the last three
years, and one of two British fashion brands on this year's 'A
List'. When I joined, we were a C and through hard work and the
determination of our talented teams, we've worked towards our Net
Zero goal, which is now starting to be recognised by our
customers.
We published our second Sustainability report in September 2022
which can be found on our Corporate Website (https:/
/corporate.superdry.com/sustainability/sustainability-report/),
this provides additional detail on everything we have committed to,
achieved so far and ultimately challenged ourselves on.
Make it Happen
A key operational improvement during the period was the signing
of our new financing facility, which we announced on 22 December.
Our new facility is larger and covenant light, making it less
complex to operate and more flexible, supporting our growth in the
years ahead. In parallel, our finance team is working hard to make
our business more efficient, making our cash cycle less
volatile.
We continue to make changes in our organisation, welcoming
Denise Posner as Marketing Director in July, and Tom Hutt as Head
of Marketing Creative shortly afterwards. . The changes to our
marketing strategy have been immediate and impactful, and I look
forward to working with Denise and Tom to further drive
improvements in our marketing impact and effectiveness. Given our
renewed focus on wholesale, we have also expanded Craig McGregor's
role from leading our Retail Stores to Global Commercial Director,
additionally taking on leadership of our Wholesale business. Craig
and I will work together to revisit our Wholesale model and explore
new strategic partnerships and improve an area of our business
which is currently underperforming. I aim to share more on this in
the future as we develop and execute our strategy.
Our investment in migrating our Ecommerce platform over to
microservices technology is now largely complete. Alongside this,
we continue to invest in additional improvements in payment
platforms and usability, improving the customer experience, whilst
also investing in our back-end systems to deliver better, more
accurate insights to support the running of the business.
Looking forward
While the global macroeconomic outlook remains challenging, we
have gained confidence from our recent robust retail performance
and the strong demand for our brand across geographies and
platforms. I believe that our honest approach to great quality
products for a great price has resonated well with consumers under
pressure and we can see that reflected in our sales numbers.
Despite a more moderate profit delivery in the first half on
account of the unseasonably warm weather experienced in October,
the more recent trading performance through the balance of calendar
2022 supports our view that the brand is clearly resonating with
consumers and continues to strengthen. This is further evidenced by
our improved gross margin performance in retail where we have
predominantly returned to a full-price stance whilst still seeing
strong demand for our jackets and winter wear.
Financial Review
Group revenue increased 3.6% year-on-year to GBP287.2m, largely
driven by the strong performance in our owned stores. Store sales
increased 14.3% year-on-year to GBP117.7m as our collections
resonated with consumers and we saw traffic shift back to physical
retail and a normalisation in online revenue. Ecommerce increased
1.6% year-on-year to GBP63.3m, with the reversion in consumer
behaviour somewhat offset by a step-up in performance on third
party sites. Retail revenue (combined Stores and Ecommerce) ended
the half up 9.5% year-on-year, which helped offset the decrease in
Wholesale revenue of 5.2% year-on-year.
During H1 23, the gross margin decreased 3.1%pts year-on-year to
52.1% due to a higher mix of third-party sales within our Ecommerce
channel, deferred wholesale price increases, and Wholesale
clearance activity designed to continue our inventory reduction
programme, all of which offset the improvements from returning to a
full-price trading stance.
Our Adjusted Loss Before Tax of GBP(13.6)m was impacted by a
return to normal rent business rates and other costs whilst the
store business remained heavily impacted by Omicron, particularly
in Europe and exacerbated by underperformance in Wholesale.
We enter into forward foreign exchange contracts to hedge the
currency exposure on stock purchases. As these contracts mature,
they offset FX gains or losses incurred in the gross margin in the
current and future periods. During the first half we had realised
gains of this nature of GBP10.3m (H1 22: GBP(1.3)m).
There is a further GBP6.9m (H1 22: GBP0.1m) of unrealised
currency gains which results from the translation of our overseas
foreign currency denominated assets and liabilities, and GBP4.1m of
unrealised fair value loss due to the uncrystallised loss on
foreign exchange forward contracts. This element will remain
subject to currency fluctuations and could, therefore, reverse in
the second half.
H1 23 Restated1 H1 22 Change
GBPm GBPm %
Revenue: Stores 117.7 103.0 14.3%
Ecommerce 63.3 62.2 1.6%
Wholesale 106.2 112.0 (5.2)%
Group revenue 287.2 277.2 3.6%
Gross profit: Stores 80.3 71.7 12.0%
Ecommerce 36.7 39.1 (6.1)%
Wholesale 32.5 42.3 (23.2)%
Group profit 149.5 153.1 (2.4)%
Gross profit margin % 52.1% 55.2% (3.1)%pts
Selling and distribution costs (150.6) (126.4) 19.1%
Central costs (33.4) (32.9) 1.5%
Impairment credit on trade receivables 0.1 2.0 100.0%
Adjusted other gains and (losses) 23.4 4.9 377.6%
Adjusted operating profit/(loss)* (11.0) 0.7 n/a
Adjusted operating margin* -3.8% 0.3% (4.1)%pts
Net finance expense (2.6) (3.5) (25.7)%
Adjusted loss before tax* (13.6) (2.8) 385.7%
Adjusting items:
Fair value movement on forward contracts (4.1) 6.2 n/a
IFRS2 charge - Founder Share Plan - 0.6 n/a
Total adjusting items (4.1) 6.8 n/a
Profit/(Loss) before tax (17.7) 4.0 n/a
Tax (expense)/credit 5.5 (1.5) n/a
Profit/(Loss) for the period (12.2) 2.5 n/a
* Adjusted operating loss, adjusted operating margin and
adjusted loss before tax are defined as reported results before
adjusting items as further explained in Note 22
Retail revenue ('Stores' and 'Ecommerce')
H1 23 H1 22 Vs H1 22
Retail revenue GBPm
GBPm %
Stores 117.7 103.0 14.3%
Ecommerce 63.3 62.2 1.6%
Total Retail revenue 181.0 165.2 9.5%
Ecommerce revenue as a proportion of Retail revenue 34.9% 37.7% (2.7)%pts
Ecommerce revenue as a proportion of Group revenue 22.0% 22.4% (0.4)%pts
Stores
Store revenue has increased 14.3% year-on-year to GBP117.7m, as
consumers returned to physical retail, and we had a full half of
open stores with no Covid-related closures.
The UK, Republic of Ireland and Rest of World, which relates to
US stores, recovered strongly in the half, particularly in the US.
Mainland Europe lagged the rest of our markets largely due to the
delayed recovery to high street footfall post Covid, particularly
in Belgium and Germany.
H1 23 H1 22 Vs H1 22
Store revenue by territory GBPm GBPm
%
UK and Republic of Ireland 63.0 53.0 18.9%
Mainland Europe 41.3 38.7 6.7%
Rest of World 13.4 11.3 19.5%
Total Store revenue 117.7 103.0 14.3%
We closed 5 stores in the half-year to H1 23 and opened 5 new
stores in the UK, the Netherlands and Germany, ending the half with
219 stores in 11 countries. New openings in the period included a
new flagship store at Battersea Power Station.
Ecommerce
Ecommerce has experienced a slower half because of the consumer
shift back to physical retail, particularly in the UK. However, we
have seen strong performance across third party channels, driving
the year-on-year increase of 1.6% to GBP63.3m. We are encouraged by
the performance and the continued progress made on product and our
focus on digital improvements across our owned sites.
Third party channels include partner programme revenue, where
Superdry fulfils the order placed on a partner website. In H1 23
the shift to 100% partner program with Zalando was completed and
has been a significant driver in the success online, particularly
across Europe which has increased 13.6% year-on-year.
H1 23 H1 22 Vs H1 22
Ecommerce revenue by territory GBPm GBPm
%
UK and Republic of Ireland 26.6 29.8 (10.7)%
Mainland Europe 33.5 29.5 13.6%
Rest of World 3.1 2.8 10.7%
Total Ecommerce revenue 63.3 62.2 1.6%
Wholesale
Our Wholesale partners, across mainland Europe particularly,
have continued to suffer from build-up of inventory over the
pandemic period, which has led to much lower levels of in-season
sales than anticipated. Low levels of dispatches in the first half,
particularly higher valued AW221 inventory, resulted in a decrease
of revenue by 5.2% year-on-year.
H1 23 H1 22 Vs H1 22
Wholesale revenue by territory GBPm GBPm
%
UK and Republic of Ireland 16.2 10.7 51.4%
Mainland Europe 62.3 73.4 (15.1)%
Rest of World 27.8 27.9 (0.4)%
Total Wholesale revenue 106.2 112.0 (5.2)%
We had good growth in the UK and Republic of Ireland which
worked to partially offset the decline in Mainland Europe. Growth
in the UK was largely driven by additional clearance deals
negotiated to continue the reduction in historical stock.
Gross Margin
As a result of the increased mix of third-party online sales,
intake margin pressures, and lower gross margin in Wholesale as a
result of the timing of price increases, total gross margin has
decreased by 3.1%pts year-on-year to 52.1%.
We remain committed to our return to full price trading and in
the first half saw full price mix4 in our owned retail channels
increase 4%pts year-on-year from 74% to 78%.
Gross margin by channel H1 23 H1 22 Vs H1 22
Stores 68.2% 69.6% (1.4)%pts
Ecommerce 58.1% 62.9% (4.8)%pts
Retail 64.7% 67.1% (2.8)%pts
Wholesale 30.6% 37.8% (7.2)%pts
Total gross margin 52.1% 55.2% (3.1)%pts
Total Operating Costs
H1 23 Restated1 H1 22 Vs H1 22
GBPm GBPm
%
Selling and distribution costs (150.6) (126.4) 19.1%
Central costs (33.4) (32.9) 1.5%
Impairment credit on trade receivables 0.1 2.0 (95.0)%
Adjusted other gains and losses 23.4 4.9 377.6%
Total adjusted operating costs (160.5) (152.4) 5.3%
Net finance expense (2.6) (3.5) (25.7)%
Adjusted loss before tax (13.6) (2.8) -
Total adjusted operating costs increased 5.3% to GBP160.5m (H1
22: GBP152.4m) and includes store, distribution, marketing, head
office, central and depreciation costs, impairment credit on trade
receivables and adjusted other gains and losses. The balance is
roughly in line with H1 22, despite our store estate being open for
the full year as we returned to a more normalised way of
working.
Selling and distribution costs increased GBP24.2m to GBP150.6m,
largely due to increase in store overhead costs. The period marked
a return to normalised cost levels following Covid related relief,
with an unwind of the rent relief as well as a return to standard
business rates. During the period, we also saw increases in our
energy costs as well as wage inflation, with a pay rise to our
store employees of 9%. Central costs have marginally decreased to
GBP33.4m.
Adjusted other gains and losses, which include realised and
unrealised FX gains, royalty income and other income, largely
related to lease renegotiations under IFRS 16, were higher than in
H1 22 GBP23.4m (H1 22: GBP4.9m), largely due to a GBP17.2m gain on
foreign exchange.
Net finance costs were roughly in line with the prior year at
GBP2.6m (H1 22: GBP3.5m). GBP2.0m (H1 22: GBP2.3m) relates to
interest expense on leases under IFRS 16.
The adjusted loss before tax declined to GBP(13.6)m during the
period, a GBP(10.8)m decline versus H1 22. Excluding the gain due
to foreign exchange, adjusted loss before tax would have been
GBP(30.8)m during the period.
Adjusting items
GBPm H1 23 H1 22 Change
Adjusted loss before tax (13.6) (2.8) 385.7%
Fair value movement on forward contracts (4.1) 6.2 (166.1)%
IFRS2 charge - Founder Share Plan - 0.6 (100.0)%
Total adjusting items (4.1) 6.8 (160.3)%
Statutory (loss)/profit before tax (17.7) 4.0 (542.5)%
Adjusting items primarily relate to a GBP(4.1)m charge in
respect of the fair value movement in financial derivatives (H1 22:
GBP6.2m credit) which has been driven by the movement between the
hedged rates and spot rates during the period and a number of
outstanding contracts.
Adjusted Profit/Loss before tax
The adjusted loss before tax for the first half is GBP(13.6)m, a
decrease of GBP10.8m from a loss of GBP(2.8)m in H1 22 and after
the benefit of GBP17.2m from foreign exchange gains.
The statutory loss before tax is GBP(17.7)m, down from a profit
of GBP4.0m in H1 22.
Taxation
The tax credit on losses is GBP5.5m (H1 21: GBP1.5m tax charge).
As a result, the group recorded an effective tax rate of 25%.
Taken with the adjusted tax credit of GBP1.0m, the Group's total
income tax credit of GBP5.5m represents a total effective tax rate
of 31.2% which is greater than the UK statutory tax rate of 19%.
The difference is driven by the effect of the increase in the UK
corporation tax rate to 25% from 01 April 2023, the tax accounting
impact of certain overseas tax losses for which no tax benefit has
been recognised, and tax rate differentials in overseas
subsidiaries.
Profit/Loss after tax
Group statutory loss after tax for the first half was
GBP(12.2)m, compared to a GBP2.5m profit in H1 22.
Profit/Loss per share
Adjusted basic EPS is (11.2)p (H1 22: EPS (3.8)p).
Reported basic EPS is (15.0)p (H1 22: 3.0p) based on a basic
weighted average of 81,380,288 shares (H1 22: 82,054,759
shares).
Adjusted diluted EPS is (11.2)p (H1 22: (3.8)p) and diluted EPS
is (15.0)p (H1 22: 3.0p). These are based on a diluted weighted
average of 85,754,749 shares (H1 22: 82,054,759 shares).
Dividends
The Board decided during the Covid pandemic that, given the
uncertain macro-economic outlook, they would not recommend either
final or interim dividends for the near-term. In addition, under
the terms of our recent loan facility, the Company is restricted
from declaring, making or paying dividends to shareholders without
prior permission from Bantry Bay, which cannot be unreasonably
withheld.
Cash Flow
We ended the half with GBP38.0m net debt as we entered our
seasonal high point in cash use, coupled with a period of slower
sales in October due to warmer weather. As noted in our 22 December
update, our cash position has continued to improve on account of
seasonal sales cycle and strong holiday trading, with net debt of
GBP9.8m as of 31 December 2022.
Working Capital
H1 23 H1 22 Change Change
GBPm GBPm GBPm GBPm
%
Inventories 172.6 159.4 13.2 8.3%
Trade and other receivables 125.3 109.4 15.9 14.5%
Trade and other payables (178.6) (148.2) (30.4) 20.5%
Net working capital 119.3 120.6 (1.3) (1.1%)
Inventory units have decreased by another 2m to 12.4m units at
the end of H1 23 as we continue with our targeted clearance
activity of older stock. We are committed to reducing this further
by the year-end through our focused reduction of the option count
for each seasonal buy. By contrast, our inventory value increased
during the period to GBP172.6m, up GBP13.2m year-on-year. This was
mostly down to the high proportion of high-value jackets in the
range which were drawn off later by wholesale partners and saw
slower sales in October's warm weather before the sales rate
increased into November and December.
Trade and other receivables have increased 14.5% to GBP125.3m in
the current year due to timing of shipments, and later commitments
from our Wholesale partners.
Trade and other payables have increased 20.5% to GBP(178.6)m
largely due to timing of inventory shipments as we brought in
orders early to ensure we could start our season with a full
range.
As at the end of H1 23 GBP2.7m of deferred rent is included in
trade and other payables (H1 22: GBP0.9m), with GBP7.5m of deferred
rent in relation to IFRS 16 leases included within lease
liabilities (H1 22: GBP8.2m).
Capital Expenditure
Additions in property, plant and equipment and intangible assets
totalled GBP7.6m (H1 22: GBP9.0m), as the business focussed on
existing IT infrastructure projects, including the re-platforming
of our Ecommerce website to microservices.
Notes: 1. During the current financial year, the Group
reclassified Net Gains/(Loss) on FX realised gains/(losses)on FX
contract and unrealised gains from selling, general and
administrative expense to Other gains and losses.This
reclassification more appropriately reflects selling, general and
administrative expenses. Prior financialyear comparatives have been
restated to align to the current financial year approach.
Principal risks and uncertainties
The principal risks and uncertainties were outlined in the 2022
Annual Report (pages 56-67). These have been reviewed and amended
to ensure they are reflective of our existing risk profile and are
assessed on an on-going basis.
Also, within the Annual Report, the CFO Review included an
analysis of the actions taken to preserve the long-term financial
position of Superdry and an Assessment of Group Prospects (page
73-75).
Specific principal risks and uncertainties include:
Damage may occur to the Superdry Brand, or the Brand may lose its resonance.
Superdry's ability to achieve success depends on setting a consumer centric and relevant commercial product strategy
that is aligned to brand position, market dynamics and consumer perception
Compromise to our key technological / physical assets would significantly impede our ability to trade, particularly
during the peak trading period from November to January. Key assets include Ecommerce platform, Distribution Centres,
Critical IT Systems, Head Office and large stores.
Elevated stock levels represent a risk in terms of shortfall in cash flow and additional storage costs.
Performance across our global, omni-channel proposition represents a risk. Specifically:
-- Retail store performance represents a risk and in line with market trends, the ongoing consumer
preference shift towards digital shopping channels has seen declining consumer visits to stores and declining
profitability in the physical retail environment. Covid-19 has accelerated the move towards digital, but the risk
associated with retail remains at an elevated level with the threat of further lockdowns and additional Covid-19
measures, such as numbers of customers permitted in stores also impacting performance.
-- Wholesale performance is at risk from a number of factors, including grey market distribution, an
inability to meet the critical path and failing to deliver on time and in full to customers. Covid-19 continues to
represent a risk in terms of our partners being able to trade and surplus stock levels where partners have return
and cancel orders.
-- Ecommerce performance represents a significant growth opportunity, however, represents a risk in terms of
reliance on the channel to offset lost store sales in the short term and delivery of medium- and long-term business
objectives. For example, we will be unable to achieve these objectives if the consumer is moving faster than we can
adapt and that our Ecommerce platforms trail in the wake of competition.
-- Failure to deliver on our growth aspirations in the Group's key future development markets, in
particular, the USA could lead to investment without sufficient return in a reasonable timeframe and/or losses and
the deployment of significant management resource at a time when we have multiple priorities.
Our financial results could be impacted by changes in exchange rates. In addition, given the size of our wholesale
partners and associated order book, overdue debt will always represent a risk for the business.
Financial results are also at risk if the controls that operate within key financial systems are not operating
effectively.
Significant cash inflows, for example, peak trading, do not align with the timing of peak outflows of cash. As such,
there is a requirement to manage working capital within the business to ensure we have sufficient cash at all times. In
addition, Covid-19 related store closures has put pressure on the cash balance, resulting in the need for close cash
management.
We need to recruit, develop, and retain the calibre of leadership that will enable us to achieve our strategic goals.
There is a risk our information security is breached causing data and/or systems compromise. Covid-19 has exacerbated
this risk and could impact our ability to trade, lead to regulatory scrutiny and fines and cause damage to the brand,
e.g., loss of customer trust.
Failure by suppliers to adhere to our Ethical Trading Code of Practice could erode our reputation as a responsible
brand. Customer enquiries on ethical trading continue to increase, awareness is also growing in line with the modern
slavery and the fast fashion debate, and failure to demonstrate our credentials in this area could also lead to
reputational damage.
Increased risk of human rights issues through the supply chain, as a result of changing local conditions, for example,
Covid-19.
Awareness of environmental sustainability is increasing, and stakeholder expectations and regulatory attention are also
developing at pace. Failure to meet expectations or adhere to regulatory standards would adversely impact our brand. A
consequence of enhanced reporting is additional resource requirements.
These factors also represent a risk in that they could influence the rate the business may need to cut its carbon
emissions and add additional cost to achieve environmental compliance (for example, raw materials and lower emission
technologies).
In addition, the Group is heavily reliant on key raw materials which will be impacted by the effects of climate change
in the long-term making them harder and more expensive to source.
A longer-term risk is shifting customer preferences as result of climate change, requiring the brand to adapt further.
Responsibility statement of the Directors in respect of the
condensed consolidated interim financial information
On 26 January 2023 the Board of Directors of Superdry Plc
approved this statement.
The Directors confirm that, to the best of their knowledge:
-- The condensed consolidated interim financial statements have
been prepared in accordance with IAS 34Interim Financial Reporting
as adopted by the UK;
-- The interim management report includes a fair review of the
information required by: ? DTR 4.2.7R of the Disclosure and
Transparency Rules, being an indication of important events that
haveoccurred during the first six months of the financial year and
their impact on the condensed consolidated interimfinancial
statements; and a description of the principal risks and
uncertainties for the remaining six months ofthe year; and ? DTR
4.2.8R of the Disclosure and Transparency Rules, being related
party transactions that have takenplace in the first six months of
the current financial year and that have materially affected the
financialposition or performance of the entity during that period;
and any changes in the related party transactionsdescribed in the
last Annual Report that could do so.
The Directors of Superdry Plc are listed on the Board section of
the Group website:
www.corporate.superdry.com
On behalf of the Board of Directors:
Julian Dunkerton
Chief Executive Officer
26 January 2023
Preliminary Results for the 26 weeks ended 29 October 2022
Condensed Group Statement of Comprehensive Income for the 26
weeks ended 29 October 2022 (unaudited)
H1 2023 H1 2022 (Restated)
Adjusted* Adjusting Total Adjusted* Adjusting Total
Note items items
GBPm (note 6) GBPm GBPm (note 6) GBPm
GBPm GBPm
Revenue 5 287.2 - 287.2 277.2 - 277.2
Cost of sales (137.7) - (137.7) (124.1) - (124.1)
Gross profit 149.5 - 149.5 153.1 - 153.1
Selling, general and administrative expenses** (184.0) - (184.0) (159.3) 0.6 (158.7)
Other gains and losses (net) 6 23.4 (4.1) 19.3 4.9 6.2 11.1
Impairment credit on trade receivables 0.1 - 0.1 2.0 - 2.0
Operating (loss)/profit (11.0) (4.1) (15.1) 0.7 6.8 7.5
Finance expense (2.6) - (2.6) (3.5) - (3.5)
(Loss)/Profit before tax 5 (13.6) (4.1) (17.7) (2.8) 6.8 4.0
Tax credit/(expense) 8 4.5 1.0 5.5 (0.3) (1.2) (1.5)
(Loss)/Profit for the period (9.1) (3.1) (12.2) (3.1) 5.6 2.5
Attributable to:
Owners of the Company (9.1) (3.1) (12.2) (3.1) 5.6 2.5
Other comprehensive expense/(income) net of tax:
Items that may be subsequently reclassified to profit
or loss:
Currency translation differences on translation of (7.1) - (1.1) - (1.1)
foreign operations (7.1)
Total comprehensive (expense)/income for the period (16.2) (3.1) (19.3) (4.2) 5.6 1.4
Attributable to:
Owners of the Company (16.2) (3.1) (19.3) (4.2) 5.6 1.4
pence pence
per per
share share
Earnings per share:
Basic 16 (15.0) 3.0
Diluted 6 (15.0) 3.0
* Adjusted and adjusting items are defined in note 7.
** During the current financial year, the Group reclassified
realised gains/(losses) on FX contract and unrealised gains from
selling, general and administrative expense to Other gains and
losses. This reclassification more appropriately reflects selling,
general and administrative expenses. Prior financial year
comparatives have been restated to align to the current financial
year approach.
H1 2023 is the 26 weeks ended 29 October 2022 and H1 2022 is for
26 weeks ended 23 October 2021.
Condensed Group Balance Sheet as at 29 October 2022
Unaudited Unaudited Audited
Note H1 23 H1 22 FY22
GBPm GBPm
GBPm
ASSETS
Non-current assets
Property, plant and equipment 11 19.9 28.1 22.4
Right-of-use assets 13 68.1 95.1 80.2
Intangible assets 12 44.8 41.8 42.3
Deferred tax assets 73.2 54.8 66.3
Derivative financial instruments 19 0.9 0.2 0.9
Total non-current assets 206.9 220.0 212.1
Current assets
Inventories 172.6 159.4 132.7
Trade and other receivables 125.3 109.4 117.5
Derivative financial instruments 19 8.9 4.1 8.9
Current tax receivables - 3.8 -
Cash and bank balances 18 27.8 44.1 20.5
Total current assets 334.6 320.8 279.6
LIABILITIES
Current liabilities
Borrowings 18 65.8 48.0 21.5
Trade and other payables 178.6 148.2 129.2
Current income tax liabilities 3.9 - 4.0
Provisions for other liabilities and charges 2.4 4.7 4.7
Derivative financial instruments 19 4.6 2.5 0.5
Lease liabilities 58.1 66.1 66.1
Total current liabilities 313.4 269.5 226.0
Net current assets 21.9 51.3 53.6
Non-current liabilities
Trade and other payables 6.4 1.3 2.6
Provisions for other liabilities and charges 5.5 8.4 7.2
Deferred income tax liabilities 0.4 - -
Derivative financial instruments 19 - 0.1 -
Deferred liabilities 0.7 1.0 0.8
Lease liabilities 128.9 168.5 151.2
Total non-current liabilities 141.9 179.3 161.8
Net assets 86.2 92.0 103.9
EQUITY
Share capital 15 4.1 4.1 4.1
Share premium 149.2 149.2 149.2
ESOP Reserve (2.0) - (2.0)
Translation reserve (8.7) 5.5 (1.6)
Merger reserve (302.5) (302.5) (302.5)
Retained earnings 246.1 235.7 256.7
Total equity 86.2 92.0 103.9
Condensed Group Cash Flow Statement for the 26 weeks ended 29
October 2022 (unaudited)
Note H1 23 H1 22
GBPm GBPm
Cash (used in)/generated from operating activities 9 (7.5) 12.5
Tax payment (0.8) (2.3)
Net cash (used in)/generated from operating activities (8.3) 10.2
Cash flow from investing activities
Purchase of property, plant and equipment (2.0) (5.0)
Purchase of intangible assets (5.6) (4.0)
Net cash (used in) investing activities (7.6) (9.0)
Cash flow from financing activities
Repayment of ABL facility (121.5) -
Draw down on borrowings 155.0 20.6
interest paid (2.6) (3.5)
Repayment of leases - principal amount (30.7) (40.0)
Net cash generated from/(used in) financing activities 0.2 (22.9)
Net (decrease) in cash and cash equivalents 18 (15.7) (21.7)
Cash and cash equivalents at beginning of period 18 17.4 38.9
Exchange gains/(losses) on cash and cash equivalents 18 12.2 (0.5)
Cash and cash equivalents at end of period 18 13.9 16.7
Which made up of:
Cash and bank balances 27.8 44.1
Overdraft (13.9) (27.4)
* Net Cash and Cash Equivalents includes overdraft
Condensed Group Statement of Changes in Equity for the 26 weeks
ended 29 October 2022 (unaudited)
Share Share ESOP share Translation Merger Retained Total
Group Note capital premium reserve reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 30 April 2022 4.1 149.2 (2.0) (1.6) (302.5) 256.7 103.9
Comprehensive expense - - - - - - -
Loss for the period - - - - - (12.2) (12.2)
Other comprehensive income - - - - - - -
Currency translation differences - - - (7.1) - - (7.1)
Total other comprehensive income/(expense) - - - (7.1) - - (7.1)
Total comprehensive income /(expense) for - - - (7.1) - (12.2) (19.3)
the period
Transactions with owners
Shares issued 15 - - - - - - -
Employee share award schemes - - - - - 1.6 1.6
Dividend payments 10 - - - - - - -
Total transactions with owners - - - - - 1.6 1.6
Balance at 29 October 2022 4.1 149.2 (2.0) (8.7) (302.5) 246.1 86.2
Condensed Group Statement of Changes in Equity for the 26 weeks
ended 23 October 2021 (unaudited)
to the members of Superdry plc
Share Share ESOP share Translation Merger Retained Total
Group Note capital premium reserve reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 24 April 2021 4.1 149.2 - 6.6 (302.5) 233.0 90.4
Comprehensive expense
Profit for the period - - - - - 2.5 2.5
Other comprehensive income
Currency translation differences - - - (1.1) - - (1.1)
Total other comprehensive income/ - - - (1.1) - - (1.1)
(expense)
Total comprehensive income/(expense)for - - - (1.1) - 2.5 1.4
the period
Transactions with owners
Shares issued 15 - - - - - - -
Employee share award schemes - - - - - 0.2 0.2
Dividend payments 10 - - - - - - -
Total transactions with owners - - - - - 0.2 0.2
Balance at 23 October 2021 4.1 149.2 - 5.5 (302.5) 235.7 92.0
Condensed Group Statement of Changes in Equity for the 53 weeks
ended 30 April 2022 (audited)
to the members of Superdry plc
Share Share ESOP share Translation Merger Retained Total
Group Note capital premium reserve reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 24 April 2021 4.1 149.2 - 6.6 (302.5) 233.0 90.4
Comprehensive expense
Profit for the period - - - - - 22.7 22.7
Other comprehensive income
Currency translation differences - - - (8.2) - - (8.2)
Total other comprehensive income/ - - - (8.2) - - (8.2)
(expense)
Total comprehensive income/(expense) for - - - (8.2) - 22.7 14.5
the period
Transactions with owners
Shares issued - - - - - - -
ESOP shares acquired - - (2.0) - - - (2.0)
Employee share award schemes - - - - - 1.0 1.0
Dividend payments - - - - - - -
Total transactions with owners - - (2.0) - - 1.0 (1.0)
Balance at 30 April 2022 4.1 149.2 (2.0) (1.6) (302.5) 256.7 103.9
Notes to the Group Financial Statements
1. Basis of preparation
General information
The Company is a public company limited by shares incorporated
in the United Kingdom under the Companies Act and is registered in
England and Wales. The condensed interim financial information
("interim financial information") of Superdry Plc for the 26 weeks
ended 29 October 2022 ("October 2022") comprise the company and its
subsidiaries (together referred to as "the Group"). The prior
comparative period is for the 26 weeks ended 23 October 2021
("October 2021").
a) Basis of preparation
This interim financial information does not comprise statutory
accounts within the meaning of section 434 of the Companies Act
2006. The Group statutory financial statements for the 53 weeks
ended 30 April 2022 ("April 2022") are available upon request from
the company's registered office at Superdry Plc, Unit 60, The
Runnings, Cheltenham, Gloucestershire, GL51 9NW or
www.corporate.superdry.com.
This interim financial information has been prepared in
accordance with IAS 34 "Interim Financial Reporting" as UK adopted
international accounting standards and the requirements of the
Disclosures and Transparency Rules. They do not include all of the
information required for full annual financial statements and
should be read in conjunction with the Group financial statements
as at and for the 53 weeks ended 30 April 2022 ("Group Annual
Report FY22), which have been prepared in accordance with
International Financial Reporting Standards ('IFRSs') as adopted by
the United Kingdom and companies act 2006. This interim financial
information was approved by the Board of Directors on 26 January
2022.
The comparative figures for April 2022 are extracted from the
Group's statutory accounts for that financial year. Those accounts
have been reported on by the company's auditor and delivered to the
registrar of companies. The report of the auditor (i) was
unqualified; (ii) did not drawn attention to any matters by way of
emphasis; and (iii) did not contain statements under section 498(2)
or (3) of the Companies Act 2006 but did include a section
highlighting a material uncertainty that may cast significant doubt
on the Group and Company's ability to continue as a going concern.
Further detail is provided within the Assessment of the Group's
Prospects section of this announcement.
The financial information in this interim financial information
document is neither audited nor reviewed by the auditor.
This interim financial information has been prepared under the
going concern basis. The Group directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future and operate within
its borrowing facilities and covenants for a period of at least 12
months from the date of signing the financial statements.
Accordingly, the financial statements continue to be prepared on
the going concern basis.
2. Significant accounting policies
The accounting policies adopted are consistent with those of the
previous financial period (see Annual Report for the year ended 30
April 2022). Whilst the financial statements were prepared on a
going conern basis, the going concern refers to a material
uncertainty at the date the financial statements were approved,
arising from the expiry of the ABL facility in January 2023. On the
basis that a replacement facility has now been negotiated as
described below, the directors consider there is no longer a
material uncertainty in relation to going concern, although the
business will continue to monitor liquidity closely, particularly
during the working capital peak ahead of the Christmas trading
period where headroom is likely to remain tight for a short
period.
A loan facility of up to GBP80m, including a GBP30m term loan,
for three years with an option to extend for one further year was
agreed, with specialist lender Bantry Bay Capital Limited1. This
replaces the previous up to GBP70m Asset Based Lending Facility
which was due to expire on 31 January 2023. The interest rate
SONIA2 + 7.5% on the drawn element. The revised facility is
covenant light, providing flexibility to navigate the current
challenging macro-economic environment and continue to focus on
driving our brand strategy forward.
Notes 1. Bantry Bay Capital Limited is a specialist lender which
provides supportive debt capital solutions tocorporates in periods
of growth and other change. Bantry Bay focuses on asset-based
financings for private andpublicly listed companies across a wide
array of industries, working with clients to provide the
foundations forstability and growth. 2. The Sterling Overnight
Interbank Average Rate (SONIA) is the effective overnight interest
rate paid bybanks for unsecured transactions in the British
sterling market.
The Group has not adopted any new accounting standards in the
period. Other changes to accounting standards in the period had no
material impact.
3. Key sources of estimation uncertainty and critical judgements
in applying the Group's accounting policies
The preparation of interim financial information requires
judgements, estimates and assumptions to be made that affect the
reported value of assets, liabilities, revenues, and expenses. The
nature of estimation and judgement means that actual outcomes could
differ from expectation.
In preparing this interim financial information, unless stated
otherwise, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation were the same as those that applied to the consolidated
financial statements for the 53 weeks ended 30 April 2022 (as set
out on pages 162 to 165 of the Group Annual Report FY22). These
were as follows:
-- Store impairment estimates;
-- Onerous property related contracts provisions;
-- Recoverability of trade debtors;
-- Attributing Ecommerce sales and costs to stores;
-- Store impairment judgements;
-- Determination of Adjusting items.
4. Seasonality of operations
Due to the seasonal nature of the Retail segment, higher
revenues and operating profits are usually expected in the second
half of the year under normal trading conditions. This weighting of
higher revenues in the second half of the year is a consequence of
the brand's strength in cooler weather categories, such as
outerwear, which also carry higher average selling prices.
Operating profits therefore benefit from operating cost leverage,
particularly in the Group's stores. Wholesale seasonality is more
evenly spread across the year.
In the financial period ended 30 April 2022, 45.5% of total
revenues accumulated in the first half of the year, with 54.5% in
the second half. This corresponded to (12.8)% of adjusted profit
before tax in the first half of the year and 112.8% in the second
half.
5. Segment information
Operating segments are reported in a manner consistent with the
internal reporting provided to the Chief Operating Decision-Maker
("CODM").' As per Prior year interim accounts. Revenue is generated
from the same products (clothing and accessories) in all segments;
the reporting of segments is based on how these sales are
generated. The accounting policies of the reportable segments are
the same as the Group's accounting policies described in note 1.
Gross profit is the measure reported to the Group's CODM for the
purpose of resource allocation and assessment of segment
performance. The Group derives its revenue from contracts with
customers for the transfer of goods and services at a point in
time.
Segmental information for the business segments of the Group for
H1 23 and H1 22 is set out below. The 'Retail' subtotal of the
'Stores' and 'Ecommerce' segments presented below is considered
useful additional information to the reader.
Stores Ecommerce Retail Wholesale Central costs Group
H1 23 segmental analysis (unaudited) GBPm GBPm subtotal GBPm GBPm GBPm
GBPm
Total segment revenue 117.7 63.3 181.0 194.7 - 375.7
Less: inter-segment revenue - - - (88.5) - (88.5)
Revenue from external customers 117.7 63.3 181.0 106.2 - 287.2
Gross profit 80.3 36.7 117.0 32.5 - 149.5
Profit/(loss) before tax (12.9) 11.9 (16.7) (17.7)
The segment measure of profit required to be presented under
IFRS 8 Segments is gross profit/(loss). Profit/(loss) before tax
has been presented as an additional profit measure which is
considered to provide useful information to the reader. Certain
costs have not been allocated between the Stores and Ecommerce
segments in both the current and prior period.
The following additional information is considered useful to the
reader:
Adjusted* Adjusting items Reported
H1 23 segmental analysis (unaudited) items GBPm
GBPm GBPm
Revenue
Retail 181.0 - 181.0
Wholesale 106.2 - 106.2
Total revenue 287.2 - 287.2
Operating (loss)
Retail (7.8) (3.2) (11.0)
Wholesale 12.9 (0.9) 12.0
Central costs (16.1) - (16.1)
Total operating (loss) (11.0) (4.1) (15.1)
Profit/(loss) before tax (13.6) (4.1) (17.7)
Retail (9.7) (3.2) (12.9)
Wholesale 12.8 (0.9) 11.9
Central costs (16.7) - (16.7)
Total (loss) before tax (13.6) (4.1) (17.7)
* Adjusted is defined as reported results before adjusting items
and is further explained in note 22.
The (GBP4.1m) adjusting items in the Retail and Wholesale
segments relate to the fair value of forward exchange contracts, as
disclosed further in note 7.
Stores Ecommerce Retail Wholesale Central costs Group
H1 22 segmental analysis (unaudited) GBPm GBPm subtotal GBPm GBPm GBPm
GBPm
Total segment revenue 103.0 62.2 165.2 187.8 - 353.0
Less: inter-segment revenue - - - (75.8) - (75.8)
Revenue from external customers 103.0 62.2 165.2 112.0 - 277.2
Gross profit 71.7 39.1 110.8 42.3 - 153.1
Profit/(loss) before tax 12.5 26.2 (34.7) 4.0
The following additional information is considered useful to the
reader:
Adjusted* Adjusting items Reported
H1 22 segmental analysis (unaudited) Items GBPm
GBPm GBPm
Revenue
Retail 165.2 - 165.2
Wholesale 112.0 - 112.0
Total revenue 277.2 - 277.2
Operating profit
Retail 10.2 4.5 14.7
Wholesale 24.5 1.7 26.2
Central costs (34.0) 0.6 (33.4)
Total operating profit 0.7 6.8 7.5
Profit/(loss) before tax
Retail 8.0 4.5 12.5
Wholesale 24.5 1.7 26.2
Central costs (35.3) 0.6 (34.7)
Total (loss)/profit before tax (2.8) 6.8 4.0
* Adjusted is defined as reported results before adjusting items
and is further explained in note 22.
The GBP0.6m adjusting item in the Central segment is in relation
to the Founder Share Plan. The GBP6.2m adjusting items in the
Retail and Wholesale segments relate to the unrealised fair value
of forward exchange contracts, as disclosed further in note 7.
Revenue from external customers in the UK and the total revenue
from external customers from other countries are:
Unaudited H1 23 Unaudited H1 22
GBPm GBPm
External revenue - UK 105.8 93.5
External revenue - Europe 137.0 141.6
External revenue - Rest of World 44.4 42.1
Total external revenue 287.2 277.2
Included within non-UK external revenue is GBP65.2m (H1 22:
GBP59.6m) generated by our overseas
subsidiaries.
The total of non-current assets, other than deferred tax assets,
located in the UK is GBP79.9m (H1 22: GBP75.7m), and the total of
non-current assets located in other countries is GBP53.8m (H1 22:
GBP89.5m).
6. Other gains and losses (net)
The below adjustments are disclosed separately in the Group
statement of comprehensive income and are applied to the reported
(loss) before tax to arrive at the adjusted (loss) before tax.
Group
Restated
Unaudited H1
23 Unaudited H1
GBPm 22
GBPm
Realised gains on foreign exchange contracts 10.3 (1.3)
Unrealised gains on foreign exchange 6.9 0.1
Net Gains on foreign exchange excluding unrealised fair value (loss)/gain on foreign 17.2 (1.1)
exchange forward contracts*
Unrealised fair value (loss)/gain on foreign exchange forward contracts (4.1) 6.2
Royalty income 3.4 3.0
Lease modifications and terminations 2.0 10.8
Lease termination: Settlement Fee - (8.1)
Other income 0.8 0.4
Total other gains and losses 19.3 11.1
*During the current financial year, the Group reclassified
realised gains/(losses) on FX contracts and unrealised gains on FX
from selling, general and administrative expense to Other gains and
losses. This reclassification more appropriately reflects selling,
general and administrative expenses. Prior financial year
comparatives have been restated to align to the current financial
year approach.
The unrealised fair value loss on foreign exchange forward
contracts of GBP4.1m (H1 22: GBP6.2 gain) has been treated as an
adjusting item, see note 7. Hedge accounting is not applied by the
Group to these financial instruments.
Royalty income relates to wholesale royalty agreements. Other
income in both financial years includes rent and profit from the
sales of fixtures and fittings to franchisees.
Lease modifications and terminations relate to lease
renegotiations under IFRS 16, which resulted in reducing both the
lease liability and the right-of-use asset. As the adjustment
exceeded the carrying value of the right-of-use asset, this excess
has been recognised as a gain in profit or loss.
7. Adjusting items
The adjustments below are disclosed separately in the Group
statement of comprehensive income and are applied to the Reported
(Loss) before tax to arrive at the Adjusted (Loss) before tax.
Further information about the determination of adjusting items in
financial year 2023 is included in note 22.
Unaudited H1 23 Unaudited H1 22
GBPm GBPm
Adjusting items
Unrealised (loss)/ gain on financial derivatives (4.1) 6.2
IFRS 2 (charge)/credit on Founder Share Plan - 0.6
Total adjusting items (4.1) 6.8
Taxation
Deferred tax on adjusting items 1.0 (1.2)
Total taxation 1.0 (1.2)
Total adjusting items after tax (3.1) 5.6
Adjusting items before tax in the period totalled a net loss of
(GBP4.1m) in the year (H1 22: GBP6.8m gain).
Unrealised (loss)/gain on financial derivatives
A GBP4.1m charge has been recognised in respect of the fair
value movement in financial derivatives (H1 22: GBP6.2m
credit).
IFRS 2 charge on Founder Share Plan
The IFRS 2 charge of GBPnil (H1 22: GBP0.6m credit) in respect
of the Founder Share Plan is also included within adjusting items.
The scheme ended on 31st January 2022.
8. Tax expense/(credit)
The Group's income tax credit for H1 23 is GBP5.5m (H1 22:
GBP1.5m income tax charge).
The Group's tax credit of GBP1.0m on adjusting items of GBP4.1m
represents an effective tax rate of 25%.
Taken with the adjusted tax credit of GBP1.0m, the Group's total
income tax credit of GBP5.5m represents a total effective tax rate
of 31.2% for the period (H1 22: 37.5%).
The Group's total effective tax rate of 31.2% is higher than the
statutory rate of tax of 19%. This is primarily due to the effect
of the UK corporation tax rate change to 25% from 01 April 2023,
the tax accounting impact of certain overseas losses for which no
tax benefit has been recognised and tax rate differentials in
overseas subsidiaries.
Factors affecting the tax expense for the period are as
follows:
Unaudited H1 23 Unaudited H1 22
GBPm GBPm
(Loss)/Profit before tax (17.7) 4.0
(Loss)/Profit multiplied by the standard rate in the UK - 19.0% (H1 22: 19.0%) (3.3) 0.8
Expenses not deductible for tax purposes 0.3 1.2
Fixed asset differences 0.4 -
Uncertain tax position - 0.5
Overseas tax differentials 1.3 1.4
Deferred tax not recognised (2.1) (2.5)
UK rate change on CY movement (2.1) -
Adjustment in respect of prior periods - 0.1
Total tax (credit)/expense (5.5) 1.5 9. Note to the cash flow statement
Reconciliation of operating profit to cash generated from
operations
Unaudited Unaudited
Note
H1 23 H1 22
GBPm GBPm
Operating (loss)/profit (15.1) 7.5
Adjusted for:
-- Unrealised Loss/(gain) on derivatives 7 4.1 (6.2)
-- Depreciation of property, plant and equipment and 11,13 20.9 19.3
right-of-use assets
-- Amortisation of intangible assets 12 3.9 3.8
-- Loss on disposal of property, plant and equipment (0.2) -
-- Lease modifications (2.0) (10.3)
-- IFRS 16 Covid-19 rent concessions 0.1 (1.3)
-- Decrease in onerous property related contracts provision (net of releases on (3.4) (2.8)
exited stores)
-- Decrease in other provisions (0.2) -
-- IFRS 2 Charges - FSP - (0.6)
-- Employee share award schemes 1.8 0.4
-- Net foreign exchange (gains)/loss (16.8) 1.2
-- Write down of inventory 1.4 1.0
-- Net impairment (credit) of trade receivables (0.1) (2.0)
Operating cash flow before movements in working capital (5.6) 10.6
Changes in working capital:
-- (Increase) in inventories (41.0) (12.3)
-- (Increase) in trade and other receivables (5.7) (5.8)
-- Increase in trade and other payables and provisions 44.8 20.0
Cash (used in)/generated from used in operating activities (7.5) 12.5
10. Dividends
The Board decided during the Covid pandemic that, given the
uncertain macro-economic outlook, they would not recommend either
final or interim dividends for the near-term. In addition, under
the terms of our recent loan facility, the Company is restricted
from declaring, making or paying dividends to shareholders without
prior permission from Bantry Bay, which cannot be unreasonably
withheld.
11. Property, plant and equipment
Movements in the carrying amount of property, plant and
equipment in the period to H1 23 were as follows:
Land and Leasehold Furniture, fixtures and Computer Total
buildings improvements fittings equipment GBPm
GBPm GBPm GBPm GBPm
NBV at 30 April 2022 (Audited) 4.1 7.7 8.5 2.1 22.4
Additions - 0.5 1.4 0.1 2.0
Disposals - - 0.1 - 0.1
Depreciation Charge - (4.9) (2.1) (0.5) (7.5)
Exchange Differences - 2.5 0.4 - 2.9
Net book value at 29 October 2022 4.1 5.8 8.3 1.7 19.9
(Unaudited)
12. Intangible assets
Movements in the carrying amount of intangible assets in the
period to H1 23 were as follows:
Trademarks Website and software Distribution agreements Goodwill Total
GBPm GBPm GBPm GBPm GBPm
NBV at 30 April 2022 (Audited) 2.1 17.7 1.8 20.7 42.3
Additions 0.1 5.5 - - 5.6
Disposals - - - - -
Amortisation charge (0.2) (3.7) - - (3.9)
Exchange differences - - 0.4 0.4 0.8
Net book value at 29 October 2022 (Unaudited) 2.0 19.5 2.2 21.1 44.8
13. Leases
Right-of-use assets
Right-of-use asset Right-of-use asset
H1 23 H1 22
GBPm GBPm
NBV as at 30 April 2022 (Audited) 80.2 91.1
Additions 1.3 33.8
Disposals (0.1) (15.8)
Lease modifications - (1.0)
Depreciation charge (13.4) (13.1)
Exchange rate difference - 0.1
Net balance sheet amount at 29 October 2022 (Unaudited) 68.1 95.1
14. Contingencies and commitments
Contingent liabilities
The Company is party to an unlimited cross guarantee over all
liabilities of the Group.
The Group has contractual agreements with third party wholesale
agents which include a right for the wholesale agent to be
indemnified when the contract is terminated. These future indemnity
amounts are held as contingent liabilities until the contract is
terminated, at which point they are held as provisions or accruals.
The value of future obligations for contracts which have not yet
been terminated (and have no defined end date) is GBP3.3m (H1 22:
GBP3.4m).
15. Equity securities
39,576 ordinary shares of 5p each were authorised, allotted and
issued in the period under the Superdry Plc Share based Long Term
Incentive Plans, Save As You Earn and Buy As You Earn schemes.
16. Earnings per share
Unaudited Unaudited
H1 23 H1 22
GBPm GBPm
Earnings
(Loss)/Profit for the period attributable to owners of the Company (12.2) 2.5
No. No.
Number of shares at period-end 81,399,763 82,109,706
Weighted average number of ordinary shares - basic 81,380,288 82,054,759
Effect of dilutive options and contingent shares 4,374,461 2,386,732
Weighted average number of ordinary shares - diluted 85,754,749 84,441,491
Basic earnings per share (pence) (15.0) 3.0
Diluted earnings per share (pence) (15.0) 3.0
Adjusted earnings per share
Unaudited Unaudited
H1 23 H1 22
GBPm GBPm
Earnings
Adjusted profit/(loss) for the period attributable to the owners of the Company (9.1) (3.1)
No. No.
Weighted average number of ordinary shares - basic 81,380,288 82,054,759
Weighted average number of ordinary shares - diluted 81,380,288 82,054,759
Adjusted basic earnings per share (pence) (11.2) (3.8)
Adjusted diluted earnings per share (pence) (11.2) (3.8)
On 29 October 2022, 4,374,461 (23 October: 2,386,732) share
options were outstanding that could potentially dilute basic EPS.
These are antidilutive when the Group is in a loss-making position,
so have not been included in the EPS calculations where this is the
case.
There were no share-related events after the balance sheet date
that may affect earnings per share.
17. Balances and transactions with related parties
Transactions with Directors
Directors of the Group within the period and their immediate
relatives control 24.1% (H1 22: 20.7%) of the voting shares of the
Group. There have been no material transactions in the period with
related parties, including Directors.
During the reporting period, the Group has spent GBP0.1m (H1 22:
GBP0.1m) on travel and subsistence through companies in which
Julian Dunkerton has a personal investment. The balance outstanding
at 29 October 2022 was GBPnil (2021: GBPnil). This expenditure
includes the provision of corporate travel, hotel and catering
services supplied on an arm's-length basis. These interests have
been disclosed and authorised by the Board.
In addition, the Group occupies two properties owned by J M
Dunkerton SIPP pension fund whose beneficiary and member trustee is
Julian Dunkerton. The properties are rented to the Group at a rate
that is not on an arm's-length basis. Rental charges for these
properties during the year were GBP0.1m (H1 22: GBP0.1m). The
balance outstanding at 29 October 2022 was GBPnil (H1 22:
GBPnil).
18. Net cash/(debt)
Analysis of net cash - October 2022 (unaudited) 30 April 2022 Cash flow Non-cash changes 29 October 2022
GBPm GBPm GBPm GBPm
Cash and bank balances 20.5 (4.9) 12.2 27.8
Overdraft (3.1) (10.8) - (13.9)
Cash and cash equivalents 17.4 (15.7) 12.2 13.9
ABL Facility (18.4) (33.5) - (51.9)
Net debt (1.0) (49.2) 12.2 (38.0)
Group
Analysis of net cash - October 2021 (unaudited) 24 April 2021 Cash flow Non-cash changes 23 October 2021
GBPm GBPm GBPm GBPm
Cash and bank balances 38.9 5.7 (0.5) 44.1
Overdraft - (27.4) - (27.4)
Cash and cash equivalents 38.9 (21.7) (0.5) 16.7
ABL Facility - (20.6) - (20.6)
Net cash/(debt) 38.9 (42.3) (0.5) (3.9)
Non-cash changes relate to exchange gains on cash and cash
equivalents.
Short-term borrowings
The Group had up to a net GBP10m uncommitted overdraft facility
which has no financial covenants and is included within the cash
pooling arrangements.
The Group had an Asset Backed Lending facility (ABL facility)
for up to GBP70m, which end in January 2023. The borrowing base
varied throughout the year depending on the level of the Group's
eligible inventory and receivables. As at half-year end, GBP60.4m
was reported to HSBC as being available to borrow based on eligible
inventory and receivables in October 2022. The ABL facility with
HSBC and BNPP had a drawn balance of GBP51.9m as at 29 October
2022.
A new loan facility of up to GBP80m, including a GBP30m term
loan, for three years with an option to extend for one further year
was agreed, with specialist lender Bantry Bay Capital Limited1.
This replaces the previous up to GBP70m Asset Based Lending
Facility which was due to expire on 31 January 2023. The interest
rate SONIA2 + 7.5% on the drawn element. The revised facility is
covenant light, providing flexibility to navigate the current
challenging macro-economic environment and continue to focus on
driving our brand strategy forward.
Notes 1. Bantry Bay Capital Limited is a specialist lender which
provides supportive debt capital solutions tocorporates in periods
of growth and other change. Bantry Bay focuses on asset-based
financings for private andpublicly listed companies across a wide
array of industries, working with clients to provide the
foundations forstability and growth. 2. The Sterling Overnight
Interbank Average Rate (SONIA) is the effective overnight interest
rate paid bybanks for unsecured transactions in the British
sterling market.
The bank overdraft balance represents individual overdrawn
balances within the Group's cash-pooling
arrangements. These had been disclosed gross in line with the
requirements of IAS 32. Financial instruments: Presentation. The
Group has a net overdraft facility with HSBC Bank plc. Gross
overdrafts at 29 October 2022 amounted to GBP13.9m.
Bank overdrafts are shown within borrowings in current
liabilities on the balance sheet.
19. Financial risk management
The Group's activities expose it to a variety of financial risks
including: market risk (including foreign currency risk and cash
flow interest rate risk), credit risk and liquidity risk. The
condensed interim financial information does not include all
financial risk management information and disclosures required in
the annual financial statements; they should be read in conjunction
with the Group Annual Report FY22. There have been no changes in
the risk management department or in any risk management policies
since the year end.
Liquidity risk
Compared to the year end, there was no material change in the
contractual undiscounted cash out flows for financial
liabilities.
Fair value estimation
The table below analyses financial instruments carried at fair
value, by valuation method. The different levels have been defined
as follows:
-- Quoted prices (unadjusted) in active markets for identical
assets or liabilities (Level 1).
-- Inputs other than quoted prices included within Level 1 that
are observable for the asset or liability,either directly (that is,
as prices) or indirectly (that is, derived from prices) (Level
2).
-- Inputs for the asset or liability that are not based on
observable market data (that is, unobservableinputs) (Level 3).
The following table presents the Group's assets and liabilities
that are measured at fair value at 29 October 2022 and 23 October
2021.
Level 1 Level 2 Unaudited H1 23 Level 1 Level 2 UnauditedH1 22
GBPm GBPm Level 3 GBPm GBPm Level 3
GBPm GBPm
Assets
Derivative financial instruments
-- Forward foreign exchange contracts - 9.8 - - 4.3 -
Liabilities
Derivative financial instruments
-- Forward foreign exchange contracts - (4.6) - - (2.6) -
The level 2 forward foreign exchange valuations are derived from
mark-to-market valuations based on observable market data as at the
close of business on 29 October 2022.
There were no transfers between levels during the period.
The fair value of the following financial assets and liabilities
is approximate to their carrying amount:
-- Trade and other receivables
-- Cash and cash equivalents
-- Trade and other payables
-- Borrowing
-- Lease liabilities 20. Government assistance
The Group received government support within the UK and EU
territories during the prior year in response to the COVID-19
pandemic. This included: deferring tax payments; obtaining
reductions in business rates from the UK government; seeking
compensation for lost revenue and subsidies to cover fixed costs;
and placing staff on furlough during the periods of store
closures.
Furlough support across all territories of GBPnil was recognised
in the half-year (H1 22: GBP0.2m), through the UK's Coronavirus Job
Retention Scheme (CJRS) and equivalent schemes in other countries.
A provision was recognised in FY22 to cover any existing furlough
related clawbacks. This provision now totals GBP1.1m (H1 22:
GBP1.7m).
Lost revenue and subsidy support in the UK and other territories
of GBP0.1m has been recognised in the period (H1 22: GBP0.7m).
Government grants are not recognised until there is reasonable
assurance that the Group will comply with the conditions attached
to them and that the grants will be?received. Government grants are
recognised in profit or loss on a systematic basis over the periods
in which the Group recognises as expenses the related costs for
which the grants are intended to compensate. The value is netted
off against costs in selling, general and
administrative?expenses.
21. Post balance sheet events
On 22 December Superdry announced that it has agreed a loan
facility of up to GBP80m, including a GBP30m term loan, for three
years to January 2026 with an option to extend for one further
year, with specialist lender Bantry Bay Capital Limited. This will
replace the existing up to GBP70m Asset Based Lending Facility
which was due to expire at the end of January 2023. Given market
conditions, the interest rate will be higher than our previous
agreement at SONIA + 7.5% on the drawn element. The revised
facility is operationally less complex to manage and covenant
light, giving the necessary flexibility to navigate the current
challenging macro-economic environment and continue to focus on
driving the brand strategy forward.
22. Alternative performance measures
Introduction
The Directors assess the performance of the Group using a
variety of performance measures, some are IFRS, and some are
adjusted and therefore termed "non-GAAP" measures or?"alternative
performance measures" (APMs). The rationale for using adjusted
measures is explained below. The Directors principally discuss the
Group's results on an adjusted basis. Results on an adjusted basis
are presented before adjusting items.
The APMs used these consolidated interim statements are adjusted
operating profit and margin, adjusted profit/(loss) before tax,
adjusted tax expense and adjusted effective tax rate, adjusted
earnings per share and net cash/debt.
A reconciliation from these non-GAAP measures to the nearest
measure prepared in accordance with IFRS is presented below. The
APMs we use may not be directly comparable with similarly titled
measures used by other companies. There have been no changes in
definitions from the prior period.
Adjusting items
The Group's statement of comprehensive income and segmental
analysis separately identify adjusted results before adjusting
items. The adjusted results are not intended to be a replacement
for the IFRS results. The Directors believe that presentation of
the Group's results in this way provides stakeholders with
additional helpful analysis of the Group's financial performance.
This presentation is consistent with the way that financial
performance is measured by management and reported to the Board and
the Executive Committee. It is also consistent with the way that
management is incentivised. In determining whether events or
transactions are treated as adjusting items, management considers
quantitative as well as qualitative factors such as the frequency
or predictability of occurrence. Adjusting items are identified by
virtue of their size, nature or incidence.
Examples of charges or credits meeting the above definition, and
which have been presented as adjusting items in the current and/or
prior years include:
-- Acquisitions/disposals of significant businesses and
investments (including related to the jointventure);
-- Impact on deferred tax assets/liabilities for changes in tax
rates;
-- Business restructuring programmes;
-- Derecognition of deferred tax assets (including related to
the joint venture);
-- Asset impairment charges and onerous lease provisions;
-- The movement in the fair value of unrealised financial
derivatives; and
-- IFRS 2 charges in respect of Founder Share Plan ('FSP').
In the event that other items meet the criteria, which are
applied consistently from year to year, they are also treated as
adjusting items. In previous reporting periods "Adjusting items"
were described as "Exceptional and other items".
Adjusting items in this period
The following items have been included within "Adjusting items"
for the period ended 29 October 2022:
Fair value re-measurement of foreign exchange contracts -
Financial years H1 23, FY22 and H1 22
The fair value of unrealised financial derivatives is reviewed
at the end of each reporting period and unrealised losses/gains are
recognised in the Group statement of comprehensive income.
The Directors consider unrealised losses/gains to be adjusting
items due to both their size and nature. The size of the movement
on the fair value of the contracts is dependent on the spot foreign
exchange rate at the balance sheet date and an assessment of future
foreign exchange volatility applied to the relevant contract
currencies, as such the size of the movements can be substantial.
The unrealised foreign exchange contracts have been entered into in
order to achieve an economic hedge against future payments and
receipts and are not a reflection of historical performance.
Founder Share Plan ("FSP") - IFRS 2 charge - in financial years
H1 23, FY22 and H1 22
While there are no cost or cash implications for the Group, the
Founder Share Plan (FSP) falls within the scope of IFRS 2. The
Group has included the IFRS 2 charge and related deferred tax
movement in relation to the FSP within adjusting items for the
prior periods.
The Directors consider the plan to be one-off in nature and
unusual in that the share awards are being funded exclusively by
the Founders. While the charge is spread over a few financial
years, the plan is a one-time scheme. Accordingly, the IFRS 2
charge in respect of the FSP is an adjusting item due to the size,
nature and incidence of the scheme. There are no known recent
examples within quoted companies of incentive arrangements
operating in a similar way to the FSP. While unusual in terms of
size, the plan is also unusual regarding its treatment in what is
essentially a personal arrangement, with no net cost or cash and
minimal administrative burden to the Company. There are no other
adjustments anticipated in respect of the scheme other than the
IFRS 2 charge.
Therefore, the Directors consider the charge to be significant
in terms of its potential influence on the readers' interpretation
of the Group's financial performance. The scheme ended in January
2022, with none of the vesting criteria met, there is no expense in
the 6 months to October 2022.
Adjusted operating profit/(loss) and margin
In the opinion of the Directors, adjusted operating profit and
margin are measures which seek to reflect the performance of the
Group that will contribute to long-term sustainable profitable
growth. The Directors focus on the trends in adjusted operating
profit and margins, and they are key internal management metrics in
assessing the Group's performance. As such, they exclude the impact
of adjusting items. Although the Group is currently making an
adjusted operating loss, adjusted operating profit and margin
remain key metrics monitored by management given the Group's
intention to return to profitability.
A reconciliation from operating profit/(loss), the most directly
comparable IFRS measure, to the adjusted operating profit/(loss)
and margin is set out below.
H1 23 H1 22 FY 22
GBPm GBPm
GBPm
Reported revenue 287.2 277.2 609.6
Operating (loss)/profit (15.1) 7.5 25.9
Adjusting items 4.1 (6.8) 4.0
Adjusted operating (loss)/profit (11.0) 0.7 29.9
H1 23 H1 22 FY 22
Operating margin (5.3)% 2.7% 4.2%
Adjusted operating margin (3.8)% 0.3% 4.9%
Adjusted profit/(loss) before tax
In the opinion of the Directors, adjusted (loss)/profit before
tax is a measure which seeks to reflect the performance of the
Group that will contribute to long-term sustainable profitable
growth. As such, adjusted (loss)/ profit before tax excludes the
impact of adjusting items. The Directors consider this to be an
important measure of Group performance and is consistent with how
the business performance is reported to and assessed by the Board
and the Executive Committee. In previous reporting periods
"Adjusted (loss)/profit before tax" was described as "Underlying
(loss)/profit before tax".
This is a measure used within the Group's incentive plans. Refer
to the Remuneration Report in the Group Annual Report FY22 for
explanation of why this measure is used within incentive plans.
A reconciliation from profit/(loss) before tax, the most
directly comparable IFRS measures, to the adjusted loss before tax
is set out below.
H1 23 H1 22 FY 22
GBPm GBPm
GBPm
Loss/profit before tax (17.7) 4.0 17.9
Adjusting items 4.1 (6.8) 4.0
Adjusted (loss)/profit before tax (13.6) (2.8) 21.9
Adjusted tax expense and adjusted effective tax rate
In the opinion of the Directors, adjusted tax expense is the
total tax charge for the Group excluding the tax impact of
adjusting items. Correspondingly, the adjusted effective tax rate
is the adjusted tax expense divided by the adjusted (loss)/profit
before tax. For interim reporting purposes, we categorise the prior
year items and specific other balances as discrete items, in the
calculation of our adjusted effective tax rate.
A reconciliation from tax expense, the most directly comparable
IFRS measures, to the adjusted tax expense is set out below:
H1 23 H1 22 FY 22
GBPm GBPm
GBPm
Adjusted (loss)/profit before tax (13.6) (2.8) 21.9
Tax credit/(expense) 5.5 (1.5) 4.8
Adjusting items - tax impact (1.0) 1.2 3.0
Adjusted tax credit/(expense) 4.5 (0.3) 7.8
Adjusted effective tax rate (33.1)% 10.7% 35.6%
Adjusted EPS
In the opinion of the Directors, adjusted earnings per share is
calculated using basic earnings, adjusted to exclude adjusting
items net of current and deferred tax. See note 16 for the Group's
adjusted EPS.
Net cash/(debt)
In the opinion of the Directors, net cash/(debt) is a useful
measure to monitor the overall cash position of the Group. It is
the total of all short- and long-term loans and borrowings, less
cash and cash equivalents. Net cash and cash equivalents is used to
define the net cash/(debt) position excluding short and long-term
loans. See note 17 for the Group's net cash/(debt) position. This
position is exclusive of financial liabilities in relation to IFRS
16.
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ISIN: GB00B60BD277
Category Code: IR
TIDM: SDRY
LEI Code: 213800GAQMT2WL7BW361
OAM Categories: 1.2. Half yearly financial reports and audit reports/limited reviews
Sequence No.: 218759
EQS News ID: 1544957
End of Announcement EQS News Service
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