TIDMSGP
RNS Number : 8424J
SuperGroup PLC
03 July 2017
SuperGroup<Plc
3 July 2017
Full year results for the year ended 29 April 2017(1)
A further year of brand and strategy progress driving strong
financial performance
SuperGroup Plc ("SuperGroup", "Company" or "Group"), owner of
the Superdry brand, today announces full year unaudited results for
the 52 weeks to 29 April 2017(1) .
Key Financial Highlights(2)
On a comparable 2016 52-week basis:
-- Revenue up 27.4% to GBP752.0m, with retail like-for-like(4) sales growth +12.7%
-- Underlying gross margin down 130 basis points ("bps") to
60.2% reflecting strength of Wholesale channel mix
-- Underlying operating margin 11.9% (2016: 12.6%)
-- Underlying profit before income tax up 18.4% to GBP87.0m (2016: GBP73.5m)
-- Underlying basic earnings per share ("EPS") up 17.4% to 84.5p (2016: 72.0p)
-- Full year ordinary dividend 28.0p per share, an increase of
20.7% and representing a 3.0x cover
On a 2016 53-week basis:
-- Revenue up 25.9% to GBP752.0m (2016: GBP597.5m)
-- Underlying gross margin down 140 bps to 60.2% (2016: 61.6%)
-- Underlying operating margin down 30 bps to 11.9% (2016:12.2%)
-- Underlying profit before income tax up 20.2% to GBP87.0m (2016: GBP72.4m)
-- Profit before income tax up 53.1% to GBP84.8m (2016: GBP55.4m)
-- Underlying basic EPS up 19.2% to 84.5p (2016: 70.9p)
-- Basic EPS 81.2p up 60.2% (2016: 50.7p)
-- Net cash generated from underlying operating activities GBP62.3m down 20.9%
-- Year-end net cash(3) position GBP65.4m (2016: GBP100.7m)
Operational and Strategic Progress
-- Strong revenue growth led by low capital investment channels
Ø Strong E-commerce growth of 35%, increasing participation of
Retail sales to 26%
Ø Wholesale revenue up 43.2%
Ø Retail revenue up 20.8%; like-for-like sales growth +12.7%
-- Retail footprint increased by 80 to 555 Superdry branded stores globally:
Ø 154,000 square feet owned store space added, predominantly in
Continental Europe
Ø Net 59 new franchise stores opened, increasing franchised
locations by 23%
-- Insight led product innovation and digital marketing campaigns driving incremental sales:
Ø Strengthening of category ownership ranges e.g. jackets
Ø Womenswear, strong growth category
Ø Growing range authority within sport, including stand-alone
franchise format
-- Development markets progressing to plan:
Ø North America: full year break-even, seven new stores
opened
Ø China Joint Venture: five owned and three franchise stores
trading
-- Successfully operating two new in-market distribution centres in USA and Belgium
Euan Sutherland, Chief Executive Officer, commented:
"SuperGroup has made further significant progress this year,
delivering growth in sales, profit and the ordinary dividend as we
maintained momentum against all elements of our strategy. Our focus
on delivering long-term sustainable growth continues, through a
multi-channel approach that balances a disciplined owned and
franchised store opening programme with further development of our
re-engineered Wholesale channel and strong E-commerce
proposition.
The Group is globally diversified and financially strong and we
remain confident in our strategy to further embed Superdry's
position as a global lifestyle brand. Investment in infrastructure
is underpinning our global growth plans and creating future
leverage opportunities while ongoing product innovation and new
social and digital marketing campaigns are introducing new
customers to the Superdry brand."
Notes:
1. Extracted from the unaudited financial statements.
The Group believes that the financial results for
the 52-week period to 29 April 2017 (FY17") are more
appropriately compared to the 52-week period to 23
April 2016 ("FY16"). For completeness, we have reported
our FY17 financial highlights using both 52-week and
53-week reporting periods for FY16.
2. Underlying is defined as reported results adjusted
to reflect the impact of the (loss)/gain recognised
on re-measurements relating to financial derivatives,
exceptional items and, when appropriate, the related
income tax. The Directors believe that the underlying
results provide additional guidance to statutory measures
to help understand the performance of the Group.
3. Net cash includes cash and cash equivalents.
4. Like-for-like sales ('LFL') growth is defined as the
year-on-year sales growth for stores and concessions
open for more than one year and include E-commerce
revenues. Foreign currency sales are translated at
the average rate for the month in which they were
made.
5. The trading comparatives for each quarter of FY17
(Unaudited):
FY17 Q1 YOY Q2 YOY H1 YOY Q3(a) YOY Q4 YOY H2 YOY FY17 YOY
----------- ------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
GBPm % GBPm % GBPm % GBPm % GBPm % GBPm % GBPm %
----------- ------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Retail 100.6 24.8 114.6 25.2 215.2 25.0 162.1 20.6 125.2 14.4 287.3 17.8 502.5 20.8
----------- ------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
LFL 11.9% 13.7% 12.8% 14.9% 9.4% 12.5% 12.7%
----------- ------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Wholesale 118.8 43.8 130.7 42.7 249.5 43.2
----------- ------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Group 334.0 31.1 418.0 24.6 752.0 27.4
----------- ------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
a. FY17: 10 weeks to 7 January 2017
Dividend declaration
The Board of Directors recommends the payment of a final
ordinary dividend of 20.2 pence per share, in respect of the year
ended 29 April 2017, subject to the approval of shareholders at the
Company's Annual General Meeting to be held on 12 September 2017.
This dividend will be paid on 22 September 2017 to those
shareholders who are on the register of members on the record date
of 14 July 2017. The ex-dividend date will be 13 July 2017.
FY18 Guidance (Unaudited)
Full Year underlying PBT expected to be in line
with market expectations
Inventory reduction drives operating efficiencies:
* Gross Margin - Ongoing trading margin: Broadly flat
year-on-year - Up to 100 bps dilution from inventory
re-base from next phase of Design to Customer
programme
* Sales, Distribution and Central costs - Increase
slower than revenue
* Working Capital - Growth materially slower than
revenue
Disciplined investment continues:
* Space growth - 125k sq. ft. new owned space (75k EU,
50k USA) - 60 Superdry branded franchise store
openings (20% year-on-year growth)
* Capital - GBP60m-GBP70m investment, GBP45m on new and
refurbished store space
Capital policy
* Progressive ordinary dividend at 3.0x - 3.5x cover
* Special dividend when appropriate
FY17 Reporting Calendar
Annual General Meeting 12 September 2017
Half-year pre-close (including Q1 9 November 2017
and Q2 trading updates)
Half-year announcement and presentation 10 January 2018
(including peak trading update)
Full-year pre-close 10 May 2018
Full-year announcement and presentation 5 July 2018
Market Briefing
A presentation for analysts and investors will be held today
starting at 9.30am at the London Stock Exchange.
For further information:
SuperGroup
Nick Wharton +44 (0) 1242 586456
Chief Financial Officer nick.wharton@supergroup.co.uk
Tulchan
Susanna Voyle +44 (0) 20 7353 4200
Samantha Chiene supergroup@tulchan.com
Cautionary Statement
This announcement contains certain forward-looking statements
with respect to the financial condition and operational results of
SuperGroup 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, SuperGroup Plc has no obligation to update the
forward-looking statements or to correct any inaccuracies
therein.
Notes to Editors
SuperGroup is the owner of British global lifestyle brand
Superdry. A brand designed for attitude not age with affordable,
premium-quality clothing, accessories, footwear and cosmetics.
As we develop the breadth and nature of our product range, we
continue to appeal to a much broader, aspirational age group. Those
who want to feel amazing in what they wear and appreciate style,
quality and attention to detail.
Already well established in the UK - our home market - we
operate a significant and continually expanding international
business, selling through our websites, wholesale partners, a
network of franchise stores and, increasingly, independent stores.
We are becoming a more efficient business as we improve our process
from Design to Customer and refine our wholesale model.
Simultaneously, we are focused on expanding our business globally
with a clear strategy for growing our E-commerce business as well
as our operations in key markets within Europe, North America and
China.
The Group has a physical presence in 62 countries and 863 stores
and concessions globally. We also have a successful E-commerce
business with 27 international websites across 18 countries
covering 12 different languages.
Chairman's Statement
Over the last year SuperGroup has continued its progress towards
becoming a global lifestyle brand. Consistent and positive
financial results have been delivered through a broadening
geographic footprint and growth in all channels - Retail,
E-commerce and Wholesale - while further investments have been made
in systems, logistics and people. We have delivered on the four
pillar strategy outlined at the Capital Markets Day in 2015.
The economic environment has been tough and the political
backdrop uncertain. The Brexit vote and fluctuating exchange rates
have had the most significant direct impact. The Superdry brand has
proved resilient while the increased exposure of the business to
different countries, markets and currencies has been important in
providing some insulation from that impact. 72% of our total sales
volume is now from outside the UK, while 98% of our new Retail
square footage opened in the last year was overseas. Our Wholesale
business grew by 43% and 89% of this revenue was outside the
UK.
Under Euan Sutherland's leadership we have continued to build
the breadth and depth of the leadership team in order to ensure
that we have the capability to deliver both growth and operational
leverage in the future. We are building a structured and
professional organisation in which the culture of creativity and
innovation established by Julian Dunkerton will thrive. Our aim is
high quality execution on a consistent and cost-effective
basis.
As a Board we have focused our time in a balanced way across our
strategic priorities and governance processes. Our Board evaluation
this year indicated that the Board was functioning well. A number
of areas of improvement in Board administration were noted,
together with the importance of spending sufficient time on the
development of our brand and culture over the next year, and in
developing knowledge of the Group's markets outside the Europe and
the USA. Steve Sunnucks and Beatrice Lafon are not standing for
re-election at the AGM and I would like to thank them for their
contributions to SuperGroup and wish them well for the future.
Whilst the Board remains of sufficient size and balance for our
business in the near term, we will be looking carefully at the
composition in the coming year and putting in place a plan for
further appointments which will take into account the current
public policy debates around potential reform of corporate
governance, the evolving needs of SuperGroup and planning for
successors to me as Chairman and Keith Edelman as Senior
Independent Director. In respect of the last point we have taken
the first step with the appointment of Penny Hughes to succeed
Keith as Chairman of the Remuneration Committee with effect from
the conclusion of the AGM.
SuperGroup has continued to mature while sustaining strong
growth. This has been reflected in our Sustainability Programme and
our approach to risk management. In the case of the former we have
now established three ambitious long-term goals and will develop
implementation plans over the next year. SuperGroup faces a variety
of risks and the Board reviews the risk register regularly. We
continue to be vigilant with respect to Cyber Security and have
also spent time considering the implications of Brexit on the
Group.
The Company remains cash generative and this, together with its
strong underlying cash position, has enabled us to deliver on our
progressive dividend policy while continuing to produce growth and
make investments in infrastructure. These characteristics also
underpin our Viability Statement by enabling the business to
withstand the significant scenarios we have modelled.
As ever, our success is enabled by the passion and commitment of
the people who work for SuperGroup. Our Company is a global family
where the unique contribution of every colleague is highly valued.
I would like to thank everyone for their hard work over the last
year.
Review of the Year
Financial year 2017 summary
The articulation of a clear four pillar strategy in March 2015
enabled an organisation-wide focus on the consistent delivery of
the key long-term opportunities that will establish Superdry as a
global lifestyle brand. SuperGroup remains an opportunity rich
organisation and we are confident in the continued delivery of
sustainable revenue and profit growth supported by continued
investment in people, processes and infrastructure.
Our success in financial year 2017 has been achieved by the
continual improvement of our core product ranges and introducing
new categories to excite, inspire and enhance the brand's
relevance. The consistency of our revenue performance has been
pleasing with similar levels of growth achieved in each half-year
and positive like-for-like growth achieved in all channels: Retail,
E-commerce, which continues to deliver market leading growth, and
Wholesale.
The Wholesale division delivered growth of 43% fuelled by
material growth in the brand's franchise network, range
enhancements and the final elements of the process improvements
commenced in the previous financial year.
Our development markets in North America and China continue to
progress in line with their respective plans. The break-even
position delivered in the Group's North American operations was
achieved in our second year of ownership in line with our
acquisition plan.
Underlying profit growth of 18% reflects continued investment in
those two development markets and growth infrastructure together
with one-off migration costs incurred as part of the set-up of our
two new distribution centres. Our growth plan across geographies,
channels and categories will further reduce our reliance on any
single operating segment and during the next two years we
anticipate that we will leverage our investments as we continue to
grow our revenues and deliver improvements to our Design to
Customer process.
Embed
Our brand values for long-term sustainable growth
Embedding our brand values is a key element to realising our
ambition to become a global lifestyle brand. The Superdry brand
purpose defines the reason for being, creates a clear and concise
brand story and a brand strategy that is relevant and actionable.
Group-wide communication ensures that all colleagues become brand
ambassadors through a real understanding, appreciation and
awareness for what Superdry stands for.
A key element of the learning and development focus in the year
has been the roll-out to 1,700 store based colleagues of a Sales
and Service training programme. This programme serves to combine
our colleagues' passion for Superdry with detailed product
knowledge in order to improve customer experience and drive
sales.
Colleague engagement levels are measured annually and we
continue to see positive year-on-year progress in both response
levels and the key measures of Trust and Engagement. We continue to
invest in a number of initiatives targeted to address the specific
points raised by colleagues. These include wider employment and
progression opportunities through our participation in the National
Apprenticeship scheme and ways to share in the Group's success
through Save As You Earn and Buy As You Earn share schemes.
From a product perspective, collecting customer and market data
is key in enabling us to improve the customer experience by
embedding customer insight into our ongoing range and category
development processes.
We are committed to providing a compelling multi-channel
experience for our customers and firmly believe that the brand's
potential will be optimised through a combination of shopping
channels, including stores. Recognising the need to continually
develop the brand experience in-store during the year we opened two
trial stores that were designed to introduce a number of new
concepts to the store: to project better the wider product offer,
convey authority in our core ranges such as graphic t-shirts,
increase range intensity while increasing circulation space, and
improve the use of technology.
Commercially the updated new store format targets improvements
to sales density while also reducing the capital and operating
costs of new and refurbished stores. The first two trial stores
located in Manchester's Arndale centre and White City in London
were of differing sizes; and tested varying levels of re-fit
expenditure. The trading performances in both stores remain strong
with uplifts in like-for-like sales of 20% and 10% respectively and
have provided us with the confidence to undertake a roll-out
refurbishment programme, starting with ten stores in the UK in
financial year 2018. The concepts developed in the trial stores are
also being introduced into all new store openings.
Enable
Future growth through investment in people, systems and
infrastructure
Strengthening our teams
Our investment in people over the last three years has developed
greater capability within core functions including design,
merchandising, e-commerce and category management and introduced a
strong and experienced leadership team.
During the year, in addition to restructuring executive
responsibilities to better fit our future Design to Customer
process, the leadership team was further strengthened by the
appointment of Hugo Adams to lead the Group's marketing and
business development functions, Simon Callander as Group General
Counsel and Company Secretary and David Hennessey, who joined us in
June as our new Chief Information Officer.
Optimising the Design to Customer process
As we optimise the Design to Customer process, we will improve
our speed to market, eliminate wastage and reduce our operating
costs. Consistent with our approach to any significant change, we
will adopt a measured stance, introducing initiatives and working
practices progressively so as not to create undue risk to the
underlying business. We are confident that the changes we are
planning are well proven, best practice in the retail sector and
suitably adapted to our business model.
Early progress has been encouraging aided by establishing a
single global merchandising function consolidating the previous
retail and wholesale teams. Global range planning disciplines are
now well established leading to measureable improvements in the key
value creating metrics including crossover between Wholesale and
Retail ranges, joint buying and overall option count reduction.
Direct sourcing
Our established in-market sourcing operations in India and
Turkey continue to drive efficiencies through increasing the level
of product that is direct sourced. A Chinese sourcing office,
located in Shenzhen, will open later in 2017 enabling the
percentage of direct sourced purchases to increase from c.65%
towards our medium term goal of 80%.
Infrastructure development
Investment in infrastructure to support the growth and
development of the business will continue over the medium-term.
This will focus on a continued improvement approach and enhancement
to information technology applications introduced over the past
four years and enhancements to physical infrastructure to benefit
the Group. In order to protect the quality of execution, only one
significant change will be executed each year.
Our primary goals are to establish in-territory multi-channel
distribution centres close to each of our markets, delivering
better service and accelerated fulfilment at a lower cost,
harmonising inventory through the creation of a single stock pool
and the systems and processes necessary to support the Design to
Customer process. We will also progressively invest in warehouse
automation to improve efficiency and service.
As the first step in delivering this ambition we successfully
implemented two new regional distribution centres in the year in
Grobbendonk, Belgium and Pennsylvania, USA. These operated
successfully through peak trading, each serving a single channel
only and their operation will be extended in financial year 2018 to
fully serve each market on a multi-channel basis, including the
planned integration of the currently outsourced USA Wholesale
logistics operations into the Group's network.
Extend
Our key categories to achieve our brand growth potential
Our product opportunities
Continual range development is a core business capability
introducing newness, in the form of shape, fabric, design or
branding, to each successive season. This opportunity is therefore
equally relevant for heritage or new categories.
We believe there is a clear opportunity for us to more broadly
and confidently communicate our "ownership" of certain key
categories, such as jackets or graphic t-shirts. Our Jackets
campaign in autumn 2016 combined range development and social media
based communication of the breadth and technical benefits of our
range. While the consistent market trend of 'the padded jacket'
plays perfectly to our brand heritage we believe we have extended
the iconic status clearly associated with the Windcheater to other
ranges including Fuji, Bombers and Rookies. The success of the
campaign provided valuable insight that will support future
seasonal campaigns.
The opportunities to extend Superdry into adjacent product
categories and ranges that are natural extensions for the brand are
equally significant. In the year we have further developed our
Sport, Premium, Snow and footwear ranges which continued to gain
traction with our customers and tactically introduced a widened
range of gifts to support the key peak trading period. Our premium
ranges, both Superdry branded and those branded in collaboration
with Idris Elba, provide a natural range and price hierarchy
extension and have developed each season following the insight
gained from our customers.
Our most significant opportunities remain in Sport and
Womenswear.
Focusing on the opportunity in Sport and Womenswear
Superdry Sport remains a natural evolution for the brand and has
shown significant growth in all markets. The "ath-leisure" element
of our range provides the natural entry point for customers before
widening their buying to more technical products, where options are
expanding and building range credibility. Looking forward we intend
to introduce a number of dedicated Sport "shop-in-shops" in a
number of our larger stores, enhance the technical capability of
our range including improved moisture wicking, weather tolerance
and higher visibility and further develop our footwear offer to
participate in this key part of the market.
The long-term strategy to grow our Womenswear category to the
same value as Superdry Menswear continues to gain traction, with
Womenswear again growing marginally faster than Menswear driving an
improvement in participation to 36.5%.
This brand strategy targets a more feminine approach to both our
product and customer experience. Our in-house category and design
teams have broadened our core ranges to better match and appeal to
our identified customer profiles and introduced more regular
injections of new ranges to encourage repeat purchase. Within
store, the merchandising developments delivered within the Next
Generation store re-fit programme provides the inspirational story
that women are looking for at the point of purchase.
SuperDesign Lab provides dedicated innovation capability
Having developed the capacity and capability of our design team,
the business is now well placed to continue its planned programme
of core product development. This programme will be complemented by
the SuperDesign Lab which, led by James Holder, will focus on the
creation of further extensions of the Superdry brand into adjacent
lifestyle categories and providing a fast route to market where
commercial opportunities are identified.
Execute
Growth opportunities in new and existing markets and online
We believe we will optimise our customers' brand experience and
the ultimate scale of the brand by combining an e-commerce
proposition with a physical store presence, achieved via owned and
franchised stores and wholesale partners. Specifically, our
research has shown that multi-channel customers are more valuable
to us than single channel customers as they spend more often and
have greater brand loyalty.
Superdry stores
A key driver of our growth strategy is the expansion of the
store portfolio balancing owned stores of between 4,000 to 6,000
square feet in major city locations or prime locations in shopping
malls with franchised stores operating in smaller catchments. At
the end of financial year 2017 the brand operated from 555 stores
across 49 countries with 220 owned, 319 franchised and 16 licensed
stores.
Our focus for owned stores continues to be Continental Europe,
where we remain under-represented and deliver strong returns on
capital with, on average, a 25-month post-tax payback against a
target of 30 months. In financial year 2017 we opened 124,000
square feet of new space in Continental Europe through 14 net new
stores. Germany continues to be a priority market for the brand and
we are pleased with the overall performance of the store portfolio
which has grown to 31 owned stores and 14 franchises, since our
market entry in 2012.
Continental European owned stores at the year-end comprised
405,000 square feet of trading space, an increase of 44% during the
year, and represents 38% of our total retail estate.
Cognisant of consumer trends towards e-commerce our approach to
new stores remains cautious, being capital disciplined and
demanding lease flexibility in all cases. While considerable
opportunity for new owned and operated space exists, looking
forward we anticipate opening c.75,000 square feet of owned store
space in Continental Europe each year.
A net 59 franchise and three licence stores were added to the
estate through the financial year representing an additional 95,000
square feet of Superdry sales space. These openings included market
entry into Croatia, Israel, Romania, Russia, Slovakia, and
Slovenia. We have also commenced a programme of franchise store
re-fits to continue to modernise and strengthen our third party
store estate alongside the Next Generation store re-fit programme
in our own store estate.
Increasing e-commerce penetration
Our e-commerce objective is to make it inspiring and easy for
people across the planet to buy Superdry products and deliver an
amazing end-to-end experience centred on a sector leading delivery
proposition. As in recent years, online remains the fastest growing
route to our customers with year-on-year sales increasing by c.35%
and e-commerce participation up to 25.9% of total Retail sales.
This growth reflects the benefit of small incremental
improvements to the customer on-line experience and includes: image
based search on search engines such as Google; use of social media
to increase awareness and keep customers engaged, for example, the
introduction of #mysuperdry to the www.superdry.com website;
changes in creative style of the product imagery and fully
responsive technology implemented throughout the site. Our plans
for financial year 2018 include integration of a new order
management system into our operations that will facilitate the
launch of regional fulfilment capability in our new Belgian
warehouse allowing us to service Continental Europe from that
location.
Our partner programme, where we offer our product for sale on
third party retailer sites, drives incremental growth by accessing
a new customer base whilst controlling the brand experience. We
have seven partner sites currently, including Zalando, La Redoute,
and The Iconic. The partner programme has seen good growth during
the year and now represents 14% of our E-commerce business.
Customer interaction with each of our 27 fully localised
websites continues to be led by mobile use; 67% of visits
originated from either a mobile or tablet during the period, with
visits from mobiles having grown by 34% year-on-year.
Improving our Wholesale operation
The Wholesale division has shown substantial growth throughout
financial year 2017, with a consistent delivery of over 40%
year-on-year growth in each half of the financial year, and
continues to increase its significance within our income and
operations. This year has seen the crystallisation of process
improvements made in prior years, expansion of European Wholesale
sales teams and showrooms, and investment in best-in-class trade
shows and exhibitions.
Financial year 2017 saw double-digit growth in our forward order
books and was supplemented by increased in-season sales growth
facilitated by enhanced inventory availability. Continental Europe
continues to be the key growth driver with more than 30% growth in
revenue reaching more than EUR190m. While some of the sales
increases achieved in the year are one-off in nature as we step
changed our operating processes, we anticipate that the Wholesale
division will deliver sustained double digit revenue growth in the
medium-term.
Looking forward we also anticipate advances in aligning our
Wholesale and Retail operations, offering both economies of scale
to the Group as well as increased choice and flexibility to
customers. This long-term strategy will continue into financial
year 2018 and beyond as we move forward with our Design to Customer
initiatives and improvements.
Developing new markets
Looking long-term we have continued our development of two
markets that represent significant future growth opportunities.
North America
Establishing a successful presence in North America is an
important and natural step to realising our global ambition. North
America provides us with the opportunity to enhance our brand and
build significantly the long-term value of our business. Progress
has been made in resetting the USA business and through remedial
actions taken we have seen a positive customer response during the
year from our Retail and Wholesale channels that we acquired in
2015. Store trading improvements, represented by a strong
like-for-like performance, reflect the introduction of a broader
product range, better price architecture and more capable store
colleagues.
During financial year 2017 we opened seven stores as part of a
trial which enabled us to experiment with different store formats
in different types of location. These stores were predominantly
located in the North-East of the USA and reflect a full Superdry
offer, representative of that seen in Continental Europe. We are
confident that we have secured good locations at appropriate rents
and performance in these stores to date is encouraging. We will use
the learning to develop a new store opening programme that will
lead to the opening of up to ten new stores in financial year 2018,
mainly located in clusters within major cities such as Boston and
Washington DC. We also plan to open a flagship location on the West
coast in Los Angeles during the coming year.
Overall financial performance continues in line with our initial
plan, with the Group's North American operations breaking even in
our second year of ownership.
China
China is an exciting market and is forecast to overtake the USA
as the largest apparel and footwear market in the world. Customer
tastes are evolving from luxury brands to brands influenced by
"pop" culture and we believe that the Superdry brand, with the
right product, pricing model and infrastructure, is well positioned
to be successful. We have a ten-year minimum 50:50 joint venture
agreement with Trendy International Group ("Trendy").
During the year, we have worked with Trendy to establish an
experienced joint venture team who manage the Chinese business with
our involvement focused on strategic direction, product and brand
support and supporting store opening and marketing activities.
Trendy provide logistical, financial processing and IT support in
addition to people development and market knowledge.
During financial year 2017 we opened five trial stores with a
sixth opened in May 2017 and three franchises. If the operation of
the trial stores is successful we plan to undertake a measured
roll-out programme using a combination of owned and franchised
stores.
Conclusion
We have made good progress against our four strategic
objectives, delivering developments targeted in each of the two
years since we launched the strategy at the Capital Markets day in
March 2015. Through our strategy we will build both international
scale, through opening new stores, wholesale expansion and further
global e-commerce growth, while also improving efficiency across
the business. We will continue to invest in our infrastructure,
product, processes and colleagues to deliver long-term, sustainable
growth as we establish Superdry as a global lifestyle brand.
Finance Review
Basis of commentary
The financial year 2017 represents trading for the 52 weeks to
29 April 2017. The comparative 2016 period represented trading for
the 53 weeks to 30 April 2016. In order to provide comparability of
performance across the two years the trading commentary below
focuses on the 52-week period to 23 April 2016 as the comparative
while also referencing the 2016 year in full. In summary the 53rd
week in 2016, which was characterised by a low seasonal sales
profile in each of our channels, represented GBP7.4m of revenue and
an operating loss of GBP1.1m.
Introduction
We have made good progress again this year with strong
performance against each of our key financial metrics. Total sales
growth of 27.4% over financial year 2017 reflected ongoing space
growth, increasing by an average 17.4%, and positive like-for-like
growth in each sales channel, including stores. Reflecting the
strength of our on-line proposition, E-commerce revenue increased
by 35% year-on-year increasing the participation within Retail
sales by 280bps to 25.9%.
We remain committed to investing in our business to support
future growth. Capital investment totalled GBP60.9m (2016:
GBP53.2m) reflecting the increased scale of our new Retail space
programme, leading to store related investment of GBP42.3m (2016:
GBP30.7m) and the continued development of our Group
infrastructure. Capital investment to enhance our distribution
capability centred on the successful introduction during the year
of regional distribution centres in Continental Europe and North
America. Ongoing investments to improve core systems were matched
by investment in central headcount to increase our overall
capability.
Within our operating performance are the one-off costs of
GBP2.1m associated with the set-up of the Group's new distribution
facilities together with the continuing investment in our two
development markets, North America and China. In line with our
development plan, the North America operation was break-even in
financial year 2017 (2016: loss of GBP2.8m) and the initial trading
loss in China was GBP2.2m (2016: loss of GBP0.6m). Excluding these
factors, underlying profit before income tax for the 52-week
comparable trading period was 18.7% above the prior year comparable
period.
Group Statement of Comprehensive Income
The Group has a growing natural hedge through foreign currency
denominated revenues and has financial hedges in place that extend
over an 18-month period to provide a level of certainty for future
transactions. Since the European referendum vote in June 2016
Sterling exchange rates have weakened against the US Dollar and
Euro. While mitigated by the hedges referred to above, the impact
of the currency movement has been to increase the Sterling value of
both revenues and costs while remaining materially neutral at the
profit before income tax level.
Underlying GBPm 52 weeks
------------------------- --------
Revenue 752.0
------------------------- --------
Gross profit 453.0
------------------------- --------
Gross profit % 60.2%
------------------------- --------
Operating costs (363.6)
------------------------- --------
Operating profit 89.4
------------------------- --------
Profit before income tax 87.0
------------------------- --------
Group revenue for the year rose by 27.4% to GBP752.0m (2016:
GBP590.1m) when compared to the 52 week period in 2016. Within
this, the currency translation benefit of the Group's international
operations was 8.7%, and revenue from newly opened and maturing
retail space contributed 15.9% of this growth.
The Group gross margin fell 130bps to 60.2% (2016: 61.5%) with
approximately 70% of this movement reflecting the structural mix
impact of the relative strength of Wholesale revenue growth at a
lower margin.
Sales and distribution costs (which include costs associated
with operating stores, depreciation and transporting products)
totalled GBP308.7m (2016: GBP242.4m), an increase of 27.4%. In the
year these costs include one-off costs associated with the set-up
of the two new distribution facilities totalling GBP2.1m. On an
ongoing basis these costs are primarily driven by our continuing
store opening programme, where average retail space increased by
17.4% during the year, together with the impact of foreign exchange
movements and the continued impact of the higher unit variable cost
to serve our fast growing e-commerce business.
Central costs (which include the costs of operating our global
operations teams and support functions, marketing costs and related
depreciation) were GBP66.7m (2016: GBP54.8m), an increase of 21.7%.
Growth in Central costs reflects continued investment, linked to
the introduction of the Design to Customer process, in key
personnel concentrated within the merchandising and design teams
and more scalable and functional IT platforms.
Group underlying operating margin declined by 70bps on last year
to 11.9% (2016: 12.6%). In addition to the one-off distribution
facility costs, this reduction primarily reflects the dilutive
impact of both foreign exchange across the Group's global
operations and the performance of our North American development
market.
Underlying profit before income tax increased by 18.4% on the
prior year to GBP87.0m (2016: GBP73.5m).
Underlying Total 52-week
2017 Re-measurements 2017
GBPm GBPm GBPm
-------------------------------------------- ---------- --------------- -------------
Revenue:
-------------------------------------------- ---------- --------------- -------------
Retail 502.5 - 502.5
-------------------------------------------- ---------- --------------- -------------
Wholesale 249.5 - 249.5
-------------------------------------------- ---------- --------------- -------------
Group revenue 752.0 - 752.0
-------------------------------------------- ---------- --------------- -------------
Operating profit:
-------------------------------------------- ---------- --------------- -------------
Retail 68.9 (0.3) 68.6
-------------------------------------------- ---------- --------------- -------------
Wholesale 84.8 (1.9) 82.9
-------------------------------------------- ---------- --------------- -------------
Central costs (64.3) - (64.3)
-------------------------------------------- ---------- --------------- -------------
Total operating profit/(loss) 89.4 (2.2) 87.2
-------------------------------------------- ---------- --------------- -------------
Net finance income - Central costs 0.2 - 0.2
-------------------------------------------- ---------- --------------- -------------
Share of loss of investment - Central costs (2.6) - (2.6)
-------------------------------------------- ---------- --------------- -------------
Profit/(loss) before income tax:
-------------------------------------------- ---------- --------------- -------------
Retail 68.9 (0.3) 68.6
-------------------------------------------- ---------- --------------- -------------
Wholesale 84.8 (1.9) 82.9
-------------------------------------------- ---------- --------------- -------------
Central (66.7) - (66.7)
-------------------------------------------- ---------- --------------- -------------
Total profit/(loss) before income tax 87.0 (2.2) 84.8
-------------------------------------------- ---------- --------------- -------------
There were no exceptional costs in the year.
Underlying and reported profit
Underlying is defined as reported results adjusted to reflect
the impact of exceptional items and re-measurements and the related
income tax where appropriate. We believe that the underlying
results provide additional guidance to statutory measures to help
understand the performance of the Group. All references to
underlying are after making these adjustments.
For financial year 2017 those items relate to the unrealised
loss on financial derivatives of GBP2.2m (note 4).
Our Retail division (including E-commerce)
Reflecting the continued expansion of owned stores across
Continental Europe and now in North America, together with positive
Group Retail like-for-like growth in the year of +12.7% (2016:
+11.3%), our Retail division delivered revenue of GBP502.5m (2016:
GBP415.9m), up 20.8% on the year. The Retail division represents
67% of total Group revenue (2016: 70%). An additional 154,000
square feet of space was added in the year through a net 18 new
store openings in nine countries, including a further seven in
Germany, reflecting the strategic emphasis on this market.
Group Retail like-for-like sales were particularly fuelled by a
strong e-commerce performance that benefited from incremental
enhancements to the on-site customer journey and improved
availability following the combination of Retail and E-commerce
inventory into a single inventory pool in October 2015.
The Retail division's operating profit in financial year 2017
was GBP68.6m (2016: GBP62.6m). Underlying operating profit was
GBP68.9m (2016: GBP67.7m), up 1.8% on the prior year, and
underlying operating profit margin was 13.7% (2016: 16.3%).
While we continue to deliver scale-led efficiencies within our
distribution, the operating margin decline reflects the net impact
of the higher unit variable cost to serve of our fast growing
e-commerce business together with investments made to both exit
legacy stock-holding and protect service to customers during the
period of set-up of the new distribution centres within the
year.
2017 2016*
Retail division GBPm GBPm Growth
-------------------------------- ----- ----- --------
External revenues 502.5 415.9 20.8%
-------------------------------- ----- ----- --------
Underlying operating profit 68.9 67.7 1.8%
-------------------------------- ----- ----- --------
Underlying operating margin (%) 13.7% 16.3% (260)bps
-------------------------------- ----- ----- --------
Re-measurements (0.3) (1.9)
-------------------------------- ----- ----- --------
Exceptional items - (3.2)
-------------------------------- ----- ----- --------
Retail operating profit 68.6 62.6 9.6%
-------------------------------- ----- ----- --------
* 2016 is treated as a 52-week comparable period for these measures.
Our Wholesale division
Our Wholesale division delivered revenue of GBP249.5m, up 43.2%
(2016: GBP174.2m), representing 33% of total Group revenue (2016:
30%). At the end of the year the Group had Wholesale operations in
55 countries through direct sale relationships with major and
independent accounts, 319 (2016: 260) Superdry branded franchise
stores and 16 (2016: 13) licensed stores.
Revenue growth in Wholesale was achieved across all territories.
Our most significant sales increase was generated in our
Continental European operations benefiting from a concentration of
new franchise openings and the favourable results from our initial
efforts to reposition our Wholesale offering. This focus led to
significant increases in in-season sales, sales of innovation
ranges such as Sport and Premium to new and existing customers, and
order fill levels materially higher than in recent years. Clearance
sales have been higher this year due to the focused clearance
activity prior to the migration to our new distribution
centres.
2017 2016*
Wholesale revenue by territory GBPm GBPm Growth
------------------------------- ----- ----- ------
UK and Republic of Ireland 37.1 32.5 14.2%
------------------------------- ----- ----- ------
Europe 161.4 105.5 53.0%
------------------------------- ----- ----- ------
Rest of World 43.4 32.8 32.3%
------------------------------- ----- ----- ------
Clearance and other 7.6 3.4 123.5%
------------------------------- ----- ----- ------
Total Wholesale revenue 249.5 174.2 43.2%
------------------------------- ----- ----- ------
Operating profit was GBP82.9m (2016: GBP48.6m), whilst
underlying operating profit was GBP84.8m (2016: GBP60.5m).
Underlying operating margin at 34.0% (2016: 34.7%) decreased by
70bps year on year primarily reflecting the dilutive mix impact of
higher clearance sales during the year.
2017 2016*
Wholesale division GBPm GBPm Growth
------------------------------------- ----- ------ --------
External revenues 249.5 174.2 43.2%
------------------------------------- ----- ------ --------
Underlying operating profit 84.8 60.5 40.2%
------------------------------------- ----- ------ --------
Underlying operating profit margin % 34.0% 34.7% (70) bps
------------------------------------- ----- ------ --------
Re-measurements (1.9) (11.9)
------------------------------------- ----- ------ --------
Wholesale operating profit 82.9 48.6 70.6%
------------------------------------- ----- ------ --------
* 2016 is treated as a 52-week comparable period for these measures.
The following sections relate to the 52-week comparative period
in 2016 unless otherwise stated.
Re-measurements and exceptional items
Re-measurements in the year reflect a GBP2.2m charge in respect
of financial derivatives (2016: GBP13.8m charge) which has been
driven primarily by the devaluation of Sterling against the Euro
and US Dollar, and its impact on forward currency contracts
existing at the time of the UK's decision to leave the European
Union in June 2016. There were no exceptional items during
financial year 2017 (2016: GBP3.2m).
Taxation in the period
Our income tax expense on underlying profit of GBP18.3m (2016:
GBP14.8m) represents an effective tax rate of 21.0% (2016: 20.4%).
This is higher than the UK statutory rate of 19.9% (2016: 20.0%)
primarily due to the depreciation and amortisation of
non-qualifying assets, non-allowable expenses and the
non-deductibility of the the joint venture loss in the period. The
applicable UK corporation tax rate has been further offset by the
recognition of deferred tax assets in relation to overseas tax
losses (at a higher taxable rate) recognised on the basis of
expected recoverability against our future plans. In the medium
term we anticipate that the substantial majority of the Group's
earnings will be taxed in the UK.
During the year we paid GBP56m (2016: GBP44m) in UK taxes, which
includes corporation tax, import duty, business rates, employer's
national insurance and stamp duty.
Earnings per share (comparatives are based on 53 week
figures)
Reflecting the increased profitability of the Group during the
year, underlying basic EPS is 84.5p (2016: 70.9p), an increase of
19.2%.
The improved underlying performance of the business offset by
the movement in re-measurements and exceptional adjustments
outlined above leads to reported basic EPS of 81.2p (2016: 50.7p)
based on a basic weighted average of 81,308,378 shares (2016:
81,148,918 shares). The increase in the basic weighted average
number of shares is predominantly due to 103,457 5p ordinary shares
being issued during the year in accordance with the vesting of
certain tranches of the Performance Share Plan.
Underlying diluted EPS is 84.0p (2016: 70.7p) and diluted EPS is
80.7p (2016: 50.6p). These are based on a diluted weighted average
of 81,751,539 (2016: 81,382,620) shares.
Dividends
The introduction in the prior year of a dividend policy
reflected our confidence in the Superdry brand as well as our
ability to deliver sustainable profitable growth, cash generation
and return on capital. The policy also recognised the significant
range of investment opportunities available to us to grow
shareholder value while providing flexibility for the organic and
other opportunities that may require investment concentrated within
a short time period.
The key parameters of our dividend policy remain as follows:
-- a progressive dividend policy at a prudent earnings cover targeting 3.0x - 3.5x;
-- a dividend formula so that the interim dividend will be the
equivalent of approximately one-third of the total dividend for the
previous year; and
-- if, over an extended period, excess capital has not been
deployed, we will consider one-off returns to shareholders whilst
maintaining flexibility through a positive cash balance.
An interim dividend of 7.8p per share was paid on 27 January
2017. In line with the dividend policy the Board has recommended a
final ordinary dividend of 20.2p per share, taking the full-year
ordinary dividend to 28.0p per share. If approved, the ordinary
final dividend will represent a cash outflow of approximately
GBP16.4m and will be paid on 22 September 2017 to all shareholders
on the register at the close of business on 14 July 2017. The total
ordinary dividend represents a dividend cover of 3.0x on a
full-year basis.
Cash flow, balance sheet and investments
We remain financially strong and highly cash generative, with
underlying operating cash generated before working capital
movements of GBP118.7m (2016: GBP101.7m) and retaining net cash
balances of GBP65.4m (2016: GBP100.7m) at the end of the year after
funding continued investment across our business.
2017 2016
GBPm GBPm GBPm
------------------------------------------------------------------- ------ ------
Underlying operating cash flow before movements in working capital 118.7 101.7
------------------------------------------------------------------- ------ ------
Working capital movement (36.7) (3.4)
------------------------------------------------------------------- ------ ------
Net interest 0.2 (0.6)
------------------------------------------------------------------- ------ ------
Income taxes (19.9) (18.9)
------------------------------------------------------------------- ------ ------
Net cash generated from operations 62.3 78.8
------------------------------------------------------------------- ------ ------
PPE and intangible assets (56.3) (50.6)
------------------------------------------------------------------- ------ ------
Investments (6.5) (3.8)
------------------------------------------------------------------- ------ ------
Dividends (36.5) (5.0)
------------------------------------------------------------------- ------ ------
Other (including foreign currency movement) 0.1 10.3
------------------------------------------------------------------- ------ ------
Net (decrease)/increase in cash (36.9) 29.7
------------------------------------------------------------------- ------ ------
Net cash generated from operations of GBP62.3m has decreased
versus the prior year (2016: GBP78.8m) reflecting the increase in
working capital consumption as the Group continues to grow.
Inventories, trade and similar receivables and trade and similar
payables increased during the year to GBP148.1m (2016: GBP104.3m)
and as a proportion of Group revenue was 19.7% (2016: 17.7%).
Inventory levels increased by 28% on a constant currency basis and
increased by 39.6% at a total level to GBP157.2m (2016: GBP112.6m),
of which 11.2% is due to currency impacts. Underlying increases
have been to secure inventory availability, due to the expanded
store footprint in Continental Europe and the USA, and through the
transition to the new distribution centres. Trade and similar
payables were GBP109.0m (2016: GBP83.1m), an increase of 31.2% on
the prior year. The slightly slower growth than that in inventory
reflects the rebasing of the Group's payment profile in line with
terms agreed with suppliers. Trade and similar receivables
increased by 33.6% to GBP99.9m (2016: GBP74.8m) and were 13.3%
(2016: 12.7%) of Group revenue. Relative to the Wholesale revenue
increase of 43.2% in the year, this reflects an improvement in
debtor recovery with 71% of year-end trade receivables within
agreed payment terms.
We continue to review our supplier base in order to manage risk
and meet growth expectations. During the year, the number of
primary suppliers of goods for resale increased to 92 (2016: 74)
although several of these operate from multiple locations. Changes
to sourcing in recent years have resulted in the supply base being
focused in three principal territories: Turkey, China and India.
The flexible sourcing model that we have adopted, in terms of both
suppliers and territories, enables us to generate competitive
tension between suppliers and de-risk our sources of supply.
2017 2016 Growth
Current assets GBPm GBPm %
---------------------------- -------------------------------------- ------- ------- ------
Inventories 157.2 112.6 39.6
-------------------------------------------------------------------- ------- ------- ------
Trade and other receivables Trade receivables 59.0 40.7 45.0
---------------------------- -------------------------------------- ------- ------- ------
Other receivables/derivatives 56.3 40.4 37.4
------------------------------------------------------------------- ------- ------- ------
Subtotal receivables 115.3 81.1 41.2
-------------------------------------------------------------------- ------- ------- ------
Financial assets at
fair value through
profit and loss 2.2 0.7 214.3
-------------------------------------------------------------------- ------- ------- ------
Net cash 65.4 100.7 (35.1)
-------------------------------------------------------------------- ------- ------- ------
Total current assets 340.1 295.1 15.0
-------------------------------------------------------------------- ------- ------- ------
Trade and other payables Trade payables (77.0) (56.6) 36.2
---------------------------- -------------------------------------- ------- ------- ------
Other payables/derivatives/borrowings (55.1) (47.3) 14.8
------------------------------------------------------------------- ------- ------- ------
Total current liabilities (132.1) (103.9) 26.4
-------------------------------------------------------------------- ------- ------- ------
Net current assets 208.0 191.2 8.8
-------------------------------------------------------------------- ------- ------- ------
Working capital Inventories 157.2 112.6 39.6
---------------------------- -------------------------------------- ------- ------- ------
Trade and similar
receivables* 99.9 74.8 33.6
------------------------------------------------------------------- ------- ------- ------
Trade and similar
payables (109.0) (83.1) (31.2)
------------------------------------------------------------------- ------- ------- ------
Total working capital 148.1 104.3 42.0
-------------------------------------------------------------------- ------- ------- ------
* Trade and similar receivables exclude items not considered to
be working capital being derivatives, cash contributions and rent
deposits.
Trade and similar payables exclude items not considered to be
working capital being derivatives, lease incentives and other taxes
payable.
There has been an investment in property, plant and equipment
and intangible assets of GBP60.9m (2016: GBP53.2m). This has been
driven by expenditure incurred in opening 154,000 square feet of
net new retail space, ongoing investment in information technology
and in the new distribution centres and, recognising the importance
of strengthening the central capability, the continued
reconfiguration and expansion of our UK head office to centralise
regional support functions.
As at 29 April 2017, the net book value of property, plant and
equipment was GBP121.3m (2016: GBP95.4m).
During the year, GBP53.3m (2016: GBP46.8m) of capital additions
were made, of which GBP35.6m (2016: GBP28.6m) related to leasehold
improvements across the Group in respect of new stores. We continue
to generate strong returns on these investments with the average
payback from stores opened in the last three financial years
anticipated to be 25 months. The remaining balance of capital
additions includes land and buildings (GBP1.8m), furniture,
fixtures and fittings (GBP12.6m) and computer equipment
(GBP3.3m).
Intangible assets, comprising goodwill, lease premiums,
distribution agreements, trademarks, the website and computer
software, stood at GBP53.8m at the year-end (2016: GBP51.5m).
Additions in the year were GBP7.6m (2016: GBP6.4m), being mainly
website and software additions.
Robust financial management
We believe that robust systems and business and monitoring
processes allied to a culture of strong cost control are key to
operating our business effectively and efficiently in both the
short and long-term. Further improvement to business processes and
financial controls have been made during the year, aided by the
further development of our core finance system and key
transactional systems controlling merchandise management and sales
order processing.
Outlook
The Group's continued strong financial development mirrors the
progress delivered across each element of the business strategy
launched two years ago. Our disciplined growth strategy, across
geographies, channels and categories, has resulted in strong
revenue growth on a constant currency basis with margins diluted
primarily as a result of structural sales mix and foreign exchange.
We continue to strengthen our business for the longer-term through
investments in core infrastructure and the development of our
operations in North America where, importantly, we achieved a
financial break-even position in the year consistent with our
business plan at acquisition, and China. The business remains
strongly cash generative, well able to support the investments
necessary to deliver our planned growth while providing cash
returns to shareholders through a progressive ordinary
dividend.
Our focus remains on the development of a global lifestyle brand
and the delivery of long-term sustainable growth in revenue and
earnings. Our international new store pipeline for both owned and
franchised stores remains strong, which together with continued
growth in our differentiated e-commerce business provides
confidence in delivering further growth while reducing the Group's
exposure to any single market. The forthcoming year will also see
the initial crystallisation of the cost benefits from our ongoing
Design to Customer process.
Unaudited Group statement of comprehensive income
Re-measurements Re-measurements
and exceptional and exceptional
Underlying* items (note Total Underlying* items (note Total
2017 4) 2017 2016 4) 2016
Note GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
Revenue 3 752.0 - 752.0 597.5 - 597.5
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
Cost of sales (299.0) - (299.0) (229.7) (2.5) (232.2)
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
Gross profit 453.0 - 453.0 367.8 (2.5) 365.3
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
Selling, general and
administrative
expenses (375.4) - (375.4) (303.2) (0.7) (303.9)
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
Other gains and losses
(net) 11.8 (2.2) 9.6 8.5 (13.8) (5.3)
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
Operating profit 3 89.4 (2.2) 87.2 73.1 (17.0) 56.1
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
Finance income 0.2 - 0.2 - - -
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
Finance expense - - - (0.1) - (0.1)
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
Share of loss of joint
venture (2.6) - (2.6) (0.6) - (0.6)
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
Profit before income tax 87.0 (2.2) 84.8 72.4 (17.0) 55.4
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
Income tax expense 5 (18.3) (0.5) (18.8) (14.8) 0.7 (14.1)
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
Profit for the period 68.7 (2.7) 66.0 57.6 (16.3) 41.3
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
Attributable to:
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
Owners of the Company 68.7 (2.7) 66.0 57.5 (16.3) 41.2
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
Non-controlling interests - - - 0.1 - 0.1
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
68.7 (2.7) 66.0 57.6 (16.3) 41.3
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
Other comprehensive
income/(expense)
net of tax:
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
Items that may be
subsequently
reclassified to profit
or loss
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
Currency translation
differences 5.0 - 5.0 3.5 - 3.5
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
Total comprehensive
income/(expense)
for the period 73.7 (2.7) 71.0 61.1 (16.3) 44.8
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
Attributable to:
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
Owners of the Company 73.7 (2.7) 71.0 61.0 (16.3) 44.7
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
Non-controlling interests - - - 0.1 - 0.1
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
73.7 (2.7) 71.0 61.1 (16.3) 44.8
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
pence pence pence per pence per
per share per share share share
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
Earnings per share:
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
Basic 6 84.5 81.2 70.9 50.7
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
Diluted 6 84.0 80.7 70.7 50.6
--------------------------- ---- ----------- ---------------- ---------- ----------- ---------------- ---------
* Underlying is defined in note 3.
2017 is for the 52 weeks ended 29 April 2017 and 2016 is for the
53 weeks ended 30 April 2016.
Unaudited Group balance sheet
29 April 30 April
2017 2016
Note GBPm GBPm
--------------------------------------- ---- -------- --------
ASSETS
--------------------------------------- ---- -------- --------
Non-current assets
--------------------------------------- ---- -------- --------
Property, plant and equipment 8 121.3 95.4
--------------------------------------- ---- -------- --------
Intangible assets 9 53.8 51.5
--------------------------------------- ---- -------- --------
Investment in joint venture 6.0 3.0
--------------------------------------- ---- -------- --------
Deferred income tax assets 5 31.6 28.9
--------------------------------------- ---- -------- --------
Derivative financial instruments - 0.1
--------------------------------------- ---- -------- --------
Total non-current assets 212.7 178.9
--------------------------------------- ---- -------- --------
Current assets
--------------------------------------- ---- -------- --------
Inventories 157.2 112.6
--------------------------------------- ---- -------- --------
Trade and other receivables 112.2 80.4
--------------------------------------- ---- -------- --------
Financial assets at fair value through
profit or loss 2.2 0.7
--------------------------------------- ---- -------- --------
Derivative financial instruments 3.1 0.7
--------------------------------------- ---- -------- --------
Cash and cash equivalents 65.4 100.7
--------------------------------------- ---- -------- --------
Total current assets 340.1 295.1
--------------------------------------- ---- -------- --------
LIABILITIES
--------------------------------------- ---- -------- --------
Current liabilities
--------------------------------------- ---- -------- --------
Trade and other payables 118.9 90.2
--------------------------------------- ---- -------- --------
Current income tax liabilities 11.8 10.4
--------------------------------------- ---- -------- --------
Derivative financial instruments 1.4 3.3
--------------------------------------- ---- -------- --------
Total current liabilities 132.1 103.9
--------------------------------------- ---- -------- --------
Net current assets 208.0 191.2
--------------------------------------- ---- -------- --------
Non-current liabilities
--------------------------------------- ---- -------- --------
Trade and other payables 37.8 30.8
--------------------------------------- ---- -------- --------
Provisions for other liabilities and
charges 3.1 3.1
--------------------------------------- ---- -------- --------
Deferred income tax liabilities 5 1.0 0.8
--------------------------------------- ---- -------- --------
Derivative financial instruments 6.4 -
--------------------------------------- ---- -------- --------
Total non-current liabilities 48.3 34.7
--------------------------------------- ---- -------- --------
Net assets 372.4 335.4
--------------------------------------- ---- -------- --------
EQUITY
--------------------------------------- ---- -------- --------
Share capital 4.1 4.1
--------------------------------------- ---- -------- --------
Share premium 148.4 148.3
--------------------------------------- ---- -------- --------
Translation reserve (4.2) (9.2)
--------------------------------------- ---- -------- --------
Merger reserve (302.5) (302.5)
--------------------------------------- ---- -------- --------
Retained earnings 526.6 494.7
--------------------------------------- ---- -------- --------
Equity attributable to the owners of
the Company 372.4 335.4
--------------------------------------- ---- -------- --------
Non-controlling interests - -
--------------------------------------- ---- -------- --------
Total equity 372.4 335.4
--------------------------------------- ---- -------- --------
Unaudited Group cash flow statement
2017 2016
Note GBPm GBPm
--------------------------------------------- ---- ------ ------
Operating profit 87.2 56.1
--------------------------------------------- ---- ------ ------
Re-measurements and exceptional items 4 2.2 17.0
--------------------------------------------- ---- ------ ------
Underlying operating profit 89.4 73.1
--------------------------------------------- ---- ------ ------
Adjusted for:
--------------------------------------------- ---- ------ ------
- Depreciation of property, plant and
equipment 8 29.1 24.7
--------------------------------------------- ---- ------ ------
- Amortisation of intangible assets 9 7.4 7.1
--------------------------------------------- ---- ------ ------
- Loss on disposal of property, plant
and equipment 8 1.0 1.0
--------------------------------------------- ---- ------ ------
- Other non-cash items (1.2) -
--------------------------------------------- ---- ------ ------
- Gain on fair value of financial assets (1.5) -
--------------------------------------------- ---- ------ ------
- Gain on sale of investments - (1.5)
--------------------------------------------- ---- ------ ------
- Release of lease incentives (7.9) (4.9)
--------------------------------------------- ---- ------ ------
- Employee share award schemes 2.4 2.2
--------------------------------------------- ---- ------ ------
Underlying operating cash flow before
movements in
working capital 118.7 101.7
--------------------------------------------- ---- ------ ------
Changes in working capital:
--------------------------------------------- ---- ------ ------
- Increase in inventories (43.1) (7.2)
--------------------------------------------- ---- ------ ------
- Increase in trade and other receivables (29.0) (11.9)
--------------------------------------------- ---- ------ ------
- Increase in trade and other payables,
and provisions 35.4 15.7
--------------------------------------------- ---- ------ ------
Cash generated from underlying operating
activities 82.0 98.3
--------------------------------------------- ---- ------ ------
Interest received/(paid) 0.2 (0.6)
--------------------------------------------- ---- ------ ------
Tax (paid)/received (19.9) (18.9)
--------------------------------------------- ---- ------ ------
Net cash generated from underlying
operating activities 62.3 78.8
--------------------------------------------- ---- ------ ------
Cash outflows in respect of exceptional - -
items
--------------------------------------------- ---- ------ ------
Net cash generated from operations 62.3 78.8
--------------------------------------------- ---- ------ ------
Cash flow from investing activities
--------------------------------------------- ---- ------ ------
Payment of deferred consideration (0.9) -
--------------------------------------------- ---- ------ ------
Investments in joint ventures (5.6) (3.6)
--------------------------------------------- ---- ------ ------
Purchase of property, plant and equipment (48.7) (44.2)
--------------------------------------------- ---- ------ ------
Purchase of intangible assets (7.6) (6.4)
--------------------------------------------- ---- ------ ------
Cash received from disposal of investments - 1.5
--------------------------------------------- ---- ------ ------
Purchase of non-controlling interest - (1.7)
--------------------------------------------- ---- ------ ------
Maturity of other financial asset - 10.0
--------------------------------------------- ---- ------ ------
Net cash used in investing activities (62.8) (44.4)
--------------------------------------------- ---- ------ ------
Cash flow from financing activities
--------------------------------------------- ---- ------ ------
Dividend payments 7 (36.5) (5.0)
--------------------------------------------- ---- ------ ------
Proceeds of issue of share capital 0.1 0.3
--------------------------------------------- ---- ------ ------
Net cash (used in)/from financing activities (36.4) (4.7)
--------------------------------------------- ---- ------ ------
Net (decrease)/increase in cash and
cash equivalents (36.9) 29.7
--------------------------------------------- ---- ------ ------
Cash and cash equivalents at beginning
of period 100.7 67.6
--------------------------------------------- ---- ------ ------
Exchange gains on cash and cash equivalents 1.6 3.4
--------------------------------------------- ---- ------ ------
Cash and cash equivalents at end of
period 65.4 100.7
--------------------------------------------- ---- ------ ------
Unaudited statements of changes in equity
Share Share Translation Merger Retained Other Non-controlling Total
capital premium reserve reserve earnings reserves Total interests equity
Group Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Balance at 25
April 2015 4.0 147.5 (12.7) (302.5) 456.0 0.7 293.0 2.2 295.2
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Comprehensive
income
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Profit for the
period - - - - 41.2 - 41.2 0.1 41.3
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Other
comprehensive
income
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Currency
translation
differences - - 3.5 - - - 3.5 - 3.5
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Total other
comprehensive
income - - 3.5 - - - 3.5 - 3.5
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Total
comprehensive
income for the
period - - 3.5 - 41.2 - 44.7 0.1 44.8
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Transactions
with owners
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Employee share
award schemes - 0.3 - - 2.2 - 2.5 - 2.5
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Deferred tax
- employee
share
award schemes - - - - (0.5) - (0.5) - (0.5)
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Purchase of
non-controlling
interest - - - - 0.8 (0.7) 0.1 (2.3) (2.2)
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Shares issued 0.1 0.5 - - - - 0.6 - 0.6
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Dividend
payments 7 - - - - (5.0) - (5.0) - (5.0)
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Total
transactions
with owners 0.1 0.8 - - (2.5) (0.7) (2.3) (2.3) (4.6)
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Balance at 30
April 2016 4.1 148.3 (9.2) (302.5) 494.7 - 335.4 - 335.4
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Comprehensive
income
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Profit for the
period - - - - 66.0 - 66.0 - 66.0
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Other
comprehensive
income
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Currency
translation
differences - - 5.0 - - - 5.0 - 5.0
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Total other
comprehensive
income - - 5.0 - - - 5.0 - 5.0
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Total
comprehensive
income for the
period - - 5.0 - 66.0 - 71.0 - 71.0
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Transactions
with owners
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Employee share
award schemes - - - - 2.4 - 2.4 - 2.4
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Shares issued - 0.1 - - - - 0.1 - 0.1
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Dividend
payments 7 - - - - (36.5) - (36.5) - (36.5)
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Total
transactions
with owners - 0.1 - - (34.1) - (34.0) - (34.0)
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Balance at 29
April 2017 4.1 148.4 (4.2) (302.5) 526.6 - 372.4 - 372.4
---------------- ---- ------- -------- ----------- -------- -------- -------- ------ --------------- -------
Selected Notes to the Group Financial Statements
1. Basis of preparation
The financial information set out above has been prepared in
accordance with International Financial Reporting Standards adopted
by
the European Union and does not constitute the Group's statutory
accounts for the 52 weeks ended 29 April 2017 ("2017") (2016: 53
weeks ended 30 April 2016 ("2016")). The results and financial
information for the 52 weeks ended 29 April 2017 are unaudited.
Statutory accounts for 2016 have been delivered to the registrar of
companies, and those for 2017 will be delivered in due course. The
auditors reported on the 2016 accounts; their report was (i)
unqualified, (ii) did not include references to any matters to
which the auditors drew attention by way of emphasis without
qualifying their reports and (iii) did not contain a statement
under section 498(2) or (3) of the Companies Act 2006. This
preliminary results announcement has been prepared applying
accounting policies consistent with those applied by the Group in
the Annual Report 2016 and was approved by the Board on 2 July
2017.
2. New accounting pronouncements
New standards and interpretations issued but not yet
effective
At the balance sheet date there are a number of new standards
and amendments to existing standards in issue but not yet effective
including IFRS 9 'Financial Instruments', which is effective for
periods beginning on or after 1 January 2018, IFRS 15 'Revenue from
contracts with customers', which is effective for periods beginning
on or after 1 January 2018, and IFRS 16 'Leases', which is
effective for periods beginning on or after 1 January 2019. The
Group has not early adopted any of these new standards or
amendments to existing standards.
IFRS 9 'Financial Instruments' supersedes IAS 39 'Financial
Instruments: Recognition and Measurement'. The new standard
introduces a principles-based approach to the classification and
measurement of financial instruments, a new impairment model to be
applied and changes to hedge accounting. Upon initial assessment,
management do not expect there to be a material effect on the
financial statements.
IFRS 15 'Revenue from contracts with customers' supersedes IAS
18 'Revenue'. The new standard provides a single model for revenue
recognition based on when identified performance obligations are
satisfied. The approach now focuses on the transfer of control
rather than the transfer of risks and rewards. On initial
assessment, management do not expect there to be a material effect
on revenue recognition or measurement as revenue is recognised at
the point of sale of a product for own store and concession
revenue, and Wholesale and E-commerce revenue is recognised on
either dispatch or delivery. This is currently consistent with the
passing of control under IFRS 15. The standard will however require
a balance sheet reclassification of the value of returned
inventory, which forms part of the returns provision, from a
reduction in other payables to a current asset account.
IFRS 16 'Leases' becomes effective for the accounting period
ended 26 April 2020. This standard will bring operating leases onto
the balance sheet. Management have performed an initial assessment
of its impact, including sensitivity analysis, based on forecast
operating leases at transition date and expect there to be a
material adjustment to the Group retained earnings, lease
liabilities and right of use assets. An associated finance charge
and depreciation charge will replace the operating lease charge and
as a result there is expected to be an impact on operating profit
and on profit after tax in future periods.
There are no other new standards, amendments to existing
standards or interpretations that are not yet effective that would
be expected to have a material impact on the Group.
3. Segment information
The Group's operating segments under IFRS 8 have been determined
based on the reports reviewed by the Group's Chief Operating
Decision-Maker (Executive Committee members: "the CODM"). The CODM
assesses the performance of the operating segments based on profit
before interest, before inter-segment royalties. The CODM considers
the business from a customer perspective only, being Retail and
Wholesale. The CODM reviews the balance sheet at a Group level. No
separate balance sheet measures are provided between the Retail and
Wholesale segments.
The CODM receives information, reviews the performance of the
business, allocates resources and approves budgets for two
operating segments, and therefore information is disclosed in
respect of the following two segments:
-- Retail - principal activities comprise the operation of UK,
Republic of Ireland, European and USA stores, concessions and all
internet sites. Revenue is derived from the sale to individual
consumers of own brand and third party clothing, footwear and
accessories.
-- Wholesale - principal activities comprise the ownership of
brands, wholesale distribution of own brand products (clothing,
footwear and accessories) worldwide and trade sales.
Segment results and assets include items directly attributable
to a segment as well as those that can be allocated on a reasonable
basis. The Group reports and manages central functions separately
to the Retail and Wholesale operations, which includes design,
finance, HR, IT, legal, marketing, merchandising, property,
sourcing and the goodwill and intangibles arising on
consolidation.
The revenue from external parties reported to the CODM is
measured in a manner consistent with that of the IFRS financial
statements.
Inter-segment royalties, transfers or transactions entered into
under a cost plus pricing structure are not reflected in the
performance of each business segment.
Segmental information for the business segments of the Group for
FY17 and FY16 is set out below:
Retail Wholesale Central costs
2017 2017 2017 2017
GBPm GBPm GBPm GBPm
-------------------------------- ------ --------- ------------- ------
Total segment revenue 513.0 279.6 - 792.6
-------------------------------- ------ --------- ------------- ------
Less: inter-segment revenue (10.5) (30.1) - (40.6)
-------------------------------- ------ --------- ------------- ------
Revenue from external customers 502.5 249.5 - 752.0
-------------------------------- ------ --------- ------------- ------
Profit/(loss) before income tax 68.6 82.9 (66.7) 84.8
-------------------------------- ------ --------- ------------- ------
The following additional information is considered useful to the
reader:
Underlying* Reported
2017 Re-measurements Exceptional 2017
GBPm GBPm costs GBPm GBPm
-------------------------------------- ----------- --------------- ----------- --------
Revenue
-------------------------------------- ----------- --------------- ----------- --------
Retail 502.5 - - 502.5
-------------------------------------- ----------- --------------- ----------- --------
Wholesale 249.5 - - 249.5
-------------------------------------- ----------- --------------- ----------- --------
Total revenue 752.0 - - 752.0
-------------------------------------- ----------- --------------- ----------- --------
Operating profit
-------------------------------------- ----------- --------------- ----------- --------
Retail 68.9 (0.3) - 68.6
-------------------------------------- ----------- --------------- ----------- --------
Wholesale 84.8 (1.9) - 82.9
-------------------------------------- ----------- --------------- ----------- --------
Central costs (64.3) - - (64.3)
-------------------------------------- ----------- --------------- ----------- --------
Total operating profit/(loss) 89.4 (2.2) - 87.2
-------------------------------------- ----------- --------------- ----------- --------
Net finance income - Central costs 0.2 - - 0.2
-------------------------------------- ----------- --------------- ----------- --------
Share of loss of investment - Central
costs (2.6) - - (2.6)
-------------------------------------- ----------- --------------- ----------- --------
Profit/(loss) before income tax
-------------------------------------- ----------- --------------- ----------- --------
Retail 68.9 (0.3) - 68.6
-------------------------------------- ----------- --------------- ----------- --------
Wholesale 84.8 (1.9) - 82.9
-------------------------------------- ----------- --------------- ----------- --------
Central costs (66.7) - - (66.7)
-------------------------------------- ----------- --------------- ----------- --------
Total profit/(loss) before income
tax 87.0 (2.2) - 84.8
-------------------------------------- ----------- --------------- ----------- --------
* Underlying is defined as reported results adjusted to reflect
the impact of the (loss)/gain recognised on re-measurements (being
the fair valuation of financial derivatives), exceptional items
and, when appropriate, the related income tax. The Directors
believe that the underlying results provide additional guidance to
statutory measures to help understand the performance of the Group.
Further details of the adjustments are included in note 4. All
references to underlying are after making these adjustments. Retail
and Wholesale segments are presented before inter-segment
royalties.
Retail Wholesale Central costs
2016 2016 2016 2016
GBPm GBPm GBPm GBPm
-------------------------------- ------ --------- ------------- ------
Total segment revenue 428.3 201.1 - 629.4
-------------------------------- ------ --------- ------------- ------
Less: inter-segment revenue (5.6) (26.3) - (31.9)
-------------------------------- ------ --------- ------------- ------
Revenue from external customers 422.7 174.8 - 597.5
-------------------------------- ------ --------- ------------- ------
Profit/(loss) before income tax 63.3 47.9 (55.8) 55.4
-------------------------------- ------ --------- ------------- ------
The following additional information is considered useful to the
reader:
Underlying* Re- Exceptional Reported
2016 measurements costs 2016
GBPm GBPm GBPm GBPm
-------------------------------------------- ----------- ------------- ----------- --------
Revenue
-------------------------------------------- ----------- ------------- ----------- --------
Retail 422.7 - - 422.7
-------------------------------------------- ----------- ------------- ----------- --------
Wholesale 174.8 - - 174.8
-------------------------------------------- ----------- ------------- ----------- --------
Total revenue 597.5 - - 597.5
-------------------------------------------- ----------- ------------- ----------- --------
Operating profit
-------------------------------------------- ----------- ------------- ----------- --------
Retail 68.4 (1.9) (3.2) 63.3
-------------------------------------------- ----------- ------------- ----------- --------
Wholesale 59.8 (11.9) - 47.9
-------------------------------------------- ----------- ------------- ----------- --------
Central costs (55.1) - - (55.1)
-------------------------------------------- ----------- ------------- ----------- --------
Total operating profit/(loss) 73.1 (13.8) (3.2) 56.1
-------------------------------------------- ----------- ------------- ----------- --------
Net finance expense - Central costs (0.1) - - (0.1)
-------------------------------------------- ----------- ------------- ----------- --------
Share of loss of investment - Central costs (0.6) - - (0.6)
-------------------------------------------- ----------- ------------- ----------- --------
Profit/(loss) before income tax
-------------------------------------------- ----------- ------------- ----------- --------
Retail 68.4 (1.9) (3.2) 63.3
-------------------------------------------- ----------- ------------- ----------- --------
Wholesale 59.8 (11.9) - 47.9
-------------------------------------------- ----------- ------------- ----------- --------
Central costs (55.8) - - (55.8)
-------------------------------------------- ----------- ------------- ----------- --------
Total profit/(loss) before income tax 72.4 (13.8) (3.2) 55.4
-------------------------------------------- ----------- ------------- ----------- --------
* Underlying is defined as reported results adjusted to reflect
the impact of the (loss)/gain recognised on re-measurements (being
the fair valuation of financial derivatives), exceptional items
and, when appropriate, the related income tax. The Directors
believe that the underlying results provide additional guidance to
statutory measures to help understand the performance of the Group.
Further details of the adjustments are included in note 4. All
references to underlying are after making these adjustments. Retail
and Wholesale segments are presented before inter-segment
royalties.
The Group has subsidiaries which are incorporated and resident
in the UK and overseas.
Revenue from external customers in the UK and the total revenue
from external customers from other countries are:
2017 2016
GBPm GBPm
--------------------------------- ----- -----
External revenue - UK 319.2 312.9
--------------------------------- ----- -----
External revenue - Europe 332.9 234.2
--------------------------------- ----- -----
External revenue - Rest of world 99.9 50.4
--------------------------------- ----- -----
Total external revenue 752.0 597.5
--------------------------------- ----- -----
Included within external revenue overseas is revenue of
GBP195.8m (2016: GBP116.5m) generated by overseas subsidiaries. The
total of non-current assets, other than deferred income tax assets,
located in the UK is GBP76.7m (2016: GBP74.2m), and the total of
non-current assets located in other countries is GBP104.4m (2016:
GBP76.4m).
4. Re-measurements and exceptional items
Non-underlying adjustments constitute the fair value
re-measurement of financial derivatives and exceptional items.
Exceptional items are defined as being items that are material in
size, unusual or infrequent in nature, and are disclosed separately
as exceptional items in the Group statement of comprehensive
income.
2017 2016
GBPm GBPm
------------------------------------------------ ----- ------
Re-measurements
------------------------------------------------ ----- ------
Unrealised loss on financial derivatives (2.2) (13.8)
------------------------------------------------ ----- ------
Exceptional items
------------------------------------------------ ----- ------
Revision of fair values arising on USA business
combination - (0.7)
------------------------------------------------ ----- ------
Impact of IFRS3 (revised) on inventory acquired
at date of acquisition - (2.5)
------------------------------------------------ ----- ------
Exceptional items - (3.2)
------------------------------------------------ ----- ------
Re-measurements and exceptional items (2.2) (17.0)
------------------------------------------------ ----- ------
Taxation:
------------------------------------------------ ----- ------
Tax impact of non-underlying adjustments (note
5) 0.4 2.5
------------------------------------------------ ----- ------
Deferred income tax - exceptional (note 5) (0.9) (1.8)
------------------------------------------------ ----- ------
Total taxation (0.5) 0.7
------------------------------------------------ ----- ------
Total non-underlying adjustments (2.7) (16.3)
------------------------------------------------ ----- ------
Re-measurements
Unrealised loss/gain on financial derivatives
Unrealised loss/gain on derivatives is recognised as a
re-measurement.
Exceptional items
Buy-out of USA licence and business combination costs
The Group completed a business combination in the USA in FY15
including the acquisition of trade and assets of 15 Superdry
branded stores.
In FY16 the consideration paid for assets acquired was lower
than the assumed provisional fair value of those assets, resulting
in a GBP1.0m gain. The provisional fair values of the assets and
liabilities were reviewed within 12 months of acquisition and an
adjustment of GBP0.7m was made to reduce the overall gain from
GBP1.0m to GBP0.3m in the comparative period.
The acquired inventory was valued at sale price less cost to
sell, increasing the value of the inventory by GBP2.5m. The
acquired inventory was sold in the comparative period.
5. Income tax expense
The income tax expense comprises:
2017 2016
GBPm GBPm
---------------------------------------------------- ----- -----
Current income tax
---------------------------------------------------- ----- -----
- UK corporation tax charge for the period 19.6 14.9
---------------------------------------------------- ----- -----
- Adjustment in respect of prior periods (0.1) -
---------------------------------------------------- ----- -----
Overseas tax 1.8 0.9
---------------------------------------------------- ----- -----
Total current income tax 21.3 15.8
---------------------------------------------------- ----- -----
Deferred income tax
---------------------------------------------------- ----- -----
- Origination and reversal of temporary differences 2.4 (0.2)
---------------------------------------------------- ----- -----
- Deferred tax assets recognised in respect
of losses arising in current period (3.0) (2.3)
---------------------------------------------------- ----- -----
- Deferred tax assets recognised in respect
of losses arising in prior periods (3.1) (1.0)
---------------------------------------------------- ----- -----
- Adjustment in respect of prior periods 0.3 -
---------------------------------------------------- ----- -----
Exceptional income tax expense 0.9 1.8
---------------------------------------------------- ----- -----
Total deferred income tax (2.5) (1.7)
---------------------------------------------------- ----- -----
Total income tax expense 18.8 14.1
---------------------------------------------------- ----- -----
The income tax expense on underlying profit is GBP18.3m (2016:
GBP14.8m). The income tax credit on re-measured and exceptional
items is GBP0.4m (2016: GBP2.5m credit) and the exceptional income
tax charge is GBP0.9m (2016: GBP1.8m charge), so the net position
being disclosed as a non-underlying tax charge in the period is
GBP0.5m (2016: GBP0.7m credit). The exceptional tax charge of
GBP0.9m is as a result of the change in the UK corporation tax rate
from 18% to 17% and the subsequent impact on deferred tax
assets/liabilities.
Factors affecting the tax expense for the period are as
follows:
2017 2016
GBPm GBPm
----------------------------------------------- ----- -----
Profit before income tax 84.8 55.4
----------------------------------------------- ----- -----
Profit multiplied by the standard rate in
the UK - 19.9% (2016: 20.0%) 16.9 11.1
----------------------------------------------- ----- -----
Expenses not deductible for tax purposes 1.2 0.3
----------------------------------------------- ----- -----
Non-deductible JV loss 0.5 0.1
----------------------------------------------- ----- -----
Overseas tax differentials (2.4) (1.4)
----------------------------------------------- ----- -----
Deferred tax assets not recognised in respect
of losses arising in current period at local
tax rate 4.6 3.1
----------------------------------------------- ----- -----
Deferred tax assets recognised in respect
of losses arising in prior periods at local
tax rate (3.1) (1.0)
----------------------------------------------- ----- -----
Adjustment in respect of prior periods 0.2 0.1
----------------------------------------------- ----- -----
Total income tax expense excluding exceptional
items 17.9 12.3
----------------------------------------------- ----- -----
Exceptional income tax expense 0.9 1.8
----------------------------------------------- ----- -----
Total income tax expense including exceptional
items 18.8 14.1
----------------------------------------------- ----- -----
The Group's income tax expense on underlying profit of GBP18.3m
represents an effective tax rate of 21.0% for the period ended 29
April 2017. The Group's underlying effective tax rate of 21.0% is
higher than the statutory rate of 19.9%, primarily due to
depreciation and amortisation on non-qualifying assets,
non-allowable expenses and the non-deductibility of JV loss in the
period.
In addition to the above tax charged to the income statement,
there is a tax charge to equity of GBPnil (2016: GBP0.5m) in
respect of deferred tax relating to employee share schemes.
Net deferred income tax movement is as follows:
2017 2016
GBPm GBPm
----------------------------------------------------- ------ ------
Opening net deferred income tax asset (28.1) (26.9)
----------------------------------------------------- ------ ------
Charged/(credited) to the statement of comprehensive
income
----------------------------------------------------- ------ ------
- Accelerated capital allowances 0.4 (2.2)
----------------------------------------------------- ------ ------
- Movement on goodwill and intangibles 3.1 2.6
----------------------------------------------------- ------ ------
- Movement on goodwill and intangibles - change
in corporation tax rate 0.6 1.4
----------------------------------------------------- ------ ------
- Recognition of tax losses (6.1) (3.3)
----------------------------------------------------- ------ ------
- Movement on lease incentives - timing differences - 3.8
----------------------------------------------------- ------ ------
- Other temporary differences (0.2) (1.3)
----------------------------------------------------- ------ ------
- Revaluation of derivatives and forward exchange
contracts (0.3) (2.7)
----------------------------------------------------- ------ ------
Employee share award scheme included in equity - 0.5
----------------------------------------------------- ------ ------
Closing net deferred income tax asset (30.6) (28.1)
----------------------------------------------------- ------ ------
The 17% rate for UK corporation tax (effective from 1 April
2020) was substantively enacted on 6 September 2016. Included
within note 4 is an exceptional tax charge of GBP0.9m (2016:
GBP1.8m charge), of which GBP0.6m (2016: GBP1.4m) relates to the
impact of the tax rate change on goodwill and intangibles. The
remainder of GBP0.3m tax charge (2016: GBP0.4m) is included within
other movements such as accelerated capital allowances and
temporary differences. In the medium term we anticipate that the
substantial majority of the Group's earnings will be taxed in the
UK.
6. Earnings per share
2017 2016
GBPm GBPm
--------------------------------------------- ---------- ----------
Earnings
--------------------------------------------- ---------- ----------
Profit for the period attributable to owners
of the Company 66.0 41.2
--------------------------------------------- ---------- ----------
No. No.
--------------------------------------------- ---------- ----------
Number of shares at year end 81,358,746 81,235,727
--------------------------------------------- ---------- ----------
Weighted average number of ordinary shares
- basic 81,308,378 81,148,918
--------------------------------------------- ---------- ----------
Effect of dilutive options and contingent
shares 443,161 233,702
--------------------------------------------- ---------- ----------
Weighted average number of ordinary shares
- diluted 81,751,539 81,382,620
--------------------------------------------- ---------- ----------
Basic earnings per share (pence) 81.2 50.7
--------------------------------------------- ---------- ----------
Diluted earnings per share (pence) 80.7 50.6
--------------------------------------------- ---------- ----------
Underlying basic earnings per share
2017 2016
GBPm GBPm
---------------------------------------------- ---------- ----------
Earnings
---------------------------------------------- ---------- ----------
Underlying profit for the period attributable
to the owners of the Company 68.7 57.5
---------------------------------------------- ---------- ----------
No. No.
---------------------------------------------- ---------- ----------
Weighted average number of ordinary shares
- basic 81,308,378 81,148,918
---------------------------------------------- ---------- ----------
Weighted average number of ordinary shares
- diluted 81,751,539 81,382,620
---------------------------------------------- ---------- ----------
Underlying basic earnings per share (pence) 84.5 70.9
---------------------------------------------- ---------- ----------
Underlying diluted earnings per share (pence) 84.0 70.7
---------------------------------------------- ---------- ----------
There were no share-related events after the balance sheet date
that may affect earnings per share.
7. Dividends
2017 2016
GBPm GBPm
------------------------------------------------------------------------ ----- -----
Equity - ordinary shares
------------------------------------------------------------------------ ----- -----
Interim for the 52 weeks to 29 April 2017 - paid 7.8p per share (2016:
6.2p) 6.4 5.0
------------------------------------------------------------------------ ----- -----
Final dividend for the 53 weeks to 30 April 2016 - paid 17.0p per share 13.8 -
------------------------------------------------------------------------ ----- -----
Special dividend - paid 20.0p per share 16.3 -
------------------------------------------------------------------------ ----- -----
Total dividends paid 36.5 5.0
------------------------------------------------------------------------ ----- -----
In addition, the Directors are proposing a final dividend in
respect of the financial period ended 29 April 2017 of 20.2p per
share (2016: 17.0p) which will absorb an estimated GBP16.4m of
shareholders' funds. In the prior period a special dividend of
20.0p per share was declared. The final dividend will be paid on 22
September 2017 to shareholders on the register at the close of
business on 14 July 2017.
8. Property, plant and equipment
Land and Leasehold Furniture, Computer Total
buildings improvements fixtures equipment
and fittings
GBPm GBPm GBPm GBPm GBPm
--------------------- ---------- ------------- ------------- ---------- ------
NBV as at
30 April 2016 5.8 69.6 17.9 2.1 95.4
--------------------- ---------- ------------- ------------- ---------- ------
Additions 1.8 35.6 12.6 3.3 53.3
--------------------- ---------- ------------- ------------- ---------- ------
Net disposals - (0.6) (0.4) - (1.0)
--------------------- ---------- ------------- ------------- ---------- ------
Depreciation (0.1) (20.3) (6.7) (2.0) (29.1)
--------------------- ---------- ------------- ------------- ---------- ------
Exchange differences (0.2) 2.3 0.6 - 2.7
--------------------- ---------- ------------- ------------- ---------- ------
NBV as at
29 April 2017 7.3 86.6 24.0 3.4 121.3
--------------------- ---------- ------------- ------------- ---------- ------
9. Intangible assets
Website Lease Distribution Goodwill Total
Trademarks and software premiums agreements
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------- ------------ ------------- --------- ------------ -------- -----
NBV as at
30 April 2016 1.7 14.0 10.3 6.7 18.8 51.5
--------------------- ------------ ------------- --------- ------------ -------- -----
Additions 0.1 7.5 - - - 7.6
--------------------- ------------ ------------- --------- ------------ -------- -----
Amortisation (0.5) (4.3) (1.1) (1.5) - (7.4)
--------------------- ------------ ------------- --------- ------------ -------- -----
Exchange differences - - 1.0 (0.9) 2.0 2.1
--------------------- ------------ ------------- --------- ------------ -------- -----
NBV as at
29 April 2017 1.3 17.2 10.2 4.3 20.8 53.8
--------------------- ------------ ------------- --------- ------------ -------- -----
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GMGGNRZRGNZM
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