Interim Results - 26 weeks to 24 October 2021

RNS Number : 0484V

Frasers Group PLC

09 December 2021

9 December 2021

Unaudited Interim Results for the 26 weeks to 24 October 2021 ("FY22 H1")

	FY22 H1	FY21 H1	Change (%)
	£m	£m
Group revenue	2,339.8	1,893.3	23.6
UK Sports Retail	1,367.1	1,071.6	27.6
Premium Lifestyle	427.9	320.4	33.6
European Retail	399.8	352.0	13.6
Rest of World Retail	65.6	77.1	(14.9)
Wholesale & licensing	79.4	72.2	10.0
Group gross margin (%)	44.7%	44.0%

Reported profit before tax	186.0	106.1	75.3
Adjusted profit before tax (PBT)⁽⁴⁾	186.8	115.5	61.7

Reported profit after tax	143.7	84.4	70.3

Reported basic earnings per share	28.2p	16.0p	76.3
Adjusted basic earnings per share (EPS)⁽¹⁾	29.2p	17.5p	66.9

Cash inflow from operating activities	559.8	330.5	69.4
Net debt ⁽²⁾	(24.3)	(250.1)	90.3

Outlook: Since our last outlook statement given at our FY21 results announcement on 5 August 2021, our performance continues to be strong in both our store estate and online. We do however remain cautious with a number of well publicised macroeconomic headwinds on the horizon in the form of but not limited to cost increases, supply chain issues and potential squeezes on consumer spending power. There is also still the risk that Covid-19 measures could adversely affect outlook and we are now seeing restrictions return, including lockdowns in Europe.

Notwithstanding the above risks, which are appropriately considered in our forecasts including for impairments, we do believe the Group can achieve an adjusted profit before tax⁽⁴⁾ of between £300m to £350m for the period ended 24 April 2022 on the proviso there are no substantial lockdowns imposed in the UK, particularly over the important Christmas period.

• Group revenue increased by 23.6%

• Excluding acquisitions and on a currency neutral basis, revenue increased by 24.6%⁽³⁾

• UK Sports Retail revenue increased by 27.6%, largely due to the strong reopening of stores after the last lockdown in March 2021 and the comparative period being impacted by lockdowns as a result of Covid-19

• Excluding acquisitions, revenue increased by 27.0%(3)

• Premium Lifestyle revenue increased by 33.6%, largely due to new Flannels stores, continued growth in online, and the strong reopening of stores after the last lockdown in March 2021

• Flannels revenue growth continues to exceed all expectations. The compound annual growth rate (CAGR) from taking full ownership in FY18 to the end of FY22 H1 is 40%+

• European Retail revenue increased by 13.6%, largely due to strong growth in Ireland and the lockdowns experienced in the prior year

• Excluding acquisitions and on a currency neutral basis, revenue increased by 18.4%(3)

• Group gross margin increased to 44.7% from 44.0%, as we maintained product margin over the period

• Reported profit before tax was £186.0m, up 75.3% from £106.1m driven by the strong reopening of stores after lockdown, new Flannels stores, continued growth in online, continued operating efficiencies, and the FY21 comparative including Covid-19 related lockdowns

• Adjusted PBT was £186.8m, up 61.7%

• Excluding acquisitions and on a currency neutral basis, adjusted PBT increased by 88.4%⁽³⁾

• Cash inflow from operating activities increased to £559.8m compared to £330.5m in the prior period due to the increase in operating profit and improved working capital

• Reported basic earnings per share grew by 76.3% to 28.2p, from 16.0p

• Adjusted basic earnings per share increased by 66.9% to 29.2p from 17.5p⁽¹⁾

• Reported profit after tax was £143.7m up 70.3% from £84.4m

• Net debt decreased to £24.3m from £248.9m at 25 April 2021 (FY21 H1: £250.1m)⁽²⁾

(1) Adjusted basic EPS is reported basic EPS less the effects of exceptional items, unhedged foreign exchange (FX), gains and losses on strategic investments, and share schemes. Further detail on this calculation can be found in note 9.

(2) Net debt is borrowings (excluding IFRS 16 lease liabilities) less cash and cash equivalents held.

(3) A reconciliation excluding acquisitions and currency neutral performance measures can be found in the Glossary.

(4) Adjusted profit before tax (PBT) is reported profit before tax less the effects of exceptional items, unhedged foreign exchange (FX), gains and losses on strategic investments, and share schemes. Further detail on this calculation can be found in the Glossary.

Frasers Group plc

Chris Wootton, Chief Financial Officer

Tom Piper, Company Secretary

T: 0344 245 9200

CHAIR'S STATEMENT

BUSINESS PERFORMANCE

The Board is very pleased with the overall trading performance of the Frasers Group during the first half of the year and I want to extend my thanks on behalf of the Board to our hardworking and dedicated teams across the Group. As noted in our outlook statement, both our bricks and mortar and online businesses have continued to perform well since reopening from the last lockdown in the UK in March 2021.

Unfortunately we still have the shadow of uncertainty cast by the ongoing Covid-19 pandemic, with restrictions including lockdowns returning to parts of Europe and with the emergence of new variants. There are also supply chain risks which to date we have proven resilient to but which must be factored into our future forecasting given these could continue for some time. On top of this there are the well-publicised macroeconomic factors contributing to a likely cost of living squeeze which could impinge on consumers spending plans heading into the new year.

We once again remind our stakeholders of our key accounting principles, namely being conservative, consistent, and simple. Noting the above potential headwinds our results highlights are:

· Revenue increased to £2,339.8m (FY21 H1: £1,893.3m)

· Statutory PBT increased to £186.0m (FY21 H1: £106.1m)

· Adjusted PBT increased to £186.8m (FY21 H1: £115.5m)

· Net debt of £24.3m (FY21 H1: £250.1m)

More underlying detail is given throughout this Results Announcement. The highlights and explanations of these by segment is set out in the Chief Executive's Report and Business Review.

OUTLOOK

With a successful half year's trading mitigated to some extent by our conservative forecasting and based on the above mentioned headwinds, we still believe we can achieve an adjusted PBT of between £300m to £350m by the end of the financial year, assuming no significant UK lockdowns before then.

ELEVATION NO LIMITS

Despite the current uncertainty, we continue to invest for the long term including on our store estate and on our digital and fulfilment capabilities.

We opened our new Sports Direct flagship store on Oxford Street in London to great acclaim in June, and have recently opened two Flannels regional flagship stores at Meadowhall in Sheffield and at Leicester Fosse Park. Both are performing above expectations.

There is continued investment in our automation within the Shirebrook warehouse and in November we completed the purchase of land in Bitburg, Germany. The site is planned to house a new 1 million square foot warehouse and will significantly expand our fulfilment capabilities in Europe.

MARKETING CAMPAIGNS

We've made monumental strides repositioning Sports Direct with our brand partners. This has been fuelled by our brand campaigns - physical proof that showcases our new direction to external stakeholders. Momentum started with our Euros campaign, "Just A Game?!" featuring Eric Cantona and a host of England athletes. Then "Back To School" starred Gen-Z megastars Ollie & Jacob. But our recent Christmas campaign shows the true extent of what we've achieved shifting perceptions. Last year we featured 1 athlete. Fast forward 12 months, we featured 15 athletes including Emma Raducanu and Jack Grealish. A multi-million pound campaign that had the brands, and their talent, fighting to be featured. It's called "Go All Out This Christmas", and we did. It's been a pivotal year, bringing the brands on our elevation journey. And the undeniable progress we have made will unlock even more opportunities from our partners next year and beyond.

OUR PEOPLE

We continue to invest in our people and our organisation as we build the Group to make us stronger and well prepared for the future.

Michael Murray will become CEO of Frasers Group in May 2022. Michael has made a significant impact on the business in recent years as we have reshaped our property portfolio. He has been a significant driver of the Elevation No Limits strategy which has been a great success and he is considered by the Board to be the best person to lead the Group as we continue on this path in the coming years.

Our Frasers Group Elevation Programme has welcomed the second intake of twenty four highly talented people who are rotating through different departments in the business as they learn and develop their skills. It is intended that the future generations of leaders for the Group will come through this recruitment programme and we are pleased with the quality and talent that have joined Frasers Group through this initiative.

Anouska Kapur has recently joined the Frasers Group board as a Non-Executive Director. Anouska is a partner at the law firm Child & Child and she brings both legal and property expertise to the board.

The Board are proud that its composition is 37.5% female, which is in excess of the 33% target set by the Hampton Alexander review. The Board are also proud that as a FTSE 250 company, we are ahead of the target of the Parker Review to have at least one director from an ethnic minority background on the Board by 2024. The Board continually monitors diversity at Board level not just in relation to gender and ethnic diversity but also other factors including, but not limited to, age and socio-economic background.

SUSTAINABILITY

Sustainability and Elevation go hand in hand and both are important priorities for the Group and its stakeholders. We have built a Sustainability Team structure within the organisation with our CFO Chris Wootton as the executive sponsor. There are Sustainability Champions across the business and hundreds of dedicated people across our stores who are responsible for helping deliver against our priorities.

We have set ourselves targets to reduce emissions and single use plastic, and improve our waste management and recycling. We now offer a carbon neutral delivery option on the web.

So far in FY22 we are surpassing our UK stores' 10% energy reduction target for the year which is a sterling effort to effect change and we are grateful to our store staff.

We continue to make progress with delivery of our Taskforce on Climate-related Financial Disclosures (TCFD). We have completed a thorough gap analysis with the support of external advisers and have identified and ranked climate related risks and opportunities of greatest materiality to Frasers Group. This assessment will be used to inform scenario analysis modelling which will feed into our risk management framework. We are on track for full TCFD disclosures in line with the next annual reporting period.

GROUP REFINANCING

We were pleased to announce a refinance of our Group facility whereby we now have a combined term loan and revolving credit facility (RCF) of £930.0m for a period of 3 years, with the possibility to extend this by a further 2 years. We believe this is a great endorsement of the business and our Elevation strategy and I want to say thank you to our banking partners both new and existing for their support.

DIVIDEND / SHARE BUYBACK

No dividend was paid during the half year period and the Board has decided not to declare an interim dividend in respect of this period.

Our share buyback programme has continued which is a demonstration of our confidence in the Group and the strategy for future growth.

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

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

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

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

David Daly

Non-Executive Chair

9 December 2021

CHIEF EXECUTIVE'S REPORT AND BUSINESS REVIEW

SUMMARY OF RESULTS

	26 weeks ended 24 October 2021 (Unaudited)	26 weeks ended 25 October 2020 (Unaudited)
Group revenue	£2,339.8m	£1,893.3m
Adjusted PBT ⁽¹⁾	£186.8m	£115.5m
Group gross margin	44.7%	44.0%
Adjusted basic earnings per share ⁽²⁾	29.2p	17.5p
Cash inflow from operating activities	£559.8m	£330.5m
Net debt	£24.3m	£250.1m
Number of retail stores ⁽³⁾	1,561	1,557

(1) Adjusted profit before tax (PBT) is reported profit before tax less the effects of exceptional items, unhedged foreign exchange (FX), gains and losses on strategic investments, and share schemes. Further detail on this calculation can be found in the Glossary.

(2) Adjusted basic EPS is reported basic EPS less the effects of exceptional items, unhedged foreign exchange (FX), gains and losses on strategic investments, and share schemes. Further detail on this calculation can be found in note 9.

(3) Excluding associates and stores in the Baltic states that trade under fascias other than SPORTLAND or SPORTSDIRECT.com and other niche fascias.

The Directors have adopted Alternative Performance Measures (APM's). APM's should be considered in addition to IFRS measures. The Directors believe that Adjusted profit before tax (PBT) and Adjusted basic EPS provide further useful information for shareholders on the underlying performance of the Group in addition to the reported numbers and are consistent with how business performance is measured internally. They are not recognised profit measures under IFRS and may not be directly comparable with "adjusted" or "alternative" profit measures used by other companies.

From FY22 management changed the main reporting KPI from Underlying EBITDA to Adjusted PBT. Adjusted PBT is Reported Profit Before Tax less the effects of unhedged FX, exceptional items, share scheme charges and gains and losses on strategic investments. This change has been reviewed by the Audit Committee who have appropriately challenged management on the presentation and the adjusting items included in this APM. Management have taken this decision for the following reasons:

· With the continued significant investment in and roll out of our elevation strategy on both the physical and digital fronts, the importance of depreciation and amortisation to both the Board and our stakeholders in terms of assessing performance has grown.

· Our understanding from a number of financial sectors including the banking sector is that IFRS 16 Leases is becoming an increasingly important consideration.

· With this new measure being introduced we are trying to align with the Financial Reporting Council's thematic standpoint with regard to 'alternative performance measures' as far as possible whilst retaining a degree of interpretation given factors outside of our control, such as FX and strategic investments movements which are exceptionally difficult to forecast, particularly months in advance.

PERFORMANCE OVERVIEW

Group revenue was up 23.6% to £2,339.8m, largely due to the strong reopening of stores after lockdowns, continuing strong online performance, and the comparative period being impacted by lockdowns as a result of Covid-19.

Gross margin for the Group increased 70 basis points to 44.7% (FY21 H1: 44.0%) as we maintained product margins over the period.

Adjusted PBT is up 61.7%, largely driven by the strong reopening of stores after lockdown, new Flannels stores, the FY21 comparative including the impact of Covid-19 related lockdowns, and continued operating efficiencies. Excluding acquisitions and on a currency neutral basis adjusted PBT is up 88.4% with the difference to the 61.7% growth figure largely because of impairments.

In FY22 H1, impairments of £135.3m (FY21 H1: £128.9m) have been recognised due to the ongoing impact of the Covid-19 pandemic, further restrictions including lockdowns returning to parts of Europe, the availability and cost of shipping containers and other supply chain cost increases, and the likely cost of living squeeze on consumers, all being factored into our future forecasting.

Adjusted basic earnings per share increased by 66.9% to 29.2p (FY21 H1: 17.5p).

Reported Profit Before Tax increased by 75.3% to £186.0m (FY21 H1: £106.1m).

The Group generated cash inflow from operating activities of £559.8m during the period, up from £330.5m in the prior period.

As at 24 October 2021, the Group had a Revolving Credit Facility (RCF) of £913.5m (FY21 H1: £913.5m) valid until November 2021 and £847.5m valid to November 2022. On 30 November 2021 the Group refinanced its existing borrowings and entered into a combined term loan and revolving credit facility of £930.0m for a period of 3 years, with the possibility to extend this by a further 2 years. The Group continues to operate comfortably within its banking facilities and covenants and the Board remains comfortable with the Group's available headroom.

Net debt decreased to £24.3m at the period end (£248.9m at 25 April 2021). It should be noted this figure is calculated at period end not month end and thus does not include items such as month end supplier payments and payroll costs, this means there is always a material difference between period end net debt and the corresponding month end net debt.

REVIEW BY BUSINESS SEGMENT

UK SPORTS RETAIL

UK Sports Retail includes all of the Group's sports retail and USC store operations in the UK (including Northern Ireland), all of the Group's sports online businesses (excluding Bob's Stores, Eastern Mountain Sports, Baltics and Malaysia), the Group's gyms, Evans Cycles, GAME UK stores and online operations and the Group's Shirebrook campus operations. UK Sports Retail is the main driver of the Group and accounts for 58% of Group revenue.

	26 weeks ended 24 October 2021 (unaudited)	26 weeks ended 25 October 2020 (unaudited)
Revenue	£1,367.1m	£1,071.6m
Cost of Sales	£(768.1)m	£(595.4)m
Gross Profit	£599.0m	£476.2m
Gross Margin %	43.8%	44.4%
Adjusted PBT	£117.4m	£55.6m

Revenue increased 27.6% to £1,367.1m. Excluding acquisitions revenue grew 27.0%. This was largely due to the strong reopening of stores after the last lockdown in March 2021, and the prior period comparative including Covid-19 related lockdowns.

Gross margin decreased to 43.8%, mostly due to strong growth in GAME UK console sales which have a lower gross margin, but also because of an increased inventory provision in this segment.

Adjusted PBT for UK Sports Retail was £117.4m, an increase of 111.2% for the period, largely due the strong reopening of stores after lockdown and the comparative period being impacted by lockdowns as a result of Covid-19.

UK SPORTS RETAIL STORE PORTFOLIO⁽²⁾

	24 October 2021	25 October 2020	25 April 2021
England	390	395	394
Scotland	39	42	39
Wales	31	32	31
Northern Ireland	20	21	21
Isle of Man	1	1	1
GAME UK ⁽¹⁾	258	244	247
Evans Cycles	53	53	48
USC	23	27	25
Total	815	815	806

Opened	58	42	93
Closed	(49)	(38)	(98)
Acquired	-	42	42
Area (sq.ft.)	approx 6.9m	approx 7.1m	approx. 6.8m

(1) The GAME UK store numbers include 105 concessions operating within Sports Direct fascia stores (25 April 2021: 71) and does not include BELONG arenas.

(2) Table excludes the Group's standalone gyms.

PREMIUM LIFESTYLE

Premium Lifestyle consists of Flannels, Cruise, van mildert, House of Fraser, Jack Wills and Sofa.com fascia stores and corresponding web sales.

	26 weeks ended 24 October 2021 (unaudited)	26 weeks ended 25 October 2020 (unaudited)
Gross Transaction Value (GTV)⁽¹⁾	£468.0m	£350.4m
Revenue	£427.9m	£320.4m
Cost of Sales	£(223.6)m	£(169.9)m
Gross Profit	£204.3m	£150.5m
Gross Margin %	47.7%	47.0%
Adjusted PBT	£(9.7)m	£26.3m

(1) GTV being gross sales net of VAT, discounts and returns and gross sales where the Group acts as agent.

Revenue grew 33.6% to £427.9m. This was largely due to new Flannels stores, continued growth in online, growth in House of Fraser, and the impact of Covid-19 related lockdowns on the prior period comparative.

Gross margin increased to 47.7% as product margins were maintained over the period.

It should be noted that despite year on year trading improvements in the House of Fraser business, business rates in their current form continue to be a significant and disproportionate cost to House of Fraser.

Adjusted PBT for Premium Lifestyle decreased from a profit of £26.3m in FY21 H1 to a loss of £9.7m for the period, largely due to property and other related impairments being recognised in the period. Adjusted PBT excluding these impairments is £69.6m, compared to £26.9m in the prior period.

PREMIUM LIFESTYLE STORE PORTFOLIO

	24 October 2021	25 October 2020	25 April 2021
Jack Wills	56	64	60
Flannels	44	38	41
House of Fraser / Frasers	43	45	43
Sofa.com ⁽¹⁾	25	19	24
Cruise	6	6	5
18 Montrose	4	-	3
Van Mildert	1	1	1
Garment Quarter	1	-	1
Psyche	1	-	1
Total	181	173	179

Opened	11	2	12
Acquired	-	-	5
Closed	(9)	(8)	(17)
Area (sq.ft.)	approx. 4.3m	approx. 4.4m	approx. 4.2m

(1) Sofa.com store numbers include 18 concessions operating within House Of Fraser fascia stores (25 April 2021: 17).

EUROPEAN RETAIL

The European Retail division includes the Group's sports retail store management and operations in Europe, including the Group's European distribution centres in Belgium and Austria, stores and corresponding web business in the Baltic regions and GAME Spain stores and corresponding web business.

	26 weeks ended 24 October 2021 (unaudited)	26 weeks ended 25 October 2020 (unaudited)
Revenue	£399.8m	£352.0m
Cost of Sales	£(225.0)m	£(205.3)m
Gross Profit	£174.8m	£146.7m
Gross Margin %	43.7%	41.7%
Adjusted PBT	£60.9m	£19.0m

Revenue increased 13.6% to £399.8m. On a currency neutral basis and excluding acquisitions, European Retail revenue increased by 18.4% largely due to temporary store closures as a result of Covid-19 in the prior period comparative.

Gross margin increased to 43.7% largely due to continually improving product mix in the core business mitigated to some extent by increased lower margin console sales in GAME Spain.

Adjusted PBT was £60.9m, an increase of 220.5% for the period, largely due to strong reopening of stores in the current period, particularly in The Republic of Ireland and the impact of lockdowns on the prior period comparative.

All of the following stores are operated by companies wholly owned by the Group, except Estonia, Latvia and Lithuania where the Group owns 60.0%.

EUROPEAN RETAIL STORE PORTFOLIO₍₁₎

	24 October 2021	25 October 2020	25 April 2021
GAME Spain	236	241	236
Republic of Ireland(2)	41	33	39
Belgium	34	36	34
Estonia(1)	21	25	21
Austria	20	22	20
Portugal	20	21	20
Lithuania(1)	18	18	18
Latvia(1)	17	19	17
Poland	14	15	14
Slovenia	13	14	13
Czech Republic	12	12	12
Spain	10	4	9
Hungary	8	8	8
Cyprus	6	6	6
Holland	5	5	5
Slovakia	5	5	5
France	4	4	4
Germany	2	2	2
Luxembourg	2	2	2
Iceland	1	1	1
Total	489	493	486

Opened	6	7	13
Acquired	-	-	(38)
Closed	(3)	(25)	-
Area (sq.ft.)	approx. 3.7m	approx. 3.9m	approx. 3.6m

(1) Includes only stores with SPORTSDIRECT.com and SPORTLAND fascias.

(2) Excluding Heatons fascia stores.

REST OF WORLD RETAIL

Rest of World Retail includes sports stores in Malaysia trading under the SPORTS DIRECT fascia, retail stores in the US trading under Bob's Stores and Eastern Mountain Sports and their online businesses. In Malaysia the stores are 51.0% owned by the Group.

	26 weeks ended 24 October 2021 (unaudited)	26 weeks ended 25 October 2020 (unaudited)
Revenue	£65.6m	£77.1m
Cost of Sales	£(30.8)m	£(46.6)m
Gross Profit	£34.8m	£30.5m
Gross Margin %	53.0%	39.6%
Adjusted PBT	£14.3m	£7.7m

Revenue decreased 14.9% to £65.6m mostly due to Covid-19 related restrictions in Malaysia. Gross margin increased to 53.0% from 39.6% largely due to inventory holding efficiencies combined with less year on year promotional activity in the US businesses. Adjusted PBT was £14.3m, compared to £7.7m in FY21 H1, largely due to overall operating efficiencies in the US businesses.

REST OF WORLD RETAIL STORE PORTFOLIO

	24 October 2021	25 October 2020	25 April 2021
Malaysia	34	31	33
Bob's Stores	21	24	22
Eastern Mountain Sports	21	21	21
Total	76	76	76

Area (sq.ft.)	approx. 1.3m	approx. 1.3m	approx. 1.3m

WHOLESALE & LICENSING

The portfolio of Group brands includes a wide variety of world-famous sport and lifestyle brands. The Group's Sports Retail division sells products under these brands in its stores, and the Wholesale & Licensing division sells the brands through its wholesale and licensing activities. The Wholesale & Licensing division continues to sponsor a variety of prestigious events and retains a variety of globally recognised celebrities and sporting professionals as brand ambassadors.

	26 weeks ended 24 October 2021 (unaudited)	26 weeks ended 25 October 2020 (unaudited)
Wholesale	£68.7m	£61.6m
Licensing	£10.7m	£10.6m
Total Revenue	£79.4m	£72.2m
Cost of Sales	£(46.4)m	£(42.3)m
Gross Profit	£33.0m	£29.9m
Gross Margin %	41.6%	41.4%
Adjusted PBT	£3.9m	£6.9m

Revenue increased by 10.0% to £79.4m. Wholesale revenues are up 11.5% to £68.7m, and Licensing revenues increased 0.9% to £10.7m, largely due to the impact of Covid-19 related lockdowns on the prior year comparative.

Total gross margin was consistent with the prior period at 41.6% (FY21 H1: 41.4%).

Adjusted PBT decreased 43.5% to £3.9m (FY21 H1: £6.9m) largely due to impairment of Goodwill in the period.

STRATEGIC INVESTMENTS

Included within long-term financial assets at the period ended 24 October 2021 are the following direct interests held by the Group:

	24 October 2021 (unaudited) %	25 October 2020 (unaudited) %	25 April 2021 (audited) %
Mulberry Group plc	36.8	12.5	36.8
Studio Retail Group plc	27.1	36.7	35.6
Hugo Boss AG	6.8	2.5	5.1
French Connection Group plc	-	26.6	-

In addition to those listed, there are various other interests held, none of which represent more than 5.0% of the voting power of the investee. The movements in fair value of these long-term financial assets are recognised within Other Comprehensive Income.

The Group also holds indirect strategic investments within contracts for difference and options. The fair value of the contracts for difference and options are recognised in Derivative Financial Assets or Liabilities on the Group Balance Sheet, with the movement in fair value recorded in the Income Statement.

FOREIGN EXCHANGE AND TREASURY

The Group reports its results in GBP but trades internationally and is therefore exposed to currency fluctuations on currency cash flows in various ways. These include purchasing inventory from overseas suppliers, making sales in currencies other than GBP and holding overseas assets in other currencies. The Board mitigate the cash flow risks associated with these fluctuations with the careful use of currency hedging using forward contracts and other derivative financial instruments.

The Group uses forward contracts that qualify for hedge accounting in two main ways - to hedge highly probable EUR sales income and USD inventory purchases. This introduces a level of certainty into the Group's planning and forecasting process. Management has reviewed detailed forecasts and the growth assumptions within them and are satisfied that the forecasts meet the criteria as being highly probable forecast transactions.

As at 24 October 2021, the Group had the following forward contracts that qualified for hedge accounting under IFRS 9 Financial Instruments, meaning that fluctuations in the value of the contracts before maturity are recognised in the Hedging Reserve through Other Comprehensive Income. After maturity, the sales and purchases are then valued at the hedge rate.

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

The Group also uses currency options, swaps and spots for more flexibility against cash flows that are less than highly probable and therefore do not qualify for hedge accounting under IFRS 9 Financial Instruments. The fair value movements before maturity are recognised in the Income Statement.

The Group has the following currency options and unhedged forwards:

Currency	Expected use	Currency value	Timing	Rates
EUR / GBP	Euro sales	EUR 500m	FY23, FY26	0.99 - 1.08
USD / EUR	USD inventory purchases	USD 120m	FY23, FY25	1.26 - 1.31

The Group also holds short-term swaps for Treasury management purposes:

Currency	Expected use	Currency value	Timing	Rates
USD / GBP	Cash flow management	USD 100m	FY22	1.37 - 1.39

The Group is proactive in managing its currency requirements. The Treasury team works closely with senior management to understand the Group's plans and forecasts, they also discuss and understand appropriate financial products with various financial institutions, including those within the Group's Bank Financed Facility. This information is then used to implement suitable currency products to align with the Group's strategy.

Regular reviews of the hedging performance are performed by the Treasury team alongside senior management to ensure the continued appropriateness of the currency hedging in place, and where suitable, either implementing additional strategies and/or restructuring existing approaches in conjunction with our financial institution partners.

Given the potential impact of commodity prices on raw material costs, the Group may hedge certain input costs, including cotton, crude oil and electricity.

CASH FLOW AND NET DEBT

Net debt decreased by £224.6m from £248.9m at 25 April 2021 to £24.3m at 24 October 2021. Net interest on bank loans and overdrafts decreased to £4.7m (FY21 H1: £5.6m) largely due to reduced usage of the RCF in the period.

Analysis of net debt:

	24 October 2021 (unaudited) £m	25 October 2020 (unaudited) £m	25 April 2021 (audited) £m
Cash and cash equivalents	350.7	371.3	457.0
Borrowings	(375.0)	(621.4)	(705.9)
Total	(24.3)	(250.1)	(248.9)

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

The Group continues to operate well within its banking covenants and the Board remains comfortable with the Group's available headroom.

Cash flow:

	26 weeks ended 24 October 2021 (unaudited) £m	26 weeks ended 25 October 2020 (unaudited) £m	52 weeks ended 25 April 2021 (audited) £m
Cash inflow from operating activities	559.8	330.5	578.3
Income taxes paid	(62.6)	(54.3)	(59.3)
Invested in:
Purchase of subsidiaries, net of cash acquired	-	(37.0)	(39.4)
Purchase of listed investments	(107.1)	(49.9)	(113.3)
Proceeds on disposal of listed investments and derivatives	96.6	4.2	55.1
Proceeds on disposal of subsidiary undertaking	1.0	-	-
Net capital expenditure	(112.0)	(49.7)	(192.3)
Exchange movement on cash balances	(1.9)	1.4	(5.3)
Investment income received	5.6	0.3	0.5
Finance income received less finance costs paid	(14.4)	(12.5)	(22.6)
Lease payments	(61.9)	(17.1)	(78.0)
Purchase of own shares	(78.5)	-	(4.3)
Repayment of acquired debt	-	-	(1.4)
Dividend paid to non-controlling interest	-	-	(0.9)
Decrease in net debt	224.6	115.9	117.1

SUMMARY CONSOLIDATED BALANCE SHEET (EXTRACT)

	24 October 2021 (unaudited) £m	25 October 2020 (unaudited) £m	25 April 2021 (audited) £m
Property, plant and equipment	800.8	1,049.3	915.2
Right of use assets	211.9	259.3	249.7
Investment properties	52.7	18.2	14.1
Long-term financial assets	352.4	127.2	263.3
Deferred tax assets	103.7	59.3	66.8
Inventory	1,201.5	1,110.3	1,096.6
Trade and other receivables	490.7	578.8	546.5
Provisions	351.9	331.8	361.2
Trade and other payables	789.4	626.0	646.3
Lease liabilities	684.7	715.6	722.7
Borrowings	375.0	621.4	705.9

The decrease within property, plant and equipment is largely due to property and other related impairments, offset by additions for store fitouts and warehouse automation in the period. Right of use assets relate to leasehold properties capitalised under IFRS 16. Right of use assets have decreased from 25 April 2021 largely due to impairments in the period of £29.5m.

The increase in investment properties relates to the reclassification of the Robin Retail Park, Wigan as an investment property.

Long-term financial assets have increased during the period due to the additions of Hugo Boss AG and increase in fair value of the Hugo Boss AG investment.

Deferred tax assets have increased during the period largely due to the change in UK tax rate from 19% to 25% which was substantively enacted in May 2021.

Inventory has increased from 25 April 2021 as holdings are increased in the build up to the Christmas period. Inventory provision percentages have decreased from 16.6% at 25 April 2021 to 16.1% at period end.

Trade and other receivables includes a £118.3m reimbursement asset in relation to the Group's ongoing non-UK tax enquiries (25 April 2021: £118.3m) and £109.4m relating to deposits in respect of derivative financial instruments (25 April 2021: £131.0m).

Provisions have decreased to £351.9m largely due to utilisation of property related provisions.

Trade and other payables has increased from 25 April 2021 largely due to the increase in inventory supplier payables in the run up towards the Christmas period.

Lease liabilities relate to the present value of property lease payments expected to be made over the remaining life of the lease under IFRS 16. The lease liability has decreased largely due to repayments made in the period.

Borrowings have decreased from 26 April 2021. Continued positive net cash inflow from operating activities in the current period have allowed for reductions in the RCF drawn balance.

RELATED PARTY TRANSACTIONS

Related party transactions are disclosed in note 16. There have been no material changes in the related party transactions described in the last annual report.

GOING CONCERN

Having thoroughly reviewed the performance of the Group and having made suitable enquiries, the Directors are confident that the Group have adequate resources to remain in operational existence for the foreseeable future which is at least 12 months from the date of approval of these Unaudited Interim Financial Statements. Full details of this assessment can be found in note 1.

DIRECTORS' RESPONSIBILITY STATEMENT

Each of the directors confirm that to the best of their knowledge:

• The condensed set of financial statements has been prepared in accordance with UK-adopted IAS 34 'Interim Financial Reporting';

• The interim management report includes a fair review of the information required by:

a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events during the first 26 weeks of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining 26 weeks of the year; and

b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first 26 weeks of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

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

Mike Ashley

Chief Executive

9 December 2021
CONSOLIDATED INCOME STATEMENT

FOR THE 26 WEEKS ENDED 24 OCTOBER 2021

	Note	26 weeks ended 24 October 2021 (unaudited) £m	26 weeks ended 25 October 2020 (unaudited) £m	52 weeks ended 25 April 2021 (audited) £m
Revenue		2,339.8	1,893.3	3,625.3
Cost of sales		(1,293.9)	(1,059.5)	(2,094.5)
Gross profit		1,045.9	833.8	1,530.8
Selling, distribution and administrative expenses⁽¹⁾		(729.6)	(599.4)	(1,319.0)
Other operating income		18.7	15.1	36.8
Property and other related impairments⁽¹⁾		(135.3)	(128.9)	(317.0)
Exceptional items	4	-	3.7	(1.6)
Profit on sale of properties		-	-	9.7
Operating profit / (loss)		199.7	124.3	(60.3)
Investment income	5	28.8	40.0	103.7
Investment costs	6	(38.8)	(37.1)	(7.7)
Finance income	7	12.6	2.2	9.0
Finance costs	8	(16.3)	(23.3)	(36.2)
Profit before taxation		186.0	106.1	8.5
Taxation		(42.3)	(21.7)	(86.5)
Profit / (loss) for the period		143.7	84.4	(78.0)

ATTRIBUTABLE TO:
Equity holders of the Group		138.2	80.4	(83.0)
Non-controlling interests		5.5	4.0	5.0
Profit / (loss) for the period		143.7	84.4	(78.0)

EARNINGS PER SHARE ATTRIBUTABLE TO THE EQUITY SHAREHOLDERS
		Pence per share	Pence per share	Pence per share
Basic earnings per share	9	28.2	16.0	(16.5)
Diluted earnings per share	9	28.2	16.0	(16.5)

(1) Property and other related impairments have been separately presented for the period ended 24 October 2021 and further details can be found in Note 2. The prior year comparative was previously included within Selling, distribution and administrative expenses in the FY20 H1 Report and has been represented to be comparable.

The Unaudited Consolidated Income Statement has been prepared on the basis that all operations are continuing.

The accompanying accounting policies and notes form part of these Interim Financial Statements.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE 26 WEEKS ENDED 24 OCTOBER 2021

	Note	26 weeks ended 24 October 2021 (unaudited) £m	26 weeks ended 25 October 2020 (unaudited) £m	52 weeks ended 25 April 2021 (audited) £m
Profit / (loss) for the period		143.7	84.4	(78.0)

OTHER COMPREHENSIVE INCOME
ITEMS THAT WILL NOT BE RECLASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS
Fair value movement on long-term financial assets		80.5	(0.5)	77.3

ITEMS THAT WILL BE RECLASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS
Exchange differences on translation of foreign operations		(11.4)	(9.9)	(49.1)
Fair value movement on hedged contracts - recognised in the period	11	21.6	(15.3)	0.4
Fair value movement on hedged contracts - reclassified and reported in sales	11	-	(1.3)	(2.8)
Fair value movement on hedged contracts - reclassified and reported in cost of sales	11	3.6	(8.7)	(17.1)
Fair value movement on hedged contracts - taxation taken to reserves	11	(7.2)	4.3	3.0

OTHER COMPREHENSIVE INCOME / (LOSS) FOR THE PERIOD, NET OF TAX		87.1	(31.4)	11.7

TOTAL COMPREHENSIVE INCOME / (LOSS) FOR THE PERIOD		230.8	53.0	(66.3)

ATTRIBUTABLE TO:
Equity holders of the Group		225.3	49.0	(71.3)
Non-controlling interest		5.5	4.0	5.0
		230.8	53.0	(66.3)

The accompanying accounting policies and notes form part of these Interim Financial Statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 24 OCTOBER 2021

Note		24 October 2021 (unaudited) £m	25 October 2020 (unaudited) £m	25 April 2021 (audited) £m
ASSETS - NON CURRENT
Property, plant and equipment		1,012.7	1,308.6	1,164.9
Investment properties		52.7	18.2	14.1
Intangible assets		113.5	131.7	120.5
Long-term financial assets		352.4	127.2	263.3
Deferred tax assets		103.7	59.3	66.8
		1,635.0	1,645.0	1,629.6
ASSETS - CURRENT
Inventories		1,201.5	1,110.3	1,096.6
Trade and other receivables		490.7	578.8	546.5
Derivative financial assets	11	61.4	64.9	55.4
Cash and cash equivalents		350.7	371.3	457.0
		2,104.3	2,125.3	2,155.5
TOTAL ASSETS		3,739.3	3,770.3	3,785.1

Share capital		64.1	64.1	64.1
Share premium		874.3	874.3	874.3
Treasury shares reserve		(374.2)	(295.7)	(295.7)
Permanent contribution to capital		0.1	0.1	0.1
Capital redemption reserve		8.0	8.0	8.0
Foreign currency translation reserve		17.4	68.0	28.8
Reverse combination reserve		(987.3)	(987.3)	(987.3)
Own share reserve		(66.7)	(67.0)	(66.7)
Hedging reserve	11	29.5	7.0	11.5
Share based payment reserve		5.2	-	1.3
Retained earnings		1,775.1	1,644.8	1,554.5
Issued capital and reserves attributable to owners of the parent		1,345.5	1,316.3	1,192.9
Non-controlling interests		21.7	17.0	18.1
TOTAL EQUITY		1,367.2	1,333.3	1,211.0

LIABILITIES - NON CURRENT
Borrowings		375.0	621.4	705.9
Lease liabilities		505.2	585.9	534.2
Retirement benefit obligations		1.7	2.0	1.9
Deferred tax liabilities		30.0	19.6	27.0
Provisions	10	351.9	331.8	361.2
		1,263.8	1,560.7	1,630.2
LIABILITIES - CURRENT
Derivative financial liabilities	11	28.4	88.4	19.2
Trade and other payables		789.4	626.0	646.3
Lease liabilities		179.5	129.7	188.5
Current tax liabilities		111.0	32.2	89.9
		1,108.3	876.3	943.9
TOTAL LIABILITIES		2,372.1	2,437.0	2,574.1
TOTAL EQUITY AND LIABILITIES		3,739.3	3,770.3	3,785.1

The accompanying accounting policies and notes form part of these Interim Financial Statements.

CONSOLIDATED CASH FLOW STATEMENT

FOR THE 26 WEEKS ENDED 24 OCTOBER 2021

	Note	26 weeks ended 24 October 2021 (unaudited) £m		26 weeks ended 25 October 2020 (unaudited) £m	52 weeks ended 25 April 2021 (audited) £m
CASH INFLOW FROM OPERATING ACTIVITIES	12		559.8	330.5	578.3
Income taxes paid			(62.6)	(54.3)	(59.3)
NET CASH INFLOW FROM OPERATING ACTIVITIES			497.2	276.2	519.0


Proceeds on disposal of property, plant and equipment			0.7	2.7	20.6
Proceeds on disposal of intangible assets			-	4.6	7.5
Proceeds on disposal of listed investments and derivatives			96.6	4.2	55.1
Proceeds on disposal of subsidiary undertaking			1.0	-	-
Purchase of subsidiaries, net of cash acquired			-	(37.0)	(39.4)
Purchase of property, plant and equipment			(112.7)	(57.0)	(219.4)
Purchase of intangible assets			-	-	(1.0)
Purchase of listed investments			(107.1)	(49.9)	(113.3)
Investment income received			5.6	0.3	0.5
Finance income received			0.1	2.2	9.0
NET CASH OUTFLOW FROM INVESTING ACTIVITIES			(115.8)	(129.9)	(280.4)


Lease payments			(61.9)	(17.1)	(78.0)
Finance costs paid			(14.5)	(14.7)	(31.6)
Borrowings drawn down			409.0	1,551.4	1,128.1
Borrowings repaid			(739.9)	(1,830.0)	(1,323.6)
Dividends paid to non-controlling interests			-	-	(0.9)
Purchase of own shares	15		(78.5)	-	(4.3)
NET CASH OUTFLOW FROM FINANCING ACTIVITIES			(485.8)	(310.4)	(310.3)

NET DECREASE IN CASH AND CASH EQUIVALENTS			(104.4)	(164.1)	(71.7)
Exchange movement on cash balances			(1.9)	1.4	(5.3)
CASH AND CASH EQUIVALENTS INCLUDING OVERDRAFTS AT BEGINNING OF PERIOD			457.0	534.0	534.0
CASH AND CASH EQUIVALENTS INCLUDING OVERDRAFTS AT THE PERIOD END			350.7	371.3	457.0

The accompanying accounting policies and notes form part of these Interim Financial Statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE 26 WEEKS ENDED 24 OCTOBER 2021 (UNAUDITED)

		Share capital	Share premium⁽¹⁾	Treasury shares	Share scheme reserve	Foreign currency translation	Own share reserve	Retained earnings	Other⁽²⁾	Total attributable to owners of parent	Non-controlling interests	Total
		(£m)	(£m)	(£m)	(£m)	(£m)	(£m)	(£m)	(£m)	(£m)	(£m)	(£m)

At 25 April 2021		64.1	874.3	(295.7)	1.3	28.8	(66.7)	1,554.5	(967.7)	1,192.9	18.1	1,211.0
Acquisitions		-	-	-	-	-	-	1.9	-	1.9	(1.9)	-
Purchase of own shares		-	-	(78.5)	-	-	-	-	-	(78.5)	-	(78.5)
Share scheme		-	-	-	3.9	-	-	-	-	3.9	-	3.9
TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS		-	-	(78.5)	3.9	-	-	1.9	-	(72.7)	(1.9)	(74.6)
Profit for the financial period		-	-	-	-	-	-	138.2	-	138.2	5.5	143.7
	OTHER COMPREHENSIVE INCOME
Cash flow hedges - recognised in the period		-	-	-	-	-	-	-	21.6	21.6	-	21.6
Cash flow hedges - reclassified and reported in cost of sales		-	-	-	-	-	-	-	3.6	3.6	-	3.6
Cash flow hedges - taxation		-	-	-	-	-	-	-	(7.2)	(7.2)	-	(7.2)
Fair value adjustment in respect of long term financial assets - recognised		-	-	-	-	-	-	80.5	-	80.5	-	80.5
Translation differences - Group		-	-	-	-	(11.4)	-	-	-	(11.4)	-	(11.4)
Total comprehensive income for the period		-	-	-	-	(11.4)	-	218.7	18.0	225.3	5.5	230.8

At 24 October 2021		64.1	874.3	(374.2)	5.2	17.4	(66.7)	1,775.1	(949.7)	1,345.5	21.7	1,367.2

FOR THE 26 WEEKS ENDED 25 OCTOBER 2020 (UNAUDITED)

		Share capital	Share premium⁽¹⁾	Treasury shares	Share scheme reserve	Foreign currency translation	Own share reserve	Retained earnings	Other⁽²⁾	Total attributable to owners of parent	Non-controlling interests	Total
		(£m)	(£m)	(£m)	(£m)	(£m)	(£m)	(£m)	(£m)	(£m)	(£m)	(£m)
At 26 April 2020		64.1	874.3	(295.7)	-	77.9	(67.0)	1,564.9	(951.2)	1,267.3	13.0	1,280.3
Profit for the financial period		-	-	-	-	-	-	80.4	-	80.4	4.0	84.4
	OTHER COMPREHENSIVE INCOME
Cash flow hedges - recognised in the period		-	-	-	-	-	-	-	(15.3)	(15.3)	-	(15.3)
Cash flow hedges - reclassified and reported in sales		-	-	-	-	-	-	-	(1.3)	(1.3)	-	(1.3)
Cash flow hedges - reclassified and reported in cost of sales		-	-	-	-	-	-	-	(8.7)	(8.7)	-	(8.7)
Cash flow hedges - taxation		-	-	-	-	-	-	-	4.3	4.3	-	4.3
Fair value adjustment in respect of long term financial assets - recognised		-	-	-	-	-	-	(0.5)	-	(0.5)	-	(0.5)
Translation differences - Group		-	-	-	-	(9.9)	-	-	-	(9.9)	-	(9.9)
Total comprehensive income for the period		-	-	-	-	(9.9)	-	79.9	(21.0)	49.0	4.0	53.0

At 25 October 2020		64.1	874.3	(295.7)	-	68.0	(67.0)	1,644.8	(972.2)	1,316.3	17.0	1,333.3

FOR THE 52 WEEKS ENDED 25 APRIL 2021 (AUDITED)

		Share capital	Share premium⁽¹⁾	Treasury shares	Share scheme reserve	Foreign currency translation	Own share reserve	Retained earnings	Other⁽²⁾	Total attributable to owners of parent	Non-controlling interests	Total
		(£m)	(£m)	(£m)	(£m)	(£m)	(£m)	(£m)	(£m)	(£m)	(£m)	(£m)

At 26 April 2020		64.1	874.3	(295.7)	-	77.9	(67.0)	1,564.9	(951.2)	1,267.3	13.0	1,280.3
Acquisitions		-	-	-	-	-	-	-	-	-	1.0	1.0
Share scheme		-	-	-	1.3	-	0.3	(4.7)	-	(3.1)	-	(3.1)
Dividends paid to non-controlling interests		-	-	-	-	-	-	-	-	-	(0.9)	(0.9)
TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS		-	-	-	1.3	-	0.3	(4.7)	-	(3.1)	0.1	(3.0)
(Loss)/profit for the financial period		-	-	-	-	-	-	(83.0)	-	(83.0)	5.0	(78.0)
	OTHER COMPREHENSIVE INCOME
Cash flow hedges - recognised in the period		-	-	-	-	-	-	-	0.4	0.4	-	0.4
Cash flow hedges - reclassified and reported in sales		-	-	-	-	-	-	-	(2.8)	(2.8)	-	(2.8)
Cash flow hedges - reclassified and reported in cost of sales		-	-	-	-	-	-	-	(17.1)	(17.1)	-	(17.1)
Cash flow hedges - taxation		-	-	-	-	-	-	-	3.0	3.0	-	3.0
Fair value adjustment in respect of long term financial assets - recognised		-	-	-	-	-	-	77.3	-	77.3	-	77.3
Translation differences - Group		-	-	-	-	(49.1)	-	-	-	(49.1)	-	(49.1)
Total comprehensive (loss) for the period		-	-	-	-	(49.1)	-	(5.7)	(16.5)	(71.3)	5.0	(66.3)

At 25 April 2021		64.1	874.3	(295.7)	1.3	28.8	(66.7)	1,554.5	(967.7)	1,192.9	18.1	1,211.0

(1) The share premium account is used to record the excess proceeds over nominal value on the issue of shares.

(2) Other reserves comprise permanent contribution to capital, capital redemption reserve, reverse combination reserve and the hedging reserve. All movements in the period related to the hedging reserve.

The accompanying accounting policies and notes form part of these Interim Financial Statements.

NOTES TO THE FINANCIAL INFORMATION

FOR THE 26 WEEKS ENDED 24 OCTOBER 2021

1. BASIS OF PREPARATION

Non-Statutory

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

Going Concern

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

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

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

New accounting standards, interpretations and amendments adopted by the Group

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

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

Risks and uncertainties

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

· Strategy

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

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

· Treasury, liquidity and credit risks

· Customer

· Legal and regulatory compliance

· Technology capability and infrastructure renewal

· Cyber risks, data loss and data privacy

· Business continuity management and incident response

· Group entities and extended enterprise

· People, talent management and succession

· Environmental, social & governance (ESG)

· Property

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

2. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES

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

Key Judgements

Determining Related Party Relationships

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

Control And Significant Influence Over Certain Entities

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

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

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

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

• There has been no interchange of managerial personnel;

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

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

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

Cash Flow Hedging

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

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

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

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

Key Estimates

Provision For Obsolete, Slow Moving or Defective Inventories

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

a) Continuity inventory

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

c) Third party versus own brand inventory

d) Ageing of inventory

e) Sports Retail or Premium Lifestyle

f) Local economic conditions

g) Divisional specific factors

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

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

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

Key assumptions used to create the estimates are:

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

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

• Repricing - Labour cost associated with repricing units of stock

• Shrinkage - Stock lost through damage and theft

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

Property Related Provisions

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

Dilapidations

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

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

Other Provisions

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

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

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

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

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

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

Other Receivables And Amounts Owed By Related Parties

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

IFRS 16

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

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

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

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

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

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

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

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

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

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

Freehold Land and Buildings and Long-term leasehold

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

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

Value in use (VIU)

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

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

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

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

Fair value less cost of disposal

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

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

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

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

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

3. SEGMENTAL ANALYSIS

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

• The nature of the products;

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

• The methods used to distribute the products.

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

1) UK Retail:

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

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

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

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

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

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

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

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

	UK Sports Retail		Premium Lifestyle		UK Retail Total	European Retail		Rest of World Retail		Total Retail	Wholesale & Licensing		Eliminations		Group Total
	(£m)		(£m)		(£m)	(£m)		(£m)		(£m)	(£m)		(£m)		(£m)
Sales to external customers	1,367.1		427.9		1,795.0	399.8		65.6		2,260.4	79.4		-		2,339.8
Sales to other segments	-		-		-	-		-		-	45.0		(45.0)		-
Revenue	1,367.1		427.9		1,795.0	399.8		65.6		2,260.4	124.4		(45.0)		2,339.8
Gross profit	599.0		204.3		803.3	174.8		34.8		1,012.9	33.0		-		1,045.9
Operating profit before foreign exchange, exceptional items and property and other related impairments	174.5		70.2		244.7	65.1		16.6		326.4	4.1		-		330.5
Realised foreign exchange gain / (loss)	0.7		(0.5)		0.2	1.5		(0.4)		1.3	3.2		-		4.5
Property and other related impairments	(51.0)		(79.3)		(130.3)	(3.1)		(1.9)		(135.3)	-		-		(135.3)
Operating profit	124.2		(9.6)		114.6	63.5		14.3		192.4	7.3		-		199.7

Investment income	28.8	-		28.8			-		-	28.8		-		-	28.8
Investment costs	(38.8)	-		(38.8)			-		-	(38.8)		-		-	(38.8)
Finance income	12.6	-		12.6			-		-	12.6		-		-	12.6
Finance costs	(14.0)	(0.6)		(14.6)			(1.1)		(0.4)	(16.1)		(0.2)		-	(16.3)
Profit before taxation	112.8	(10.2)		102.6			62.4		13.9	178.9		7.1		-	186.0
Taxation															(42.3)
Profit for the period															143.7


Total assets	3,470.90	565.6		4,036.5			470.4		79.7	4,586.6		341.7		(1,189.0)	3,739.3
Total liabilities	(2,138.6)	(692.5)		(2,831.1)			(604.9)		(4.6)	(3,440.6)		(120.5)		1,189.0	(2,372.1)

Tangible asset additions	65.0	40.7		105.7			6.0		0.4	112.1		0.6		-	112.7
Right-of-use asset additions	5.0	15.3		20.3			14.7		0.8	35.8		-		-	35.8

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

	UK Sports Retail		Premium Lifestyle	UK Retail Total		European Retail		Rest of World Retail		Total Retail		Wholesale & Licensing		Eliminations		Group Total
	(£m)		(£m)	(£m)		(£m)		(£m)		(£m)		(£m)		(£m)		(£m)
Sales to external customers	1,071.6		320.4	1,392.0		352.0		77.1		1,821.1		72.2		-		1,893.3
Sales to other segments	-		-	-		-		-		-		30.6		(30.6)		-
Revenue	1,071.6		320.4	1,392.0		352.0		77.1		1,821.1		102.8		(30.6)		1,893.3
Gross profit	476.2		150.5	626.7		146.7		30.5		803.9		29.9		-		833.8
Operating profit before foreign exchange, exceptional items and property and other related impairments	171.5		33.7	205.2		34.0		10.6		249.8		7.1		-		256.9
Exceptional	3.7		-	3.7		-		-		3.7		-		-		3.7
Realised foreign exchange (loss)/gain	(13.7)		(0.6)	(14.3)		7.6		(0.1)		(6.8)		(0.6)		-		(7.4)
Property and other related impairments	(107.1)		(6.6)	(113.7)		(14.8)		(0.4)		(128.9)		-		-		(128.9)
Operating profit	54.4		26.5	80.9		26.8		10.1		117.8		6.5		-		124.3

Investment income	40.0	-			40.0		-		-		40.0		-		-	40.0
Investment costs	(37.1)	-			(37.1)		-		-		(37.1)		-		-	(37.1)
Finance income	2.1	-			2.1		0.1		-		2.2		-		-	2.2
Finance costs	(19.4)	(0.8)			(20.2)		(0.4)		(2.5)		(23.1)		(0.2)		-	(23.3)
Profit before taxation	40.0	25.7			65.7		26.5		7.6		99.8		6.3		-	106.1
Taxation																(21.7)
Profit for the period																84.4


Total assets	2,866.9	510.1			3,377.0		459.1		125.9		3,962.0		340.6		(532.3)	3,770.3
Total liabilities	(1,751.5)	(329.0)			(2,080.5)		(615.9)		(185.8)		(2,882.2)		(87.1)		532.3	(2,437.0)

Tangible asset additions	31.5	8.3			39.8		12.5		4.7		57.0		-		-	57.0
Right-of-use asset additions	26.9	13.3			40.2		9.7		-		49.9		-		-	49.9

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

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

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

	UK Sports Retail		Premium Lifestyle	UK Retail Total		European Retail		Rest of World Retail		Total Retail		Wholesale & Licensing		Eliminations		Group Total
	(£m)		(£m)	(£m)		(£m)		(£m)		(£m)		(£m)		(£m)		(£m)
Sales to external customers	1,968.5		735.6	2,704.1		615.2		152.7		3,472.0		153.3		-		3,625.3
Sales to other segments	-		-	-		-		-		-		95.4		(95.4)		-
Revenue	1,968.5		735.6	2,704.1		615.2		152.7		3,472.0		248.7		(95.4)		3,625.3
Gross profit	829.3		330.3	1,159.6		239.7		64.0		1,463.3		67.5		-		1,530.8
Operating profit before foreign exchange, exceptional items and property and other related impairments	191.0		34.3	225.3		20.5		18.6		264.4		20.2		-		284.6
Exceptional	3.1		(1.6)	1.5		(3.1)		-		(1.6)		-		-		(1.6)
Realised foreign exchange (loss) / gain	(20.2)		(0.2)	(20.4)		0.8		(1.4)		(21.0)		(5.3)		-		(26.3)
Property and other related impairments	(201.9)		(40.9)	(242.8)		(71.6)		(2.6)		(317.0)		-		-		(317.0)
Operating (loss) / profit	(28.0)		(8.4)	(36.4)		(53.4)		14.6		(75.2)		14.9		-		(60.3)

Investment income	103.7	-			103.7		-		-		103.7		-		-	103.7
Investment costs	(7.7)	-			(7.7)		-		-		(7.7)		-		-	(7.7)
Finance income	6.5	-			6.5		2.5		-		9.0		-		-	9.0
Finance costs	(28.1)	(1.2)			(29.3)		(2.7)		(3.8)		(35.8)		(0.4)		-	(36.2)
Profit before taxation	46.4	(9.6)			36.8		(53.6)		10.8		(6.0)		14.5		-	8.5
Taxation																(86.5)
Loss for the period																(78.0)


Total assets	3,305.9	668.0			3,973.9		670.8		158.6		4,803.3		344.7		(1,362.9)	3,785.1
Total liabilities	(2,357.8)	(499.6)			(2,857.4)		(857.0)		(95.1)		(3,809.5)		(127.5)		1,362.9	(2,574.1)

Tangible asset additions	163.4	33.1			196.5		17.4		3.0		216.9		2.5		-	219.4
Right-of-use asset additions	77.5	14.1			91.6		24.3		2.4		118.3		0.5		-	118.8

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

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

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

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

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

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

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

4. EXCEPTIONAL ITEMS

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

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

5. INVESTMENT INCOME

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

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

6. INVESTMENT COSTS

26 weeks ended
24 October 2021

(unaudited)

(£m)

26 weeks ended
25 October 2020

(unaudited)

(£m)

52 weeks ended

25 April 2021

(audited)

(£m)

Fair value loss on derivative financial instruments

38.8

37.1

7.7

38.8

37.1

7.7

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

7. FINANCE INCOME

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

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

8. FINANCE COSTS

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

9. EARNINGS PER SHARE ATTRIBUTABLE TO THE EQUITY SHAREHOLDERS

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

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

BASIC AND DILUTED EARNINGS PER SHARE

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

ADJUSTED EARNINGS PER SHARE

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

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

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

10. PROVISIONS

26 weeks ended 24 October 2021 (unaudited)

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

26 weeks ended 25 October 2020 (unaudited)

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

52 weeks ended 25 April 2021 (audited)

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

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

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

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

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

11. FINANCIAL INSTRUMENTS

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

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

(Unaudited)	Level 1 (£m)	Level 2 (£m)	Level 3 (£m)	Other (£m)	Total (£m)
FINANCIAL ASSETS - 24 October 2021
Amortised cost:
Trade and other receivables*	-	-	-	390.1	390.1
Cash and cash equivalents	-	-	-	350.7	350.7
Amounts owed by related parties	-	-	-	24.0	24.0

FVOCI:
Long Term Financial Assets (Equity Instruments) - designated	352.4	-	-	-	352.4

Derivative financial assets (FV):
Foreign forward purchase and sale contracts	-	61.4	-	-	61.4
	-	61.4	-	-	61.4

FINANCIAL LIABILITIES - 24 October 2021
Amortised cost:
Non-current borrowings	-	-	-	(375.0)	(375.0)
Trade and other payables**	-	-	-	(719.7)	(719.7)
IFRS 16 lease liabilities	-	-	-	(684.7)	(684.7)

Derivative financial liabilities (FV):
Foreign forward and written options purchase and sales contracts - unhedged	-	(7.6)	-	-	(7.6)
Derivative financial liabilities - contracts for difference & equity options	-	(20.8)	-	-	(20.8)
	-	(28.4)	-	-	(28.4)

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

(Unaudited)	Level 1 (£m)	Level 2 (£m)	Level 3 (£m)	Other (£m)	Total (£m)
FINANCIAL ASSETS - 25 October 2020
Amortised cost:
Trade and other receivables*	-	-	-	473.5	473.5
Cash and cash equivalents	-	-	-	371.3	371.3
Amounts owed by related parties	-	-	-	35.2	35.2

FVOCI:
Long Term Financial Assets (Equity Instruments) - designated	127.2	-	-	-	127.2

Derivative financial assets (FV):
Foreign forward purchase and sale contracts	-	28.4	-	-	28.4
Derivative financial assets - contracts for difference & equity options	-	36.5	-	-	36.5
	-	64.9	-	-	64.9

FINANCIAL LIABILITIES - 25 October 2020
Amortised cost:
Non-current borrowings	-	-	-	(621.4)	(621.4)
Trade and other payables**	-	-	-	(568.1)	(568.1)
IFRS 16 lease liabilities	-	-	-	(715.6)	(715.6)

Derivative financial liabilities (FV):
Foreign forward and written options purchase and sales contracts - unhedged	-	(6.6)	-	-	(6.6)
Derivative financial liabilities - contracts for difference & equity options	-	(81.8)	-	-	(81.8)
	-	(88.4)	-	-	(88.4)

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

(Audited)	Level 1 (£m)	Level 2 (£m)	Level 3 (£m)	Other (£m)	Total (£m)
FINANCIAL ASSETS - 25 April 2021
Amortised cost:
Trade and other receivables*	-	-	-	435.1	435.1
Cash and cash equivalents	-	-	-	457.0	457.0
Amounts owed by related parties	-	-	-	26.8	26.8

FVOCI:
Long Term Financial Assets (Equity Instruments) - designated	263.3	-	-	-	263.3

Derivative financial assets (FV):
Foreign forward purchase and sale contracts	-	35.3	-	-	35.3
Derivative financial assets - contracts for difference & equity options	-	20.1	-	-	20.1
	-	55.4	-	-	55.4

FINANCIAL LIABILITIES - 25 April 2021
Amortised cost:
Non-current borrowings	-	-	-	(705.9)	(705.9)
Trade and other payables**	-	-	-	(620.1)	(620.1)
IFRS 16 lease liabilities	-	-	-	(722.7)	(722.7)

Derivative financial liabilities (FV):
Foreign forward and written options purchase and sales contracts - unhedged	-	(17.5)	-	-	(17.5)
Derivative financial liabilities - contracts for difference & equity options	-	(1.7)	-	-	(1.7)
	-	(19.2)	-	-	(19.2)

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

(b) Financial assets and liabilities

Fair value hierarchy

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

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

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

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

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

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

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

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

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

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

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

(c)(i) Hedged currency instruments

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

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

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

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

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

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

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

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

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

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

The timing of the contracts is as follows:

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

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

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

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

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

The movements through the Hedging reserve are:

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

(c)(ii) Unhedged currency instruments

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

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

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

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

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

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

Capital Management

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

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

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

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

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

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

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

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

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

12. CASH INFLOW FROM OPERATING ACTIVITIES

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

13. POST BALANCE SHEET EVENTS

14. CAPITAL COMMITMENTS

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

15. PURCHASE OF OWN SHARES

16. RELATED PARTY TRANSACTIONS

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

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

26 weeks ended 24 October 2021 (unaudited):

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

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

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

26 weeks ended 25 October 2020 (unaudited):

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

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

(3) The sales relate to inventory.

52 weeks ended 25 April 2021 (audited):

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

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

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

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

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

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

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

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

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

Profit for the period	7.3	15.4

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

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

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

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

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

GLOSSARY

ALTERNATIVE PERFORMANCE MEASURES

Excluding acquisitions and currency neutral performance measure reconciliation:

	UK Sports Retail	Premium Lifestyle	European Retail	Rest Of World Retail	Wholesale & Licensing	Group Total
	Revenue
FY22 H1 Reported	1,367.1	427.9	399.8	65.6	79.4	2,339.8
Adjustments for acquisitions and currency neutral	(12.4)	-	-	-	-	(12.4)
FY22 H1 Excluding acquisitions and currency neutral	1,354.7	427.9	399.8	65.6	79.4	2,327.4

FY21 H1 Reported	1,071.6	320.4	352.0	77.1	72.2	1,893.3
Adjustments for acquisitions and currency neutral	(4.7)	-	(14.2)	(6.0)	-	(24.9)
FY21 H1 Excluding acquisitions and currency neutral	1,066.9	320.4	337.8	71.1	72.2	1,868.4

% Variance	27.0%	33.6%	18.4%	(7.7%)	10.0%	24.6%

	Adjusted PBT
FY22 H1 Reported	117.4	(9.7)	60.9	14.3	3.9	186.8
Adjustments for acquisitions and currency neutral	29.1	-	-	-	-	29.1
FY22 H1 Excluding acquisitions and currency neutral	146.5	(9.7)	60.9	14.3	3.9	215.9

FY21 H1 Reported⁽¹⁾	55.6	26.3	19.0	7.7	6.9	115.5
Adjustments for acquisitions and currency neutral	0.6	-	(0.8)	(0.6)	(0.1)	(0.9)
FY21 H1 Excluding acquisitions and currency neutral	56.2	26.3	18.2	7.1	6.8	114.6

% Variance	160.7%	(136.9%)	234.6%	101.4%	(42.6%)	88.4%

Reconciliation of Adjusted PBT performance measure, 5 year record:

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

KEY PERFORMANCE INDICATORS

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

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END

IR DKFBQCBDDOBK

TIDM	FRAS
Share Price	807.50p-1.83%
Market Cap	£5.17bn

Date	9 Dec 2021
Time	07:00:05
Category	Results
ID	0484V

TIDM	FRAS
Share Price	807.50p-1.83%
Market Cap	£5.17bn

Date	9 Dec 2021
Time	07:00:05
Category	Results
ID	0484V

t

Company Information

RNS Metadata

Company Information

RNS Metadata

Interim Results - 26 weeks to 24 October 2021

• Reported basic earnings per share grew by 76.3% to 28.2p, from 16.0p

• Reported profit after tax was £143.7m up 70.3% from £84.4m

GLOSSARY

ALTERNATIVE PERFORMANCE MEASURES