RNS Number : 4817H
SuperGroup PLC
12 July 2012
 



12 July 2012

SuperGroup Plc ("the Group")

 

Preliminary results for the 52 weeks ended 29 April 2012

 

SuperGroup Plc ("SuperGroup" or "the Group"), owner of the Superdry brand, today announces  preliminary results for the 52 weeks ended 29 April 2012 ("2012").

 

Financial results

 



2012

2011

Growth

Group revenue

£m

313.8

237.9

31.9%

Group gross profit margin

%

57.0

55.8

120bps

Profit before tax ("PBT")

£m

51.4

47.3

8.7%

Underlying1 PBT

£m

42.8

50.2

-14.7%

Basic earnings per share ("EPS")

pence

45.0

37.9

18.7%

Underlying1 basic EPS

pence

38.1

45.2

-15.7%

Year end net cash

£m

30.9

32.2

-4.0%

 

 

Operational highlights

·       31.9% growth in revenue despite operational challenges.

·       26 new standalone stores opened in the UK and Europe, including one relocation, taking the total to 103 (2011: 78).

·       UK like-for-like sales (including internet) 2% on the year.

·       International expansion: 48 franchised and licensed stores opened during the year, with two closures, taking the total to 101 stores (2011: 55).

·       Internet continues to grow strongly and now contributes 10% of Group revenue (2011: 8%).

·       Management team strengthened by key, high calibre appointments.

 

Julian Dunkerton, Chief Executive Officer of SuperGroup Plc, commented:

 

"Whilst sales have continued to grow substantially, this has been a disappointing year for the Group. We have faced challenges brought about by the rapid growth of our business which have been compounded by the volatile and adverse market conditions being experienced by all fashion retailers. Profits have, therefore, fallen short of expectations.

 

We have now strengthened our management team and I am pleased with the impact these changes are having on our efforts to improve our operational capability. Despite the backdrop, the Superdry brand remains strong and I am encouraged by the potential for our 2013 ranges. We are now committed to growing the Group in a controlled and measured way."

 

 

Notes:

1.   Underlying results have been adjusted to reflect the impact of the gain/loss recognised on fair valuing deferred consideration, financial derivatives and exceptional items.  In addition, the prior periods have been adjusted to reflect the impact of the revaluation of inventory within SuperGroup Europe BVBA at acquisition (IFRS 3 revised requirement) and the impact of including the prior year's freight and duty costs into inventory.  All references to underlying in this statement are after making these adjustments.  Retail and Wholesale are presented before Group overheads and royalties unless stated otherwise.

 

Enquiries:

 

SuperGroup Plc

Shaun Wills - Chief Financial Officer

Tony Newbould - Investor Relations Officer

Matthew Barnett - Public Relations Officer

Tel: 020 7457 2020 on the day

 




College Hill

Matthew Smallwood

Tel:  020 7457 2020


Justine Warren





 

 

Chairman's statement

 

The last year has clearly been a difficult one for SuperGroup. We have delivered a strong performance in Group revenues, but profits have fallen considerably short of expectations. Whilst the tough and volatile economic environment has not helped, our problems have been largely self-inflicted. The underlying issue is that our management and operational capability has fallen behind the needs of a rapidly growing business. Since becoming a public company in March 2010 we have invested substantially in the infrastructure of the business. However, revenues have grown by 125% times over the last 3 years, the UK Retail store base has grown from 42 to 79 and the number of international franchised stores increased from 29 to 101. Clearly, keeping pace with this level of growth would always have been a challenge, but we should have done better.

 

Communications with the City have proved to be challenging and have highlighted the need for a thorough review of the Group's forecasting and review processes.  Shaun Wills was appointed as Chief Financial Officer at a time when the Group came under scrutiny following a number of forecasting issues that came to light towards the end of the financial year.  Since his appointment he has commenced a thorough review of the finance department looking at skills, competencies and systems. Shaun's experience in leading finance teams in the fashion retail sector is key to developing a professional team that will operate at a level that would be expected.

 

Importantly though, the fundamentals of our business remain intact. Our products are in demand and all the indications from in-depth research we have carried out on the Superdry brand are that it is well-defined, clearly understood by customers and in good health. Julian Dunkerton and James Holder are focusing their talents on developing our ranges, whilst Theo Karpathios continues to build our international presence.

 

As a board we are committed to growing SuperGroup in a controlled and measured way. Through the key management appointments made towards the end of the year, particularly Susanne Given as Chief Operating Officer and Shaun Wills as Chief Financial Officer, and a continued programme of investment in systems, we are taking the steps required to build the operational capability that will enable the Group to realise the full potential of our brand.

 

The changes to the executive team will also ensure that the board can be more effective in underpinning the exceptional entrepreneurial skills and passion in the business with a more structured and disciplined approach. We will continue to review the composition of the board as the Group develops and to ensure diversity and the appropriate mix of skills. The board also has a key role in ensuring that the internal forecasts and external guidance the company gives are more accurate in the future.

 

I would like to thank everyone who works for SuperGroup for their continued hard work and commitment during this difficult and, at times, stressful year. I am optimistic that the changes we are making will ensure that our SuperGroup remains a fulfilling and enjoyable place to work as well as delivering financial performance which is in line with the expectations of our investors.

 

Peter Bamford

Chairman

11 July 2012

 

 

 

 

 

 

 

 

Business review

 

Introduction

SuperGroup operates in the branded fashion clothing sector selling Superdry branded premium quality clothing and accessories for both men and women at accessible price points. The Group operates an expanding international business and continues to grow market share in the UK through its new store opening programme and the internet.

 

In a challenging retail environment, the financial year to 29 April 2012 has been disappointing. Whilst each of the Group's divisions has delivered strong revenue growth, the business has faced a number of challenges which have seen underlying1 profit before tax fall by 14.7% and the underlying1 operating profit margin fall by 7.5 percentage points.  The movement in operating margin reflects the impact of a number of issues, the most significant of which was the difficulty experienced during the autumn after implementing a new warehouse management system ("WMS"). Further contributing factors include the rise in cotton prices, higher head office costs as the business has strengthened its management, and the increased participation of "off-price" to ensure the business operates with cleaner inventory, having cleared slow moving and older stock.

 

In 2011, the board recognised the need to strengthen the management team, and over the last 12 months the Group has made a number of important appointments to the senior management team.  The appointments of a new Chief Operating Officer and Chief Financial Officer are catalysts to improving the way the business operates and will afford Julian Dunkerton additional time to continue the evolution of the brand through the creation of new and exciting product ranges and the development of the brand identity. 

 

The Group has enhanced its logistical and warehousing capability through the introduction of a WMS and new physical warehouse capacity. The next 12 to 18 months will see continued infrastructure investment with the introduction of new merchandising and point of sales systems.

 

During the year, the Group launched a comprehensive, continuous brand tracking survey which provides insight about how the consumer views the brand and how the brand compares to its competitors. This research has confirmed the underlying strength of Superdry and its continuing appeal to its target customers.

 

Superdry has a number of points of differentiation that support its success: quality products at affordable prices with an attractive British tailored style reflecting an obsessive attention to detail.  Julian Dunkerton and James Holder both have many years of experience designing fashion clothing allowing them to develop product ranges that continue to move on and reflect the changing tastes of the consumer.  As part of the new ranges for 2013, Superdry is introducing a more feminine women's wear assortment and, through collaboration with the acclaimed British tailor Timothy Everest, is introducing a men's range of tailored suits, jackets and overcoats.

 

The Superdry brand remains strong and the Group is committed to investing in the business to provide a controlled and measured growth strategy.

 

Group strategy

Since the flotation on the London Stock Exchange in 2010, the Group's strategy has focused on five key areas:

 

1.    Roll-out of standalone stores in the UK and Europe;

2.    Developing the online offer;

3.    Expanding the international business;

4.    Extending the product range; and

5.    Developing an infrastructure that delivers profitable growth and operational efficiency.

 

Despite the issues highlighted above, progress has been made within each strategic area, contributing to the Group's continuing sales growth.

 

1.             Standalone stores

Since the Group's flotation it has almost doubled its standalone store presence in the UK and Eire, having delivered the short-term strategy of adding 20 stores per year. In line with many other retailers, given current economic conditions, management will continually review its ongoing store opening programme. Going forward, with the acquisition of SuperGroup Europe BVBA in February 2011, investment opportunities outside the UK will also be given due consideration providing a further channel for growth.

 

The Group successfully opened the ground floor of its flagship store on London's Regent Street in time for Christmas 2011.  Two further floors were opened during March 2012 and the final floor will open during July 2012.  The store will ultimately trade from approximately 22,000 square feet of retail space and is an international showcase for the Superdry brand; a further floor above the store incorporates a showroom which showcases the brand in an appropriate environment for international clients and franchisees.

 

The growing success of the Superdry brand has led management to take the decision to rebrand its 20 Cult stores as Superdry.  The rebranding process will be completed ahead of 2012 Christmas trading and the Group intends to exit third party stocks in an orderly manner through its off-price channels.

 

The Group's off-price channels include outlet stores, eBay and trade partners.  These generate profitable sales, minimise dilution of the brand with customers on the high street, and enable the Group to accelerate new product into the business.  The demand for outlet stores has grown in recent years as UK consumers and tourists look to purchase discounted branded products.  The success of these outlet stores has contrasted with the trend seen by most retailers in traditional store locations.  Since flotation, the Group has increased the number of outlet stores from three to nine.

 

As a result of these extra stores and an aged stock clearance exercise, 2012 saw increased levels of product being sold through off-price channels.  Similar levels of sales are anticipated through eBay, outlets and trade partners in the current year as the Group looks to sell through redundant third party stock following the rebranding of the Cult stores and the clearance of prior season ranges.

 

2.             Online offer

Internet sales are included within the Retail division's revenues and are complementary to the standalone stores.  Through the "full-price" internet channel the Group sells to 101 territories. Six websites operate throughout the world, fulfilled from the UK, and the Group will continue to open international sites in the forthcoming year.

 

Traffic to the Superdry sites continues to grow with the number of visitors increasing by 39.3% to 20.2m visitors during the period (2011: 14.5m).  Improving key performance indicators - conversion rates, average transaction values and service levels - have all improved with the continued success of the Group's e-commerce proposition.  During the year, internet revenues grew to 10% of total Group sales (2011: 8%).

 

3.             International business

 The Group's overseas operations have continued to demonstrate significant growth during the year. The acquisition of SuperGroup Europe BVBA has given the Group additional experience and knowledge of European markets. This has assisted with wholesale and franchise expansion in other European territories, helping achieve a net extra 46 franchised and licensed stores worldwide over the year, an increase of 83%.  The Wholesale division will continue to launch new and expand existing franchises and concessions as well as consolidating its existing markets of Germany, Italy, Spain, Denmark and the Middle East.

 

Since the year end, the Group has entered into an an exclusive long-term franchise agreement with Reliance Brands Limited - a part of the Reliance Industries Group, the largest private sector company in India - to launch the Superdry brand in that country.  

 

4.             Product range

Almost half of retail sales are generated by t-shirts, casual tops and jackets. Superdry will, therefore, continue to extend its offer into denim, footwear and accessories, categories in which the Group believes there are significant opportunities. 

 

Women's wear represents 34.5% of total retail sales which is broadly level with last year.  The forthcoming spring/summer 2013 ranges have more distinctive feminine handwriting and stylistically represent a move forward of the women's ranges.

 

Accessory ranges continue to be well accepted by the brand conscious customer.  Sales of accessories such as iPad/iPhone covers, headphones, and bags have seen growth of almost 300% during the year.  Further ranges are in the pipeline and include a cosmetics range to be launched in time for Christmas 2012.

 

The Group has also sought to license the Superdry brand into new product areas.  Examples include the successful launch of the Superdry fragrance and the Superdry optical range. Further licensed products are being considered including a new range of Superdry watches.

 

5.             Infrastructure

Investment in infrastructure is pivotal in underpinning the next phase of the Group's development. The dual objectives of supporting business growth and delivering operational efficiencies will be achieved through improvements in information technology and thorough reviews of current business processes. There will be continued strengthening of the management team to ensure both are delivered optimally.

 

Key personnel

The business has been further strengthened during the year with the recruitment of experienced senior managers, including, towards the end of the financial year, two board appointments: Susanne Given as Chief Operating Officer, and Shaun Wills as Chief Financial Officer.

 

Shaun joined the Group on 23 April 2012 and one of his earliest priorities has been to review and strengthen the controls around the internal forecasting process to prevent the recurrence of the issues that contributed to the revised profit guidance communicated on 20 April 2012.

 

Susanne joined the Group and was appointed to the board on 10 April 2012.  Susanne's primary focus will be to deliver continued growth and operational improvements and efficiencies in the UK Retail business whilst also overseeing central business functions including marketing, logistics, sourcing, IT and property. 

 

A Head of Retail Operations also joined the Group during June 2012 and other key appointments during the year include a Head of Logistics and a Head of Sourcing. These appointments reflect the Group's plans to develop and professionalise its retail businesses and supply chain infrastructure. A Head of International Business Development was also appointed, reflecting increased focus on the Group's international growth opportunities. There will be an on-going focus on personnel during 2013.

 

Systems enhancement

A new WMS, designed to enable greater efficiency and provide a platform for future growth, was implemented in August 2011. 

 

Issues relating to the implementation and integration of the new system led to stores not being correctly replenished, the result of which was incorrect stock profiles in the majority of the Group's UK retail stores and incomplete size ranges of key lines. The financial impact of the disruption was estimated at £9m, driven by a combination of lost sales revenue and additional distribution costs, including the use of temporary warehouse facilities.

 

The underlying systems and operational issues were resolved by the end of November 2011 ahead of the Group's peak Christmas trading and, with the UK's Retail division delivering 9% like-for-like sales during December 2011, it was apparent that replenishment was then operating effectively.

 

Other enhancements to the Group's systems capability are planned and include new merchandising and point of sale systems during the financial year ending 28 April 2013. A higher degree of rigour and project management resource will ensure lessons learnt from the WMS implementation are taken fully into consideration and the issues avoided.

Retail

 

The Retail division comprises Cult and Superdry branded retail outlets in the UK and Ireland, as well as concessions and the internet.  

 

 



2012

2011

Growth



£m

£m

%


External revenues


191.0

147.4

29.6%


Underlying1 operating profit


31.7

37.8

-16.1%


Underlying1 operating profit margin (%)


16.6%

25.6%

-9.0ppts







 

The Retail division delivered external revenue of £191.0m, up 26.6% (2011: £147.4m), representing 61% of total Group revenue (2011: 62%). Underlying1 operating profit in the year was £31.7m (2011: £37.8m). Underlying1 operating profit margin was 16.6% (2011: 25.6%). The decline in underlying1 profitability of nine percentage points was driven by a number of factors and principally the impact of the WMS implementation which accounted for just under half of this movement.  Other factors making up the remaining half include the impact of cotton prices, changes in the off-price sales mix, and cost increases across distribution and internet marketing. Further information on the Retail segment is included in note 3.

 

Business disruption arising through operational issues associated with the WMS launched in September 2011 adversely impacted Group profit by £9m.  The gross profit impact through lost sales was around £6m and there were additional distribution costs, including the use of temporary warehousing of £3m.  The system and operational issues were resolved ahead of the Christmas 2011 peak trading period.

 

The increased level of sales during the year through outlet stores and eBay provided the Group with the opportunity to manage stock levels effectively and in a profitable manner.  In addition, outlets continue to grow in popularity with consumers. During the year, as planned, the number of outlet stores grew from five to nine stores.

 

In total 20 new stores were opened during the year, of which one was a relocation, adding 124,000 square feet of selling space, in line with the Group's objective.  The total number of stores increased by 19 to 79 and at the year end retail traded from 430,000 square feet (2011: 306,000 square feet).  The Group received £7.7m (2011: £9.7m) in landlord cash contributions which were used to finance the associated store fit-out costs.

 

Wholesale

 

The Wholesale division comprises all international operations, whether wholesale, license or franchise arrangements, and SuperGroup Europe, but excludes the internet. 

 

 



2012

£m

2011

£m

Growth

%


External revenues


122.8

90.5

35.7%


Underlying1 operating profit


25.3

21.4

18.2%


Underlying1 operating profit margin (%)


20.6%

23.6%

-3.0ppts







 

The Wholesale division delivered external revenue of £122.8m, up 35.7% (2011: £90.5m), representing 39% of total Group revenue (2011: 38%).  Underlying1 operating profit in the year was £25.3m (2011: £21.4m). Underlying1 operating profit margin was 20.6% (2011: 23.6%). The decline of three percentage points was split relatively evenly between cost price pressures, in common with the Retail division, and investments in head office teams. Further information on the Wholesale segment is included in note 3.

 

The revenue growth in Wholesale is primarily attributable to increasing demand for the Superdry brand in Europe, in part driven by continued investment in franchise stores by distribution partners. Globally, there are now 130 franchise or licensed stores and 50 concessions in 54 countries, of which 46 were opened in the year (30 in Europe and 16 in the rest of the world). During the year a franchise store in the Manchester Arndale centre was closed and replaced by an owned store. In addition, the Kildare franchise outlet store was acquired and now trades as an owned store.

 

SuperGroup Europe BVBA, which includes both Retail and Wholesale activities, has completed its first full year of trading as part of the Group. Sales in the first full year were £44.0m (2011: £11.7m for 12 weeks). During the year, SuperGroup Europe BVBA added six owned stores (four in Belgium and one each in France and the Netherlands) and 11 franchise stores (eight in France, two in Belgium and one in Luxembourg).

 

In the rest of the world, franchises have opened in Finland, Switzerland, Hong Kong, Taiwan, Kuwait, Columbia and South Africa. Four concessions have opened in Canada and four licensed stores opened in the United States taking the total to 10. 

Outlook and current trading

 

Whilst having full confidence in recent product developments and the operational improvements discussed previously, management does not foresee any material improvement in the UK retail market over the next 12 months and consequently expects conditions to remain difficult and extremely competitive.

                   

It has been well publicised that the European market is more volatile than the UK presently but SuperGroup's relatively small market share in each territory still affords opportunities for growth in these countries.

 

During the financial year to 28 April 2013 ("2013"), the Group has targeted to add approximately 70,000 - 90,000 square feet of selling space through the opening of standalone stores across the UK and Europe. Additionally, a minimum of 30 franchise and license stores will be added to the portfolio globally.

 

The first 10 weeks of trading have been affected by the unseasonal weather conditions, with June being announced recently as officially the wettest on record. Despite that, results have been broadly in line with management expectations.

 

 

Financial review

 

 


2012

£m

2011

£m

Growth

%

Revenue:




    Retail

191.0

147.4

29.6%

    Wholesale

122.8

90.5

35.7%

Group revenue

313.8

237.9

31.9%





Underlying1 operating profit:




    Retail

31.7

37.8

-16.1%

    Wholesale

25.3

21.4

18.2%

    Group overheads2

(14.3)

(9.1)

57.1%

Underlying1 Group operating profit

42.7

50.1

-14.8%

Finance Income

0.1

0.1


Underlying1 Group profit before tax

42.8

50.2

-14.7%

Non-underlying adjustments:




    Fair value movement on deferred share consideration

8.3

(0.4)


    Other

0.3

(1.8)


Group profit before tax and exceptional items

51.4

48.0

7.1%

 

    Exceptional items

-

(0.7)


 

Group profit before tax

51.4

47.3

8.7%

 





 

Underlying1 operating profit margin:




 

    Retail

16.6%

25.6%

-9.0 ppts

 

    Wholesale

20.6%

23.6%

-3.0 ppts

 

Group underlying1 operating profit margin

13.6%

21.1%

-7.5 ppts

 

 

 

Notes

1.     Underlying results have been adjusted to reflect the impact of the gain/loss recognised on fair valuing deferred consideration, financial derivatives and exceptional items.  In addition, the prior periods have been adjusted to reflect the impact of the revaluation of inventory within SuperGroup Europe BVBA at acquisition (IFRS 3 revised requirement) and the impact of including the prior year's freight and duty costs into inventory.  All references to underlying in this statement are after making these adjustments.  Retail and Wholesale are presented before Group overheads and royalties unless stated otherwise.

 

2.     Group overheads have been separated here as the directors believe it provides useful analysis for the reader. Within the segmental analysis they are presented in the Retail division in total.

 

 

 

Adjustments to reported results

 

A number of adjusting items have been identified in establishing the underlying performance of the Group as they were either non-recurring items or accounting adjustments for derivatives and deferred consideration. These have been separated into non-underlying items and exceptional operating costs:

 

 


2012

£m

2011

£m

Growth

%

Revenue

313.8

237.9

31.9%

Operating profit

51.3

47.2

8.7%

Non-underlying items:




(a)  Impact of IFRS 3 (revised) on inventory acquired at   date of acquisition

-

1.9


(b)  Impact of new accounting policy relating to prior periods

-

(1.6)

 

(c)  (Gain)/loss recognised on fair value of deferred consideration

(8.3)

0.4

 

(d)  (Gain)/loss on financial derivatives

(0.3)

1.5


Total non-underlying items

(8.6)

2.2

 

Exceptional operating costs

-

0.7

 

Underlying1 operating profit

42.7

50.1

-14.8%

Finance income

0.1

0.1


Underlying1 profit before tax

42.8

50.2

-14.7%

 

 

 

Notes: Non-underlying items

 

(a)         IFRS 3 (revised) requires inventory purchased with the acquisition of SuperGroup Europe BVBA in February 2011 to be fair valued to selling prices less costs to sell and hence no profit was recognised on this inventory when it was sold post acquisition. Had this adjustment not been made £1.9m of additional profits would have been recognised.

(b)         Inclusion of prior years' inbound freight and duty costs into inventory previously expensed in the Group statement of comprehensive income.

(c)         Statement of comprehensive income adjustment to reflect the fair value movement in share price for the deferred contingent consideration related to the acquisition of SuperGroup Europe BVBA.

(d)         The revaluation of forward foreign exchange contracts to fair value by using the year end spot rate.

 

Group operating profit

Underlying1 operating profit of £42.7m (2011: £50.1m) is down 14.8% compared to an overall growth in revenue of 31.9%. Consequently the underlying1 operating profit margin at 13.6% (2011: 21.1%) fell by 7.5 percentage points. The details of each division's operating profit have been discussed in the business review.

 

The Group's gross profit margin now stands at 57.0% (2011: 55.8%), an increase of 120 bps on the prior year.  The predominant driver of this is the full year impact of the acquisition of SuperGroup Europe BVBA. This has brought European retail stores into the Group which operate at similar margins to the UK retail operation; previously the Group made a lower distributor margin on these stores. Additionally, the margin made by SuperGroup Europe BVBA on sales to third parties is now retained within the Group. Excluding this impact, underlying gross margins have declined, as disclosed in the business review, through a combination of cotton price increases and the mix of off-price sales.

 

The Group continues to increase its supplier base in order to manage risk and meet growth expectations.  During the year, the number of suppliers increased to 72 (2011: 47) and this trend is expected to continue.

The changes in supply from geographical territories and an evolving supplier base enable competitive tension which helps drive margin improvements without compromising product quality or ethical operations.

 

Underlying1 Group central overheads were £14.3m (2011: £9.1m) an increase of £5.2m, which have been the key drivers in the cost base growth. Central payroll costs have risen by £2.3m reflecting the continued investment in people and the impact of the long term incentive plan.

 

Depreciation and amortisation have increased by £1.7m, primarily representing the amortisation of intangible assets recognised on the acquisition of SuperGroup Europe BVBA and the IT spend associated with the implementation of the WMS.

 

Premises costs, which include centralised costs of the UK store portfolio (for example insurance, telephone and security), have increased by £1.0m reflecting the additional stores opened during the year and the full year equivalent of stores opened last year.  

 

Exceptional operating costs

There were no exceptional operating costs during the year (2011: £0.7m).  The prior year comparative represents acquisition costs of SuperGroup Europe BVBA in February 2011.

 

Taxation

In preparation for the listing of the business on the London Stock Exchange, a substantial reorganisation was undertaken with effect from 7 March 2010 and the Group's subsidiaries acquired net assets with a total fair value of £375m. Within this amount, £340m was identified as intangible assets and goodwill, of which the directors believe that at least £187m should be deductible against taxable profits over the useful economic lives of the respective assets. This gave rise to £52.4m of the exceptional deferred tax credit booked in 2010. Based on this the directors consider that the Group's future cash tax expense should be reduced by approximately £3.4m per annum using the corporation tax rate of 24%.

 

The Group's underlying corporation tax expense of £12.2m represents an effective tax rate of 28.5% for the period ended 29 April 2012.  This is higher than the statutory rate of 25.8% primarily due to the depreciation of non-qualifying assets and non-allowable expenses.

 

The UK corporation tax rate reduction from 26% to 24% with effect from 1 April 2012 is substantively enacted at the balance sheet date so the deferred tax balances at 29 April 2012 have been re-measured resulting in an exceptional deferred tax charge of £3.2m.

 

Discussions with HMRC in respect of the tax deductible goodwill arising on the March 2010 reorganisation have significantly progressed. Written confirmation has been received from HMRC that they will not challenge the commercial nature of the transactions. The related deferred tax asset in respect of the goodwill therefore continues to be considered recoverable.

 

Earnings per share

Basic earnings per share is 45.0p (2011: 37.9p) based on a basic weighted average of 80,234,588 shares (2011: 79,337,981 shares).  The increase in the basic weighted average number of shares is due to the increase of 1,234,568 shares issued primarily for the acquisition of SuperGroup Europe BVBA in February 2011.

 

Diluted earnings per share is 44.7p (2011: 37.9p) based on a diluted weighted average of 80,792,443 (2011: 79,407,993) shares and underlying basic earnings per share is 38.1p (2011: 45.2p).

 

 

 

 

Cash flow and balance sheet

The Group has net cash balances, of £30.9m as at the end of the year, down £1.3m (2011: net cash £32.2m). Cash in-flow from operations was £56.5m (2011: £25.4m) which, after increases in capital investment, corporation tax and a decrease in landlord contributions, has resulted in a net decrease in cash of £1.3m (2011: net increase £4.2m). The business remains highly cash generative and it is anticipated that the Group will continue to see a strong balance sheet that will enable investment in new stores and working capital to support future growth.

 

Net finance income of £0.1m (2011: £0.1m) arose from the cash reserves held throughout the year.

 

The net book value of property, plant and equipment is £63.8m, up 65% (2011: £38.6m) primarily due to the opening of 26 stores (including one relocation).  In the year, £36.6m of capital additions were made on property, plant and equipment, of which £23.5m relates to leasehold improvements across the Group.  The balance is made up of fixtures and fittings £8.3m and IT £4.8m.

 

Landlords' contributions of £7.7m were received during the year (2011: £9.7m). The reduction was partially due to a switch from contributions to rent free periods and partially due to the continued opening of stores in prime locations where landlords' incentives are less prevalent. The contributions will be amortised over the lives of the respective leases.

 

Investment in inventories, trade receivables and trade payables decreased by 14.4% during the year to £42.8m (2011: £50.0m) and as a proportion of the Group's revenue was 13.6% (2011: 21.0%).

 

Group inventory increased to £55.5m (2011: £52.3m), up 6.1%. The increase in stock reflects the additional working capital investment in new stores opened during the year, although the growth rate is significantly below that of sales reflecting the outcome of clearing aged stock discussed previously.

 

Trade receivables (excluding prepayments) increased by 5.9% to £23.5m (2011: £22.2m).  Trade receivables were 7.5% of Group revenue, down 1.8% points (2011: 9.3%). Trade payables were £36.2m, up 47.8% (2011: £24.5m) and represented 11.5% of Group revenue (2011: 10.3%).

 

Dividends

The board of directors remains of the view that the business is best served by retaining current cash reserves to support growth. Consequently a recommendation will be made at the Annual General Meeting ("AGM") that no dividend is payable in relation to 2012 (2011: £nil).

 

The board will keep the dividend policy under review by considering the Group's profitability, underlying growth, availability of cash and distributable reserves and the investment opportunities open to the business.

 

Going concern

The directors report that, having reviewed the current performance forecasts, they have a reasonable expectation that the company and the Group have adequate resources to continue their operations for the foreseeable future. For this reason they have continued to adopt the "going concern" basis in preparing the financial information.

 

Board approval

On 11 July 2012 the board of directors of SuperGroup Plc approved this statement.

 

Cautionary statement                                       

This report contains certain forward-looking statements with respect to the financial condition, results of the operations and businesses of SuperGroup Plc. These statements and forecasts involve risk, uncertainty and assumptions because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. These forward-looking statements are relevant on the date of publication of this statement. Nothing in this statement should be construed as a profit forecast. Except as required by law, SuperGroup Plc has no obligation to update the forward-looking statements or to correct any inaccuracies therein.

 

12 July 2012

 

Group Statement of Comprehensive Income

 


 

 

 

 

Note

 

 

 

Underlying1 

2012

Non underlying and exceptional items

 

 

 

Total

 2012

 

 

 

Underlying1 

2011

Non underlying and exceptional items

 

 

 

Total

2011



£m

£m

£m

£m

£m

£m

Revenue

3

313.8

-

313.8

237.9

-

237.9

Cost of sales


(135.0)

-

(135.0)

(104.8)

(0.3)

(105.1)

Gross profit


178.8

-

178.8

133.1

(0.3)

132.8

Selling, general and administrative expenses


(138.8)

8.3

(130.5)

(85.2)

(1.1)

(86.3)

Other gains and losses (net)


2.7

0.3

3.0

2.2

(1.5)

0.7

Operating profit

3

42.7

8.6

51.3

50.1

(2.9)

47.2

Finance income


0.1

-

0.1

0.1

-

0.1

Profit before tax


42.8

8.6

51.4

50.2

(2.9)

47.3

Income tax expense

5

(12.2)

(3.1)

(15.3)

(14.3)

(2.9)

(17.2)

Profit for the period


30.6

5.5

36.1

35.9

(5.8)

30.1

Other comprehensive income net of tax:








Currency translation differences


(3.8)

-

(3.8)

1.7

-

1.7

Total comprehensive income for the period


26.8

5.5

32.3

37.6

(5.8)

31.8

Attributable to:








Owners of the Company


26.8

5.5

32.3

37.6

(5.8)

31.8













pence per share



pence per share

Earnings per share:

        







Basic

9



45.0



37.9

Diluted

9



44.7



37.9









 

1 Underlying results have been adjusted to reflect the impact of the gain/ loss recognised on fair valuing deferred consideration, financial derivatives and exceptional items. In addition the prior periods have been adjusted to reflect the impact of revaluation of inventory within SuperGroup Europe BVBA at acquisition (IFRS 3 revised requirement) and the impact of including the prior year's freight and duty costs into inventory. All references to underlying in this statement are after making these adjustments. Retail and Wholesale are presented before Group overheads and royalties unless stated otherwise.

 

Group Balance Sheet

 


Note

2012

2011



£m

£m

ASSETS




Non-current assets




Property, plant and equipment

7

        63.8

        38.6

Intangible assets


          40.7

          29.4

Deferred income tax assets

5

        38.0

        44.2

Total non-current assets


142.5

112.2

Current assets




Inventories


55.5

52.3

Trade and other receivables


42.6

35.7

Cash and cash equivalents

11

30.9

32.2

Total current assets


129.0

120.2

LIABILITIES




Current liabilities




Borrowings


          0.2

          -

Trade and other payables


47.4

        34.1

Current income tax liabilities


4.4

7.1

Derivative financial instruments


            1.2

            1.5

Total current liabilities


53.2

42.7

Net current assets


75.8

77.5

Non-current liabilities




Borrowings


0.4

0.9

Trade and other payables


        30.8

        34.5

Provisions for other liabilities and charges


            0.6

            0.5

Deferred income tax liabilities

5

       2.5

       3.0

Total non-current liabilities


       34.3

       38.9

Net assets


      184.0

      150.8





EQUITY




Share capital


          4.0

          4.0

Share premium


      138.6

      138.6

Translation reserve


 (2.1)

 1.7

Merger reserve


(302.5)

(342.3)

Retained earnings


346.0

348.8

Total equity


      184.0

      150.8

 

 

 

 

Group Cash Flow Statement

 


Note

2012

2011



£m

£m

Cash flow from operating activities




Profit before tax


        51.4

        47.3

Adjusted for:




Depreciation of property, plant and equipment


         11.1

         7.4

Loss on disposal of property, plant and equipment


              -

              0.2

Amortisation of intangible assets


           2.1

            0.5

Net impact of lease incentives


         (2.2)

            (0.2)

Net finance income


         (0.1)

            (0.1)

Fair value (gain)/loss on derivative financial instruments


(0.3)

1.5

Foreign exchange losses on operating activities


0.3

0.1

Share based payment for termination agreement with 888 clothing


-

0.5

Fair value (gain)/loss on deferred share consideration


(8.3)

0.4

Impact of IFRS 3 (revised) on inventory acquired at date of acquisition


-

1.9

Long term incentive plan


0.7

0.2

Changes in working capital:




Increase in inventories


(3.6)

(24.3)

Increase in trade and other receivables


(6.9)

(13.4)

Increase in trade and other payables


         12.3

         3.4

Cash generated from operations


        56.5

        25.4

Interest received


           0.1

              0.1

Tax paid


(12.3)

(7.4)

Net cash generated from operating activities


        44.3

        18.1

Cash flow from investing activities




Acquisition of subsidiaries (net of cash acquired)


(0.3)

(2.9)

Purchase of property, plant and equipment


(36.8)

(19.8)

Proceeds on sale of property, plant and equipment


              -

              0.1

Purchase of intangible assets


(15.6)

(0.7)

Net cash used in investing activities


(52.7)

(23.3)

Cash flow  from financing activities




Cash contributions received from landlords


        7.7

        9.7

Repayment of borrowings


 (0.3)

 -

Net cash generated from financing activities


        7.4

        9.7

Net (decrease)/increase in cash and cash equivalents

11

(1.0)

4.5

Cash and cash equivalents, net of overdraft, at beginning of period


32.2

28.0

Exchange losses on cash and cash equivalents


         (0.3)

            (0.3)

Cash and cash equivalents at end of period, net of overdraft

11

30.9

32.2

 

 

Group Statement of Changes in Equity

 


Share capital

Share premium

Translation reserve

Merger reserve

Retained earnings

Total equity


£m

£m

£m

£m

£m

£m

Balance at 2 May 2010

 4.0

  120.1

          -

(342.3)

  318.7

100.5

Comprehensive income







  Profit for the period

-

-

-

-

30.1

30.1

Other comprehensive income







  Currency translation differences

-

-

1.7

-

-

1.7

Total other comprehensive income

-

-

1.7

-

-

1.7

Total comprehensive income for the period

-

-

1.7

-

30.1

31.8

Transactions with owners







Issue of ordinary shares

-

18.5

-

-

-

18.5

Total transactions with owners

-

18.5

-

-

-

18.5

Balance at 1 May 2011

4.0

138.6

1.7

(342.3)

348.8

150.8

Comprehensive income







  Profit for the period

-

-

-

-

36.1

36.1

Other comprehensive income







  Currency translation differences

-

-

(3.8)

-

-

(3.8)

Total other comprehensive income

-

-

(3.8)

-

-

(3.8)

Total comprehensive income for the period

-

-

(3.8)

-

36.1

32.3

Transactions with owners







Employee share award scheme

-

-

-

-

0.9

0.9

Impairment of goodwill1

-

-

-

39.8

(39.8)

-

Total transactions with owners

-

-

-

39.8

(38.9)

0.9

Balance at 29 April 2012

4.0

138.6

(2.1)

(302.5)

346.0

184.0

 

 

1 An impairment of £39.8m (2011: £nil), which relates to: £20.3m in C-Retail Limited, £16.2m in SuperGroup Concessions Limited and £3.3m in SuperGroup Retail Ireland Limited, has been recorded in the subsidiaries of the Group. Under the principles of predecessor accounting the impairment creates a movement between the merger reserve and retained earnings on consolidation. 

 

Selected Notes to the financial information

 

1.   Basis of preparation

 

The financial information contained in this announcement, which does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006, has been derived from the audited statutory accounts for the 52 weeks ended 29 April 2012 ("2012") (2011: 52 weeks ended 1 May 2011 ("2011")). The statutory accounts for the year ended 29 April 2012 will be filed with the Registrar of Companies in due course.

 

2.   Significant accounting policies

 

Except as noted below, the financial information has been prepared using the same accounting policies as used in the preparation of the Group's financial statements for 2011 and as discussed therein.

 

There are no IFRS's or IFRIC interpretations that are effective for the first time for the financial year beginning 2 May 2011 that would be expected to have a material impact on the Group.

 

The following new standards, new interpretations and amendments to standards and interpretations have been issued but are not effective for the financial year beginning 2 May 2011:

 

IAS 19 (amendments), 'Employee benefits', amended in June 2011. The impact will be as follows: to eliminate the corridor approach and recognise all actuarial gains and losses in OCI as they occur; to immediately recognise all past service costs; and to replace interest cost and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability (asset). This is not applicable for the Group as it does not have any defined benefit pension schemes.

 

IFRS 9, 'Financial instruments', addresses the classification, measurement and recognition of financial assets and financial liabilities. IFRS 9 was issued in November 2009 and October 2010. It replaces the parts of IAS 39 that relate to the classification and measurement of financial instruments. IFRS 9 requires financial assets to be classified into two measurement categories: those measured as at fair value and those measured at amortised cost. The determination is made at initial recognition. The classification depends on the entity's business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. For financial liabilities, the part of a fair value change due to an entity's own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. The Group is yet to assess IFRS 9's full impact and intends to adopt IFRS 9 no later than the accounting period beginning on or after 1 January 2015, subject to endorsement by the EU.

 

IFRS 10, 'Consolidated financial statements', builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess. The Group is yet to assess IFRS 10's full impact and intends to adopt IFRS 10 no later than the accounting period beginning on or after 1 January 2013, subject to endorsement by the EU.

 

IFRS 12, 'Disclosure of interest in other entities', includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balances sheet vehicles. The Group is yet to assess IFRS 12's full impact and intends to adopt IFRS 12 no later than the accounting period beginning on or after 1 January 2013, subject to endorsement by the EU.

 

IFRS 13, 'Fair value measurement', aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements, which are largely aligned between IFRSs and US GAAP, do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs or US GAAP. The Group is yet to assess IFRS 13's full impact and intends to adopt IFRS 13 no later than the accounting period beginning on or after 1 January 2013, subject to endorsement by the EU.

 

3.   Segmental information

 

The Group's operating segments under IFRS 8 have been determined based on the reports reviewed by the Group's Chief Operating Decision Maker (executive board members "the board"). The board assesses the performance of the operating segments based on profit before tax, before inter-segment royalties. The board considers the business from a customer perspective only, being Retail and Wholesale.

 

The board receives information, reviews the performance of the business, allocates resources and approves budgets for two operating segments, and therefore information is disclosed in respect of the following two segments:

 

·      Retail - principal activities comprise the operation of UK and Republic of Ireland stores, concessions and all internet sites. Revenue is derived from the sale to individual consumers of own brand and third party clothing, footwear and accessories; and

 

·      Wholesale - principal activities comprise the design and ownership of brands, wholesale distribution of own brand products (clothing, footwear and accessories) worldwide and the operation of European stores.

 

Segment results and assets include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. The Group reports and manages central functions as part of Retail operations, which includes the goodwill and intangibles arising on consolidation.

 

Sales between segments are carried out at arms' length. The revenue from external parties reported to the board is measured in a manner consistent with that of the IFRS financial statements.

 

Royalties charged between segments have been reflected in the performance of each business segment. Inter-segment transfers or transactions entered into under a cost plus pricing structure are not reflected in the performance of each business segment.

 

Segmental information for the main reportable business segments of the Group for the 52 weeks ended 29 April 2012 and 1 May 2011 is set out below:

 


Retail

2012

Wholesale

2012

Group

2012


£m

£m

£m

Total segment revenue

191.0

126.0

317.0

Less: inter-segment revenue

-

(3.2)

(3.2)

Revenue from external customers

191.0

122.8

313.8

Finance income

-

Profit before tax before inter-segment royalties

25.7

25.7

51.4

Inter-segment royalties

(15.3)

15.3

-

Profit before tax

41.0

51.4

Total assets

129.7

141.8

271.5

Total liabilities

64.0

23.5

87.5

Capital expenditure

47.9

4.3

52.2

Depreciation and amortisation

12.0

1.2

13.2

Net impact of lease incentives (income)

2.2

-

2.2

Underlying income tax expense

2.8

9.4

12.2

Non underlying and exceptional income tax expense

-

3.1

3.1

 

The following additional information is considered useful to the reader.

 


 

Reported 2012

 

Gain recognised on fair value of deferred consideration

 

Financial derivatives

 

 

Underlying1 2012


£m

£m

£m

£m

Revenue





Retail

191.0

-

-

191.0

Wholesale

122.8

-

-

122.8

Total revenue

313.8

-

-

313.8

Gross profit

178.8

-

-

178.8

Operating profit





Retail

31.6

-

0.1

31.7

Wholesale

25.7

-

(0.4)

25.3

Total  operating profit before Group overheads

 

57.3

 

-

 

(0.3)

 

57.0

Group overheads

(6.0)

(8.3)

-

(14.3)

Operating profit before royalties





Retail

25.6

(8.3)

0.1

17.4

Wholesale

25.7

-

(0.4)

25.3

Total operating profit before royalties

51.3

8.3

(0.3)

42.7

Net finance income - Retail

0.1

-

-

0.1

Profit before tax before royalties

51.4

(8.3)

(0.3)

42.8

Retail

25.7

(8.3)

0.1

17.5

Wholesale

25.7

-

(0.4)

25.3

 

 


Retail

2011

Wholesale

2011

Group

2011


£m

£m

£m

Total segment revenue

147.4

91.6

239.0

Less: inter-segment revenue

-

(1.1)

(1.1)

Revenue from external customers

147.4

90.5

237.9

Exceptional items

-

(0.7)

(0.7)

Finance income

0.1

-

0.1

Profit before tax before inter-segment royalties

29.3

18.0

47.3

Inter-segment royalties

(11.3)

11.3

-

Profit before tax

18.0

29.3

47.3

Total assets

119.3

113.1

232.4

Total liabilities

63.4

18.2

81.6

Capital expenditure

17.9

2.6

20.5

Depreciation and amortisation

6.9

1.0

7.9

Net impact of lease incentives (income)

0.2

-

0.2

Underlying income tax expense

5.4

8.9

14.3

Non underlying and exceptional income tax expense

-

2.9

2.9

 

 

The following additional information is considered useful to the reader.

 


Reported 2011

Impact of IFRS 3 on inventory acquired at date of acquisition

Impact of new accounting policy relating to prior periods

Exceptional items 

        

 

 

 

 Loss recognised on fair value of deferred consideration

 

 

 

 

 

 

 

 

Financial derivatives

 

 

 

 

 

 

 

 

Underlying1 2011


£m

£m

£m

£m

£m

£m

£m

Revenue








Retail

147.4

-

-

-

-

-

147.4

Wholesale

90.5

-

-

-

-

-

90.5

Total revenue

237.9

-

-

-

-

-

237.9

Gross profit

132.8

1.9

(1.6)

-

-

-

133.1

Operating profit








Retail

38.3

-

(1.4)

-

0.4

0.5

37.8

Wholesale

18.0

1.9

(0.2)

0.7

-

1.0

21.4

Total  operating profit before Group overheads

56.3

1.9

(1.6)

0.7

0.4

1.5

59.2

Group overheads

(9.1)

-

-

-

-

-

(9.1)

Operating profit before royalties








Retail

29.2

-

(1.4)

-

0.4

0.5

28.7

Wholesale

18.0

1.9

(0.2)

0.7

-

1.0

21.4

Total operating profit before royalties

47.2

1.9

(1.6)

0.7

0.4

1.5

50.1

Net finance income - Retail

0.1

-

-

-

-

-

0.1

Profit before tax before royalties

47.3

1.9

(1.6)

0.7

0.4

1.5

50.2

Retail

29.3

-

(1.4)

-

0.4

0.5

28.8

Wholesale

18.0

1.9

(0.2)

0.7

-

1.0

21.4

 

 

Revenues of £16.3m (2011: £17.6m) in the Retail segment are derived from concessions within department stores which are all under common ownership.

 

 

The Group has subsidiaries incorporated and resident in the UK and overseas. Revenue from external customers in the UK and the total revenue from external customers from other countries are:

 


2012

2011


£m

£m

External revenue - UK

213.9

             179.5

External revenue - Overseas

99.9

               58.4

Total external revenue

313.8

             237.9

 

Included within external revenue overseas is revenue of £48.0m (2011: £15.3m) generated by our overseas subsidiaries.

 

4.         Non-underlying and exceptional items

 

Non-underlying and exceptional items incurred during the period are as follows:

 


2012

2011


£m

£m

Non-underlying cost of sales



Impact of new inventory accounting policy relating to prior periods

-

1.6

Impact of IFRS 3 (revised) on inventory at date of acquisition

-

(1.9)

Total non-underlying cost of sales

-

(0.3)

Non-underlying and exceptional selling, general and administrative expenses



Fair value movement of deferred share consideration - non-underlying

8.3

(0.4)

Professional advisors' fees relating to the acquisition of SuperGroup Europe BVBA - exceptional item

 

-

 

(0.7)

Total non-underlying and exceptional selling, general and administrative expenses

 

8.3

 

(1.1)

Non-underlying other gains and losses (net)



Gain/(loss) on financial derivatives

0.3

(1.5)

Total non-underlying other gains and losses (net)

0.3

(1.5)

Non-underlying and exceptional income tax expense



Tax impact of non-underlying items

0.1

0.5

Re-measurement of deferred tax asset - exceptional

(3.2)

(3.4)

Total non-underlying and exceptional income tax expense

(3.1)

(2.9)

Total non-underlying and exceptional items

5.5

(5.8)

 

Impact of new inventory accounting policy relating to prior periods

 

Previously, certain non-reclaimable duty and freight costs were expensed as incurred by the Group on the basis that they were not considered to be material. In the prior period, the Group adopted a policy of including all non-reclaimable duty and freight costs incurred in getting inventories into the Group's distribution centres into the cost of inventory.

 

The impact of adopting this new policy was to increase the value of inventories by £3.5m as at 1 May 2011, of which £1.6m related to prior periods to 2 May 2010 and earlier.

 

Impact of IFRS 3 (revised) on inventory acquired at date of acquisition

 

The fair value adjustment to inventories acquired on the acquisition of SuperGroup Europe BVBA under IFRS 3 (revised), which values inventories at its sales price less costs to sell, increased the value of inventory in the prior period by £1.9m (2012: nil); the directors have considered this to be a non-underlying adjustment to profit.

 

Fair value movement of deferred share consideration

 

The SuperGroup Europe acquisition in the prior year included two tranches of deferred contingent consideration to be issued on the second and third anniversaries of the acquisition. The consideration is payable in shares, and the shares will be issued in proportion to the percentage completion of certain sales and store number targets. The fair value of these shares at the acquisition date was £10.3m.

 

IFRS 3 (revised) requires deferred contingent consideration to be re-measured at each period end to reflect the estimated percentage completion of the targets and change in share price. By 1 May 2011, the fair value had increased by £0.4m, reflecting the year end share price of £15.86. At 29 April 2012 the share price was £3.50 and therefore the liability reduced by £8.3m and this has been recorded as a credit in the Group statement of comprehensive income.

 

5.         Income tax expense

 

The tax expense comprises:

2012

2011

Current tax:

£m

£m

UK corporation tax charge for the period

8.7

11.7  

Adjustment in respect of prior periods

0.1

(0.4)

Overseas tax

0.8

0.8

Total current tax

9.6

12.1

Deferred tax:



Origination and reversal of temporary differences

2.6

1.6

Adjustment in respect of prior periods

(0.1)

0.1

Exceptional income tax expense

3.2

3.4

Total deferred tax

5.7

5.1

Total tax expense

15.3

17.2

 

The taxation charge on the underlying profit is £12.2m (2011: £14.3m). The taxation charge on non-underlying and exceptional items is £3.1m (2011: £2.9m)

 

Factors affecting the tax expense for the period

2012

2011


£m

£m

Profit before tax

51.4

47.3

Profit multiplied by the standard rate in the UK - 25.83% (2011: 27.83%)

13.3

13.2

Expenses not deductible for tax purposes

0.4

0.6

Fair value movement of deferred share consideration

(2.2)

-

Non-qualifying additions

0.5

0.3

Prior year adjustment

0.1

(0.3)

Total income tax expense excluding exceptional items

12.1

13.8

Exceptional income tax expense

3.2

         3.4

Total income tax expense including exceptional items

15.3

17.2

 

Net deferred tax movement

2012

2011


£m

£m

Opening net deferred tax

(41.2)

(49.7)

Deferred tax liability on acquisition

-

3.2

Charged to the statement of comprehensive income:



Accelerated capital allowances

(0.5)

(0.6)

Movement on goodwill and intangibles

6.9

7.1

Other temporary differences

(0.8)

(0.9)

Revaluation of derivatives and forward exchange contracts

0.1

(0.3)

Closing net deferred tax

(35.5)

(41.2)

Represented by:



Accelerated capital allowances

2.3

2.3

Other intangibles

2.5

3.0

Temporary differences (losses)

(0.6)

(0.5)

Recognition of lease incentives

(1.9)

(1.2)

Goodwill and other intangibles arising in subsidiary entities

(37.5)

(44.4)

Revaluation of derivatives and forward exchange contracts to fair value

(0.3)

(0.4)

Closing net deferred tax

(35.5)

(41.2)

 

The Group's underlying income tax expense of £12.2m represents an effective tax rate of 28.5% for the period ended 29 April 2012. The Group's underlying effective tax rate of 28.5% is higher than the statutory rate of 25.8%, primarily due depreciation of non-qualifying assets and non-allowable expenses.

 

The UK corporation tax rate reduction from 26% to 24%, with effect from 1 April 2012 is substantially enacted at the balance sheet date so the deferred tax balances at 29 April 2012 have been re-measured resulting in an exceptional deferred tax charge of £3.2m.

 

Discussions with HMRC in respect of the tax deductible goodwill arising on the March 2010 reorganisation have significantly progressed. Written confirmation has been received from HMRC that they will not challenge the commercial nature of the transactions. The related deferred tax asset in respect of the goodwill therefore continues to be considered supportable.

 

6.   Dividends

 

No dividends were paid in the year, and no dividends will be proposed at the Annual General Meeting on 20 September 2012 (2011: £nil).

 

7.   Property, plant and equipment

 

The Group made improvements to leasehold buildings and acquired fixtures and fittings at a total cost of £31.8m during the 52 weeks ended 29 April 2012 (£17.7m for the 52 weeks ended 1 May 2011).

 

8.   Capital expenditure commitments

 

The Group is committed to capital expenditure on property, plant and equipment of £0.9m as at 29 April 2012 (£1.2m as at 1 May 2011).

 

9.   Earnings per share


2012

2011


No.

No.

Number of shares at year end

80,234,588

80,234,588

Weighted average number of ordinary shares - basic

80,234,588

79,337,981

Effect of dilutive options and contingent shares

557,855

70,012

Weighted average number of ordinary shares outstanding - diluted

80,792,443

79,407,993

Earnings



Profit for the period (£m)

36.1

30.1

Basic earnings per share (pence per share)

45.0

37.9

Diluted earnings per share (pence per share)

44.7

37.9




 

Underlying1 basic earnings per share

2012

2011






Underlying1 profit for the period (£m)

30.6

35.9


Weighted average number of ordinary shares outstanding - basic

80,234,588

79,337,981


Underlying1 basic earnings per share (pence per share)

38.1

45.2


Weighted average number of ordinary shares outstanding - diluted

80,792,443

79,407,993


Underlying1 diluted earnings per share (pence per share)

37.9

45.2


 

There were no share related events after the balance sheet date that may affect earnings per share.

 

10. Related parties

 

Directors of the Group and their immediate relatives control 62% of the voting shares of the Group.

 

The Group occupies two properties owned by J M Dunkerton SIPP pension fund, whose beneficiary and member trustee is Julian Dunkerton. The properties are rented to the Group on an arm's length basis. The rent charge in the Group statement of comprehensive income is £0.1m (2011: £0.1m).

 

On 26 September 2011, the Group acquired the entire share capital of Tokyo Retail Limited, in which Julian Dunkerton's brother-in-law was a director and shareholder, for a total cash consideration of £0.5m. The fair value of the assets acquired was £0.3m. Tokyo Retail Limited operates a Superdry outlet store in Kildare, Eire. The acquisition is not material and no further disclosures have been made.

 

11. Net cash

 

Analysis of net cash

2011

Cash flow

Non cash changes

2012


£m

£m

£m

£m

Cash and short-term deposits

32.2

(1.0)

(0.3)

30.9

Cash and cash equivalents net of overdraft

32.2

(1.0)

(0.3)

30.9

Other loans

(0.9)  

0.3

-

(0.6)

Total net cash

31.3

(0.7)

(0.3)

30.3






 

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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