Superdry Plc – Announcement of preliminary results -19-

The above balances relate to trade debts, other debts, accrued liabilities and overdrafts. See note 17 for the analysis of undiscounted rental debts.

Valuation hierarchy

The table below presents the financial instruments recognized at fair value by valuation method:

                                                         Group 
                                                         Level 1 Level 2 2021    Level 1 Level 2 2020 
                                                         GBPm      GBPm      Level 3 GBPm      GBPm      Level 3 
                                                                         GBPm                      GBPm 
Assets 
Derivative financial instruments 
     -- forward foreign exchange contracts -       2.7     -       -       2.6     - 
Liabilities 
Derivative financial instruments 
     -- forward foreign exchange contracts -       (7.2)   -       -       (2.3)   - 

Level 2 currency forward valuations are derived from mark-to-market valuations based on market data observable at the close of business on April 24, 2021.

The notional principal amount of firm foreign exchange contracts outstanding as of April 24, 2021 was £ 103 million (2020: £ 245.2 million). There was no structured currency forward contract in place as of April 24, 2021 (2020: structured currency forward contracts in place to sell up to EUR 96 million (GBP 87.4 million)).

Derivative financial instruments

There is a master netting agreement for derivatives. All cash flow will occur within 24 months. All derivative financial instruments are recognized at fair value as an asset when the fair value is positive and as a liability when the fair value is negative.

The table below analyzes the derivative financial instruments of the Group and the Company. The amounts shown in the table are the book balances of assets and liabilities at the balance sheet date.

                                                  Group 
                                                  2021 2020 
                                                  GBPm   GBPm 
Forward foreign exchange contracts - current      2.4  2.5 
Forward foreign exchange contracts - non-current  0.3  0.1 
Total derivative financial assets                 2.7  2.6 
Forward foreign exchange contracts - current      5.7  2.1 
Forward foreign exchange contracts - non-current  1.5  0.2 
Total derivative financial liabilities            7.2  2.3 

All derivative financial instruments are due within 24 months.

The total fair value of a derivative is classified as a non-current asset or liability when the residual maturity of the derivative is greater than 12 months and as a current asset or liability if the maturity of the derivative is less than 12 months.

Capital risk management

The Group’s objectives in terms of capital management are to preserve its ability to continue operating in order to provide returns to shareholders and benefits to other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital. The Group is not subject to any externally imposed capital requirement. The Group’s strategy remains unchanged compared to the 2020 financial year.

Like others in the industry, the Group monitors capital on the basis of the debt ratio. This ratio is calculated as net debt divided by total capital employed. Net debt is defined in Note 22. Total capital employed is calculated in “shareholders’ equity” as they appear in the consolidated balance sheet, increased by net debt. The Group is in net cash as of April 24, 2021.

The Board has implemented a distribution policy which takes into account the degree of maintainability of the Group’s profit streams as well as the need to maintain a certain level of liquidity for working capital and capital investment. Where appropriate, the Board will recommend an ordinary dividend that broadly reflects the earnings for the relevant period. In addition, the Board will consider and, if appropriate, recommend the payment of an additional dividend in addition to the final ordinary dividend. The value of such additional dividend will vary depending on the performance of the Group and the anticipated working capital and capital investment needs of the Group throughout the cycle. It is expected that, under normal circumstances, the value of ordinary dividends declared in respect of a year will be covered at least three times by adjusted after-tax profit (see note 22 for definition). Given the current economic climate and in accordance with the FY20 decision, the Board did not propose an interim dividend and took the decision not to recommend a final dividend for FY21.

The capital structure is as follows:

                               Group 
 
                               2021 2020 
                               GBPm   GBPm 
Equity                         90.4 112.7 
Cash and cash equivalents      38.9 307.4 
Overdraft                      -    (270.7) 
Net cash and cash equivalents  38.9 36.7 
                                             Group 
                                             Assets at                     Assets at 
                                             fair        Financial         fair 
                                             value       assets at   Total value       Financial assets at        Total 
                                             through     amortised   2021  through     amortised cost             2020 
                                             profit or   cost        GBPm    profit or   2020                       GBPm 
                                             loss        2021              loss        GBPm 
                                             2021        GBPm                2020 
                                             GBPm                            GBPm 
Trade and other receivables excluding        -           84.7        84.7  -           88.5                       88.5 
non-financial assets 
Derivative financial instruments             2.7         -           2.7   2.6         -                          2.6 
Cash and cash equivalents                    -           38.9        38.9  -           307.4                      307.4 
Financial instruments - assets               2.7         123.6       126.3 2.6         395.9                      398.5 
                             Group 
                                                                                Liabilities 
                             Liabilities at fair    Other financial             at fair     Other financial 
                             value through profit   liabilities at        Total value       liabilities at        Total 
                             or loss                amortised cost        2021  through     amortised cost        2020 
                             2021                   2021                  GBPm    profit or   2020                  GBPm 
                             GBPm                     GBPm                          loss        GBPm 
                                                                                2020 
                                                                                GBPm 
Derivative financial         7.2                    -                     7.2   2.3         -                     2.3 
instruments 
Lease liabilities            -                      269.6                 269.6 -           320.9                 320.9 
Overdrafts                   -                      -                     -     -           270.7                 270.7 
Trade and other payables 
excluding non-financial      -                      106.2                 106.2 -           83.8                  83.8 
liabilities 
Financial instruments -      7.2                    375.8                 383.0 2.3         675.4                 677.7 
liabilities 

21. Share capital

5p shares authorized, allocated and fully paid up

                                    Value of 
Group and Company  Number of shares shares 
                                    (GBPm) 
24 April 2021      82,041,820       4.1 
25 April 2020      82,010,788       4.1 

31,032 ordinary 5p shares were authorized, allocated and issued during the period under the Superdry Share Based Long Term Incentive Plans, Buy As You Earn and Save As You Earn plans.

22. Alternative performance measures

introduction

The Directors assess the performance of the Group using various performance measures, some are in accordance with IFRS and others are adjusted and therefore called “non-GAAP” or “Alternatives Performance Measures” (“APM”). The rationale for using adjusted metrics is explained below. The directors mainly discuss the results of the Group on an adjusted basis. Results on an adjusted basis are presented before adjusting items.

APMs used in preliminary results are adjusted operating profit and margin, adjusted (loss) / profit before tax, adjusted tax expense and adjusted effective tax rate, adjusted earnings per share and cash / net debt.

Comparable data (“LFL”) has been removed from the NPAs for the current year as it is no longer considered relevant as a key performance measure due to disruptions caused by Covid-related store closures. 19.

A reconciliation between these non-GAAP measures and the closest measure prepared in accordance with IFRS is presented below. The APMs we use may not be directly comparable to measures of the same name used by other companies. There has been no change in the definitions compared to the previous period.

Adjust elements

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September 16, 2021 02:00 ET (06:00 GMT)

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