Financial Review


The Group has made changes to the way it reports its divisional performances, details of which are included in note 4, segment information. The changes made provide greater transparency and allow for improved management of divisional performance and replace the previous methodology of reporting based upon the historical management of the corporate entities that comprise the Group. The principal changes are:

  • inclusion of SuperGroup Europe retail stores in the Retail division;
  • including all trade sales in Wholesale; and
  • non-division specific central overheads have been moved to central costs.
Group revenue360.4313.8+14.9%
Underlying operating profit:
Central costs(29.9)(26.7)+12.0%
Underlying Group operating profit51.942.7+21.5%
Finance income0.30.1
Underlying Group profit before income tax52.242.8+22.0%
Non-underlying and exceptional adjustments:
Fair value movement on deferred share consideration(2.5)8.3
Financial derivatives2.60.3
Restructuring costs — exceptional items(0.5)
Reported Group profit before income tax51.851.4+0.8%
Underlying operating profit margin:
Group underlying operating profit margin14.4%13.6%+80bps

Underlying is defined as reported results adjusted to reflect the impact of the gain/loss recognised on fair valuing deferred contingent share consideration, financial derivatives, exceptional items and, when appropriate, the related income tax. The directors believe that the underlying results provide additional guidance to statutory measures to help understand the performance of the Group. Further details of the adjustments are included in note 13. All references to underlying are after making these adjustments. Retail and Wholesale segments are presented before inter-segment royalties.

Adjustments to reported results

A number of adjusting items have been identified in establishing the underlying performance of the Group, which are either non-recurring items or accounting adjustments for derivatives. They are separated into non-underlying items and exceptional operating costs:

Operating profit51.551.3+0.4%
Non-underlying items:
(a) Loss/(gain) recognised on fair value of deferred share consideration12.5(8.3)
(b) Gain on financial derivatives2(2.6)(0.3)
Total non-underlying items(0.1)(8.6)
Exceptional operating costs (note 13)0.5
Underlying operating profit51.942.7+21.5%
Finance income0.30.1
Underlying profit before income tax52.242.8+22.0%

Notes: Non-underlying items

  1. Statement of comprehensive income adjustment to reflect the fair value movement in the share price for the deferred contingent share consideration related to the acquisition of SuperGroup Europe BVBA.
  2. The revaluation of forward foreign exchange contracts to fair value by using the year end spot rate.

Group operating profit

Underlying operating profit of £51.9m (2012: £42.7m) is up 21.5% and compares to an overall growth in revenue of 14.9%. Underlying operating profit margin at 14.4% (2012: 13.6%) has improved by 80 basis points.

The Group's gross profit of £210.0m (2012: £178.8m) is up 17.4% compared to an overall growth in revenue of 14.9%. Group gross profit percentage at 58.3% (2012: 57.0%) has increased by 130 basis points on the prior year.

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 79 (2012: 72) and this trend is expected to continue. Changes to sourcing in recent years have resulted in the supply base being focused in three principal territories: Turkey, China and India. This flexible sourcing model that the Group has adopted, both in terms of suppliers and territories, enables the Group to generate competitive tension between suppliers and de-risk its sources of supply.

Underlying central costs were £29.9m (2012: £26.7m), an increase of £3.2m on the prior year. The Group continues to grow its store portfolio and invest in its infrastructure, which have been the key drivers in the cost base growth. Employee benefit expenses have risen by £4.1m reflecting the continued investment in human resource and the costs of the long-term incentive plan.

Depreciation and amortisation has increased by £5.0m representing the additional stores opened, store extensions and store fixtures, and computer and office equipment.

Exceptional operating costs

Restructuring costs and provisions totalling £0.5m (2012: £nil) have been charged following the Group's announcement on 15 April 2013 to relocate the Retail and e-commerce distribution centre from Gloucester to Burton upon Trent. The costs relate to provisions for redundancy, dilapidations, onerous leases and accelerated depreciation, and further exceptional costs will be incurred during financial year 2014.


The Group's income tax expense on underlying profit of £13.4m (2012: £12.2m) represents an effective tax rate of 25.7% for the period ended 28 April 2013 (29 April 2012: 28.5%). This is higher than the statutory rate of 23.9% (2012: 25.8%) primarily due to depreciation and amortisation of non-qualifying assets.

The UK corporation tax rate reduction from 24% to 23%, with effect from 1 April 2013 is substantively enacted at the balance sheet date so the deferred tax balances at 28 April 2013 have been remeasured resulting in an exceptional deferred tax charge of £1.5m (2012: £3.2m).

During the year the Group paid more than £29m in UK taxes, which includes corporation tax, import duty, business rates, employer's national insurance and stamp duty.

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 asset booked in 2010. Based on this the directors consider that the Group's future cash tax expense should be reduced by approximately £3.3m per annum using the corporation tax rate of 23%.

Earnings per share

Underlying basic earnings per share is 47.8p (2012: 38.1p). Basic earnings per share is 44.7p (2012: 45.0p) based on a basic weighted average of 80,280,115 shares (2012: 80,234,588 shares). The increase in the basic weighted average number of shares is due to 220,959 ordinary shares being issued during February 2013 in accordance with the deferred contingent share consideration agreement following the acquisition of SuperGroup Europe BVBA in 2011. The transaction resulted in an increase of £1.5m in share premium.

Underlying diluted earnings per share is 47.4p (2012: 37.9p). Diluted earnings per share is 44.3p (2012: 44.7p) based on a diluted weighted average of 81,049,304 (2012: 80,792,443) shares.

Cash flow and balance sheet

The Group had net cash balances of £54.5m (2012: £30.9m) at the end of the year. Cash generated from operations was £46.5m (2012: £56.5m); the year-on-year decline is largely due to higher non-cash adjustments for depreciation and the fair value adjustment on deferred contingent share consideration offset by an increase in working capital, principally driven by an increase in inventories. A reduction in investing activities driven by decreased capital expenditure compared to the prior year has resulted in a net increase in cash of £23.6m (2012: net decrease of £1.3m). The business remains highly cash generative and it is anticipated that the Group will continue to enjoy a strong balance sheet that will enable investment in infrastructure, new stores and working capital to support future growth.

Net finance income of £0.3m (2012: £0.1m) arose from the cash reserves held throughout the year.

The net book value of property, plant and equipment is £63.7m (2012: £63.8m). During the year, £15.0m (2012: £36.6m) of capital additions were made, of which £10.0m (2012: £23.5m) relates to leasehold improvements across the Group. The year-on-year decrease represents management's decision to review and temporarily slow the store opening programme. The balance is made up of furniture, fixtures and fittings (£3.9m) and computer equipment (£1.1m).

Landlord contributions of £3.0m (2012: £7.7m) were received during the year and will be amortised over the length of the respective leases. The decline in contributions received reflects the reduced number of stores opened during the year, a move towards rent-free periods being given as an incentive and opening of stores in prime locations where incentives are less prevalent.

Intangible assets, which comprise goodwill, lease premiums, distribution agreements, trademarks, the website and software, were £41.5m at the year end (2012: £40.7m).

Investment in inventories, trade receivables and trade payables increased by 59.8% during the year to £68.4m (2012: £42.8m) and as a proportion of Group revenue was 19.0% (2012: 13.6%).

Group inventory increased to £72.5m (2012: £55.5m), up 30.6%. The increase in inventory is predominantly represented by the planned arrival of the Spring/Summer 2013 range during February and March to ensure availability in-store for the season, compared to the prior year when deliveries were received during May.

Trade receivables (excluding prepayments) increased by 20.4% to £28.3m (2012: £23.5m) and were 7.9% (2012: 7.5%) of Group revenue. This increase is in line with the year-on-year growth in Wholesale revenue during the final quarter of the year.

Trade payables were £32.4m (2012: £36.2m), a decrease of 10.5% (2012: increase of 47.8%) representing 9.0% (2012: 11.5%) of Group revenue. This movement reflects the timing of supplier payment runs around the year end. There had been an increase in payments made during the final period of the financial year compared to last year, as a result of the earlier stock intake, and this is reflected in the decrease in creditor days as noted in the Directors' Report.

Group cash flow £m


Current assets
Trade and other receivablesTrade receivables28.323.5+20.4%
Other receivables/derivatives19.019.1-0.5 %
Cash and cash equivalents54.530.9+76.4%
Total current assets174.3129.0+35.1%
Current liabilitiesTrade payables32.436.2-10.5%
Other payables/derivatives/borrowings25.017.0+47.1%
Total current liabilities57.453.2+7.9%
Net current assets116.975.8+54.2%
Working CapitalInventories72.555.5+30.6%
Trade receivables28.323.5+20.4%
Trade payables(32.4)(36.2)-10.5%
Total working capital68.442.8+59.8%


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 that no dividend is payable in relation to 2013 (2012: £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.

Key performance indicators

KPIUnits20132012Change %
Group revenue£m360.4313.8+14.9%
Like-for-like sales%+5.7%+2.8%+290bps
Gross margin%58.357.0+130bps
Underlying operating profit margin%14.413.6+80bps
Underlying profit before income tax£m52.242.8+22.0%
Total Retail selling space'000 sq. ft.536471+13.8%
Total Retail store numbersNo.113103+10 stores
Internet revenue as % of Group revenue%11.210.0+120bps
Wholesale overseas revenue mix%7263+9ppts
International franchised and licensed storesNo.159101+58 stores
Number of Wholesale territoriesNo.6054+11.1%
Number of product suppliersNo.7972+9.7%
  • Group revenue represents amounts receivable for goods supplied, net of discounts, returns and value added taxes;
  • Like-for-like sales growth is defined as the year-on-year increase in revenue from stores and concessions open for more than one year and includes e-commerce revenues;
  • Gross margin percentage is gross profit expressed as a percentage of Group revenue;
  • Underlying operating profit margin is the ratio of operating profit, before charging non-underlying and exceptional items, to external revenue;
  • Underlying profit before income tax is the net of external revenue less cost of sales, selling, general and administrative expenses, plus other gains and losses (net), plus finance income, less finance costs and before charging non-underlying and exceptional items (note 13);
  • Total Retail selling space is defined as the trading floor area of all standalone stores excluding stockroom, administration and other non-trading areas at the year end;
  • Total Retail store numbers include all standalone stores open and trading at the year end;
  • Internet revenue as a percentage of Group revenue is the ratio of internet revenue to Group revenue;
  • Wholesale overseas revenue mix is the proportion of Wholesale revenue sourced outside the UK, excluding royalty receipts;
  • International franchised and licensed stores include all franchised and licensed stores open and trading at the year end;
  • Number of Wholesale territories are the countries in which the Group's products are sold primarily by distribution, franchise or agency arrangements to Wholesale customers; and
  • Number of product suppliers is the number of suppliers that have supplied items for resale during the year.

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 10 July 2013 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.

Shaun WillsChief Financial Officer
10 July 2013