Investor Presentaiton

BOOHOO GROUP PLC NOTES TO THE FINANCIAL STATEMENTS (FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED ANNUAL REPORT AND ACCOUNTS 2021 /// FINANCIAL STATEMENTS 27 FINANCIAL INSTRUMENTS (A) FAIR VALUES OF FINANCIAL INSTRUMENTS Trade and other receivables The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date if the effect is material. Trade and other payables The fair value of trade and other payables is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date if the effect is material. Cash and cash equivalents The fair value of cash and cash equivalents is estimated as its carrying amount where the cash is repayable on demand. Where it is not repayable on demand then the fair value is estimated at the present value of future cash flows, discounted at the market rate of interest at the reporting date. Interest-bearing borrowings Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. Cash flow hedges Fair value is calculated using forward interest rate points to restate the hedge to fair market value. Foreign exchange rates The key currency exchange rates used in the financial statements are: USD closing rate USD year average rate EUR closing rate EUR year average rate 2021 1.39269 2020 1.29532 1.15361 1.11678 1.80693 1.28198 1.27834 1.16257 1.14792 1.96778 AUD year average rate 1.83878 1.85513 The impact of any reasonable fluctuations in the exchange rates used to translate assets and liabilities at the year end is not considered to be material and has therefore not been disclosed. AUD closing rate Fair values (B) CREDIT RISK Financial risk management Credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the group's receivables from customers and hedging and other financial activities. The group faces minimal credit risk from trade receivables as customers pay for their orders in full at the time of purchase and third-party sales are to a small number of large established corporations. The risk of default from related party undertakings is considered low. (C) LIQUIDITY RISK Financial risk management Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group's approach to managing liquidity is to use both short-term and long-term cash forecasts to assist in monitoring cash flow requirements. (D) CAPITAL RISK Financial risk management Capital risk is the risk that the group will not be able to continue as a going concern. The group's approach to managing capital risk is to safeguard the group's ability to continue as a going concern by securing an appropriate mix of debt and equity funding, a strong credit rating and sufficient headroom. The capital structure is regularly reviewed to ensure it is appropriate to the group's strategic objectives. The funding requirements of the group are ascertained by regular cash flow forecasts and projections. At 28 February 2021, the group had capital of £748.5 million (2020: £568.5 million), comprising equity of £472.5 million (2020: £327.9 million) and net cash of £276.0 million (2020: £240.6 million). (E) FOREIGN CURRENCY RISK Financial risk management The group trades internationally and is exposed to exchange rate risk on purchases and sales, primarily in Australian dollars, euros and US dollars. The group's results are presented in sterling and are exposed to exchange rate risk on translation of foreign currency assets and liabilities. The group's approach to managing foreign currency risk is to use financial instruments in the form of forward foreign exchange contracts to hedge foreign currency cash flows. The fair value of forward foreign exchange contracts recognised in the statement of financial position within financial assets at 28 February 2021 was £30.2 million (2020: £11.1 million) and within financial liabilities was £4.5 million (2020: £15.6 million). The non-current element of the financial assets is £13.1 million (2020: £4.5 million) and of financial liabilities is £1.9 million (2020: £6.9 million). Cash flows related to these contracts will occur during the three years to 29 February 2024 and gains or losses will be recognised in the statement of comprehensive income during those periods. The amount recognised in other comprehensive income during the year is a gain of £21.2 million (2020: £13.6 million loss) and the amount reclassified from other comprehensive income to profit and loss in revenue during the year is a loss of £9.0 million (2020: £1.3 million loss). Financial assets Cash and cash equivalents Cash flow hedges Trade and other receivables Financial liabilities Cash flow hedges Trade and other payables Interest-bearing loans and borrowings Fair value hierarchy 2021 2020 £ million £ million 276.0 245.4 30.2 11.1 Maturity of forward currency hedging instruments - notional amount £ million 30.2 24.5 1-6 7-12 13-18 336.4 281.0 Currency months months months 19-24 months More than 2 years Total USD 113.2 121.3 79.3 60.7 3.7 378.2 2021 2020 EUR 69.7 65.7 52.1 35.8 8.1 231.4 £ million £ million AUD 28.4 23.6 19.9 13.7 1.8 87.4 CAD 4.6 4.9 4.3 2.3 0.3 16.4 4.5 15.6 SEK 5.3 4.0 4.4 1.7 15.4 268.2 184.1 NZD 5.1 4.5 3.1 1.6 0.3 14.6 4.8 DKK 2.7 1.3 2.1 0.8 6.9 272.7 204.5 229.0 225.3 165.2 116.6 14.2 750.3 Financial instruments carried at fair value are required to be measured by reference to the following levels under IFRS 13 Fair Value Measurement: Average rate of forward currency hedging instruments - GBP: currency 1-6 7-12 13-18 19-24 More than Hierarchy level Inputs Level 2 Inputs other than quoted prices included within Level 1 that are Financial instruments Valuation methodology Currency months months months months 2 years Average USD 1.3154 1.3075 1.2951 1.3015 1.3514 1.3067 Derivative observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) financial instruments - cash flow hedges the foreign exchange spot and forward rates, yield curves of the respective currencies, currency basis spreads between the respective currencies and interest rate curves Valuation techniques include forward pricing and swap models using net present value calculation of future cash flows. The model inputs include EUR 1.1277 1.1294 1.1190 1.0978 1.1111 1.1210 AUD 1.8521 1.8644 1.8794 1.8248 1.8333 1.8570 CAD 1.7391 1.7347 1.8372 1.8696 2.6667 1.7988 SEK NZD DKK 11.8868 1.9608 8.5185 12.0000 11.8182 11.7647 11.8831 1.9778 2.0323 2.0000 1.6667 1.9795 8.4615 8.2381 7.8750 8.3478 112 113