Investor Presentaiton
BOOHOO GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS
(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED
ANNUAL REPORT AND ACCOUNTS 2021
/// FINANCIAL STATEMENTS
1 ACCOUNTING POLICIES CONTINUED
Significant estimates and judgements
The preparation of financial statements in conformity with IFRS as adopted by the EU requires management to make judgements, estimates and
assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. The estimates and
assumptions are based on historical experience and various other factors believed to be reasonable under the circumstances. Actual results could
differ from these estimates and any subsequent changes are accounted for when such information becomes available. The judgements, estimates
and assumptions that are the most subjective or complex are discussed below:
Returns provision
The provision for sales returns is estimated based on recent historical returns and management's best estimates and is allocated to the period
in which the revenue is recorded. Actual returns could differ from these estimates. The historic difference between the provision estimate and
the actual results, known at a later stage, has never been, nor is expected to be, material. A difference of 1%pt in the percentage of sales returns
rate would have an impact of +/- £1.6 million on reported revenue and +/- £0.8 million on operating profit. The choice of a 1%pt change for the
determination of sensitivity represents a reasonable, but not extreme, variation in the return rate.
Claims provision
Management makes judgements in respect of the likelihood of the realisation of a claim. The provision for claims is then estimated from the
settlement amount of similar claims in the relevant jurisdiction, with assistance from legal counsel. Factors taken into account are the degree of loss
to the appealing party, the likelihood of success in defence and the possible bases of the amount of the settlement claims.
Inventory valuation
Inventory is carried at the lower of cost or net realisable value. The judgement of net realisable value may be different from the future actual value
realised, but that difference is not expected ever to be material. A difference of 1%pt in the provision as a percentage of gross inventory would give
rise to a difference of +/- £1.4m in gross margin. The choice of a 1%pt change for the determination of sensitivity represents a reasonable, but not
extreme, variation in the provision.
Acquisition of the non-controlling interest in PrettyLittleThing.com Limited
The remaining 34% non-controlling interest in PrettyLittleThing was acquired in May 2020, ahead of the original 2022 option-to-acquire date,
for a combination of cash and shares with initial total consideration £269.8 million, potentially rising to £323.8 million subject to the group's share
price averaging 491 pence per share over a six-month period up until a longstop date of 14 March 2024. If this condition is not met, (although
management has judged it will be met), this final £54 million element of consideration will lapse.
The amount written off to equity, in other reserves, as shown in the consolidated statement of changes in equity is as follows:
Cash consideration
Share consideration
Fair value of future performance-related share consideration
Less: carrying value of non-controlling interest
Amount written off to other reserves
2 SEGMENTAL ANALYSIS
IFRS 8, 'Operating Segments', requires operating segments to be determined based on the group's internal reporting to the chief operating
decision maker. The chief operating decision maker is considered to be the executive board, which has determined that the primary segmental
reporting format of the group for the year ending February 2021 is by geographic region. This is a change to the segments reported in previous
periods, since the group has become multi-brand and now focusses on geographic performance at a group level and not on individual brand
performance. The group strategy is to increase market share in each territory using the optimum mix of brands that is appropriate for each market,
taking into account factors such as consumer preference, established presence and brand appeal.
Revenue
Cost of sales
Gross profit
Distribution costs
-
Administrative
expenses other
Amortisation of acquired intangibles
Other income
Operating profit
Finance income
Finance expense
Profit before tax
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative
expenses other
-
Total
Year ended 28 February 2021
Rest of
Rest of
UK
Europe
USA
world
£ million
945.1
(464.2)
480.9
£ million
£ million
£ million
£ million
244.7
(107.1)
435.1
(174.5)
120.4
1,745.3
(54.3)
(800.1)
137.6
260.6
66.1
945.2
(422.0)
(394.6)
(5.5)
1.0
124.1
0.9
(0.3)
124.7
Year ended 29 February 2020
Rest of
Rest of
UK
Europe
USA
world
Total
£ million
679.4
(337.8)
341.6
£ million
£ million
£ million
£ million
188.4
263.6
103.5
1,234.9
(79.2)
(105.9)
(45.7)
(568.6)
109.2
157.7
57.8
666.3
(278.3)
(292.2)
(5.1)
0.2
90.9
1.7
(0.4)
£ million
161.9
107.9
Amortisation of acquired intangibles
Other income
31.9
Operating profit
(20.4)
Finance income
281.3
Finance expense
Profit before tax
Due to the nature of its activities, the group is not reliant on any
individual customers.
92.2
98
No analysis of the assets and liabilities of each operating segment is provided to the chief operating decision maker in the monthly management
accounts; therefore, no measure of segmental assets or liabilities is disclosed in this note. Non-current assets located outside the UK comprise
offices in the USA with a net book value of £2.5 million.
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