Investor Presentaiton

BOOHOO GROUP PLC CONTINUED PROFITABLE GROWTH CONTINUED ANNUAL REPORT AND ACCOUNTS 2021 / STRATEGIC REPORT Operating costs comprise distribution costs and administrative expenses excluding depreciation and amortisation and have increased by 60bps to 44.3% of revenue, with tight control of overheads and marketing costs mitigating the increase in overseas distribution costs caused by the pandemic. Adjusted EBITDA, which is not a statutory measure, represents earnings before interest, tax, depreciation, amortisation, non-cash share-based payments charges and exceptional items. It provides a useful measure of the underlying profitability of the business. Adjusted EBITDA increased by 37% from £126.6 million to £173.6 million and, as a percentage of revenue, moved from 10.2% to 10.0%. Adjusted profit after tax, as with Adjusted EBITDA, provides another more consistent measure of the underlying profitability of the business by removing non-cash amortisation of intangible assets relating to the acquisition of new brands (being their trademarks and customer lists), share-based payment charges and exceptional items. TAXATION The effective rate of tax for the year was 25.1% (2020: 21.0%), which is higher (2020: higher) than the blended UK statutory rate of tax for the year of 19.0% (2020: 19.0%), due to expenditure not deductible for tax purposes, being principally depreciation on buildings and fit out, disallowable legal claims and share-based payment charges on growth shares. CONSOLIDATED STATEMENT OF FINANCIAL POSITION Intangible assets Property, plant and equipment Right-of-use assets Financial assets Deferred tax asset Non-current assets Working capital Lease liabilities Net financial assets/(liabilities) Cash and cash equivalents Interest-bearing loans and borrowings Deferred tax liability CONSOLIDATED CASH FLOW STATEMENT Profit after tax for the year Share-based payments charge Depreciation charges and amortisation Finance income Finance expense Loss on sale of fixed assets Tax expense Increase in inventories Increase in trade and other receivables Increase in trade and other payables 2021 2020 £ million £ million 93.4 72.9 19.7 11.0 29.8 24.7 (0.9) (1.7) 0.3 0.4 0.2 31.3 19.3 (45.8) (32.3) (8.8) (9.4) 82.1 42.2 Operating cash flow 201.1 127.3 Capital expenditure and intangible asset purchases (49.3) (26.2) Acquisition of new brands (73.4) (19.4) 2021 2020 Acquisition of non-controlling interest in PrettyLittleThing (161.9) £ million £ million Tax paid (38.3) (11.6) 118.3 42.3 Free cash (outflow)/inflow after tax (121.8) 70.1 141.6 119.2 Net proceeds from the issue of ordinary shares 201.4 2.7 16.7 14.6 Purchase of own shares by EBT (39.4) (14.9) 13.1 4.5 1.2 1.8 3.2 6.0 (0.1) (0.3) 292.9 186.6 (3.4) (90.9) (63.9) (5.9) (6.0) (18.3) (16.2) (4.8) (2.4) 12.6 (9.0) 30.6 47.6 276.0 245.4 245.4 197.8 (4.8) 276.0 245.4 (4.2) (3.6) 4.4 (6.6) 472.5 327.9 Finance income received Finance expense paid Dividend paid to non-controlling interests Net current tax asset/(liability) Net assets The increase in intangible assets is due to the purchase of the new brands. The right-of-use-assets are the capitalised value of property leases. Working capital has decreased in line with business growth and because of the increase in provisions of £23.4 million due to a number of claims. The lease liability is the discounted value of future lease The payments. has repaid all its borrowings. group Purchased intangible and fixed assets INTANGIBLE AND FIXED ASSET ADDITIONS Intangible assets Trademarks and customer lists Software Tangible fixed assets Distribution centres Offices, office equipment, fixtures and fit outs Motor vehicles Total intangible and fixed asset additions LIQUIDITY AND FINANCIAL RESOURCES 2021 2020 £ million £ million 73.4 19.4 12.3 3.8 85.7 23.2 16.9 15.4 20.0 6.6 0.1 0.4 37.0 22.4 122.7 45.6 Operating cash flow was £201.1 million compared to £127.3 million in the previous year, and free cash outflow after tax was £121.8 million compared to an inflow of £70.1 million in the previous financial year. Capital expenditure and intangible asset purchases were £49.3 million, which includes a £16.9 million investment in our distribution centres to support projected growth in the business, acquisition of new brands was £73.4 million and purchase of the remaining non-controlling interest in PrettyLittleThing was £161.9 million. The closing cash balance for the group was £276.0 million. Lease payments Repayment of borrowings Net cash flow Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year TRENDS AND FACTORS LIKELY TO AFFECT FUTURE PERFORMANCE The market for online fashion is forecast to continue to grow and, along with the increasing use of the internet globally, provides a favourable backdrop for the group with much opportunity for further growth. Customers throughout the world are seeking a wide choice of quality products at value prices lower than those available on the high street, with the convenience of home delivery. The group's target market has a high propensity to spend on fashion and the market is quite resilient to external macroeconomic factors. OUTLOOK As always, our focus is to maintain an outstanding customer proposition, with the latest fashion at great prices, combined with excellent customer service. To this end, we have a plan of continuous investment in our systems, infrastructure and technology to ensure we offer an optimal online shopping experience as we look to further cement our position as a leader in global fashion e-commerce. Revenue growth for the full year to February 2022 is expected to be around 25% at a group level, with newly acquired brands expected to deliver approximately five percentage points of this growth. Growth within our established brands remains strong, and over the last two years we have achieved a revenue CAGR of 42%. Trading in the first few weeks of the financial year has been encouraging; however, the economic outlook remains uncertain and we expect the benefits seen from reduced returns over the last 12 months to begin to unwind this year, whilst still experiencing significantly elevated levels of carriage and freight costs. Margins for established brands are expected to be in line year-on-year. We expect investment in newly acquired brands to dilute the group's overall adjusted EBITDA margin by 50-100bps, with the group's adjusted EBITDA margin expected to be in the region of 9.5-10% for the full year. Adjusted EBITDA is likely to see more of a weighting towards the second half of the year, reflecting a strong comparative period in the first half. This is consistent with financial prior to the one herein reported, and the group expects a higher adjusted EBITDA margin in the second half, reflecting investments in our scalable multi-brand platform. years group As announced on 12 April 2021, the acquired a new office in the heart of London's West End for £72 million. Capital expenditure for the remainder of the financial year is expected to be in the region of £125-175 million. This relates to growth investments in our new warehouse sites in Wellingborough and Daventry, as well as continued enhancements to our existing facilities, including automation at our Sheffield site to increase both capacity and efficiency. We are focused on building the business for the future and continued investment in our brands, infrastructure, people and technology will drive this growth and further economies of scale. We are also committed to continued improvements across our environmental responsibilities and to accelerate our sustainability journey. The group's medium- term target of sales growth of 25% per annum and an adjusted EBITDA margin of around 10% remains unchanged. 32 33