TIDMWOSG
RNS Number : 9509V
Watches of Switzerland Group PLC
07 December 2023
7 December 2023
Watches of Switzerland Group PLC
H1 FY24 Results
for the 26 weeks to 29 October 2023 (H1 FY24)
Good H1 performance with continued strong momentum in the US
Full Year guidance unchanged
Brian Duffy, Chief Executive Officer, said:
"Our good first half performance reflects the Group's growing
leadership position in our chosen markets as the strength of our
longstanding brand partnerships and our proven business model
continue to drive our performance forward. We are particularly
pleased with performance in the US, where we grew revenue +11% in
the period, and the US now comprises 43% of Group revenue. The
consumer environment in the UK continues to be more challenging and
UK and Europe revenue was -4% in the period, impacted by the timing
of product intake in Q1 FY24 and temporary showroom closures for
refurbishment .
"We have expanded our retail network at pace in the first half,
opening a total of 19 showrooms globally, whilst investing in
elevating the luxury experience for our clients through significant
refurbishments across seven showrooms. We were also delighted to
complete the acquisition of selected luxury showrooms from Ernest
Jones in November 2023. Looking ahead into the balance of the
financial year, we will integrate the Ernest Jones portfolio and
continue to deliver on our exciting pipeline of new projects.
"Demand dynamics remain strong, and our client registration
lists continue to grow, whilst the pre-owned market remains a
significant opportunity. We are encouraged by the early performance
of the Rolex Certified Pre-Owned programme following its launch in
the first half in both the US and UK. We will continue to expand
the number of showrooms to meet demand for all pre-owned luxury
watches and are excited by the growth potential in this
category.
"Looking ahead, we are well positioned for a good holiday
trading period as we present our clients with our strongest ever
range of luxury watches and luxury branded jewellery. We remain on
track to deliver full year guidance, with our confidence for H2
underpinned by the reopening of several high revenue showrooms
which were closed for upgrade in H1.
"Looking further ahead, we are confident in our Long Range Plan
objectives of doubling sales and profit by 2028 through
capitalising on our leading market positions and the unique growth
opportunities available to us as the world's largest luxury watch
retailer."
H1 FY24 Financial Highlights
-- Group revenue GBP761 million (H1 FY23: GBP765 million), +2%
at constant currency, flat at reported rates
o Continued growth in luxury watches with the reduction in the
broader jewellery market reflecting temporary softer consumer
sentiment and a repositioning to full price sales in the US
o Excellent progress with showroom expansion and refurbishment
programme
o Launch of Rolex Certified Pre-Owned in both the US and UK
markets with encouraging early performance
o Group ecommerce sales(1) -3% on last year at constant currency
against strong comparatives in the prior year and impacted by the
higher proportion of jewellery sales through this channel
-- Adjusted EBIT(2) of GBP73 million ahead of previously guided
at GBP70-72 million (-15% on a reported basis (H1 FY23: GBP87
million))
o Adjusted EBIT margin 9.6% (H1 FY23: 11.3%), limited leverage
in H1 FY24 alongside headwinds from Interest Free Credit, which
annualise in the second half of the year
-- Statutory operating profit GBP78 million (HY FY23: GBP93 million), -16% on a reported basis
-- Expansionary capital expenditure(3) of GBP48 million (H1
FY23: GBP27 million) with 19 (H1 FY23: 20) new showrooms opened and
seven showrooms refurbished
-- Free cashflow(2) of GBP57 million (H1 FY23: GBP56 million)
with conversion of 60% (H1 FY23: 53%), improvement driven by lower
working capital investment, offsetting lower Adjusted EBITDA(2)
-- Net cash(2) of GBP16 million as of 29 October 2023 (30
October 2022: net debt(2) of GBP26 million)
26 weeks 26 weeks YoY change YoY change
(GBPmillion) ended 29 ended 30 Reported Constant
October 2023 October 2022 rates currency(2)
-------------- --------------
Group revenue 761 765 0% 2%
UK and Europe 433 454 (4%) (4%)
US 328 311 5% 11%
Adjusted EBITDA 94 104 (10%)
Adjusted EBITDA
margin 12.3% 13.6% (130bps)
Adjusted EBIT 73 87 (15%)
Adjusted EBIT margin 9.6% 11.3% (170bps)
Adjusted basic EPS(2)
(p) 21.5 27.8 (23%)
Statutory operating
profit 78 93 (16%)
Statutory operating
margin 10.2% 12.1% (190bps)
Statutory basic EPS
(p) 19.8 27.2 (27%)
Statutory profit
before tax 67 83 (20%)
Free cash flow 57 56 2%
Return On Capital
Employed(2) 23.9% 27.6% (370bps)
Net cash/(debt) 16 (26)
-------------------------- -------------- -------------- ----------- -------------
H1 FY24 Operating highlights
-- Continued strong momentum in the US with revenue of GBP328
million (H1 FY23: GBP311 million), +11% at constant currency, +5%
at reported rates
o Sustained growth in core business, reflecting the success of
our model and strength of client demand
o Further investment in showroom network with opening of eight
mono-brand boutiques and one new Watches of Switzerland multi-brand
showroom, anchored by Rolex at American Dream in New Jersey
o The first half of FY24 ended with 25 multi-brand showrooms (H1
FY23: 24) and 31 mono-brand boutiques (H1 FY23: 23)
-- UK and Europe performance driven by domestic clientele, with
revenue of GBP433 million (H1 FY23: GBP454 million), -4% vs H1
FY23
o Q1 FY24 was impacted by the unwinding of the benefit of
product intake in Q4 FY23, which meant Q1 FY24 revenue was down -8%
vs the prior year. Revenue in Q2 FY24 was flat on prior year, with
several high turnover Goldsmiths and Mappin & Webb showrooms
closed for upgrade during the period and trading out of pop-ups.
These reopened pre-Christmas in the second half of the financial
year
o Investment in seven new UK showroom openings; six mono-brand
boutiques and one Goldsmiths multi-brand in Bromley
o Continued rollout of Goldsmiths Luxury concept most notably in
Liverpool with our largest Goldsmiths Luxury showroom to date, and
the launch of our first new contemporary showroom concept for
Mappin & Webb
o The first half of FY24 ended with 89 UK multi-brand showrooms
(H1 FY23: 91) and 57 UK mono-brand boutiques (H1 FY23: 46)
o Further European expansion through the opening of three new
mono-brand boutiques including our first showroom in Germany, a TAG
Heuer boutique in Berlin. This takes the total number of European
mono-brand boutiques to nine
-- Agreed purchase of luxury watch showrooms from Ernest Jones
o Acquisition completed in November 2023
o Multi-brand showrooms already re-branded to Goldsmiths or
Mappin & Webb
o During the balance of the financial year, we will be working
on systems, merchandising, training and marketing in order to have
the full beneficial impact from this acquisition in FY25
-- Xenia, the Group's elevated Client Experience Programme, is
now embedded across all showrooms, further enhancing the
relationship we have with our clients
-- The Watches of Switzerland Group Foundation has now donated
GBP3.5 million to charities since formation and continues to
support disadvantaged communities in both the UK and US
Outlook
-- FY24 guidance remains unchanged, based on our sequential
trading improvement and the large showroom refurbishments reopening
pre-Christmas. Our guidance does not reflect any expectation of an
improvement in consumer confidence in the remainder of the
financial year. Guidance reflects current visibility of supply from
key brands and confirmed showroom refurbishments, openings and
closures, and excludes uncommitted capital projects and
acquisitions.
-- The Group has an exciting schedule of new showroom projects
for the remainder of FY24, a number of which have completed since
the end of Q2
o Relocation of the Rolex boutique Millenia, Orlando to a
showroom three times the previous size (opened November 2023)
o Continued roll-out of the Goldsmiths Luxury format, including
the expansion of the Birmingham Bullring showroom (opened November
2023), and relocation of Trafford Centre Manchester and Metrocentre
Newcastle showrooms (December 2023)
o Further roll-out of the Mappin & Webb contemporary format
with refurbishments in Glasgow (opened November 2023) and Bluewater
(December 2023)
o Watches of Switzerland multi-brand showroom at One Vanderbilt,
New York due to open early 2024
o Expansion of the mono-brand portfolio with four boutiques
planned across the UK, US and Europe
-- Unchanged FY24 guidance (on an organic pre-IFRS 16 basis):
o Revenue: GBP1.65 - GBP1.70 billion, growth of
8-11% at constant currency
o Adjusted EBIT margin In line with FY23
%:
o Total finance costs: c.GBP5 million
o Underlying tax rate: 27% - 28% reflecting the increase in
UK corporation tax
o Capex: GBP70 - 80 million
o Operating cash conversion: c.70% weighted towards H2 in line with
the seasonal pattern
The equivalent guidance on an IFRS 16 basis is:
o Adjusted EBIT margin In line with FY23
%:
o Total finance costs: GBP26 - GBP30 million
-- The Group is exposed to movements in the GBP/$ exchange rate
when translating the results of its US operations into Sterling.
The actual average exchange rate for FY23 was 1.20
H1 FY24 Revenue Performance by Geography
H1 FY24 H1 FY23 H1 FY24 vs H1
FY23
---------------
26 weeks 26 weeks
to to Constant
(GBPm) 29 Oct 30 Oct Reported currency
2023 2022 YoY % YoY %
--------- --------- --------- -------------
UK and Europe 433 454 -4% -4%
--------- --------- --------- -------------
US 328 311 +5% +11%
--------- --------- --------- -------------
Group Revenue 761 765 0% +2%
--------- --------- --------- -------------
H1 FY24 Revenue Performance by Category
H1
---------------------
26 weeks 26 weeks
to to Constant
(GBPm) 29 Oct 30 Oct Reported currency
2023 2022 YoY % YoY %
--------- --------- --------- -----------
Luxury watches(3) 670 667 0% +3%
--------- --------- --------- -----------
Luxury jewellery(3) 47 56 -17% -15%
--------- --------- --------- -----------
Services/other 44 42 +6% +7%
--------- --------- --------- -----------
Group Revenue 761 765 0% +2%
--------- --------- --------- -----------
H1 FY24 Results Presentation
A webcast conference call for analysts and investors will be
held at 9.00am (UK time) today to announce the H1 FY24 results. To
join the call, please use the following details:
Webcast link: https://brrmedia.news/WOS_H1FY24
Conference call dial-in: +44 (0) 33 0551 0200
Contacts
The Watches of Switzerland Group
Anders Romberg, CFO +44 (0) 207 317 4600
Caroline Browne, Group Finance Director +44 (0) 1162 817 420
investor.relations@thewosgroup.com
Headland
Lucy Legh / Rob Walker / Joanna Clark +44 (0) 20 3805 4822
wos@headlandconsultancy.com
About the Watches of Switzerland Group
The Watches of Switzerland Group is the UK's largest luxury
watch retailer, operating in the UK, US and Europe comprising five
prestigious brands; Watches of Switzerland (UK and US), Mappin
& Webb (UK), Goldsmiths (UK), Mayors (US) and Betteridge (US),
with a complementary jewellery offering.
As at 29 October 2023, the Watches of Switzerland Group had 211
showrooms across the UK, US and Europe including 97 dedicated
mono-brand boutiques in partnership with Rolex, OMEGA, TAG Heuer,
Breitling, TUDOR, Audemars Piguet, Longines, Grand Seiko, BVLGARI
and FOPE and has a leading presence in Heathrow Airport with
representation in Terminals 2, 3, 4 and 5 as well as seven retail
websites.
The Watches of Switzerland Group is proud to be the UK's largest
retailer for Rolex, OMEGA, Cartier, TAG Heuer and Breitling
watches.
www.thewosgroupplc.com
Disclaimer
This announcement has been prepared by Watches of Switzerland
Group PLC (the 'Company'). It includes statements that are, or may
be deemed to be, "forward-looking statements". These
forward-looking statements can be identified by the use of
forward-looking terminology, including the terms "believes",
"estimates", "anticipates", "expects", "intends", "plans", "goal",
"target", "aim", "may", "will", "would", "could" or "should" or, in
each case, their negative or other variations or comparable
terminology. They appear in a number of places throughout this
announcement and the information incorporated by reference into
this announcement and may include statements regarding the
intentions, beliefs or current expectations of the Company
Directors or the Group concerning, amongst other things: (i) future
capital expenditures, expenses, revenues, earnings, synergies,
economic performance, indebtedness, financial condition, dividend
policy, losses and future prospects; (ii) business and management
strategies, the expansion and growth of the Group's business
operations; and (iii) the effects of government regulation and
industry changes on the business of the Company or the Group.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future and may be
beyond the Company's ability to control or predict. Forward-looking
statements are not guarantees of future performance. The Group's
actual results of operations, financial condition, liquidity, and
the development of the industry in which it operates may differ
materially from the impression created by the forward-looking
statements contained in this announcement and/or the information
incorporated by reference into this announcement.
Any forward-looking statements made by or on behalf of the
Company or the Group speak only as of the date they are made and
are based upon the knowledge and information available to the
Directors on the date of this announcement, and are subject to
risks relating to future events, other risks, uncertainties and
assumptions relating to the Company's operations and growth
strategy, and a number of factors that could cause actual results
and developments to differ materially from those expressed or
implied by the forward-looking statements. Undue reliance should
not be placed on any forward-looking statements and, except as
required by law or regulation, the Company undertakes no obligation
to update these forward-looking statements. No statement in this
announcement should be construed as a profit forecast or profit
estimate.
Before making any investment decision in relation to the Company
you should specifically consider the factors identified in this
document, in addition to the risk factors that may affect the
Company or the Group's operations as detailed above.
Chief Executive Officer's Review
Our Group delivered a strong first half of the financial year
notwithstanding the difficult consumer environment, as we enhanced
our leadership position in our existing markets of the UK and the
US and continued to expand within Europe. Revenue improved
throughout the period with growth of +2% at constant currency vs H1
FY23 (flat at reported rates), profitability was impacted by the
lack of leverage and headwinds from interest free credit and
inflation.
Luxury watches demand remained consistently high with demand
continuing to outstrip supply for high demand product, with revenue
+3% vs H1 FY23 at constant currency with growth in the period
driven by increases in average selling price. Our pre-owned watch
category continues to grow, and we were delighted to launch Rolex
Certified Pre-Owned in both the US and UK in the half, with
encouraging early client engagement and trading. The luxury
jewellery market was challenging in the half with sales -15% at
constant currency vs H1 FY23, however the luxury branded jewellery
relatively outperformed and remains a category where we see
significant opportunity as presented in our Long Range Plan.
In the US, revenue increased by +11% vs H1 FY23 at constant
currency with the US now representing 43% of Group revenue. We
continued to expand our US network, opening eight mono-brand
boutiques alongside one multi-brand showroom, anchored by Rolex at
American Dream, in New Jersey. We are building our team and
resources, in what is now the number one market globally for luxury
Swiss watches and remain confident in the long term growth
potential of the US market.
UK and Europe revenue declined by -4% during the period but
showed an improving trend in Q2 FY24. Sales were driven by domestic
clientele and the Group continued to gain market share. Q1 FY24 was
impacted by unwinding of the benefit of product intake in Q4 FY23,
which meant Q1 FY24 revenue was down -8% in Q1 vs the prior year.
Revenue in Q2 FY24 was flat on prior year, with several high
turnover Goldsmiths and Mappin & Webb showrooms closed for
upgrade during the period and trading out of pop-ups. These
reopened pre-Christmas in the second half of the financial
year.
In the UK, we made significant investment in our showrooms
during the period, opening seven new showrooms, and have continued
with the rollout of Goldsmiths Luxury concept including the
reopening of our largest showroom to date in Liverpool. The first
half also saw the launch of our new Mappin & Webb concept in
York, and we have subsequently reopened our expanded showroom in
Guernsey. The refurbishment of certain UK showrooms during H1 FY24
and replacement with temporary pop-ups moderately impacted our top
line performance, however all refurbished showrooms will be opened
ahead of the holiday period.
I am delighted to welcome our new colleagues from Ernest Jones
and look forward to them developing within our business following
the acquisition of 15 luxury showrooms, including one mono-brand
boutique. We believe these are great showrooms and highly
complementary to our portfolio. During the balance of the fiscal
year, we will be working on systems, merchandising, training and
marketing in order to have the full beneficial impact from this
acquisition in FY25.
We opened a further three showrooms in Europe including our
first showroom in Germany, a TAG Heuer mono-brand boutique in
Berlin. We have great teams in place across all showrooms and
received strong feedback both from clients and brands, and look
forward to continuing to grow our presence in Europe.
We will continue to invest in our showroom portfolio in the UK,
US and Europe with an exciting pipeline of future projects in H2
FY24 and beyond, some of which have already opened, including:
-- Third Watches of Switzerland showroom in Manhattan at One
Vanderbilt anchored by OMEGA and Cartier, open in early 2024
-- Continued roll out of Goldsmiths Luxury with Birmingham
Bullring, Metrocentre Newcastle, and the relocation of our Trafford
lower showroom opening pre-Christmas
-- New Flagship Rolex Boutique on Bond Street with around 7,000
sq. ft of selling space in Autumn 2024
-- First Watches of Switzerland multi-brand in Europe at Mall of
the Netherlands in Autumn 2024 anchored by OMEGA and Cartier
-- New Rolex anchored showroom at Legacy West, Plano, Texas
opening October 2024 as part of showroom relocation
We continue to deliver an elevated client experience based on
the highest standards of hospitality using our Xenia principles.
This is complemented by high quality client events in conjunction
with our brand partners. We continue to invest in developing
quality marketing assets highlighting our status as the key
destination for luxury timepieces and jewellery.
During the first half of FY24, in the UK, we achieved an average
monthly digital social media reach of 41 million, and a total of 2
billion digital impressions. In the US, we delivered 213 million
impressions and had a monthly average social media reach of 25
million, in addition to generating over 10 billion PR impressions
over the last 12 months.
We were delighted to host the Grand Prix D'Horlogerie De Geneve
(GPHD) or 'Watch Oscars' in New York at our Soho Flagship for the
second year running. The announcement of the exhibition alone
generated over 20 million impressions.
Our strong and long-standing relationships with the most
recognised and prestigious luxury watch brands have remained a
point of distinction. We have continued to collaborate on exclusive
product which in the half included products such as the OMEGA
Seamaster 75 years, Breitling Avenger and TAG Heuer F1 Chrono. The
colleagues within our showrooms and Luxury Watch and Jewellery
Virtual Boutique are watch and jewellery experts, and much of this
comes from the collaboration and investment with the brands on
significant training programmes.
With the full support of, and guidance from, our Board and ESG
Committee, we continue to develop our ESG governance and
sustainability strategy, which puts our Purpose at its core.
Highlights during the period:
-- UK accredited as a Real Living Wage Employer
-- Continued to build our repair capability and our new Midlands
Service Centre will open in H2 FY24
-- Launched colleague incentive to encourage and reward eco-friendly behaviours
-- Mappin & Webb named CSR Jewellery Retailer of the Year in 2023 Professional Jeweller Awards
I would like to thank our teams who continue to inspire and
deliver. Their hard work and commitment continue to enable the
Group to be successful.
Finally, I am very proud to report that our Foundation Trustees
have donated over GBP800,000 of funds so far in FY24 in the UK and
US. We have strengthened our relationship with The Prince's Trust
with a commitment of GBP1.5 million over the next two years to fund
their education work, and the Group was again the headline sponsor
for The Prince's Trust Palace to Palace Bike Ride and through our
colleagues participation raised a further GBP80,000.
Looking ahead, we were delighted to share our updated Long Range
Plan on the 7 November 2023 which reiterated our confidence in the
sector and our belief in our ability as the world's largest luxury
watch retailer to capitalise on our leading market position and
unique growth opportunities available. We expect sales and profits
to more than double by FY28.
Financial Review
The Group's Consolidated Income Statement is shown below which
is presented including IFRS 16 'Leases' and includes exceptional
items.
26 weeks to 26 weeks to
Income Statement - post-IFRS 16 and exceptional items (GBPmillion) 29 October 2023 30 October 2022 YoY variance
Revenue 761.4 765.2 (0.5)%
---------------- ---------------- ------------
Operating profit 78.0 92.9 (16.0)%
---------------- ---------------- ------------
Net finance cost (11.5) (10.2) (12.7)%
---------------- ---------------- ------------
Profit before taxation 66.5 82.7 (19.6)%
---------------- ---------------- ------------
Taxation (19.5) (18.1) (7.7)%
---------------- ---------------- ------------
Profit for the financial period 47.0 64.6 (27.2)%
---------------- ---------------- ------------
Basic earnings per share 19.8p 27.2p (27.2)%
---------------- ---------------- ------------
Management monitor and assess the business performance on a
pre-IFRS 16 and exceptional items basis, which is shown below. This
aligns to the reporting used to inform business decisions,
investment appraisals, incentive schemes and debt covenants. A full
reconciliation between the pre- and post-IFRS 16 results is shown
in the Glossary.
26 weeks to 26 weeks to
Income Statement - pre-IFRS 16 and exceptional items (GBPmillion) 29 October 2023 30 October 2022 YoY variance
Revenue 761.4 765.2 (0.5)%
---------------- ---------------- ------------
Net margin (2) 280.1 287.6 (2.7)%
---------------- ---------------- ------------
Showroom costs (137.2) (136.3) (0.7)%
---------------- ---------------- ------------
4-Wall EBITDA (2) 142.9 151.3 (5.7)%
---------------- ---------------- ------------
Overheads (43.4) (40.0) (8.0)%
---------------- ---------------- ------------
EBITDA 99.5 111.3 (10.6)%
---------------- ---------------- ------------
Showroom opening and closing costs (5.5) (6.9) 19.0%
---------------- ---------------- ------------
Adjusted EBITDA 94.0 104.4 (10.1)%
---------------- ---------------- ------------
Depreciation, amortisation and loss on disposal of fixed assets (20.6) (17.7) (16.2)%
---------------- ---------------- ------------
Segment profit (Adjusted EBIT) 73.4 86.7 (15.4)%
---------------- ---------------- ------------
Net finance costs (1.5) (2.3) 33.1%
---------------- ---------------- ------------
Adjusted profit before taxation (2) 71.9 84.4 (14.7)%
---------------- ---------------- ------------
Adjusted earnings per share 21.5p 27.8p (22.7)%
---------------- ---------------- ------------
Revenue
Revenue by geography and category
26 weeks to 29 October UK and Europe US Total Mix
2023
(GBPmillion)
Luxury watches 369.0 301.1 670.1 88%
-------------- ----- ------ ----
Luxury jewellery 28.3 18.7 47.0 6%
-------------- ----- ------ ----
Services/other 36.3 8.0 44.3 6%
-------------- ----- ------ ----
Total revenue 433.6 327.8 761.4 100%
-------------- ----- ------ ----
26 weeks to 30 October UK and Europe US Total Mix
2022
(GBPmillion)
Luxury watches 387.1 279.7 666.8 87%
-------------- ----- ------ ----
Luxury jewellery 32.1 24.3 56.4 7%
-------------- ----- ------ ----
Services/other 34.6 7.4 42.0 6%
-------------- ----- ------ ----
Total revenue 453.8 311.4 765.2 100%
-------------- ----- ------ ----
Group revenue of GBP761.4m increased by +2% at constant currency
(flat at reported rates).
US revenue increased by +11% at constant currency (+5% at
reported rates) and the US business made up 43% of the Group's
revenue in H1 FY24 (H1 FY23: 41%). Underlying growth was strong
across all locations with continued consumer appetite for high
demand products. New York and the Wynn Resort, Las Vegas performed
particularly strongly. This was accomplished through a quality
product offering, superior client experience and backed up by
strong marketing campaigns which had significant reach across
offline and online channels.
During the period, the US opened eight mono-brand boutiques in
Topanga, California; New Orleans, Louisiana; and Murray, Utah. We
also opened a Rolex anchored multi-brand showroom at American Dream
in New Jersey which was fully completed in October with the opening
of a large Cartier space.
The US Rolex Certified Pre-Owned programme was launched in July
2023, with product currently in 14 agencies and available online,
early sales have been encouraging. Other pre-owned and vintage
continues to grow as we leverage the Analog:Shift brand.
UK and Europe revenue declined by -4% during the period but
showed an improving trend in Q2 FY24. Sales were driven by a
domestic clientele and the Group continued to gain market share. Q1
FY24 was impacted by unwinding of the benefit of product intake in
Q4 FY23, which meant Q1 FY24 revenue was down -8% vs the prior
year. Revenue in Q2 FY24 was flat on prior year, with several high
turnover Goldsmiths and Mappin & Webb showrooms closed for
upgrade during the period and trading out of pop-ups. These
reopened pre-Christmas in the second half of the financial
year.
During the period, the UK opened six mono-brand boutiques, and a
further one multi-brand Goldsmiths showroom in Bromley. One
non-core showroom was closed giving a net increase of six in the
UK. In the period, six projects were completed enhancing our
existing estate to further elevate the partner brands we display in
those showrooms and advance our client experience, this included
our first new concept Mappin & Webb showroom in York. Tourist
sales remain very low, but traffic increases in airports continue
to be encouraging.
The UK Rolex Certified Pre-Owned programme was launched in
September 2023 online and in five showrooms. Early trading has been
encouraging.
We continued our expansion into Europe through mono-brand
boutiques during H1 FY24. This included the opening of two further
boutiques in Sweden: TAG Heuer in the Mall of Scandinavia,
Stockholm and Breitling in Gothenburg. In June 2023, we opened our
first boutique in Germany for TAG Heuer in Berlin. This takes the
European mono-brands total to nine. The showrooms continue to gain
strong feedback both from clients and the brands.
In November 2023, following the half year end, the Group
completed the acquisition of 15 showrooms from Ernest Jones,
fourteen multi-brand and one mono-brand. Over the second half they
will be rebranded and we will be working on systems, merchandising,
training and marketing to gain the full beneficial impact of the
acquisition in FY25.
Group revenue from luxury watches grew by +3% at constant
currency and made up 88% of revenue (FY23: 87%). Demand for luxury
watches remains robust and continues to exceed supply, with
consistent additions to Client Registration of Interest lists and
average selling prices continue to increase.
Group luxury jewellery revenue declined by -15% at constant
currency (down -17% at reported rates). This reflected market
trends impacted by overall consumer sentiment, particularly within
the bridal category. US sales were impacted by a repositioning to
full price sales, notably in Betteridge.
Other revenue, consisting of servicing, repairs, insurance
services and the sale of fashion and classic watches and other
non-luxury jewellery grew by +6%.
Group ecommerce sales declined by -3% at constant currency
compared to the prior year reflecting a higher proportion of
jewellery through this channel and strong prior year
comparatives.
Profitability
Profitability as a % of revenue
-------------------------------------------------------------------
Income Statement - pre-IFRS 16 and exceptional items (GBP million) 26 weeks to 26 weeks to YoY variance
29 October 2023 30 October 2022
---------------- ---------------- ------------
Net margin 36.8% 37.6% (80bps)
---------------- ---------------- ------------
Showroom costs 18.0% 17.8% (20bps)
---------------- ---------------- ------------
4-Wall EBITDA 18.8% 19.8% (100bps)
---------------- ---------------- ------------
EBITDA 13.1% 14.5% (140bps)
---------------- ---------------- ------------
Adjusted EBITDA 12.3% 13.6% (130bps)
---------------- ---------------- ------------
Adjusted EBIT 9.6% 11.3% (170bps)
---------------- ---------------- ------------
Net margin as a % of revenue was 36.8% in the period. The
reduction in margin of 80bps reflects adverse product mix and the
increased cost of Interest Free Credit.
Showroom costs increased by GBP0.9 million (+1%) from the prior
year, to GBP137.2 million. Showroom costs as a percentage of
revenue increased by 20bps from 17.8% to 18.0%. This reflects the
opening of new showrooms, annualisation of prior year openings and
annual pay rises to colleagues. This was partly offset by a
reduction in business rates and efficiencies found within showroom
payroll, and digital marketing investment which continues to
maximize traffic and conversion versus cost.
Overheads increased by GBP3.4 million (+8%) due to investment in
headcount and IT to support future growth, along with the opening
of our new support centre in Leicester.
Showroom opening and closing costs include the cost of rent
(pre-IFRS 16), rates and payroll prior to the opening or closing of
showrooms, or during closures when refurbishments are taking place.
This cost will vary annually depending on the scale of expansion in
the period. Total costs for the period were GBP5.5 million versus
GBP6.9 million in H1 FY23, reflecting timing of refurbishments and
new showroom openings.
Exceptional administrative items
The Group presents as exceptional items on the face of the
Consolidated Income Statement, those material items of income and
expense which, because of the nature or the expected infrequency of
the events giving rise to them, merit separate presentation to
provide a better understanding of the elements of financial
performance in the financial period, so as to assess trends in
financial performance.
Exceptional items (GBPmillion) 26 weeks to 26 weeks to
29 October 2023 30 October 2022
Professional and legal expenses on business acquisition 0.6 0.5
---------------- ----------------
Impairment of property, plant and equipment 1.2 -
---------------- ----------------
Impairment of right-of-use assets 1.9 -
---------------- ----------------
Total 3.7 0.5
---------------- ----------------
Costs associated with the acquisition of new showrooms,
totalling GBP0.6m, are treated as exceptional as they are regarded
as non-trading, non-underlying costs.
The current macroeconomic environment, increased interest rates,
and inflationary trends gave rise to indicators of impairment in
the current period. Consequently, discounted cashflows were
performed on all Cash Generating Units with indicators of
impairment. This resulted in an impairment charge of GBP3.1m being
recorded in the period. This is allocated over the property, plant
and equipment, and the right-of-use assets of those showrooms as
required by IAS 36 Impairment of Assets. This has been booked as an
exceptional item due to the non-trading nature of the
impairment.
Adjusted EBIT and statutory operating profit
As a consequence of the items noted above, Adjusted EBIT was
GBP73.4 million, a decrease of GBP13.3 million (-15%) on the prior
year.
After accounting for exceptional costs of GBP3.7 million and
IFRS 16 adjustments of GBP8.3 million, statutory operating profit
(EBIT) was GBP78.0 million, a decrease of -16% on the prior
year.
Finance costs
Net finance costs (GBPmillion) 26 weeks to 26 weeks to
29 October 2023 30 October 2022
Pre-IFRS 16 finance costs 3.5 2.8
---------------- ----------------
Pre-IFRS 16 finance income (2.0) (0.5)
---------------- ----------------
IFRS 16 interest on lease liabilities 10.0 7.9
---------------- ----------------
Total net finance costs 11.5 10.2
---------------- ----------------
Interest payable on borrowings increased in the period,
reflecting higher market lending rates. Interest income on cash
balances and investments also increased due the higher interest
rates. The impact was a net reduction in the pre-IFRS 16 interest
charge of GBP0.8 million to GBP1.5 million.
The IFRS 16 interest on lease liabilities increased by GBP2.1
million due to recent additions to the lease portfolio as we
continue to invest in showroom portfolio expansion.
Taxation
The pre-IFRS 16 effective tax rate for the period was 29.0% and
29.2% as reported under IFRS 16. This is higher than the applicable
UK corporation tax rate for the year of 25.0% as a result of higher
chargeable taxes on US profits, and the impact of expenses
disallowed for corporation tax.
Balance Sheet
Balance Sheet (GBPmillion) 29 October 2023 30 April 2023 30 October 2022
Goodwill and intangibles 202.8 200.4 205.6
----------------- --------------- -----------------
Property, plant and equipment 185.5 154.4 136.9
----------------- --------------- -----------------
Right-of-use assets 402.6 359.1 352.8
----------------- --------------- -----------------
Inventories 399.7 356.0 379.5
----------------- --------------- -----------------
Trade and other receivables 22.3 19.8 20.6
----------------- --------------- -----------------
Trade and other payables (250.7) (219.6) (243.7)
----------------- --------------- -----------------
Lease liabilities (459.6) (410.4) (403.3)
----------------- --------------- -----------------
Net cash/(debt) 16.1 16.4 (25.6)
----------------- --------------- -----------------
Other (2.9) (6.8) 2.5
----------------- --------------- -----------------
Net assets 515.8 469.3 425.3
----------------- --------------- -----------------
The 30 October 2022 balances have been restated to reflect the
finalisation of the provisional fair values of Betteridge Jewelers,
Inc., Gotthelfs Acquisition Corp., and Vail Village Jewelers, Inc.
('Betteridge'). The net impact was a reduction in inventory and
deferred tax asset with the corresponding entry to the goodwill
balance.
Goodwill and intangibles increased by GBP2.4 million due to a
favourable exchange impact. GBP1.4 million of computer software
additions were made in the period as part of ongoing IT
developments, which was offset by amortisation of GBP1.4
million.
Property, plant and equipment increased by GBP31.1 million in
the period. Additions of GBP48.5 million and a favourable foreign
exchange impact of GBP2.2 million were offset by depreciation of
GBP18.3 million, impairments of GBP1.2 million and a loss on
disposal of GBP0.1 million.
Including software costs, which are disclosed as intangibles,
capital additions (including accruals) were GBP49.9 million in the
period (H1 FY23: GBP37.4 million) of which GBP48.3 million (H1
FY23: GBP34.8 million) was expansionary. Expansionary capex relates
to new showrooms, relocations or major refurbishments (defined as
costing over GBP0.25 million). In the period, the Group opened 19
new showrooms, and refurbished seven showrooms. Investment in our
portfolio is paramount to our strategy and the Group follows a
disciplined payback policy when making capital investment
decisions.
Right-of-use assets increased by GBP43.5 million in the period,
to GBP402.6 million. Additions to the lease portfolio along with
lease renewals or other lease changes were GBP68.1 million. Foreign
exchange impact was favourable at GBP3.9 million, offset by
depreciation of GBP26.6 million, and impairments of GBP1.9
million.
Lease liabilities increased by GBP49.2 million in the period.
The portfolio changes noted above increased the lease liability by
GBP66.4 million. Interest charged on the lease liability was
GBP10.0 million along with an adverse exchange impact of GBP5.0
million. Lease payments were GBP32.2 million, giving a lease
liability balance of GBP459.6 million.
Inventory levels increased by GBP20.2 million (+5%) compared to
H1 FY23. The increase was driven by new showrooms (GBP18 million)
and an increase in unit cost due to pricing. We are well stocked as
we enter into the holiday season.
Trade and other receivables increased by GBP1.7 million compared
to H1 FY23. The increase is reflective of higher prepayments,
deposits, rebate receivables and new rent deposits as the business
continues to grow.
Trade and other payables increased by GBP7.0 million compared to
H1 FY23. The increase principally relates to an increase in the
inventory trade payable aligned with the increased intake in the
period. The increase is also as a result of higher operational
liabilities in line with the business expansion.
Other includes taxation balances, defined benefit pension and
capitalised finance costs.
Net debt and financing
Net cash on 29 October 2023 was GBP16.1 million, a decrease of
GBP0.3 million since 30 April 2023, driven by GBP56.7 million of
free cash flow(1) offset by GBP47.8 million of expansionary capex
and GBP7.2 million for the purchase of own shares to satisfy
management incentives.
Net debt post-IFRS 16 was GBP441.5 million. The value comprises
the pre-IFRS net cash of GBP16.1 million and the GBP459.6 million
lease liability, offset by capitalised transaction costs of GBP2.0
million. The balance increased by GBP47.5 million in the period,
principally driven by additions to the lease portfolio.
The Group's maximum amount available under its committed
facility was GBP225.0 million at 29 October 2023.
Facility from 9 May 2023 Expiring Amount
(million)
Multicurrency revolving loan facility - UK SONIA + 1.50% to +2.55% May 2028 GBP225.0
-------- ----------
On 9 May 2023, the Group signed a new five-year GBP225.0 million
multicurrency revolving loan facility with lenders. The new
facility uses UK SONIA +1.50% to +2.55%. The existing facilities
were repaid and extinguished on this date.
GBP70.0 million of these facilities were drawn down at 29
October 2023. Liquidity headroom (defined as unrestricted cash plus
undrawn available facilities) was GBP224.9 million.
Cash Flow
Cash Flow (GBPmillion) 26 weeks to 26 weeks to
29 October 2023 30 October 2022
Adjusted EBITDA 94.0 104.4
---------------- ----------------
Share-based payments 1.9 2.8
---------------- ----------------
Working capital (8.3) (26.7)
---------------- ----------------
Pension contributions (0.3) (0.3)
---------------- ----------------
Tax (23.2) (20.2)
---------------- ----------------
Cash generated from operating activities 64.1 60.0
---------------- ----------------
Maintenance capex(2) (1.7) (2.6)
---------------- ----------------
Interest (5.7) (1.8)
---------------- ----------------
Free cash flow 56.7 55.6
---------------- ----------------
Free cash flow conversion (1) 60.3% 53.3%
---------------- ----------------
Expansionary capex (47.8) (27.4)
---------------- ----------------
Acquisitions - (20.6)
---------------- ----------------
Purchase of own shares (7.2) (21.3)
---------------- ----------------
Proceeds from short term borrowings - 17.5
---------------- ----------------
Repayment of term loan (120.0) -
---------------- ----------------
Proceeds from multi-currency revolving loan facility 70.0 -
---------------- ----------------
Costs directly attributable to raising new loan facility (2.2) -
---------------- ----------------
Exceptional items (0.6) (0.5)
---------------- ----------------
Cash flow (51.1) 3.3
---------------- ----------------
Free cash flow increased by GBP1.1 million to GBP56.7 million in
the period to 29 October 2023 and free cash flow conversion was
60.3% compared to 53.3% in the prior year.
Cash flow from trading (Adjusted EBITDA, decreased by GBP10.4
million), was more than offset by a GBP18.4 million favourable
working capital movement driven by a lower inventory increase year
on year.
Expansionary capex of GBP47.8 million (after taking into account
the associated creditors movement) was higher than the prior year
due to an increase in new showroom openings and refurbishments.
FY24 has a higher proportion of capex spend in the first half of
the year, as we looked to complete significant projects ahead of
the holiday season.
GBP7.2 million of shares were purchased in the period to satisfy
management incentive schemes, which will vest in the future
periods.
Return on Capital Employed (ROCE)
26 weeks to 26 weeks to
29 October 2023 30 October 2022
ROCE 23.9% 27.6%
---------------- ----------------
ROCE decreased by 370bps from 27.6% to 23.9% in comparison to
last year. This is as a result of Adjusted EBIT decreasing by
-15.4% in comparison to the prior period.
Showroom portfolio
As at the 29 October 2023, the Group had 211 showrooms, the
movement in showroom numbers is included below:
UK UK mono-brand Europe Total US multi-brand US mono-brand Total Total
multi-brand boutiques mono-brand UK showrooms boutiques US Group
showrooms boutiques and
Europe
1 May 2023 89 51 6 146 24 23 47 193
-------------- -------------- ------------ -------- --------------- -------------- ------ -------
Openings 1 6 3 10 1 8 9 19
-------------- -------------- ------------ -------- --------------- -------------- ------ -------
Closures (1) - - (1) - - - (1)
-------------- -------------- ------------ -------- --------------- -------------- ------ -------
29 October
2023 89 57 9 155 25 31 56 211
-------------- -------------- ------------ -------- --------------- -------------- ------ -------
(1) Ecommerce sales are sales which are transacted online
(2) This is an Alternative Performance Measure and is shown on a
pre-IFRS 16 basis. Refer to the Glossary for definition, purpose
and reconciliation to statutory measures where relevant.
(3) Refer to the Glossary for definition.
Certain financial data within this announcement has been
rounded.
Growth rates are calculated on unrounded numbers.
Risks and uncertainties
The Group is exposed to several risks and uncertainties in its
business which could impact its ability to effectively execute its
strategy over the remaining six months of the financial year and
cause actual results to differ materially from expected and/or
historical results.
The Board has considered the principal risks and uncertainties
for the first half and the remainder of the financial year, and,
after careful consideration of the current macroeconomic
environment, has determined that the risks presented in the 2023
Annual Report and Accounts, described as follows, remain unchanged:
Business strategy execution and development; Key suppliers and
supply chain; Client experience and market risks; Colleague talent
and capability; Data protection and cyber security; Business
interruption; Regulatory and compliance; Economic and political;
Brand and reputational damage; Financial and treasury; and Climate
Change. These are detailed on pages 116 to 121 of the 2023 Annual
Report and Accounts, a copy of which is available on the Watches of
Switzerland Group PLC (the 'Company') website at
www.thewosgroupplc.com .
WATCHES OF SWITZERLAND GROUP PLC
UNAUDITED INTERIM CONDENSED CONSOLIDATED INCOME STATEMENT
26 week period ended 26 week period ended
29 October 2023 30 October 2022
Note GBPm GBPm
---------------------------------------------- ----- --------------------- ---------------------
Revenue 2,3 761.4 765.2
Cost of sales (659.9) (651.8)
Gross profit 101.5 113.4
Administrative expenses (19.8) (20.0)
Exceptional administrative expenses 4 (0.6) (0.5)
Exceptional impairment of non-current assets 4 (3.1) -
---------------------------------------------- ----- --------------------- ---------------------
Operating profit 78.0 92.9
Finance costs (13.5) (10.7)
Finance income 2.0 0.5
---------------------------------------------- ----- --------------------- ---------------------
Net finance cost 5 (11.5) (10.2)
---------------------------------------------- ----- --------------------- ---------------------
Profit before taxation 66.5 82.7
Taxation 6 (19.5) (18.1)
---------------------------------------------- ----- --------------------- ---------------------
Profit for the financial period 47.0 64.6
---------------------------------------------- ----- --------------------- ---------------------
Earnings per share
Basic 7 19.8p 27.2p
Diluted 7 19.7p 27.0p
WATCHES OF SWITZERLAND GROUP PLC
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
26 week period ended 26 week period ended
29 October 2023 30 October 2022
Note GBPm GBPm
------------------------------------------------------------- ----- --------------------- ---------------------
Profit for the financial period 47.0 64.6
Other comprehensive income:
Items that may be reclassified to profit or loss in
subsequent periods
Foreign exchange gain on translation of foreign operations 6.7 11.8
Related tax movements (0.6) (1.2)
------------------------------------------------------------- ----- --------------------- ---------------------
6.1 10.6
Items that will not be reclassified to profit or loss in
subsequent periods
Actuarial (losses)/gains on defined benefit pension scheme 12 (1.0) 0.7
Related tax movements 0.3 (0.2)
------------------------------------------------------------- ----- --------------------- ---------------------
(0.7) 0.5
Other comprehensive income for the period net of tax 5.4 11.1
-------------------------------------------------------------------- --------------------- ---------------------
Total comprehensive profit for the period net of tax 52.4 75.7
-------------------------------------------------------------------- --------------------- ---------------------
The notes are an integral part of the Interim Condensed
Consolidated Financial Statements.
WATCHES OF SWITZERLAND GROUP PLC
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEET
29 October 2023 30 April 2023 30 October 2022
Note GBPm GBPm GBPm
------------------------------------- ----- ---------------- -------------- ----------------
Assets
Non-current assets
Goodwill 8 185.2 182.8 187.2
Intangible assets 8 17.6 17.6 18.4
Property, plant and equipment 9 185.5 154.4 136.9
Right-of-use assets 10 402.6 359.1 352.8
Deferred tax assets 3.2 6.2 6.9
Post-employment benefit asset 12 - 0.1 0.3
Trade and other receivables 2.1 2.1 2.1
-------------------------------------- ----- ---------------- -------------- ----------------
796.2 722.3 704.6
------------------------------------- ----- ---------------- -------------- ----------------
Current assets
Inventories 399.7 356.0 379.5
Current tax asset 4.2 2.6 2.6
Trade and other receivables 20.2 17.7 18.5
Cash and cash equivalents 11 86.1 136.4 111.6
-------------------------------------- ----- ---------------- -------------- ----------------
510.2 512.7 512.2
------------------------------------- ----- ---------------- -------------- ----------------
Total assets 1,306.4 1,235.0 1,216.8
-------------------------------------- ----- ---------------- -------------- ----------------
Liabilities
Current liabilities
Trade and other payables (249.6) (218.7) (242.8)
Current tax liability - (4.9) (0.2)
Lease liabilities 10 (51.5) (47.4) (48.4)
Borrowings 11 - - (17.2)
Provisions (1.3) (1.8) (1.2)
-------------------------------------- ----- ---------------- -------------- ----------------
(302.4) (272.8) (309.8)
------------------------------------- ----- ---------------- -------------- ----------------
Non-current liabilities
Trade and other payables (1.1) (0.9) (0.9)
Deferred tax liabilities (3.5) (3.0) (1.2)
Lease liabilities 10 (408.1) (363.0) (354.9)
Borrowings 11 (68.0) (120.0) (119.0)
Post-employment benefit obligations 12 (0.6) - -
Provisions (6.9) (6.0) (5.7)
-------------------------------------- ----- ---------------- -------------- ----------------
(488.2) (492.9) (481.7)
------------------------------------- ----- ---------------- -------------- ----------------
Total liabilities (790.6) (765.7) (791.5)
-------------------------------------- ----- ---------------- -------------- ----------------
Net assets 515.8 469.3 425.3
-------------------------------------- ----- ---------------- -------------- ----------------
Equity
Share capital 3.0 3.0 3.0
Share premium 147.1 147.1 147.1
Merger reserve (2.2) (2.2) (2.2)
Other reserves (23.4) (18.4) (18.6)
Retained earnings 382.4 337.0 279.6
Foreign exchange reserve 8.9 2.8 16.4
-------------------------------------- ----- ---------------- -------------- ----------------
Total equity 515.8 469.3 425.3
-------------------------------------- ----- ---------------- -------------- ----------------
As disclosed within note 24 of the Group's Annual Report and
Accounts for the 52 weeks to 30 April 2023, prior period balances
have been restated, in line with IFRS 3 'Business combinations', to
reflect the finalisation of the provisional fair values of
Betteridge Jewelers, Inc., Gotthelfs Acquisition Corp., and Vail
Village Jewelers, Inc. ('Betteridge').
The notes are an integral part of the Interim Condensed
Consolidated Financial Statements.
WATCHES OF SWITZERLAND GROUP PLC
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
Foreign Total equity
Share Share Merger Other Retained exchange attributable
capital premium reserve reserves earnings reserve to owners
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ------------- ------------- ------------- ------------- ---------- ---------- --------------
Balance at 2 May
2022 3.0 147.1 (2.2) (6.7) 214.3 5.8 361.3
Profit for the
financial
period - - - - 64.6 - 64.6
Other
comprehensive
income - - - - 0.7 11.8 12.5
Tax relating
to components
of other
comprehensive
income - - - - (0.2) (1.2) (1.4)
------------------ ------------- ------------- ------------- ------------- ---------- ---------- --------------
Total
comprehensive
income - - - - 65.1 10.6 75.7
------------------ ------------- ------------- ------------- ------------- ---------- ---------- --------------
Transactions with
owners
Purchase of
own shares* - - - (14.5) - - (14.5)
Share-based
payment
charge - - - - 2.8 - 2.8
Share-based
payments - - - 2.6 (2.6) - -
Balance at 30
October
2022 3.0 147.1 (2.2) (18.6) 279.6 16.4 425.3
------------------ ------------- ------------- ------------- ------------- ---------- ---------- --------------
Balance at 1 May
2023 3.0 147.1 (2.2) (18.4) 337.0 2.8 469.3
Profit for the
financial
period - - - - 47.0 - 47.0
Other
comprehensive
income - - - - (1.0) 6.7 5.7
Tax relating
to components
of other
comprehensive
income - - - - 0.3 (0.6) (0.3)
------------------ ------------- ------------- ------------- ------------- ---------- ---------- --------------
Total
comprehensive
income - - - - 46.3 6.1 52.4
Transactions with
owners
Purchase of
own shares* - - - (7.2) - - (7.2)
Share-based
payment
charge - - - - 1.9 - 1.9
Share-based
payments - - - 2.2 (2.2) - -
Tax on
share-based
payments - - - - (0.6) - (0.6)
------------------ ------------- ------------- ------------- ------------- ---------- ---------- --------------
Balance at 29
October
2023 3.0 147.1 (2.2) (23.4) 382.4 8.9 515.8
------------------ ------------- ------------- ------------- ------------- ---------- ---------- --------------
The notes are an integral part of the Interim Condensed Consolidated Financial Statements.
*During the period the Group purchased GBP7.2 million (30 October 2022: GBP14.5 million) of
own shares to satisfy management incentives. The shares were purchased by an Employee Benefit
Trust which has been set up for this purpose. The Group adopts a 'look-through' approach, which
in substance, accounts for the Trust as an extension of the Parent. Own shares are recorded
at cost and are deducted from equity.
WATCHES OF SWITZERLAND GROUP PLC
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS
26 week period ended 26 week period ended
29 October 2023 30 October 2022
Note GBPm GBPm
---------------------------------------------------------- ----- --------------------- ---------------------
Cash flows from operating activities
Profit for the period 47.0 64.6
Adjustments for:
Depreciation of property, plant and equipment 9 18.3 15.3
Depreciation of right-of-use assets 10 26.6 24.7
Amortisation of intangible assets 8 1.8 1.5
Impairment of right-of-use assets 10 1.9 -
Impairment of property, plant and equipment 9 1.2 -
Share-based payment charge 1.9 2.8
Finance income 5 (2.0) (0.5)
Finance costs 5 13.5 10.7
Gain on lease breaks and surrender 10 (0.5) (0.8)
Loss on disposal of property, plant and equipment 9 0.1 0.5
Taxation 19.5 18.1
Increase in inventories (38.7) (63.4)
(Increase)/decrease in debtors (0.8) 0.7
Increase in creditors, provisions, and pensions 27.5 34.4
---------------------------------------------------------- ----- --------------------- ---------------------
Cash generated from operations 117.3 108.6
Pension scheme contributions 12 (0.3) (0.3)
Tax paid (23.2) (20.2)
Total net cash generated from operating activities 93.8 88.1
---------------------------------------------------------- ----- --------------------- ---------------------
Cash flows from investing activities
Purchase of property, plant and equipment (46.2) (29.3)
Purchase of intangible assets (1.4) (0.7)
Cash outflow from purchase of non-current assets (47.6) (30.0)
Acquisition of subsidiaries net of cash - (20.6)
Total net cash outflow from investing activities (47.6) (50.6)
---------------------------------------------------------- ----- --------------------- ---------------------
Cash flows from financing activities
Own shares purchased for share schemes (7.2) (21.3)
Repayment of term loan (120.0) -
Proceeds from multicurrency revolving loan facility 70.0 -
Costs directly attributable to raising new loan facility (2.2) -
Proceeds from short term borrowings - 17.5
Payment of capital element of leases 10 (22.2) (20.7)
Payment of interest element of leases 10 (10.0) (7.9)
Interest paid (5.7) (1.8)
---------------------------------------------------------- ----- --------------------- ---------------------
Net cash outflow from financing activities (97.3) (34.2)
---------------------------------------------------------- ----- --------------------- ---------------------
Net (decrease)/increase in cash and cash equivalents (51.1) 3.3
Cash and cash equivalents at the beginning of the period 136.4 105.9
Exchange gains on cash and cash equivalents 0.8 2.4
---------------------------------------------------------- ----- --------------------- ---------------------
Cash and cash equivalents at the end of period 11 86.1 111.6
---------------------------------------------------------- ----- --------------------- ---------------------
Comprised of:
Cash at bank and in hand 68.6 97.1
Cash in transit 17.5 14.5
---------------------------------------------------------- ----- --------------------- ---------------------
Cash and cash equivalents at end of period 11 86.1 111.6
---------------------------------------------------------- ----- --------------------- ---------------------
WATCHES OF SWITZERLAND GROUP PLC
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
1. General information and basis of preparation
Basis of preparation
The Group's Interim Condensed Consolidated Financial Statements
for the 26 weeks to 29 October 2023 (prior year: 26 weeks to 30
October 2022) were approved by the Board of Directors on 6 December
2023 and have been prepared in accordance with UK adopted
International Accounting Standard 34.
The results for the 26 weeks to 29 October 2023 have been
reviewed by Ernst & Young LLP and a copy of their review report
is given at the end of this interim report. The condensed set of
interim financial statements has not been audited by the auditor
and does not comprise statutory accounts within the meaning of
section 434 of the Companies Act 2006.
The financial information contained in this report is condensed
and does not include all of the information and disclosures
required in the annual financial statements, and should be read in
conjunction with the Group's Annual Report and Accounts for the 52
weeks to 30 April 2023 which have been delivered to the Registrar
of Companies. The audit report for those accounts was unqualified,
did not draw attention to any matters by way of emphasis and did
not contain a statement under 498(2) or (3) of the Companies Act
2006.
The financial statements have been prepared on the historical
cost basis except for certain financial instruments, pension assets
and liabilities, and share-based payment liabilities which are
measured at fair value. Where applicable, disclosures required by
paragraph 16A of IAS 34 'Interim financial reporting' are given
either in these interim financial statements or in the accompanying
Interim Report.
The Interim Condensed Consolidated Financial Statements are
presented in Pounds Sterling (GBP), which is the Group's
presentational currency, and are shown in GBPmillions to one
decimal place.
Going concern
The Directors consider that the Group has, at the time of
approving the Group's Interim Condensed Consolidated Financial
Statements , adequate resources to remain in operation for the
period to 31 December 2024 and have therefore continued to adopt
the going concern basis in preparing the consolidated
information.
On 9 May 2023, the Group signed a new five year GBP225.0 million
multicurrency revolving loan facility with lenders. The existing
facilities were repaid and extinguished on this date. As a result,
the going concern assessment has been carried out using the new
GBP225.0 million facility now in place.
The key covenant tests attached to the Group's facilities, are a
measure of net debt to EBITDA and the Fixed Charge Cover Ratio
(FCCR) at each April and October. The new GBP225.0 million facility
covenants are in line with those previously used, notably on a
pre-IFRS 16 basis and excluding share based payment costs. Net debt
to EBITDA is defined as the ratio of total net debt at the
reporting date to the last 12 months Adjusted EBITDA. This ratio
must not exceed 3. The FCCR is the ratio of Adjusted EBITDA plus
rent to the total finance charge and rent for the 12 months to the
reporting date. This ratio must exceed 1.6. At 29 October 2023 the
Group satisfied the covenant tests with net debt to EBITDA being
less than 3 and the FCCR exceeding 1.6.
At the balance sheet date, the Group had a total of GBP 225.0
million in available committed facilities, of which GBP70.0 million
was drawn down. Net cash at this date was GBP16.1 million with
liquidity headroom (defined as unrestricted cash plus undrawn
available facilities) of GBP 224.9 million . The UK bank facility
of GBP225.0 million is due to expire in May 2028.
In assessing whether the going concern basis of accounting is
appropriate, the Directors have reviewed various trading scenarios
for the period to 31 December 2024 from the date of this report.
These included:
- The latest forecast approved by the Board in November 2023
which included the following key assumptions:
- A continued strong luxury watch market in the UK, US and
Europe
- Revenue forecast supported by expected luxury watch supply
- Increased cost base in line with macroeconomic environment and
environmental targets
The forecast aligns to the Guidance as given in our H1 FY24
Results. Under this forecast, the Group has significant liquidity
and complies with all covenant tests at 28 April and 27 October
2024. Our Guidance reflects current visibility of supply from key
brands and confirmed showroom refurbishments, openings and
closures, and excludes uncommitted capital projects and
acquisitions which would only occur if expected to be incremental
to the business.
- Severe but plausible scenarios of:
- 10% reduction in sales against the forecast due to reduced
consumer confidence and lower disposable income due to the
cost-of-living challenges. This scenario did not include cost
mitigations which are given below
- The realisation of material risks detailed within the
Principal Risks and Uncertainties on pages 116 to 121 and
environmental risks highlighted on pages 98 to 100 of the Group's
Annual Report and Accounts for the 52 weeks to 30 April 2023
Under these scenarios the net debt to EBITDA and the FCCR
covenants would be complied with.
- Reverse stress-testing of cashflows during the going concern
period was performed. This determined what level of reduced EBITDA
and worst case cash flows would result in a breach of the liquidity
or covenant tests. The likelihood of this level of reduced EBITDA
is considered remote taking into account current trading and
liquidity headroom, as well as mitigating actions within
management's control (as noted below) plus the fact that this would
represent a significant reduction in sales from prior financial
years.
Should trading be worse than the outlined severe but plausible
scenarios, the Group has the following mitigating actions within
management's control:
- Reduction of marketing spend
- Reduction in the level of stock purchases
- Restructuring of the business with headcount and showroom
operations savings
- Redundancies and pay freezes
- Reducing the level of planned capex
As a result of the above analysis, including potential severe
but plausible scenarios and reverse stress-testing, the Board
believes that the Group is able to adequately manage its financing
and principal risks, and that the Group will be able to operate
within the level of its facilities and meet the required covenants
for the period to 31 December 2024. For this reason, the Board
considers it appropriate for the Group to adopt the going concern
basis in preparing the financial statements.
Climate change
In preparing the Interim Condensed Consolidated Financial
Statements, management has considered the impact of climate change,
particularly in the context of the disclosures included in the
Strategic Report. These considerations did not have a material
impact on the financial reporting judgements and estimates,
consistent with the assessment that climate change is not expected
to have a significant impact on the Group's going concern
assessment to 31 December 2024.
Accounting policies
The accounting policies adopted in the preparation of the
condensed set of interim financial statements are the same as those
set out in the Group's Annual Report and Accounts for the 52 weeks
ended 30 April 2023.
IFRS 17 Insurance Contracts
In May 2017, the IASB issued IFRS 17 Insurance Contracts, a
comprehensive new accounting standard for insurance contracts
covering recognition and measurement, presentation and disclosure.
The overall objective of IFRS 17 is to provide an accounting model
for insurance contracts that is more useful and consistent for
insurers. The amendments did not have a material impact on the
Group's Interim Condensed Consolidated Financial Statements.
Further amendments to and the interpretation of, existing
accounting standards that became effective during the period, did
not have a material impact on the Interim Condensed Consolidated
Financial Statements.
Exceptional items
The Group presents as exceptional items on the face of the
Consolidated Income Statement, those material items of income and
expense which, because of the nature or the expected infrequency of
the events giving rise to them, merit separate presentation to
provide a better understanding of the elements of financial
performance in the financial period, so as to assess trends in
financial performance. Further details on exceptional items are
given within note 4.
Alternative performance measures (APMs)
The Group has identified certain measures that it believes will
assist the understanding of the performance of the business. These
APMs are not defined or specified under the requirements of
IFRS.
The Group believes that these APMs, which are not considered to
be a substitute for, or superior to, IFRS measures, provide
stakeholders with additional useful information on the underlying
trends, performance and position of the Group and are consistent
with how business performance is measured internally. The
Alternative Performance Measures are not defined by IFRS and
therefore may not be directly comparable with other companies'
Alternative Performance Measures.
The key APMs that the Group uses include: Net margin, Adjusted
EBITDA, Adjusted EBIT and Adjusted EPS. These APMs are set out in
the Glossary including explanations of how they are calculated and
how they are reconciled to a statutory measure where relevant.
The Group makes certain adjustments to the statutory profit
measures in order to derive many of these APMs. The Group's policy
is to exclude items that are considered non-underlying and
exceptional due to their size, nature or incidence, and are not
considered to be part of the normal operating costs of the Group.
Treatment as an adjusting item provides stakeholders with
additional useful information to assess the year-on-year trading
performance of the Group but should not be considered in isolation
of statutory measures.
Major sources of estimation uncertainty and judgement
The preparation of consolidated financial information requires
the Group to make estimates and assumptions that affect the
application of policies and reported amounts. Estimates and
judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future
events that are reasonable under the circumstances. Actual results
may differ from these estimates. The critical accounting judgements
and major sources of estimation uncertainty remain consistent with
those presented in the Group's Annual Report and Accounts for the
52 weeks ended 30 April 2023 unless otherwise stated.
2. Segment reporting
The key Group performance measures are Adjusted Earnings Before
Interest, Tax, Depreciation and Amortisation (Adjusted EBITDA) and
Adjusted Earnings Before Interest and Tax (Adjusted EBIT), both
shown pre-exceptional items, as detailed below. The segment
reporting is disclosed on a pre-IFRS 16 basis reflecting how
results are reported to the Chief Operating Decision Makers (CODMs)
and how they are measured for the purposes of covenant testing.
Both Adjusted EBITDA and Adjusted EBIT are APMs and these measures
provide stakeholders with additional useful information to assess
the year-on-year trading performance of the Group but should not be
considered in isolation of statutory measures.
Adjusted EBITDA represents profit for the period before finance
costs, finance income, taxation, depreciation, amortisation, and
exceptional items presented in the Group's Interim Condensed
Consolidated Income Statement (consisting of exceptional
administrative expenses, exceptional finance costs and exceptional
impairment) on a pre-IFRS 16 basis.
26 week period ended 29 October
2023
UK and US Corporate Total
Europe
--------------------------------- ------- ------- ---------- --------
GBPm GBPm GBPm GBPm
Revenue 433.6 327.8 - 761.4
Net margin 157.8 122.3 - 280.1
Less:
Showroom costs (79.4) (57.8) - (137.2)
Overheads (23.3) (18.7) (1.4) (43.4)
Showroom opening and closing
costs (4.0) (1.5) - (5.5)
Adjusted EBITDA 51.1 44.3 (1.4) 94.0
--------------------------------- ------- ------- ---------- --------
Depreciation, amortisation
and loss on disposal of assets (13.0) (6.9) (0.7) (20.6)
Segment profit/(loss)* 38.1 37.4 (2.1) 73.4
--------------------------------- ------- ------- ---------- --------
IFRS 16 adjustments 8.3
Exceptional impairment of
assets (note 4) (3.1)
Exceptional administrative
costs (note 4) (0.6)
Net other finance costs (note
5) (11.5)
Profit before taxation for
the financial period 66.5
--------------------------------- ------- ------- ---------- --------
26 week period ended 30 October
2022
UK and US Corporate Total
Europe
--------------------------------- --------- -------- ---------- ---------
GBPm GBPm GBPm GBPm
Revenue 453.8 311.4 - 765.2
Net margin 169.2 118.4 - 287.6
Less:
Showroom costs (78.2) (58.1) - (136.3)
Overheads (20.8) (17.4) (1.8) (40.0)
Showroom opening and closing
costs (5.4) (1.5) - (6.9)
Adjusted EBITDA 64.8 41.4 (1.8) 104.4
--------------------------------- --------- -------- ---------- ---------
Depreciation, amortisation
and loss on disposal of assets (10.7) (7.0) - (17.7)
Segment profit/(loss)* 54.1 34.4 (1.8) 86.7
--------------------------------- --------- -------- ---------- ---------
IFRS 16 adjustments 6.7
Exceptional administrative
costs (note 4) (0.5)
Net other finance costs (note
5) (10.2)
Profit before taxation for
the financial period 82.7
--------------------------------- --------- -------- ---------- ---------
* Segment profit/(loss) is defined as being Earnings Before
Interest, Tax, exceptional items and IFRS 16 adjustments (Adjusted
EBIT).
Entity-wide revenue disclosures
26 week period 26 week period
ended ended
29 October 30 October
2023 2022
--------------------- --------------- ---------------
GBPm GBPm
UK and Europe
Luxury watches 369.0 387.1
Luxury jewellery 28.3 32.1
Services/other 36.3 34.6
--------------------- --------------- ---------------
Total 433.6 453.8
--------------------- --------------- ---------------
US
Luxury watches 301.1 279.7
Luxury jewellery 18.7 24.3
Services/other 8.0 7.4
--------------------- --------------- ---------------
Total 327.8 311.4
--------------------- --------------- ---------------
Group
Luxury watches 670.1 666.8
Luxury jewellery 47.0 56.4
Services/other 44.3 42.0
--------------------- --------------- ---------------
Total 761.4 765.2
--------------------- --------------- ---------------
'Services/other' consists of the sale of fashion and classic
watches and jewellery, the sale of gifts, servicing, repairs and
insurance.
Information regarding geographical areas, including revenue from
external customers is disclosed above.
No single customer accounted for more than 10% of revenue in any
of the financial periods noted above.
Entity-wide non-current assets disclosures
30 October
29 October 2023 2022
---------------------------------- ---------------- -----------
GBPm GBPm
UK and Europe
Goodwill 121.6 121.6
Intangible assets 5.3 4.5
Property, plant and equipment 109.6 83.8
Right-of-use assets 272.2 224.8
Total 508.7 434.7
---------------------------------- ---------------- -----------
US
Goodwill 63.6 65.6
Intangible assets 12.3 13.9
Property, plant and equipment 65.0 53.1
Right-of-use assets 124.4 128.0
Total 265.3 260.6
---------------------------------- ---------------- -----------
Corporate
Property, plant and equipment 10.9 -
Right-of-use assets 6.0 -
---------------------------------- ---------------- -----------
Total 16.9 -
---------------------------------- ---------------- -----------
Group
Goodwill 185.2 187.2
Intangible assets 17.6 18.4
Property, plant and equipment 185.5 136.9
Right-of-use assets 402.6 352.8
Total 790.9 695.3
---------------------------------- ---------------- -----------
As disclosed within note 24 of the Group's Annual Report and
Accounts for the 52 weeks to 30 April 2023, prior period balances
have been restated, in line with IFRS 3 'Business combinations', to
reflect the finalisation of the provisional fair values of
Betteridge Jewelers, Inc., Gotthelfs Acquisition Corp., and Vail
Village Jewelers, Inc. ('Betteridge').
3. Revenue
The Group's disaggregated revenue recognised under contracts
with customers relates to the following categories and operating
segments.
26 week period ended 29 October
2023
Sale of goods Rendering Total
of services
--------------- -------------- ------------- ------
GBPm GBPm GBPm
UK and Europe 415.2 18.4 433.6
US 321.4 6.4 327.8
Total 736.6 24.8 761.4
--------------- -------------- ------------- ------
26 week period ended 30 October
2022
Sale of goods Rendering Total
of services
--------------- -------------- ------------- ------
GBPm GBPm GBPm
UK and Europe 436.2 17.6 453.8
US 305.6 5.8 311.4
Total 741.8 23.4 765.2
--------------- -------------- ------------- ------
4. Exceptional items
Exceptional items are those that in the judgement of the
Directors need to be disclosed by virtue of their size, nature or
incidence, in order to draw the attention of the reader and to show
the underlying business performance of the Group. Such items are
included within the Income Statement caption to which they relate
and are separately disclosed on the face of the Interim
Consolidated Income Statement.
26 week period 26 week period
ended ended
29 October 30 October
2023 2022
-------------------------------------------------- --------------- ---------------
GBPm GBPm
Exceptional administrative expenses
Professional and legal expenses on
business combinations(i) (0.6) (0.5)
Total exceptional administrative costs (0.6) (0.5)
Exceptional impairment of assets
Impairment of property, plant and equipment(ii) (1.2) -
Impairment of right-of-use assets(ii) (1.9) -
-------------------------------------------------- --------------- ---------------
Total exceptional impairment of assets (3.1) -
Total exceptional items (3.7) (0.5)
-------------------------------------------------- --------------- ---------------
(i) Professional and legal expenses on business combinations
Professional and legal expenses incurred in relation to business
combinations have been expensed to the Interim Condensed
Consolidated Income Statement as an exceptional cost as they are
regarded as non-trading, non-underlying costs and are considered to
be material by nature.
(ii) Impairment of property, plant and equipment and right-of-use assets
The current macroeconomic environment, increased interest rates,
and inflationary trends gave rise to indicators of impairment in
the current period. Consequently, discounted cashflows were
performed on all CGUs with indicators of impairment. This resulted
in an impairment charge of GBP3.1m being recorded in the period.
This is allocated over the property, plant and equipment, and the
right-of-use assets of those showrooms as required by IAS 36
Impairment of Assets. This has been booked as an exceptional item
due to the non-trading nature of the impairment.
Tax on the exceptional items noted above totalled GBP1.0m (26
week period to 30 October 2022: GBP0.1m).
5. Net finance costs
26 week period 26 week period
ended ended
29 October 30 October
2023 2022
------------------------------------------- --------------- ---------------
GBPm GBPm
Finance costs
Interest payable on long term borrowings (3.3) (2.3)
Interest payable on short term borrowings - (0.1)
Amortisation of capitalised transaction
costs (0.2) (0.4)
Interest on lease liabilities (note 10) (10.0) (7.9)
(13.5) (10.7)
Finance income
Bank interest receivable 1.1 0.1
Net foreign exchange gain on financing
activities 0.4 0.4
Other interest receivable 0.5 -
2.0 0.5
Net finance costs (11.5) (10.2)
------------------------------------------- --------------- ---------------
Further detail of borrowing facilities in place is given in note
11 to these interim financial statements.
6. Taxation
The income tax expenses recognised in the results is based on
management's best estimate of the full-year effective tax rate
based on estimated full-year profits excluding any discrete items.
The effective tax rate at the half year is 29.2% (26 week period to
30 October 2022: 21.9%). This is higher than the applicable UK
corporation tax rate for the year of 25.0%, as a result of higher
taxes chargeable on US profits and the impact of expenses
disallowed for corporation tax.
OECD Pillar Two model rules
The Group is within the scope of the OECD Pillar Two model
rules. Pillar Two legislation was enacted in the UK, the
jurisdiction in which the company is incorporated, and will come
into effect from 1 January 2025. The Group applies the exception to
recognising and disclosing information about deferred tax assets
and liabilities related to Pillar Two income taxes, as provided in
the amendments to IAS 12 issued in May 2023, and endorsed by the
UKEB in July 2023.
7. Earnings per share (EPS)
26 week period 26 week period
ended ended
29 October 30 October
2023 2022
---------------------------------------- --------------- ---------------
Basic
EPS 19.8p 27.2p
EPS adjusted for exceptional items 21.0p 27.4p
EPS adjusted for exceptional items and
pre-IFRS 16 21.5p 27.8p
Diluted
EPS 19.7p 27.0p
EPS adjusted for exceptional items 20.9p 27.2p
EPS adjusted for exceptional items and
pre-IFRS 16 21.4p 27.6p
---------------------------------------- --------------- ---------------
Basic EPS is based on the profit for the period attributable to
the equity holders of the parent company divided by the net of the
weighted average number of shares ranking for dividend.
Diluted EPS is calculated by adjusting the weighted average
number of shares used for the calculation of basic EPS as increased
by the dilutive effect of potential ordinary shares.
The following table reflects the profit and share data used in
the basic and diluted EPS calculations:
26 week period 26 week period
ended ended
29 October 30 October
2023 2022
----------------------------------------- --------------- ---------------
GBPm GBPm
Profit after tax attributable to equity
holders of the parent company 47.0 64.6
Add back:
Exceptional administrative expenses,
net of tax 2.7 0.5
Profit adjusted for exceptional items 49.7 65.1
----------------------------------------- --------------- ---------------
Pre-exceptional IFRS 16 adjustments,
net of tax 1.2 1.0
----------------------------------------- --------------- ---------------
Profit adjusted for exceptional items
and IFRS 16 50.9 66.1
----------------------------------------- --------------- ---------------
The following table reflects the share data used in the basic
and diluted EPS calculations:
26 week period 26 week period
ended ended
29 October 30 October
2023 2022
---------------------------------------- --------------- ---------------
Weighted average number of shares: '000 '000
Weighted average number of ordinary
shares in issue 237,056 237,848
---------------------------------------- --------------- ---------------
Weighted average shares for basic
EPS 237,056 237,848
---------------------------------------- --------------- ---------------
Weighted average dilutive potential
shares 1,358 1,252
---------------------------------------- --------------- ---------------
Weighted average shares for diluted
EPS 238,414 239,100
---------------------------------------- --------------- ---------------
8. Intangible assets
Goodwill Brands Agency agreement Computer software Total
------------------------------ --------- ------- ----------------- ------------------ ------
GBPm GBPm GBPm GBPm GBPm
Net book value
At 1 May 2023 182.8 10.5 1.2 5.9 200.4
Additions - - - 1.4 1.4
Amortisation - (0.3) (0.1) (1.4) (1.8)
Foreign exchange differences 2.4 0.4 - - 2.8
------------------------------ --------- ------- ----------------- ------------------ ------
At 29 October 2023 185.2 10.6 1.1 5.9 202.8
------------------------------ --------- ------- ----------------- ------------------ ------
9. Property, plant and equipment
Land and Fittings and equipment Total
buildings
------------------------------ ----------- ----------------------- -------
GBPm GBPm GBPm
Net book value
At 1 May 2023 0.8 153.6 154.4
Additions - 48.5 48.5
Disposals - (0.1) (0.1)
Depreciation (0.1) (18.2) (18.3)
Exceptional impairment - (1.2) (1.2)
Foreign exchange differences - 2.2 2.2
------------------------------ ----------- ----------------------- -------
At 29 October 2023 0.7 184.8 185.5
------------------------------ ----------- ----------------------- -------
10. Leases
Right-of-use assets
Properties Other Total
------------------------------ ----------- ------ -------
GBPm GBPm GBPm
At 1 May 2023 358.0 1.1 359.1
Additions 67.2 0.3 67.5
Depreciation (26.4) (0.2) (26.6)
Lease breaks (0.5) - (0.5)
Lease surrender (2.7) - (2.7)
Exceptional impairment (1.9) - (1.9)
Lease extensions 3.8 - 3.8
Foreign exchange differences 3.9 - 3.9
------------------------------ ----------- ------ -------
At 29 October 2023 401.4 1.2 402.6
------------------------------ ----------- ------ -------
Lease liabilities
Properties Other Total
------------------------------ ----------- ---------------- --------
GBPm GBPm GBPm
At 1 May 2023 (409.4) (1.0) (410.4)
Additions (66.2) (0.3) (66.5)
Payments 32.0 0.2 32.2
Interest (10.0) - (10.0)
Lease breaks 0.5 - 0.5
Lease surrender 3.2 - 3.2
Lease extensions (3.6) - (3.6)
Foreign exchange differences (5.0) - (5.0)
------------------------------ ----------- ---------------- --------
At 29 October 2023 (458.5) (1.1) (459.6)
------------------------------ ----------- ---------------- --------
Impairment considerations
Property, plant and equipment and other non-current assets are
reviewed for impairment if events or changes in circumstances
indicate that the carrying amount of an asset or a cash-generating
unit (CGU) is not recoverable. A CGU is the smallest identifiable
group of assets that generate independent cash flows which are
monitored by management and the CODMs. Refer to note 4 for details
of the impairment booked in the period.
Impairment has been considered as at 29 October 2023 in line
with the current trading environment and cost-of-living challenges.
It has been concluded that previous impairments made remain
appropriate, and remaining asset values held at 29 October 2023 are
supported by expected future cashflows.
11. Borrowings
29 October 30 April 2023 30 October
2023 2022
------------------------- ----------- -------------- -----------
GBPm GBPm GBPm
Current
Short term borrowings - - (17.2)
Non-current
Multicurrency revolving (70.0) - -
loan facility
Term loan - (120.0) (120.0)
Associated capitalised
transaction costs 2.0 - 1.0
Total borrowings (68.0) (120.0) (136.2)
------------------------- ----------- -------------- -----------
On 9 May 2023, the Group signed a new five year GBP225.0 million
multicurrency revolving loan facility with lenders. The existing
facilities were repaid and extinguished on this date.
The key covenant tests attached to the Group's facilities, are a
measure of net debt to EBITDA and the Fixed Charge Cover Ratio
(FCCR) at each April and October. The new GBP225.0 million facility
covenants are in line with those previously used, notably on a
pre-IFRS 16 basis and excluding share based payment costs. Net debt
to EBITDA is defined as the ratio of total net debt at the
reporting date to the last 12 months Adjusted EBITDA. This ratio
must not exceed 3. The FCCR is the ratio of Adjusted EBITDA plus
rent to the total finance charge and rent for the 12 months to the
reporting date. This ratio must exceed 1.6. At 29 October 2023 the
Group comfortably satisfied the covenant tests with net debt to
EBITDA being less than 3 and the FCCR exceeding 1.6.
At the balance sheet date, the Group had a total of GBP 225.0
million in available committed facilities, of which GBP70.0 million
was drawn down. Net cash at this date was GBP16.1 million with
liquidity headroom (defined as unrestricted cash plus undrawn
available facilities) of GBP 226.8 million . The UK bank facility
of GBP225.0 million is due to expire in May 2028.
Analysis of net debt
1 May 2023 Cash flow Non-cash Foreign 29 October
charges^ exchange 2023
--------------------------- ----------- ---------- ---------- ---------- -----------
GBPm GBPm GBPm GBPm GBPm
Cash and cash equivalents 136.4 (51.1) - 0.8 86.1
Term loans (120.0) 120.0 - - -
Multicurrency revolving
loan facility - (70.0) - - (70.0)
--------------------------- ----------- ---------- ---------- ---------- -----------
Net cash excluding
capitalised transaction
costs (Pre-IFRS
16) 16.4 (1.1) - 0.8 16.1
--------------------------- ----------- ---------- ---------- ---------- -----------
Capitalised transaction
costs - 2.2 (0.2) - 2.0
Net cash
(Pre-IFRS 16) 16.4 1.1 (0.2) 0.8 18.1
--------------------------- ----------- ---------- ---------- ---------- -----------
Lease liability (410.4) 32.2 (76.4) (5.0) (459.6)
Total net debt (394.0) 33.3 (76.6) (4.2) (441.5)
--------------------------- ----------- ---------- ---------- ---------- -----------
^ Non-cash charges are principally lease liability interest
charges, additions and revisions.
12. Post-employment benefit obligations
During the 26 weeks to 29 October 2023 (prior period: 26 weeks
to 30 October 2022), the Group operated four (prior period: four)
defined contribution pension schemes and two defined benefit
schemes (prior period: two).
The movement in the defined benefit (liability)/surplus in the
period is as follows:
26 weeks 52 weeks 26 weeks
to 29 October to 30 April to 30 October
2023 2023 2022
--------------------------------- --------------- ------------- ---------------
GBPm GBPm GBPm
Net pension asset/(liability)
at the beginning of the period 0.1 (0.6) (0.6)
Administration costs - (0.2) (0.1)
Employer contributions 0.3 0.7 0.3
Actuarial (losses)/gains (1.0) 0.3 0.7
Other - (0.1) -
---------------------------------
Net pension (liability)/surplus
at the end of the period (0.6) 0.1 0.3
--------------------------------- --------------- ------------- ---------------
The IAS 19 (accounting) valuation of the defined benefit
obligation was undertaken by an external qualified actuary at 29
October 2023 using the projected unit credit method.
The scheme valuation moved from a surplus of GBP0.1 million at
30 April 2023 to a deficit of GBP0.6 million at 29 October 2023.
The movement results from changes in the principal actuarial
assumptions used in the valuation as follows:
29 October 2023 30 April 30 October
2023 2022
-------------------------------- ---------------- --------- -----------
Discount rate 5.55% 4.75% 4.50%
Rate of increase in salary n/a n/a n/a
Rate of future inflation
- RPI 3.35% 3.20% 3.25%
Rate of future inflation
- CPI 2.75% 2.60% 2.65%
Rate of increase in pensions
in payment 3.30% 3.15% 3.20%
Proportion of employees
opting for a cash commutation 100.0% 100.0% 100.00%
-------------------------------- ---------------- --------- -----------
13. Related party transactions
Transactions with related undertakings
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation.
14. Financial instruments
Categories
29 October 30 April 2023 30 October
2023 2022
------------------------------ ----------- -------------- -----------
GBPm GBPm GBPm
Financial assets - held
at amortised cost
Trade and other receivables* 17.3 13.9 13.7
Cash and cash equivalents 86.1 136.4 111.6
------------------------------ ----------- -------------- -----------
Total financial assets 103.4 150.3 125.3
------------------------------ ----------- -------------- -----------
Financial liabilities
- held at amortised cost
Short term borrowings - - (17.2)
Term loan*** - (120.0) (119.0)
Multicurrency revolving (68.0) - -
loan facility***
Trade and other payables** (225.0) (193.8) (220.3)
------------------------------ ----------- -------------- -----------
Net financial liabilities
(pre-IFRS 16) (293.0) (313.8) (356.5)
------------------------------ ----------- -------------- -----------
Lease liability (IFRS
16) (note 10) (459.6) (410.4) (403.3)
------------------------------ ----------- -------------- -----------
Total financial liabilities (752.6) (724.2) (759.8)
------------------------------ ----------- -------------- -----------
* Excludes prepayments of GBP5.0 million (30 October 2022:
GBP6.9 million, 30 April 2023: GBP5.9 million) that do not meet the
definition of a financial instrument.
** Excludes customer deposits of GBP5.9 million (30 October
2022: GBP6.4 million, 30 April 2023: GBP7.9 million) and deferred
income of GBP19.8 million (30 October 2022: GBP17.0 million, 30
April 2023: GBP17.9 million) that do not meet the definition of a
financial instrument.
*** Net of capitalised transaction costs
Fair values
The fair values of each category of the Group's financial
instruments are materially the same as their carrying values in the
Group's Interim Condensed Consolidated Balance Sheet. The fair
value of trade and other receivables, trade and other payables,
cash and cash equivalents and revolving credit facilities all
approximate their carrying amount because of the limited movement
in the short maturity of these instruments and limited change in
prevailing interest rates since recognition.
15. Contingent liabilities
From time to time, the Group may be subject to complaints and
litigation from its clients, employees, suppliers and other third
parties. Such complaints and litigation may result in damages or
other losses, which may not be covered by the Group's insurance
policies or which may exceed any existing coverage. These are not
expected to result in a material liability to the Group.
16. Post-balance sheet events
On 17 November 2023, the Group acquired the trade and assets of
15 showrooms from Ernest Jones Limited and Signet Trading Limited
for a cash consideration of GBP44.2 million. The acquisition
further advances the UK expansion strategy.
The assets and liabilities acquired principally comprise working
capital balances of inventory and property, plant and equipment.
Due to the proximity of the acquisition date to the date of
approval these Interim Condensed Consolidated Financial Statements,
the initial accounting for the business combination is incomplete
and the Group is unable to provide a quantification of the fair
values of the assets and liabilities acquired. The Group will
include an acquisition balance sheet within the Group's Annual
Report and Accounts for the 52 weeks to 28 April 2024.
No further post balance sheet events have been identified.
WATCHES OF SWITZERLAND GROUP PLC
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors confirm that, to the best of their knowledge, this
condensed consolidated interim financial information has been
prepared in accordance with UK adopted International Accounting
Standard 34 and that the interim report includes a fair review of
the information required by DTR 4.2.4R, DTR 4.2.7R and DTR 4.2.8R,
namely:
-- an indication of important events that have occurred during
the first 26 weeks to 29 October 2023 and their impact on the
condensed set of financial statements, and a description of the
principal risks and uncertainties for the remaining 26 weeks of the
financial year; and
-- material related party transactions in the first 26 weeks to
29 October 2023 and any material changes in the related party
transactions described in the last annual report.
There have been no changes to the directors of Watches of
Switzerland Group PLC to those listed in the Group's Annual Report
and Accounts 2023.
A list of current directors is maintained on the Group's
website: www.thewosgroupplc.com .
For and by order of the Board
Brian Duffy Anders Romberg
Chief Executive Officer Chief Financial Officer
6 December 2023
INDEPENT REVIEW REPORT TO WATCHES OF SWITZERLAND GROUP PLC
Conclusion
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
26 weeks ended 29 October 2023 which comprises the Unaudited
Interim Condensed Consolidated Income Statement, Unaudited Interim
Condensed Consolidated Statement of Comprehensive Income, Unaudited
Interim Condensed Consolidated Balance Sheet, Unaudited Interim
Condensed Consolidated Statement of Changes in Equity, Unaudited
Interim Condensed Consolidated Statement of Cash Flows and notes 1
to 16. We have read the other information contained in the half
yearly financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the 26 weeks ended 29
October 2023 is not prepared, in all material respects, in
accordance with UK adopted International Accounting Standard 34 and
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements 2410 (UK) "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" (ISRE) issued by the Financial Reporting Council. A review
of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with UK adopted international
accounting standards. The condensed set of financial statements
included in this half-yearly financial report has been prepared in
accordance with UK adopted International Accounting Standard 34,
"Interim Financial Reporting".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
Conclusion section of this report, nothing has come to our
attention to suggest that management have inappropriately adopted
the going concern basis of accounting or that management have
identified material uncertainties relating to going concern that
are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with this ISRE, however future events or conditions may
cause the entity to cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statements in the half-yearly financial report. Our
conclusion, including our Conclusions Relating to Going Concern,
are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK) "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London
6 December 2023
GLossary
Alternative performance measures
The Directors use alternative performance measures (APMs) as
they believe these measures provide additional useful information
on the underlying trends, performance and position of the Group.
These measures are used for performance analysis. The APMs are not
defined by IFRS and therefore may not be directly comparable with
other companies' APMs. These measures are not intended to be a
substitute for, or superior to, IFRS measures.
The majority of the Group's APMs are on a pre-IFRS 16 basis.
This aligns with the management reporting used to inform business
decisions, investment appraisals, incentive schemes and banking
covenants.
4-Wall EBITDA
Net margin less showroom costs.
Why used
4-Wall EBITDA is a direct measure of profitability of the
showroom operations.
Reconciliation to IFRS measures
GBPmillion H1 FY24 H1 FY23
Revenue 761.4 765.2
------- -------
Cost of inventory expensed (485.3) (481.7)
------- -------
Other 4.0 4.1
------- -------
Net margin 280.1 287.6
------- -------
Showroom costs (137.2) (136.3)
------- -------
4-Wall EBITDA 142.9 151.3
------- -------
Showroom costs includes rental costs on a pre-IFRS 16 basis
(i.e. under IAS 17). Refer to the IFRS 16 reconciliations below for
further details.
Adjusted Earnings Before Interest and Tax (Adjusted EBIT)
Operating profit before exceptional items and IFRS 16
impact.
Why used
Measure of profitability that excludes one-off exceptional costs
and IFRS 16 adjustments to allow for comparability between
periods.
This measure was linked to management incentives in the
period.
Reconciliation to IFRS measures
Reconciled in note 2 to the Interim Condensed Consolidated
Financial Statements.
Adjusted Earnings Before Interest, Tax, Depreciation and
Amortisation (Adjusted EBITDA)
EBITDA before exceptional items presented in the Group's Interim
Condensed Consolidated Income Statement. Shown before the impact of
IFRS 16 'Leases'.
Why used
Measure of profitability that excludes one-off exceptional and
non-underlying items and IFRS 16 adjustments to allow for
comparability between periods.
Reconciliation to IFRS measures
Reconciled in note 2 of the Interim Condensed Consolidated
Financial Statements.
Adjusted earnings per share (Adjusted EPS)
Basic earnings per share before exceptional items and IFRS 16
impact.
Why used
Measure of profitability that excludes one-off exceptional items
and IFRS 16 adjustments to provide comparability between periods.
This measure was linked to management incentives in the financial
period.
Reconciliation to IFRS measures
Reconciled within note 7 of the Interim Condensed Consolidated
Financial Statements.
Adjusted profit before tax (Adjusted PBT)
Profit before tax before exceptional items and IFRS 16
impact.
Why used
Measure of profitability that excludes one-off exceptional items
and IFRS 16 adjustments to provide comparability between
periods.
Reconciliation to IFRS measure
GBPmillion H1 FY24 H1 FY23
Segment profit (note
2) 73.4 86.7
------- -------
Net finance costs (note
5) (11.5) (10.2)
------- -------
IFRS 16 lease interest
(note 5) 10.0 7.9
------- -------
Adjusted profit before
tax 71.9 84.4
------- -------
Average selling price (ASP)
Revenue (including sales related taxes) generated in a period
from sales of a product category divided by the total number of
units of such products sold in such period.
Why used
Measure of sales performance.
Reconciliation to IFRS measures
Not applicable.
Constant currency basis
Results for the period had the exchange rates remained constant
from the comparative period.
Why used
Measure of revenue growth that excludes the impact of foreign
exchange.
Reconciliation
(GBP/$ million)
H1 FY24 Group Revenue
(GBP) 761.4
----------------
H1 FY24 US Revenue ($) 411.1
----------------
H1 FY24 US Revenue (GBP)
@ HY24 Exchange rate 327.8
----------------
H1 FY24 US Revenue (GBP)
@ HY23 Exchange rate 345.5
----------------
HY24 Group Revenue (GBP)
@ Constant currency 779.0
----------------
H1 FY24 Exchange rate 1.254
----------------
H1 FY23 Exchange rate 1.189
----------------
_________________________________________________________________________________________________________________
Exceptional items
Items that in the judgement of the Directors need to be
disclosed by virtue of their size, nature or incidence, in order to
draw the attention of the reader and to show the underlying
business performance of the Group.
Why used
Draws the attention of the reader and to show the items that are
significant by virtue of their size, nature or incidence.
Reconciliation to IFRS measures
Disclosed in note 4 of the Interim Condensed Consolidated
Financial Statements.
Net (debt)/cash
Total borrowings (excluding capitalised transaction costs) less
cash and cash equivalents and excludes IFRS 16 lease
liabilities.
Why used
Measures the Group's indebtedness.
Reconciliation to IFRS measures
Reconciled in note 11 of the Interim Condensed Consolidated
Financial Statements.
Free cash flow
Cash flow shown on a pre-IFRS 16 basis excluding expansionary
capex, acquisitions of subsidiaries, exceptional items and
financing activities.
Why used
Represents the cash generated from operations including
maintenance of capital assets. Demonstrates the amount of available
cash flow for discretionary activities such as expansionary capex,
acquisitions or returns to shareholders.
Reconciliation to IFRS measures
GBPmillion H1 FY24 H1 FY23
Net (decrease)/increase
in cash and cash equivalents (51.1) 3.3
------- -------
Net financing cash
flow 97.3 34.2
------- -------
Interest paid (5.7) (1.8)
------- -------
Lease payments (IFRS
16) (32.2) (28.6)
------- -------
Acquisition of business
combinations - 20.6
------- -------
Exceptional costs 0.6 0.5
------- -------
Expansionary capex 47.8 27.4
------- -------
Free cash flow 56.7 55.6
------- -------
Free cash flow conversion
Free cash flow divided by Adjusted EBITDA.
Why used
Measurement of the Group's ability to convert profit into free
cash flow.
Reconciliation to IFRS measures
Free cash flow of GBP56.7 million divided by Adjusted EBITDA of
GBP94.0 million shown as a percentage.
Net margin
Revenue less inventory recognised as an expense, commissions
paid to the providers of interest free credit and inventory
provision movements.
Why used
Measures the profit made from the sale of inventory before
showroom or overhead costs.
Reconciliation to IFRS measures
Refer to 4-Wall EBITDA.
Return on Capital Employed (ROCE)
Return on capital employed (ROCE) is defined as Adjusted EBIT
divided by average capital employed, calculated on a Last Twelve
Months (LTM) basis. Average capital employed is total assets less
current liabilities excluding IFRS 16 lease liabilities.
Why used
ROCE demonstrates the efficiency with which the Group utilises
capital. ROCE is linked to management incentives.
Reconciliation to IFRS measures
Adjusted EBIT of GBP151.8m divided by the average capital
employed, which is calculated as follows:
GBPmillion LTM to 29 October LTM to 30 October
2023 2022
Pre-IFRS 16 total assets 920.6 872.8
------------------ ------------------
Pre-IFRS 16 current liabilities (257.7) (267.4)
------------------ ------------------
Capital employed 662.9 605.5
------------------ ------------------
Average capital employed 634.2 541.7
------------------ ------------------
Other definitions
Expansionary capital expenditure/capex
Expansionary capital expenditure relates to new showrooms,
relocations or refurbishments greater than GBP250,000.
Showroom maintenance capital expenditure/capex
Capital expenditure which is not considered expansionary.
Luxury watches
Watches that have Recommended Retail Price greater than
GBP1,000.
Luxury jewellery
Jewellery that has a Recommended Retail Price greater than
GBP500.
IFRS 16 Adjustments
The following tables reconcile from pre-IFRS 16 balances to
post-IFRS 16 balances.
H1 FY24 Income Statement
Pre-IFRS 16 and exceptional IFRS 16 adjustments Exceptional Post-IFRS 16 and
GBPmillion items items exceptional items
Revenue 761.4 - - 761.4
--------------------------- ------------------- ----------- --------------------------
Net margin 280.1 - - 280.1
--------------------------- ------------------- ----------- --------------------------
Showroom costs (137.2) 31.3 - (105.9)
--------------------------- ------------------- ----------- --------------------------
4-Wall EBITDA 142.9 31.3 - 174.2
--------------------------- ------------------- ----------- --------------------------
Overheads (43.4) - (0.6) (44.0)
--------------------------- ------------------- ----------- --------------------------
EBITDA 99.5 31.3 (0.6) 130.2
--------------------------- ------------------- ----------- --------------------------
Showroom opening and
closing costs (5.5) 2.9 - (2.6)
--------------------------- ------------------- ----------- --------------------------
Adjusted EBITDA 94.0 34.2 (0.6) 127.6
--------------------------- ------------------- ----------- --------------------------
Depreciation, amortisation
and loss on disposal of
fixed assets (20.6) (25.9) (3.1) (49.6)
--------------------------- ------------------- ----------- --------------------------
Adjusted EBIT / Operating
profit 73.4 8.3 (3.7) 78.0
--------------------------- ------------------- ----------- --------------------------
Net finance costs (1.5) (10.0) - (11.5)
--------------------------- ------------------- ----------- --------------------------
Adjusted profit before tax
/ Profit before tax 71.9 (1.7) (3.7) 66.5
--------------------------- ------------------- ----------- --------------------------
Adjusted basic Earnings per
share 21.5p 19.8p
--------------------------- ------------------- ----------- --------------------------
H1 FY24 Balance Sheet
GBPmillion Pre-IFRS 16 IFRS 16 adjustments Post-IFRS 16
Goodwill and intangibles 202.8 - 202.8
----------- ------------------- ------------
Property, plant and equipment 193.3 (7.8) 185.5
----------- ------------------- ------------
IFRS 16 right-of-use assets - 402.6 402.6
----------- ------------------- ------------
Inventories 399.7 - 399.7
----------- ------------------- ------------
Trade and other receivables 34.4 (12.1) 22.3
----------- ------------------- ------------
Trade and other payables (295.9) 45.2 (250.7)
----------- ------------------- ------------
IFRS 16 lease liabilities - (459.6) (459.6)
----------- ------------------- ------------
Net cash 16.1 - 16.1
----------- ------------------- ------------
Other (12.2) 9.3 (2.9)
----------- ------------------- ------------
Net assets 538.2 (22.4) 515.8
----------- ------------------- ------------
H1 FY23 Income Statement
Pre-IFRS 16 and exceptional IFRS 16 adjustments Exceptional Post-IFRS 16 and
GBPmillion items items exceptional items
Revenue 765.2 - - 765.2
--------------------------- ------------------- ----------- --------------------------
Net margin 287.6 - - 287.6
--------------------------- ------------------- ----------- --------------------------
Showroom costs (136.3) 26.6 - (109.7)
--------------------------- ------------------- ----------- --------------------------
4-Wall EBITDA 151.3 26.6 - 177.9
--------------------------- ------------------- ----------- --------------------------
Overheads (40.0) - (0.5) (40.5)
--------------------------- ------------------- ----------- --------------------------
EBITDA 111.3 26.6 (0.5) 137.4
--------------------------- ------------------- ----------- --------------------------
Showroom opening and
closing costs (6.9) 3.9 - (3.0)
--------------------------- ------------------- ----------- --------------------------
Adjusted EBITDA 104.4 30.5 (0.5) 134.4
--------------------------- ------------------- ----------- --------------------------
Depreciation, amortisation
and loss on disposal of
fixed assets (17.7) (23.8) - (41.5)
--------------------------- ------------------- ----------- --------------------------
Adjusted EBIT / Operating
profit 86.7 6.7 (0.5) 92.9
--------------------------- ------------------- ----------- --------------------------
Net finance costs (2.3) (7.9) - (10.2)
--------------------------- ------------------- ----------- --------------------------
Adjusted profit before tax
/ Profit before tax 84.4 (1.2) (0.5) 82.7
--------------------------- ------------------- ----------- --------------------------
Adjusted basic Earnings per
share 27.8p 27.2p
--------------------------- ------------------- ----------- --------------------------
H1 FY23 Balance Sheet
GBPmillion Pre-IFRS 16 IFRS 16 adjustments Post-IFRS 16
Goodwill and intangibles 205.6 - 205.6
----------- ------------------- ------------
Property, plant and equipment 139.9 (3.0) 136.9
----------- ------------------- ------------
IFRS 16 right-of-use assets - 352.8 352.8
----------- ------------------- ------------
Inventories 379.5 - 379.5
----------- ------------------- ------------
Trade and other receivables 32.6 (12.0) 20.6
----------- ------------------- ------------
Trade and other payables (282.5) 38.8 (243.7)
----------- ------------------- ------------
IFRS 16 lease liabilities - (403.3) (403.3)
----------- ------------------- ------------
Net debt (25.6) - (25.6)
----------- ------------------- ------------
Other (6.6) 9.1 2.5
----------- ------------------- ------------
Net assets 442.9 (17.6) 425.3
----------- ------------------- ------------
As disclosed within note 24 of the Group's Annual Report and
Accounts for the 52 weeks to 30 April 2023, prior period balances
have been restated, in line with IFRS 3 'Business combinations', to
reflect the finalisation of the provisional fair values of
Betteridge Jewelers, Inc., Gotthelfs Acquisition Corp., and Vail
Village Jewelers, Inc. ('Betteridge').
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