BOOHOO GROUP PLC
ANNUAL REPORT
AND ACCOUNTS 2020
BOOHOO GROUP PLCANNUAL REPORT AND ACCOUNTS 2020 BOOHOO GROUP PLC,
A LEADING ONLINE
FASHION RETAIL GROUP
Our multi-brand platform comprises boohoo, boohooMAN, PrettyLittleThing,
Nasty Gal, MissPap, Karen Millen and Coast and targets fashion-conscious
16 to 40 year olds in the UK and internationally.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
CONTENTS
STRATEGIC REPORT
02 Group financial and
operational highlights
04 At a glance
06 Group structure and brands
08 Our strategy and our values
10 Chairman’s statement
12 Review of the business
16 Financial review
21 Risk management
24 Environmental, social and
governance report
GOVERNANCE
38 Board of directors
40 Corporate governance report
43 Directors’ report
46 Directors’ remuneration report
58 Statement of directors’ responsibilities
in respect of the annual report
and financial statements
FINANCIAL STATEMENTS
59 Independent auditors’ report to the members
of boohoo group plc
63 Consolidated statement of comprehensive income
64 Consolidated statement of financial position
65 Consolidated statement of changes in equity
66 Consolidated cash flow statement
67 Notes to the financial statements
91 Company statement of comprehensive income
92 Company statement of financial position
93 Company statement of changes in equity
94 Company cash flow statement
95 Notes to the company financial statements
99 Five-year group statement of comprehensive
income – unaudited
100 Five-year group statement of financial
position – unaudited
100 Five-year group cash flow statement – unaudited
101 Shareholder information
VISIT US ONLINE AT
BOOHOOPLC.COM
01
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
GROUP FINANCIAL AND OPERATIONAL HIGHLIGHTS
OUR PERFORMANCE
GROUP
BOOHOO
PRETTYLITTLETHING
NASTYGAL
Financial
5 Revenue £600.7 million,
up 38% (39% CER)
5 Gross margin 52.6%,
down 30bps
Financial
5 Revenue £516.3 million
up 38% (37% CER)
5 Gross margin 55.6%,
down 100bps
Financial
5 Revenue £98.8 million
up 106% (109% CER)
5 Gross margin 54.2%,
down 250bps
Operational
5 8.9 million active customers(B),
Operational
5 6.3 million active customers,
Operational
5 1.8 million active customers,
up 28% on prior year
5 Significant investments in
customer service, with AI
and new apps, improving
the customer proposition
REVENUE GROWTH
+38%
ACTIVE CUSTOMERS
+28%
GROSS MARGIN
52.6%
up 26% on prior year
5 High profile celebrity
associations and social
media driving traffic and
international expansion,
exceptionally well in the
US and Europe
REVENUE GROWTH
+38%
ACTIVE CUSTOMERS
+26%
GROSS MARGIN
55.6%
up 88% on prior year
5 Extensive product range now
comprises over 16,000 lines,
double that of last year
REVENUE GROWTH
+106%
ACTIVE CUSTOMERS
+88%
GROSS MARGIN
54.2%
Financial
5 Revenue £1.235 billion,
up 44% (44% CER(A))
5 Strong revenue growth across
all geographies with UK up
39% and international up 51%.
International revenue is now
45% of total, up from 43%
5 Gross margin 54.0%, down
70bps as we have invested
in growing our brands
5 Adjusted EBITDA(1) £126.5
million (2019: £84.5 million)
with Adjusted EBITDA
margin improving to 10.2%
(2019: 9.9%)
5 Robust balance sheet with net
cash of £240.7 million (2019:
£190.7 million). High cash
generation with operating
cash flow of £127.3 million
(2019: £111.9 million)
Operational
5 Acquisition of the MissPap,
Karen Millen and Coast
brands, complementary
additions to the group’s
scalable, multi-brand platform
5 Distribution centre
automation generating
efficiencies and rapid
order fulfilment
REVENUE +44%
ADJUSTED EBITDA(1) +50%
PROFIT BEFORE TAX +54%
£1,234.9m
£126.5m
£92.2m
£856.9m
£84.5m
£579.8m
£56.9m
£59.9m
£43.3m
2018
2019
2020
2018
2019
2020
2018
2019
2020
Notes:
(A)
CER designates Constant Exchange Rate translation of foreign currency revenue, which gives a truer indication of the performance in international markets by removing year-to-year exchange
rate movements when local currency sales are converted to sterling.
(B) Active customers defined as having shopped in the last year.
02
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Revenue
Gross profit
Gross margin
Adjusted EBITDA(1)
% of revenue
Adjusted EBIT(2)
% of revenue
Adjusted profit before tax(3)
Profit before tax
Adjusted diluted earnings per share(4)
Diluted earnings per share (2019 restated)
Net cash(5) at year end
2020
£m
1,234.9
666.2
54.0%
126.5
10.2%
107.0
8.7%
108.3
92.2
5.88p
5.35p
240.7
2019
£m
856.9
469.0
54.7%
84.5
9.9%
75.1
8.8%
76.3
59.9
4.15p
3.71p
190.7
Change
+44%
+42%
-70bps
+50%
+30bps
+42%
-10bps
+42%
+54%
+42%
+44%
+£50.0m
(1) Adjusted EBITDA is calculated as profit before tax, interest, depreciation, amortisation, share-based payment charges and
exceptional items.
(2) Adjusted EBIT is calculated as profit before tax, interest, share-based payment charges, amortisation of acquired intangible
assets and exceptional items.
(3) Adjusted profit before tax is calculated as profit before tax, excluding share-based payment charges, amortisation of acquired
intangible assets and exceptional items.
(4) Adjusted diluted earnings per share is calculated as diluted earnings per share, adding back amortisation of acquired intangible
assets, share-based payment charges, exceptional items and adjusting to 34% of the non-controlling interest as in previous
years (see note 1 of the accounts).
(5) Net cash is cash less borrowings.
03
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
AT A GLANCE
A WINNING BUSINESS
Our multi-brand platform comprises boohoo, boohooMAN, PrettyLittleThing,
Nasty Gal, MissPap, Karen Millen and Coast and targets fashion-conscious
16 to 40 year olds in the UK and internationally.
UK
£679.3m
EUROPE
£188.4m
GLOBAL REVENUE
USA
£263.6m
REST OF THE WORLD
£103.5m
HIGHLIGHTS
GLOBAL CUSTOMER BASE
14m14 million active customers
PROFITABLE
+54%Profit before tax up 54%
HIGH GROWTH
+44%Revenue up 44%
04
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
OUR BRANDS
KEY CHARACTERISTICS
CHALLENGING THE FASHION MARKET
Our high growth rate shows we understand what customers want.
We operate in an efficient and profitable way, delivering value to our
stakeholders. We invest to create a sustainable business.
RESPONSIBLE
We operate with responsibility towards all our stakeholders – including our
customers, employees and partners – and in a sustainable way to reduce
environmental impact.
INSPIRED
With a finger on the pulse of fashion, we spot the latest trends
from all over the world.
GLOBAL
We operate in a global market, unhindered by borders,
languages and physical presence.
CONNECTED
Through a large social media following, we connect
with millions globally.
FAST
Hundreds of new products added daily and top sellers
are re-bought within days.
05
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC GROUP STRUCTURE AND BRANDS
ABOUT OUR GROUP AND
OUR GLOBAL BRANDS
boohoo group plc owns the brands boohoo, boohooMAN, PrettyLittleThing, Nasty Gal,
MissPap, Karen Millen and Coast and designs, sources, markets and sells clothing, shoes,
accessories and beauty products targeted at 16 to 40 year-old consumers globally.
Each brand is differentiated in its message, appeal, price-point and target age-group.
OUR BRANDS
boohoo is the young girl’s fashion best friend,
offering the most up-to-date fashion at
incredible prices with unbeatable choice, great
quality and excellent service. The brand’s core
values are fun, fashion, social and inclusive.
This translates into a product range for
every young woman around the world.
PrettyLittleThing is a youthful trend leader
in online women’s fashion, offering a wide
range of products at great prices, supported
by an engaging global social media presence.
The brand aims to help every girl feel like
a celebrity with her clothes.
Nasty Gal is a bold and distinctive brand for
fashion-forward, free-thinking young women,
offering limited edition clothing to a global
audience. The brand’s largest market so far
has been in the USA and it has a global reach
with enormous potential for growth.
Combining cutting-edge design with an
affordable price tag, boohooMAN brings
young men the latest styles and looks
in a youthful package, 24/7.
06
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
OUR MOST RECENT ACQUISITIONS
MissPap is aimed at fashion-conscious young
women who love fashion and want to create
looks that are worth sharing with friends.
From: April 2019
Karen Millen is known globally for creating
beautifully crafted fashion for confident
women who know their own style. Targeted at
driven and career-minded women in their 30s
and 40s, the brand offers high quality clothes
for that modern, polished and feminine look.
From: October 2019
Coast believes that life is for living, fashion
should be fun and dressing up is for every day.
The brand produces versatile pieces that are
easy to wear and are an effortless addition
to a woman’s own style.
From: October 2019
07
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC OUR STRATEGY AND OUR VALUES
CONTINUED OPPORTUNITIES
FOR GROWTH
OUR VISION
HOW WE DO IT
“We are entirely focussed on our
customers and every element of our
model begins and ends with them.
We engage, we listen, we learn,
we create and repeat.”
T
N
E
M
E
G
A
G
N
E
Through
two-way social
media contact,
we recruit,
connect with
and constantly
learn from
our brand
evangelists
D ESIGN
Our speed, agility and market
knowledge ensures we deliver
attention-demanding,
aspirational style before others
E N GAGE
E
T
A
E
R
C
O U R
CUS TOM ER S
L
I
S
T
E
N
LEAR N
We are differentiated by our
inclusiveness, the breadth of
our product ranges and the way
we connect with customers
BRAN D S
Our sourcing
ability and
supply chain
management
delivers
outstanding
product value
V
A
L
U
E
The group’s multi-brand platform enables us
to service groups of consumers efficiently with
ranges of products differentiated in style and
price point. The appeal of online shopping,
with its convenience and value proposition,
continues to resound with consumers globally
and supports high growth rates.
Our vision is to be leading the e-commerce
fashion market for 16 to 40 year-olds,
which we will drive through our strategic
priorities: Insight, Investment, Innovation
and Integration.
INSIGHT
creating a competitive
customer proposition
INVESTMENT
delivering growth through
organic means and acquisitions
to increase market share
INNOVATION
driving customer engagement
INTEGRATION
integrating new brands
08
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
OUR VALUES
PASSION
Each day we are inspired to be the best we can be.
We are focussed and committed to giving our
customers the experience they want.
AGILE
We are constantly evolving to stay one step ahead.
We embrace change and grab new opportunities
with both hands. We are lean, effective and efficient.
CREATIVE
We are unique and aspirational. We are not afraid of doing
things our way, daring to be different. We are creative in
thinking and design.
TEAM
We listen and respond to create a place where everyone’s
contribution is important. Building success through
our people and sharing in it together. We remember
to have fun along the way.
09
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC CHAIRMAN’S STATEMENT
CREATING NEW OPPORTUNITIES
FOR GROWTH
I am proud to report another record-breaking year for the group,
with market-leading growth in our revenues across multiple geographic
regions and strong profitability.
During the year, we acquired three new brands
and talented teams along with them, to add
to our growing portfolio. Each of MissPap,
Karen Millen and Coast caters for different
segments of the market, giving the group
wider coverage and building on our scalable,
multi-brand platform. The new brands have
integrated very well and are growing strongly
since relaunch. We are very excited about
our new acquisitions, whilst keeping appraised
of other strategic opportunities globally.
John Lyttle joined as Group Chief Executive
at the start of the current financial year and
has been instrumental in his leadership role in
driving that success and bringing about change
as the group has grown. Carol and I continue
to play a very active role in the group, whilst
leaving the day-to-day operational issues to
John, which enables us to spend more time
on strategic matters and ensuring we remain
at the forefront of the online fashion sector.
We are supported by a strong team of
executives, which has been strengthened
during the year.
One of the new executive positions we
have created this year is that of Director
of Sustainability and Social Responsibility.
We attach great importance to the need
to create a sustainable business that
minimises the environmental impact.
We strongly promote recycling of clothes
and are pushing that message to our
customers. We are exploring more ways
to improve our business model: this year
has seen us develop sustainable, recycled
clothing ranges and plans have been
developed to introduce solar power
at our facilities.
COVID-19
At this time, all our thoughts turn to the
distress the pandemic is bringing upon
so many people throughout the world
and so talking about other matters seems
strangely less significant. However, we have
a responsibility to our shareholders to continue
to keep them informed in a timely fashion
through the dissemination of this report
and financial statements and to keep them
appraised of what we are doing to preserve our
business and ensure the safety and wellbeing
of our employees and those of our business
partners. From the outset of the pandemic,
we have followed government advice on safe
working practices for all our employees.
At the present time, colleagues who are able
to work from home are doing so. Where this
is not possible, for instance in the warehouse,
strict social-distancing procedures have been
introduced and audited. As for the impact
on the business, we are fortunate to have
substantial cash reserves, which will enable
us to withstand a long-standing downturn
in business activity, should the timeframe
of the pandemic be prolonged. This is further
discussed in the directors’ report in the
future prospects and viability section.
Group performance
If I may, I will now turn to the matter of the
group’s performance for the year to February
2020. I am proud to report another record-
breaking year for the group, with market-
leading growth in our revenues across multiple
geographic regions and strong profitability.
Success such as ours comes from getting
a lot of things right: product, price, service,
marketing and technology amongst others.
All of this requires a great team of focussed
experts and an envisioned leadership team to
pull it all together and make it work and work
well. This is what makes me proud – it is the
people we have, both within the group and in
our supply chain, who are our greatest asset
and the engine of our success.
WE ATTACH GREAT
IMPORTANCE
TO THE NEED
TO CREATE
A SUSTAINABLE
BUSINESS THAT
MINIMISES THE
ENVIRONMENTAL
IMPACT.
Mahmud Kamani,
Executive Chairman
10
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
REVENUE
+44%
Strong revenue growth at £1.235 billion
PROFIT BEFORE TAX
+54%Profit before tax at £92.2 million
We have continued to take market share
in the UK, keeping our finger on the pulse
of fashion with an irresistible offering
that continues to draw in more and more
customers, whilst expanding rapidly overseas
through a suite of country-specific websites
and a strong proposition. International growth
has continued to be robust and we have been
able to refine further our expertise through
local knowledge and effective marketing.
The investments we made in our two
distribution centres in the previous year
have not only enabled us to manage the high
growth rate with uninterrupted service, but
also to realise efficiency savings through the
automation that is working very effectively.
We have also invested in our IT systems and
customer-facing apps and websites and added
more payment types that have proved to be
highly popular with consumers.
Sara Murray stepped down from the board
in April and, on behalf of the board, I would
like to thank Sara for her positive contribution
to the company and in particular for her role
as Senior Independent Director and her
stewardship of the Nomination Committee.
Sara’s expertise has been invaluable to the
board and the company throughout her
four-year tenure, during which boohoo has
experienced a period of significant growth and
expansion. It is the board’s intention to appoint
another non-executive director in due course.
As always, my thanks and appreciation go to
our employees and partners who make the
group the success that it has been again this
year. I know that the team we have built will
continue to drive our business forward as
we develop the opportunities for our future
growth and prosperity.
Mahmud Kamani
Group Executive Chairman
21 April 2020
11
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC REVIEW OF THE BUSINESS
PERFORMANCE
DURING THE YEAR
The group has continued to gain market share in key focus territories, with impressive
revenue growth across our brands, driven by a combination of a great customer
proposition, effective marketing strategies and strong social media presence.
Group revenue for the year increased by 44%
(44% CER) to £1.235 billion (2019: £856.9
million). Revenue growth across all territories
and brands was strong.
Adjusted EBITDA was £126.5 million (2019:
£84.5 million), an increase of 50% on the
previous year, with efficiency improvements
and effective marketing across the group
leading to an adjusted EBITDA margin of
10.2% (2019: 9.9%). Profit before tax was
£92.2 million (2019: £59.9 million), an increase
of 54%. Adjusted diluted earnings per share
was 5.88p, up 42% on the prior year (restated).
Diluted earnings per share rose to 5.35p,
an increase of 44% (2019 restated: 3.71p).
The group has continued to gain market
share in key focus territories, with impressive
revenue growth across our brands, driven by a
combination of a great customer proposition,
effective marketing strategies and strong
2020
£000
1,234,876
666,236
54.0%
115,546
9.4%
92,222
5.35p
240,684
126,503
10.2%
106,973
8.7%
108,299
5.88p
2019
£000
856,920
468,994
54.7%
72,601
8.5%
59,856
3.71p
190,726
84,546
9.9%
75,074
8.8%
76,250
4.15p
Change
+44%
+42%
-70bps
+59%
+90bps
+54%
+44%
+£50.0m
+50%
+30bps
+42%
-10bps
+42%
+42%
OVERVIEW
Revenue
Gross profit
Gross margin
EBITDA
% of revenue
Profit before tax
Diluted earnings per share (2019 restated)
Net cash(1) at year end
Underlying:
Adjusted EBITDA(2)
% of revenue
Adjusted EBIT(3)
% of revenue
Adjusted profit before tax(4)
Adjusted diluted earnings per share(5)
(1) Net cash is cash less borrowings.
(2) Adjusted EBITDA is calculated as profit before tax, interest, depreciation, amortisation, share-based payment charges
and exceptional items.
(3) Adjusted EBIT is calculated as profit before tax, interest, share-based payment charges, amortisation of acquired
intangible assets and exceptional items.
(4) Adjusted profit before tax is calculated as profit before tax, excluding share-based payment charges and amortisation
of acquired intangible assets and exceptional items.
(5) Adjusted diluted earnings per share is calculated as diluted earnings per share, adding back amortisation of acquired intangibles,
share-based payment charges, exceptional items and adjusting to 34% of the non-controlling interest as in previous years
(see note 1 of the accounts).
12
social media presence. Through our scalable,
multi-brand platform, we have taken on three
additional brands – MissPap, Karen Millen
and Coast – which have increased the group’s
market coverage and potential. Investments
in technology and continuous systems
improvements have delivered an enhanced
customer experience and cost efficiencies.
Cash generation was strong, with operating
cash flow of £127.3 million (2019: £111.9 million)
and free cash flow up 26% to £81.7 million.
Capital expenditure was £45.6 million
including £19.4 million spent on the
acquisition of the three new brands.
Our net cash balance (cash less bank
borrowings) at the period end increased
to £240.7 million (2019: £190.7 million).
Distribution centres
The group operates through two distribution
centres: the Burnley facility services all the
group brands except PrettyLittleThing; and
the Sheffield facility, which is managed by
a third-party, services PrettyLittleThing.
Automation at the Burnley warehouse went
live in April 2019 and has been instrumental
in improving efficiency throughout, enabling
the facility to handle the rapid growth of the
group and maintain high customer service
levels. Phase 2 of the automation at Burnley
is planned to commence in the first half of the
2021 financial year, further boosting the peak
load capacity to ensure we continue our great
customer service. Both facilities give us the
scale and capacity required in the medium
term as the group develops.
Technology
As we recently invested in a team focussed
on expanding our in-house app development
capabilities, we have been able to introduce
improved app functionality and user
experience at a faster pace, including adding
apps for the three new brands acquired
during the year. A greater percentage of our
customers now use the apps for the entire
browsing and purchasing journey, enabling
us to provide them with more relevant
and targeted marketing and an optimised
user experience.
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
BOOHOO
(INCLUDING BOOHOOMAN)
£600.7m
REVENUE FOR THE YEAR
(2019: £434.6m)
8.9m
ACTIVE CUSTOMERS
(2019: 7.0m)
7m
INSTAGRAM FOLLOWERS
(2019: 5.9m)
BOOHOO (INCLUDING
BOOHOOMAN)
Performance
Revenue for the year increased to £600.7
million, up 38% on the previous year, with
continued growth in all our key focus markets.
Growth in both the UK and international
markets has been strong, driving market
share gains across key geographies. Gross
margin decreased slightly by 30bps to 52.6%,
as we optimised the customer proposition
in each territory.
Product
Our womenswear product range has
continued to be highly successful with
growth in core product lines and in our
comprehensive size offerings. In addition,
new product introductions are delivering
growth and satisfying consumer demand.
In June we introduced our first dedicated
recycled women’s clothing range, which
is part of our drive for a more sustainable
future in fashion.
Marketing
Our marketing strategy is constantly reviewed
and re-aligned in response to data analytics
that monitor its effectiveness. We continue
to focus on a balanced mix of social media
influencers, celebrity endorsements, digital
acquisition and retention, PR and above-the-
line brand campaigns. International marketing
is supported by in-country experts to ensure
we speak to customers with effective, localised
campaigns and content.
Our worldwide social media audience now
includes over seven million Instagram and
three million Facebook followers. Throughout
the year, we have worked with a host of local
brand ambassadors as well as Jordyn Woods
and four Victoria’s Secret models as global
ambassadors. All collections have featured
an inspiring range of day-to-evening looks,
emphasising the glamour of the boohoo brand.
Customer interaction
boohoo and boohooMAN have a number of
country-specific websites, several of which
are translated into local languages and further
site launches and translated foreign language
sites are planned. We have invested in visual
AI, popular payment methods and virtual
assistants to offer a more satisfying customer
experience. Our focus on excellent customer
service is supported by an “excellent”, 4.5 star,
rating on the Trustpilot consumer review site.
13
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC REVIEW OF THE BUSINESS (CONTINUED)
PRETTYLITTLETHING
£516.3m
REVENUE FOR THE YEAR
(2019: £374.4m)
6.3m
ACTIVE CUSTOMERS
(2019: 5.0m)
12.3m
INSTAGRAM FOLLOWERS
(2019: 10.5m)
Marketing
We have extended our social media reach
by increasing the number of social media
influencers, combined with celebrity campaigns
and collaborations. Using customer-created
content and working in collaboration with our
influencer partners, we have continued to be
one of the fastest growing fashion brands on
the channel. We have 12.3 million Instagram
followers and 2.2 million followers on Facebook.
We also continue to develop our exposure
to new and emerging social media platforms.
Customer interaction
We support a number of country-specific
websites. For the UK market, we offer
a wide range of free return options and in
international markets, we continue to offer
a range of services to ensure a seamless
customer experience.
PRETTYLITTLETHING
Performance
PrettyLittleThing (“PLT”) achieved strong
revenue growth of 38% over the previous
year, reaching £516.3 million. Growth across
all territories was strong, with the overseas
markets performing exceptionally well.
Gross margin has decreased to 55.6%
(2019: 56.6%), as we optimise growth
and refine the customer proposition.
Product
PLT brings the latest and most relevant
celebrity looks at affordable prices to our
customers, with a choice of over 26,500
styles and new items available daily.
Our product range continued to expand
during the year with further strong growth
in the “shape” ranges including Petite, Curve
and Plus. We have also further expanded our
range, helping us to become established as a
lifestyle brand for our customers. We are also
growing our range of accessories and beauty
offering. During the year, we brought the
latest celebrity looks to customers through
collaborations with Little Mix, Ashley Graham,
Ashanti and through PLT’s debut at New York
Fashion Week, including a collection with
US rap star Saweetie.
14
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
NASTY GAL
£98.8m
REVENUE FOR THE YEAR
(2019: £47.9m)
1.8m
ACTIVE CUSTOMERS
(2019: 0.9m)
4.4m
INSTAGRAM FOLLOWERS
(2019: 3.6m)
NASTY GAL
Performance
Revenue growth across all territories has
been exceptionally strong, with an overall
106% increase to £98.8 million. USA revenue
continues to grow strongly and remains
the brand’s largest territory. In the UK and
internationally, growth has continued at an
exceptional pace, with the brand gaining
recognition and attracting a far-reaching
customer base. Gross margin reduced to
54.2% (2019: 56.7%), which is in line with
the re-alignment of the customer proposition.
Product
Nasty Gal’s exciting product range now
encompasses over 16,000 styles, doubling
in size over the year. Other key areas of growth
include recycled ranges and further expansions
of Nasty Gal Vintage, a great collection of
sustainably-sourced, true reworked vintage
product, drawing on the brand’s heritage,
unique DNA and a commitment by the group
in terms of sustainability. Comprehensive
size ranges have also helped support the
inclusiveness of the brand and extend
its appeal to women globally.
Marketing
The marketing strategy has focussed on
building brand awareness, working with an
increasing number of influencers to engage
customer interest and promote brand loyalty.
This summer we launched an iconic collection
edited by Emily Ratajkowski (EmRata) and
throughout the year have worked with high
profile fashion collaborators Claire Rose
Cliteur, Emma Louise Connelly and Josefine
HJ. The autumn saw the biggest collaboration
the brand has ever worked on, partnering
with supermodel Cara Delevingne on our
holiday collection.
On social media Nasty Gal has 4.4 million
followers on Instagram and 1.3 million
Facebook likes.
MISSPAP, KAREN MILLEN
AND COAST
Performance
We are very encouraged by the progress
of our newly-acquired brands this year, all
of which are resurging under new ownership
and direction as online-only brands, with
their great heritage intact. Revenue from the
brands amounted to £19 million for the year,
with MissPap revenue commencing in April
2019 and Karen Millen and Coast in October
2019. Gross margin was 51.1%.
Our investment in the new brands has
incurred some set-up and initial running
costs in the first year, which is consistent
with our philosophy to invest in our brands
in order to unlock their long-term growth
potential. The new brands are operated
through our multi-brand platform, which
provides immediate efficiency in the key
operational business functions, such as
logistics, IT, e-commerce and administration.
The new brands provide the group with a wider
coverage in demographic, price points and
age segments and are highly complementary
to our existing portfolio.
15
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC FINANCIAL REVIEW
FROM STRENGTH
TO STRENGTH
KEY PERFORMANCE INDICATORS
The group has achieved a strong performance with revenues
and profits increasing in all territories.
GROUP
ACTIVE CUSTOMERS(1)
NUMBER OF ORDERS
ORDER FREQUENCY(2)
13.9m
42.2m
2.88
3.04
10.6m
30.6m
+31%
+38%
+5%
2019
2020
Change
2019
2020
Change
2019
2020
Change
CONVERSION RATE TO SALE(3)
AVERAGE ORDER VALUE(4)
NUMBER OF ITEMS PER BASKET
4.25%
4.26%
£41.20
£43.50
2.89
3.06
+1bps
+6%
+6%
2019
2020
Change
2019
2020
Change
2019
2020
Change
(1) Defined as having shopped in the last 12 months on the website.
(2) Defined as number of orders in last 12 months divided by number of active customers.
(3) Defined as the percentage of orders taken to internet sessions.
(4) Calculated as gross sales including sales tax divided by the number of orders.
16
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
GROUP REVENUE BY BRAND
boohoo
PrettyLittleThing
Nasty Gal
Other
GROUP REVENUE BY GEOGRAPHICAL MARKET
UK
Rest of Europe
USA
Rest of world
2020
£000
600,733
516,334
98,833
18,976
1,234,876
2020
£000
679,275
188,424
263,622
103,555
2019
£000
434,565
374,445
47,910
–
856,920
2019
£000
488,199
115,124
166,262
87,335
1,234,876
856,920
CONSOLIDATED INCOME STATEMENT
Revenue
Cost of sales
Gross profit
Gross margin
Operating costs
Other income
Adjusted EBITDA
Adjusted EBITDA margin %
Depreciation
Amortisation of other intangible assets
Adjusted EBIT
Adjusted EBIT margin %
Adjusting items:
Amortisation of acquired intangible assets
Equity-settled share-based payment charges
Exceptional items – warehouse relocation
Operating profit
Finance income
Finance expense
Profit before tax
Tax
Profit after tax for the year
Diluted earnings per share (2019 restated)
Adjusted profit after tax for the year
Amortisation of acquired intangible assets
Share-based payment charges
Exceptional items – warehouse relocation
Adjustment for tax
Profit after tax for the year
Adjusted profit for the period attributable to
shareholders of the company
Adjusted diluted earnings per share
Change
+38%
+38%
+106%
+100%
+44%
Change
+39%
+64%
+59%
+19%
+44%
2019
£000
856,920
(387,926)
468,994
54.7%
(384,687)
239
84,546
9.9%
(6,972)
(2,500)
75,074
8.8%
(4,449)
(5,278)
(6,667)
58,680
1,320
(144)
59,856
(12,397)
47,459
3.71p
60,803
(4,449)
(5,278)
(6,667)
3,050
47,459
2020
£000
1,234,876
(568,640)
666,236
54.0%
(539,971)
238
126,503
10.2%
(16,582)
(2,948)
106,973
8.7%
(5,120)
(10,957)
–
90,896
1,716
(390)
92,222
(19,339)
72,883
5.35p
85,987
(5,120)
(10,957)
–
2,973
72,883
69,939
5.88p
48,781
4.15p
Change
CER
+39%
+37%
+109%
+100%
+44%
Change
CER
+39%
+62%
+61%
+19%
+44%
Change
+44%
+47%
+42%
-70bps
+50%
+30bps
+42%
-10bps
+55%
+54%
+54%
+44%
+41%
+43%
+42%
17
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
FINANCIAL REVIEW (CONTINUED)
Operating costs comprise distribution costs and administrative expenses excluding depreciation and amortisation and have decreased by 120bps
to 43.7% of revenue, with efficiency improvements in distribution costs more than offsetting increases in infrastructure costs for future business
expansion, including those for the three brands acquired during the year.
Adjusted EBITDA, which is not a statutory measure, represents earnings before interest, tax, depreciation, amortisation, non-cash share-based
payments charges and exceptional items. It provides a useful measure of the underlying profitability of the business. Adjusted EBITDA increased
by 50% from £84.5 million to £126.5 million and, as a percentage of revenue, increased from 9.9% to 10.2%.
Adjusted profit after tax, as with Adjusted EBITDA, provides another more consistent measure of the underlying profitability of the business
by removing non-cash amortisation of intangible assets relating to the acquisition of new brands (being their trademarks and customer lists),
share-based payment charges and exceptional items.
TAXATION
The effective rate of tax for the year was 21.0% (2019: 20.7%), which is higher (2019: higher) than the blended UK statutory rate of tax for
the year of 19.0% (2019: 19.0%), due to expenditure not deductible for tax purposes, being principally depreciation on buildings and fit-out.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Intangible assets
Property, plant and equipment
Right-of-use assets
Financial assets
Deferred tax asset
Non-current assets
Working capital
Lease liabilities
Net financial (liabilities)/assets
Cash and cash equivalents
Interest-bearing loans and borrowings
Deferred tax liability
Net current tax liability
Net assets
2020
£000
42,255
119,216
14,591
4,467
5,980
186,509
(63,875)
(16,153)
(9,001)
245,448
(4,764)
(3,593)
(6,636)
327,935
2019
£000
27,165
108,498
–
3,756
4,034
143,453
(64,969)
–
4,047
197,872
(7,146)
(2,102)
(753)
270,402
The increase in intangible assets is due to the purchase of the new brands. The right-of-use-assets are the capitalised value of property leases in
accordance with the new accounting standard, IFRS 16. The lease liability is the discounted value of future lease payments. Working capital has
increased marginally as we are paying inventory suppliers to industry-leading 14-day terms.
INTANGIBLE AND FIXED ASSET ADDITIONS
Purchased intangible and fixed assets
Intangible assets
Trademarks and customer lists
Patents and licences
Software
Tangible fixed assets
Distribution centres
Offices, office equipment, fixtures and fit-outs
Motor vehicles
Total intangible and fixed asset additions
18
2020
£000
2019
£000
19,370
–
3,788
23,158
15,391
6,576
437
22,404
45,562
–
307
2,930
3,237
36,678
6,837
115
43,630
46,867
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
LIQUIDITY AND FINANCIAL RESOURCES
Operating cash flow was £127.3 million compared to £111.9 million in the previous year and free cash flow was £81.7 million compared to £65.1 million
in the previous financial year. We have adopted industry-leading 14-day payment terms with our key UK product suppliers. Capital expenditure and
intangible asset purchases was £45.6 million, which includes a £14.9 million investment in our distribution centres to support projected growth
in the business. The closing cash balance for the group was £245.4 million and the net cash balance (cash less bank borrowings) was £240.7 million.
CONSOLIDATED CASH FLOW STATEMENT
Profit for the year
Depreciation charges and amortisation
Share-based payments charge
Loss on sale of fixed assets
Tax expense
Finance income
Finance expense
Increase in inventories
Increase in trade and other receivables
Increase in trade and other payables
Operating cash flow
Capital expenditure and intangible asset purchases
Free cash flow
Net proceeds from the issue of ordinary shares
Purchase of own shares by EBT
Proceeds from the sale of fixed assets
Finance income received
Finance expense paid
Dividend paid to non-controlling interests
Lease payments
Tax paid
Repayment of borrowings
Net cash flow
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
2020
£000
72,883
24,650
10,957
294
19,339
(1,716)
390
(32,301)
(9,434)
42,219
127,281
(45,562)
81,719
2,665
(14,906)
–
1,807
(286)
(3,400)
(6,031)
(11,610)
(2,382)
47,576
197,872
245,448
2019
£000
47,459
13,921
5,278
24
12,397
(1,320)
144
(18,558)
(4,935)
57,513
111,923
(46,867)
65,056
3,653
(1,833)
59
1,249
(144)
–
–
(10,361)
(2,382)
55,297
142,575
197,872
TRENDS AND FACTORS LIKELY TO AFFECT FUTURE PERFORMANCE
The market for online fashion is forecast to continue to grow and, along with the increasing use of the internet globally, provides a favourable backdrop
for the group with much opportunity for further growth. Customers throughout the world are seeking a wide choice of quality products at value prices
lower than those available on the high street with the convenience of home delivery. The group’s target market has a high propensity to spend on
fashion and, apart from times of pandemic, the market is resilient to external macroeconomic factors.
OUTLOOK
At boohoo group plc, our top priority remains the health and wellbeing of our colleagues, our customers, and the many suppliers who work alongside
us from around the world. From the outset of the pandemic, we have been closely following the government initiatives that support businesses and
the public. We have been following all guidance regarding self-isolation, social distancing and personal hygiene in order to keep everyone in our
boohoo family safe and well. The vast majority of our office-based teams are now working remotely. Our fantastic warehouse teams have adapted
to completely new ways of working to ensure that they abide by all the social distancing procedures that we have in place. We are in constant contact
with them and are working day and night to ensure that everyone is following the new systems, has what they need and, most importantly, that our
teams are happy and healthy. Their ongoing safety and wellbeing is our number one priority.
As a group, we are standing alongside our suppliers, continuing to pay them promptly with industry-leading payment terms for all of their orders.
We have also set up an emergency fund to help suppliers through this difficult period. Since boohoo was founded, we have invested in our supplier
relationships and by continuing to support them through these short-term challenges, we will further secure these relationships for the long-term.
19
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
FINANCIAL REVIEW (CONTINUED)
OUTLOOK (CONTINUED)
The group saw a strong end to the financial year ended 29 February 2020 and in the first two weeks of FY21 this trading momentum was maintained.
Since the middle of March, trading has been mixed, as a result of the impact of the COVID-19 pandemic, initially with a marked decrease in
year-on-year growth. Performance has improved in more recent weeks and we are now seeing improved year-on-year growth of group sales
during April. We remain cautious regarding our outlook, as a result of the uncertainty caused by the COVID-19 pandemic.
Given the uncertainty generated by the continually-evolving COVID-19 pandemic, it is not appropriate to provide guidance for the financial year
ending 28 February 2021 at this stage. The group has taken steps to understand, as far as possible, the risks and impact that the pandemic may
potentially have on its operations, analysing a range of scenarios, factoring in a downturn in demand and the possibility of warehouse closures.
Although it is not possible to predict precisely the impact from COVID-19, we have ensured that we have stress-tested our liquidity under
these scenarios.
From this, we are comfortable that the group has sufficient financial headroom, benefitting from its largely variable cost base, low cash burn rate
and strong balance sheet with £241 million of net cash at year end.
A key strength of our business lies in its agility and flexibility, and we have moved quickly to take mitigating actions, so as to best manage our
inventory and cost base and ensure the health, safety and wellbeing of all colleagues. Our inbound supply chain continues to operate efficiently,
benefitting from its international diversification and we are working with our logistics partners to minimise any potential disruption.
As always, our focus is to maintain an outstanding customer proposition, with the latest fashion at great prices, combined with excellent customer
service. To this end, we have a plan of continuous investment in our systems, infrastructure and technology to ensure we offer an optimal online
shopping experience. International expansion will continue as we add more country-specific websites, refine our customer proposition and raise
brand awareness through marketing and social media. Our scalable, multi-brand platform provides the basis for expansion of the group through
strategic acquisitions. We are also committed to continuing to drive improvements across our environmental responsibilities and are constantly
exploring ways to accelerate our sustainability journey.
20
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
RISK MANAGEMENT
HOW WE MANAGE RISK
On an annual basis, the board reviews the principal risks and uncertainties facing the group
and assesses the mitigating factors. This assessment is also undertaken whenever there is a
perceived major change in the principal risks and uncertainties. The following are considered
to be the principal risks and uncertainties, although these may not be exhaustive in that other
unknown risks may have an adverse effect on the business.
RISK TYPE
RISK FACTORS
MITIGATION
STRATEGIC RISKS
COVID-19 PANDEMIC
5 Severe loss of revenue
5 Closure of the warehouses
5 Loss of or absence of employees due
to illness
5 Loss of supply chain
5 Transport disruption
5 Government financial support
5 Safe working practices rigorously imposed
5 Employees working from home wherever possible
5 Expense reduction initiatives
5 Close liaison with suppliers and carriers to normalise services
as far as possible
COMPETITION RISK
5 Competitors may be able to offer
consumers like-for-like better quality,
better value, superior customer service,
more generous or superior delivery
service, better website functionality
or better brand image, thereby eroding
market share
5 European customers may be deterred
from purchasing from a UK company
following the UK’s decision to leave the EU
5 Failing to keep abreast of the latest trends
in colour and style could lead to lost sales
and erosion of market share
5 Failure to react quickly enough to fashion
changes could lead to lost sales
5 Failure to respond to changing customer
preferences on sustainability issues could
affect sales
5 Buying the incorrect quantities of product
relevant to demand may result in lost sales
opportunities or excess inventory
FASHION AND
CONSUMER
DEMANDS RISK
5 Competitor activity and offerings are reviewed regularly
to remain abreast of market developments and identify
competitive advantages
5 Consumers’ changing preferences are monitored internally
and by market research to ensure product and service is
relevant to demand
5 Developments in e-commerce trends are monitored
to keep abreast of the latest developments and innovations
5 Performance targets control key deliverables
(product quality, customer service and traffic)
5 Highly competent designers and buyers are adept at
interpreting fashion and acquiring desirable product
5 Buyers and designers keep up to date with fashion
changes through fashion shows, predictive agencies
and fashion press
5 Sustainability is integral to the group ethos with a function
headed at a director level to focus on creating more
sustainable products and supply chain operations and
reduce environmental impact
5 Product range planning ensures sufficient product offering
to cover expected demand using the test-and-repeat model
5 Rapid response to fashion trends is achieved by using
factories capable of short lead times
5 Buying, merchandising and marketing departments operate
cohesively, with regular cross-functional communication
21
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
RISK MANAGEMENT (CONTINUED)
RISK TYPE
RISK FACTORS
MITIGATION
OPERATIONAL RISKS
SYSTEMS AND
TECHNICAL RISK
SUPPLY CHAIN RISK
5 Hardware or software failure could disable
5 Duplicate back-up system in remote location protects
the website or operational systems
5 Cyber-attack is an increasingly major risk
5 System capacity due to high transactional
volumes may be compromised, leading to
error or failure
5 Websites hosted by third-party, which
may be subject to business failure
5 Loss of or theft of consumer data could
lead to loss of reputation and breach
of data protection regulations
against hardware failure and to some extent software failure
5 Systems documentation and recovery procedures are
in place and tested periodically
5 High security threshold and appropriate IT access and usage
policies protect from virus and malicious attack and are
regularly reviewed
5 System load planning is undertaken to ensure transaction
volumes do not impinge on performance
5 Storage of personal data is tightly controlled and limited
in accordance with data protection guidelines and PCI
requirements, with additional mapping and controls
introduced to ensure compliance with GDPR
5 The business is dependent upon suppliers
with whom relationships have been
developed over time and whose loss
through insolvency, disaster or denial
of supply may be difficult to replace
at short notice
5 Labour or environmental abuse in the
supply chain could result in closure
of supply or reputational damage
5 Supply risk is spread over many suppliers with no major
individual dependencies
5 Extensive and up-to-date knowledge of supplier base would
enable alternative sources to be found relatively quickly
5 Levels of inventory are adequate to cover short periods
of supply delay
5 Regular auditing of suppliers, unscheduled inspections
and imposition of conformance agreements ensures
adequate standards are maintained in the supply chain
as far as possible
KEY FACILITIES
5 Fire, flood, or other disaster could lead
5 Warehouse is protected by 24 hour security, access control,
to part or total, temporary or permanent
closure of facilities
5 Failure to adequately plan for warehouse
capacity to cater for business expansion
could restrict revenue growth
fire protection and sprinkler systems
5 Head office is protected by security alarm, access control,
fire protection and sprinkler systems
5 Electric power continuity is protected by back-up generators
5 A comprehensive disaster recovery and business continuity
plan supported by a disaster recovery committee exists
5 Long-range planning aims to ensure adequate warehouse
facilities are available to keep pace with business growth
PEOPLE RISK
5 Competitors are inclined to poach key
5 Incentive schemes for senior managers are operated,
staff and talented individuals
5 Employees may leave the company for
better pay and prospects elsewhere
including share ownership, bonus and incentive schemes
linked to business performance
5 Succession planning aims to reduce key person
dependencies
22
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
RISK TYPE
RISK FACTORS
MITIGATION
OPERATIONAL RISKS (CONTINUED)
BREXIT (NO DEAL) RISK
NEGATIVE PERCEPTION
OF THE BRANDS
5 The UK’s decision to leave the EU may
increase costs if tariffs are imposed
on imports
5 Exports to the EU in the event
of a no-deal Brexit at the end of
the transition period may be impacted,
becoming less competitive or reducing
margins
5 Delays at ports could impact
customer service
5 Less than 10% of inventory is sourced from the EU and so
any duty or tariff increases are not expected to be material.
The group has a large portfolio of suppliers in many regions
of the world and constantly changes sources to obtain the
best prices and quality
5 Most exports to the EU fall below the minimum threshold
at which duty is payable by the consumer. Sales tax is already
charged on EU sales and the group would continue to pay
sales tax on imports to the EU
5 The group has developed plans to manage imports and
exports to/from the EU in the event of a no-deal Brexit
REPUTATIONAL RISKS
5 Adverse customer experience through
poor product quality, product recall
due to faulty manufacture or use of
illegal substances in manufacture,
labour abuses, environmental damage
by third-party suppliers or concerns
over environmental sustainability
could lead to reputational damage
and customer boycott of the brand
5 Adverse customer experience through
refund disputes or poor customer
service could damage reputation
5 A system of factory approvals is operated, ensuring that
manufacturers agree to a set of acceptable standards
5 Compliance with manufacturers’ agreements is monitored
by periodic audit
5 The group monitors and has action plans to improve
sustainability across product and processes throughout
the business and supply chain and reduce the
environmental impact
5 Customer service levels and complaints are monitored
and internet sites are reviewed for customer opinion
FINANCIAL RISKS
FINANCIAL RISK
5 Poor business performance or lack
of appetite for the sector may impede
raising of capital
5 Exchange rate fluctuations may
5 Regular budgeting and forecasting ensures working capital
is sufficient for business requirements and rapid reaction
to adverse business performance
5 Uncertainty due to fluctuating exchange rates is reduced
erode margins
by appropriate hedging policies
23
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
COLLABORATING TO BUILD
TRUST AND TRANSPARENCY
A central theme of our programme is that of transparency and compliance across
our ever-expanding supply chain, with the aim of having a positive social impact
and reducing our environmental impact throughout.
I am very pleased to be part of the advisory
group that is helping to devise the new 2030
plan for the Sustainable Clothing Action
Plan, something that will inform our own
ambitions in due course. Building on these
environmental commitments, we have also
undertaken a carbon assessment with our
partner, Avieco (formerly Carbon Smart),
to identify carbon hotspots along our value
chain and we are working to develop a carbon
reduction programme.
Our people form the bedrock of our business
and we have been very active in making sure
their voices are heard. During the year, we
conducted our biggest ever employee survey
that captured the views of our colleagues
and established a series of recommendations
that we are committed to addressing.
There is much more on this and many of
our other initiatives in the remainder of this
section of the report. Whatever action we
choose to take, we will be guided by evidence
and the experience and expertise of others.
We will continue to resist the temptation
to sign up to initiatives that are not able to
demonstrate the right positive impact for
our business, our customers, our suppliers
or the environment.
Tom Kershaw
Group Director of Sustainability
This year, we increased the tempo of our
responsible business activity as we strive
to continually improve our environmental
performance. I was very honoured to take up
the role of Group Director of Sustainability,
a role that will refine our strategy and,
in collaboration with my colleagues and
partners, set out a programme to improve
our performance over the coming years.
A central theme of our programme is that
of transparency and compliance across our
ever-expanding supply chain, with the aim
of having a positive social impact and reducing
our environmental impact throughout.
We are collaborating with third-party experts
in compliance, material use and carbon
management that are helping us define our
objectives and the plans to help us achieve
these. For instance, we are working with
a third-party consultancy to build a new
compliance programme that will focus initially
on our UK supply chain and will then extend
across our full, global supply chain.
We have also joined a series of internationally
renowned initiatives to help frame our
approach and ensure that we are tackling the
things that matter the most, such as fair pay,
good working conditions and reducing our
environmental footprint. One such initiative
is the Sustainable Apparel Coalition, a global
alliance that supports sustainable production
in order to raise standards and social and
environmental performance and that
represents members with combined annual
apparel and footwear revenues exceeding
$500 billion – so we know that we are part
of something that’s going to make a difference.
In 2019, we conducted a detailed assessment
of the fabrics that go into creating our
garments to see where we can make
improvements as part of our commitment to
WRAP, a multi-stakeholder body that seeks
greater resource efficiency, and we are now
working to see how we can use more recycled
materials in our fabrics.
OUR PEOPLE
FORM THE
BEDROCK OF OUR
BUSINESS AND
WE HAVE BEEN
VERY ACTIVE IN
MAKING SURE
THEIR VOICES ARE
HEARD.
Tom Kershaw,
Group Director
of Sustainability
24
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
OUR APPROACH
OUR APPROACH
N
O
I
T
A
R
O
B
A
C OLL
Read more about our Planet
approach on page 26
Read more about our People
approach on page 27
25
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT (CONTINUED)
PLANET
BOOHOO WAY
2019 ACTIONS
2020
METRICS
SUPPLY
CHAIN
5 To build
trust and
transparency
through our
supply chain
MATERIALS
5 To increasingly
introduce
sustainably
sourced
materials to
our products
PACKAGING
5 To reduce the
environmental
footprint of our
packaging
5 Engaged experts to
build comprehensive
compliance programme
for Tier 1 and 2 suppliers
in the UK
5 Ongoing membership
of Hope 4 Justice /
Slave Free Alliance to
combat modern day
slavery
5 Signatory to WRAP’s
Sustainable Clothing
Action Plan (“SCAP”)
5 Completed total fibre
mix assessment to map
environmental footprint
of materials
5 Launched recycled
collections including
boohoo’s ‘For the
Future’ range
5 Removed plastic
tags and swingtags
5 Removed dispatch
notices from all
deliveries, saving
millions of pieces
of paper
5 Joined SAC
5 Rolling out programme
of performance
improvement
5 Substantially increase the
% of recycled material and
sustainably sourced fabric
5 Work with third-party
experts to identify a
solution for managing
waste fabric
5 All UK manufacturers (Tier 1 and
Tier 2) to participate in compliance
programme
5 At least 75% of global supply chain
to receive third-party audit in FY21
5 Up to 10% (by volume) of Tier 1
suppliers to undergo SAC Higg
Facility Environment Module in 2020
5 Disclosure of core manufacturers
from across our global supply chain
5 Increase % recycled polyester
in product manufacture
5 To significantly increase collection
of unwanted garments for reuse
or recycling
5 Collaborate to find both
We are working on our plan to:
material and technological
solutions to reduce the
environmental footprint
of our packing
5 Eliminate problematic/ unnecessary
plastic packaging
5 Move from single-use to reusable
packaging where possible
5 Move to 100% of plastic packaging
being reusable, recyclable,
or compostable
5 Significantly upweight the amount
of recycled content in our packaging
5 % of renewable electricity in own
operations – 100%
5 Up to 10% (by volume) of Tier 1
suppliers to undergo SAC Higg
Facility Environment Module in 2020
ENERGY USE
5 To reduce the
energy demands
across the group
5 Commenced a solar
energy programme
at our offices in
Manchester
5 Conducted an
energy use review to
identify improvement
opportunities
5 Source 100% of own
operations electricity
needs from renewable
sources
5 Raise awareness to reduce
energy use across our
business
CARBON
5 To reduce our
5 Worked with third-
carbon footprint
globally
party experts Avieco
to measure our Scope
1 and Scope 2 carbon
footprint
5 Worked with Avieco
to map the carbon
footprint ‘hotspots’
across our value chain
5 % reduction in CO2 emissions
from own operations (Scope 1+2)
compared with previous year
5 Commitment to 2030 GHG
emissions reduction target to be
submitted to and approved by
Science Based Targets Initiative
5 Build on the Scope 1 and
Scope 2 learnings and
identify actions to reduce
footprint
5 Enhance our reporting
capability to ensure
robustness
5 Work on a Scope 3 carbon
footprint assessment
5 Identify a Scope 3 carbon
mitigation plan
26
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
PEOPLE
BOOHOO WAY
2019 ACTIONS
2020
METRICS
OUR
EMPLOYEES
5 To ensure every one
of our employees feels
respected, represented
and valued, and that we
provide them with the
opportunity to do more,
experience more and grow
OUR
COMMUNITIES
OUR
CUSTOMERS
5 To make a valuable socio-
economic contribution
to communities where
we have an influence;
through direct and
indirect employment
opportunities, through
our social and charitable
outreach programmes;
and through our economic
contributions made in
the form of taxes to
government
5 To stay close to our
customers and continue
to listen to what they
expect from us. To
deliver quality, affordable
products that celebrate
and promote diversity, and
to use our scale and reach
to inspire our customers
to act responsibly
5 Conducted a company-
wide survey to assess
the level of employee
satisfaction
5 Updated the
performance review
programme
5 Launched a new
Graduate Trainee
Programme
5 Your Voice our vital
employee engagement
platform has been
updated
5 Implement the learnings
from the company-wide
survey
5 Review all aspects
of our benefits
programme to ensure
that our remuneration is
competitive and attractive
5 Introduce a new Career
Development programme
5 Complete our second
annual staff survey
5 Revitalise the Junior
Board programme
5 Financial support
5 Launch the boohoo
for hundreds of local
charities
5 Financial support for
causes and disasters
in countries where we
do business
Foundation
5 We have created a new
strategic approach to our
charitable giving and will
begin to implement the
new system which will
include the launch of the
charitable foundation
5 90% employee
satisfaction
5 Improvement in staff
satisfaction from the
survey results
5 Gender pay gap report
5 Track the number of
internal promotions
5 Successful launch of the
boohoo Foundation
5 Support given in kind and
in funds and resource to
good causes
5 Launching our ‘For the
Future’ capsules has
given our customers
a sustainable product
offering
5 We have continued
to promote inclusivity
across our brands
5 Increased prominence of
sustainable ranges across
all brands
5 Increased engagement
with recycling content
on social media
5 Investment in consumer
sustainability campaigns
5 Number of garments
returned for recycling
5 We will use the power
of our influencers to
encourage and inspire our
customers to purchase
responsibly
5 We’ll increase the
prominence of our
sustainable ranges on
our sites and share more
guidance on how to take
better care of products
to prolong their life
5 We’ll also engage our
customers to provide their
support for events like
World Earth Day
27
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT (CONTINUED)
STAKEHOLDERS
AND ENGAGEMENT
Speaking with those we work with, deliver products for and who invest their money,
is essential to running a successful business. We take time to engage with, and listen to,
the views of our stakeholders in order to shape our decision-making and to continue
improving the way we do things.
Below we have mapped out our stakeholder groups and the material
issues that they have raised through the course of the year. It is this
collection of issues that we seek to address through our sustainability
communications.
5 Employees – job security; remuneration (contract hours and living
wage); wellbeing; working environment; performance appraisals;
business culture
5 Suppliers – transparency; labour and human rights; labour payment;
fabric/material sourcing
5 Customers – affordable, on-trend fashion
5 Investment community – supply chain management; environmental
management and performance; corporate governance; sustainability
of fast fashion; customer payment and credit facilities
5 Government – sustainability of fast fashion
5 Media – sustainability of fast fashion; corporate governance;
remuneration (living wage and executive remuneration)
5 Trade unions – labour rights
MANAGING OUR APPROACH TO
SUSTAINABILITY
Our Chief Executive, John Lyttle, is ultimately responsible for
our approach to sustainability but is closely supported by our
Group Director of Sustainability, Tom Kershaw, and Company
Secretary, Keri Devine, who oversees the environmental, social
and governance risk management of the business.
Our Group Director of Sustainability is responsible for
developing our sustainability strategy, targets and goals,
working closely with the product, procurement, supply chain,
facilities, human resources and corporate affairs teams to do so.
The way we work and boohoo’s expectations for conduct and
behaviour are set out in our group policies. These policies
cover areas such as environmental protection, animal welfare,
employee and supplier conduct, and human rights and are
available on our website.
28
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
UN SUSTAINABLE
DEVELOPMENT GOALS
The United Nations’ Sustainable Development Goals (“Goals”) were created to tackle the
world’s greatest challenges such as inequality, climate change and environmental health.
In 2016, the United Nations created 17 Goals with 169 underlying targets and a target
achievement goal of 2030.
The Goals call upon every part of society – from governments to organisations, businesses to private citizens – to play a part in their achievement
in order to create a better and more sustainable future for everyone.
In defining our sustainability strategy, we identified those targets that are relevant to our business and to which we can contribute. As our strategy
and programme mature, we will seek to address further targets to enhance the sustainable impact of our activity.
BOOHOO WAY
BOOHOO POSITION STATEMENTS
UN SDGs
PEOPLE
#ENVISION2030 GOAL 5: GENDER EQUALITY
Achieve gender equality and empower women and girls
We are contributing towards targets 5.1 and 5.9 by setting strict equality policies throughout our value
chain; and target 5.5 by ensuring equal opportunities for leadership at all levels of decision-making across
the business.
#ENVISION2030 GOAL 8: DECENT WORK AND
ECONOMIC GROWTH
Promote inclusive and sustainable economic growth, employment and decent work for all
We are contributing towards target 8.5 by offering equal opportunities to innovative and productive
employment; target 8.7 through the robust standards set in our Code of Conduct and other labour and
supplier policies; and target 8.8 through setting strict labour standards throughout our supply chain with
the support of our partners.
#ENVISION2030 GOAL 10: REDUCE INEQUALITIES
Ensure equal opportunities for all
We are contributing to targets 10.2 and 10.4 through the implementation of our Code of Conduct and
development and review of policies that champion equality throughout our value chain.
PLANET
#ENVISION2030 GOAL 9: INDUSTRY, INNOVATION
AND INFRASTRUCTURE
Build resilient infrastructure, promote inclusive and sustainable industrialisation
and foster innovation
We are contributing towards targets 9.3 and 9.4 by working with and integrating a global supply base
into our value chain, and upgrading our infrastructure to make them more sustainable, respectively.
#ENVISION2030 GOAL 12: RESPONSIBLE CONSUMPTION
AND PRODUCTION
Ensure sustainable consumption and production patterns
We are addressing target 12.2 by improving the efficiency of our operations and collaborating with leading
experts; target 12.5 by integrating more recycled materials into our product ranges and encouraging more
sustainable consumer behaviour; target 12.6 by increasing transparency in our sustainability performance
and aligning our business practices to responsible business initiatives; and target 12.7 by setting strict
procurement policies.
29
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT (CONTINUED)
PEOPLE
SUPPLY CHAIN
Improving transparency
and raising standards
Building trust, strengthening management
and working collaboratively with our supply
chain is central to the success of our business,
particularly as our business grows, and the
supplier base with it. Ensuring that we continue
to work with our suppliers to improve standards
and conditions is, and must continue to be,
a core focus for boohoo. We know we cannot
do this on our own, so we are investing in
third-party support and a new software platform
to help us map and measure our supply base.
We are delighted to have recently signed up to
become a member of the Sustainable Apparel
Coalition (“SAC”), a global alliance between
some of the world’s largest apparel brands,
retailers and manufacturers that is committed
to making transformational change across
our industry. Joining the SAC means that
we can draw on their expertise and tools to
help measure and improve social, labour and
environmental standards across the group.
We also progressed our partnership with
Hope4Justice / Slave Free Alliance to combat
modern day slavery, who conducted a gap
analysis of our supply chain, which is informing
our supply chain management programme.
30
45%SENIOR MANAGEMENT POSITIONS
HELD BY WOMEN
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
“Our goal is to ensure
that we are making a
positive social impact
for all of the people
working in our supply
chain through fair pay
and good, proper and
safe working conditions.”
Our goal is to ensure that we are making
a positive social impact for all of the people
working in our supply chain through fair pay
and good, proper and safe working conditions.
To that end, we have engaged a third-party
supply chain specialist to work with us
to completely overhaul our supply chain
transparency, including our tracking and
auditing practice, so that we are properly
equipped to work with our suppliers to
promote better working standards. For 2020,
boohoo’s focus will be on our UK supply chain,
which provides a significant percentage of our
garments. This new programme will follow our
“map, measure and modify” approach and
will include enhanced supply chain mapping
and on-the-ground compliance specialists
supporting our in-house compliance team
and working with our UK manufacturers to
roll out a programme of enhanced compliance.
UK manufacturing provides us with a unique
opportunity, supports our speed to market
and enables our business to differentiate
itself from our competitors. Whilst we have
great confidence in our UK manufacturers,
we recognise the importance of enhanced
compliance through trusted third-party
compliance specialists and hope that this
programme will enable us to assure standards
in this important manufacturing base.
Internationally, we will continue to rely on
third-party audits against the SMETA audit
standards. Members of our compliance
team have specific territory compliance
responsibility, which drives accountability
internally.
Following our ‘test and repeat’ model, we will
review the success of our UK third-party
partnership and consider whether to roll out a
similar programme to our international supply
base. We anticipate doing this in FY22.
We expect our suppliers to comply with
all relevant laws and regulations regarding
the protection and preservation of the
environment. As such, all factories and raw
material suppliers must adhere to the boohoo
group Restricted Substances Policy, and all
materials, components and finished products
must comply with: international law on the
restriction of hazardous substances; REACH
legislation; and the European Chemical
Agency (ECHA) Restricted Substances List.
Responsible payment terms
During the past year, we have introduced
industry-leading 14-day payment terms for
our UK manufacturers. We did this to help
improve cash flow in our suppliers’ businesses,
so that in turn they can pay their employees
and material and operational costs swiftly.
Our goal for 2020 is to ensure that prompt
payment is being fed down the supply chain
through Tier 2 and Tier 3 suppliers.
Good work for fair pay
Ensuring that everyone working in our supply
chain is treated fairly and remunerated
appropriately for the good work they do,
is a key KPI of this programme. To that end,
we are working with third-party specialists,
in collaboration with our suppliers across
the UK, to ensure compliance with the
standards we set.
KEY BOOHOO MEMBERSHIPS AND PARTNERSHIPS
Sustainable Apparel Coalition (“SAC”)
Hope4Justice / Slave Free Alliance
The United Nations’ Sustainable Development Goals
31
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT (CONTINUED)
EMPLOYEES
Looking after our people is woven
into the fabric of our business.
They are the most important
part of our business.
We will continue to explore every
opportunity to continually improve our
employee practices to ensure that we
are an employer of choice wherever
we do business.
Our benefits
With a firm stance on equality and rewarding
performance, we pride ourselves on our
competitive pay and overall benefit packages.
All of our hourly-paid employees are paid
above the minimum wage, regardless of their
age and absolutely no-one is employed on a
zero hours contract, unless they request one.
Our gender pay gap data in March 2020 for
the group showed females were paid 1.7%
more than males, using the median results,
and males 10.4% more than females,
using mean results (male average pay being
higher due to a greater proportion of males
in the most senior roles), which is significantly
below the national average as reported by
ONS. Importantly, 45% of our senior team
are female.
Everyone at boohoo is eligible to join the
SAYE share scheme, which, alongside our SIP
share scheme has proven financially beneficial
and allows our colleagues to share in the
success that they have worked hard to create.
With additional benefits such as access to free
or subsidised fitness facilities, life assurance,
subsidised meals in our restaurants, employee
engagement forums and the opportunity to
develop personally and professionally, we will
continue to evolve and improve our People
offer to ensure we are an employer of choice
wherever we do business.
Attracting new talent
We are proud of our track record on attracting
and retaining the right people to support the
growth of each brand. We value and look for
people who will go that extra mile, who have
an entrepreneurial spirit and who have great
drive and enthusiasm, alongside exceptional
skills in their job role.
Within the last 12 months, we have hired
925 people and our overall number of
employees sits at approximately 2,700.
To help complement the normal hiring channels
we also have the following schemes in place:
58%PERCENTAGE OF FEMALE
WORKFORCE
32
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
925
EMPLOYEES HIRED IN THE LAST 12 MONTHS
circa 2,700 employees worldwide
Future leaders
We continue to focus on our future leaders
in order to meet our rapid growth by scaling
up our leadership development. Currently we
deliver an in-house management development
programme – Stepping into Management.
Thirty managers across the group graduated
in 2019 and we have another 38 managers
signed up to complete the programme
this year.
Employee engagement survey
This year, all our colleagues across the group
were invited to participate in a confidential
employment survey. The survey itself
demonstrated that 73% of our colleagues
who responded to the survey were proud to
work for boohoo. Over 86% of our colleagues
see themselves working for boohoo in a year’s
time and 87% said they would be happy to
go the extra mile for boohoo to succeed.
The survey confirmed that we have an
engaged workforce and helped to identify
areas where we can do better, where we plan
to implement changes in 2020.
Your Voice
In addition to the survey, we have an employee
forum, ‘Your Voice’, which provides us with
a monthly check-in with our colleagues at
the Burnley site. Your Voice has been running
since 2014 and its aim is to ensure that our
employees feel listened to, respected and
confident that their voices will be heard.
It provides employees with the opportunity to
raise queries about matters ranging from social
events to process improvement whilst feeding
back on initiatives and engagement activities.
Commitment from the business this year
has been significant, with a focus on making
sure communicating upwards is made as easy
as possible when providing instant feedback.
Feedback from our colleagues has been
frequent with monthly meetings held to
discuss all points that are raised ahead of each
meeting. Actions delivered in 2019 range from
facility improvements to wellbeing initiatives
such as better visibility of Retail Trust and
mental health support. We also introduced
TV screens in all breakout areas to showcase
benefits, engagement activities and to keep
employees up to date.
33
73%EMPLOYEES ARE PROUD OF
WORKING FOR BOOHOO
1. We continued with our annual intern
programme, having been successful for
four years. This year we had over 200
applications, and the talent we attract is
quite phenomenal. We are delighted to say
we have had 29 interns in place this year.
As has historically been the case, our
interns of today often become our
employees of tomorrow, with over 15 taking
up full-time roles following their internship.
Our strong trusted links with the local
universities in Manchester, Huddersfield,
Nottingham and Liverpool stand us in
good stead.
2. We have launched a new Graduate Trainee
Programme within Operations, starting
in September 2020. The candidates
will rotate through a wide variety of
departments over a two-year period,
experiencing all areas of the business and if
successful, will be placed in a management
role within the logistics function. Once up
and running, our plan is to then extend to
other areas of the business.
Learning & development at boohoo
We believe in providing the opportunity for
everyone to realise their full potential and have
training and development systems in place to
support our employees’ ongoing development.
Diversity
We encourage diversity in the workforce:
last year the percentage of males was 42%
and females 58%, with 45% of our senior
management positions held by women.
NUMBER OF EMPLOYEES OF EACH
GENDER AT THE YEAR END:
Directors of
the parent company
Senior managers
Male Female
6
49
2
43
Other employees
1,079
1,513
1,134
1,558
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT (CONTINUED)
EMPLOYEES (CONTINUED)
Wellbeing & engagement activities
This year we have had a real focus on mental
health in the workplace where we put nine
of our colleagues through a two-day Mental
Health First Aid course. We subsequently
rolled out a one-day ‘Managing mental health
in the workplace’ course to over 60 colleagues
across Manchester and Burnley. This has been
a key initiative that has helped in so many
unseen ways for our colleagues know there
is support in the workplace; an area of vital
importance that we will continue to champion.
We have also focussed on fitness and lifestyle
by offering free yoga, hi-intensity gym
classes and meditation classes and global step
challenge, equally acknowledging the link
between physical and mental health.
CUSTOMERS
At boohoo, we pride ourselves on our inclusive
brands and their ability to celebrate and
promote diversity. Our customers continue
to inspire and motivate us to supply the latest
trends at the best prices. We continue to
develop our ranges to offer clothing to suit all,
to ensure we are promoting diversity, as well
as responsible and healthy body images.
Shared responsibility
We know we have a crucial role to play in the
way that our customers use, treat and dispose
of the garments that they purchase from
us. To that end, and to reduce our indirect
impacts, we will build on our existing ‘ways
to wear’ posts which encourage customers
to extend the life of their clothes and launch
a further consumer awareness programme
around cleaning and treatment.
COMMUNITY
At boohoo, we believe in giving back to
the communities and countries where
we do business, because we know that for
our business to thrive the countries and
communities where we do business need
to thrive too.
From being the headline sponsor of
Manchester Pride, to supporting the city’s
homeless, to cash donations to support those
tackling the wild fires in Australia, we’ve been
doing what we can where we can to support
the amazing and tireless work of volunteers
and charity workers across the globe. In 2020,
we are overhauling our Charity Strategy and
from Q2 our charitable giving will fall under
four key pillars:
Fundraising
We will put the weight of our brand behind
supporting a single cause that our customers,
team and suppliers care about.
Awareness-raising
We will use the power, reach and influence
of our brand to raise awareness of great
local causes. We will provide funds, but more
importantly resource, to help the charities
achieve their goals and ambitions.
Ad hoc giving
We will continue to review and honour as
many as possible of the hundreds of ad hoc
requests we receive each week, providing
vouchers, funds or resource where we can.
Foundation
We are a business that champions and values
the contribution that young people make
socially and economically. With a global team
of around 2,700, the majority of whom are
under 30, we plan to create a foundation that
supports the advancement of young people.
Identifying the right thing to do has taken us
a little longer than we planned, but this
remains an important part of our community
strategy. We are currently exploring a number
of options and aim to launch this by Q3 2020.
34
“At boohoo, we pride
ourselves on our
inclusive brands and their
ability to celebrate and
promote diversity.
Our customers continue
to inspire and motivate
us to supply the latest
trends at the best prices.
We continue to develop
our ranges to offer
clothing to suit all, to
ensure we are promoting
diversity, as well as
responsible and healthy
body images.”
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
PLANET
We are very mindful of the fact that much of our environmental impact occurs beyond
our operating control, but not beyond our influence, and so we are working hard to build
up a better picture of our impacts to identify where we can make a difference, working in
collaboration with partners and industry associations.
CARBON
Two initiatives have helped us to start
to understand better our carbon impacts
this year.
Firstly, through signing up to the WRAP
Sustainable Clothing Action Plan, a review of
our fibre mix helped us to understand carbon
impacts from fibre choices. For example,
by moving to recycled polyester we can
significantly reduce the carbon footprint of
a garment compared to using virgin fibres.
Secondly, we undertook our first Scope 1 and
Scope 2 carbon footprint with Avieco, together
with a high-level ‘hotspot’ overview of our
value chain. boohoo’s total location-based
carbon emissions across Scope 1 and Scope 2
for our UK sites during the 2019 calendar year
was 3,415 tonnes, with electricity accounting
for 86% of total emissions. These actions
helped us identify key areas of opportunity
to reduce carbon emissions. We will use this
data to inform our future strategy to reduce
impacts across our value chain.
Looking ahead, we plan to work with key
suppliers and partners to measure, report and
reduce our Scope 3 carbon footprint over
the next year, with the intention of setting
science-based targets for carbon emissions
reduction in 2021. Whilst reducing our
carbon footprint across our direct and wider
operations is one of our key priorities, we will
continue to broaden our scope and work with
our suppliers to address wider environmental
impacts throughout the supply chain, such
as water.
35
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT (CONTINUED)
ENERGY USE
We recognise that energy is a key driver
of carbon emissions and are committed to
reducing our energy use across our own
operations. In 2019, the group took several
measures to reduce energy use and emissions
in our own operations. These included:
5 A move to purchasing only renewable
electricity across all key UK group sites
5 A switch to LED lighting and motion
sensors across all UK group sites as they
are refurbished (current coverage is
approximately 80%)
5 Submitting an application for planning
permission to install solar panels with
a capacity of 2MW at our Burnley
warehouse, and 200KW at our
Manchester office (in addition to
200KW already installed in Manchester)
5 Improving the insulation and roof covering
to our Manchester office
5 Planned energy reduction measures
in our own operations for 2020 include:
5 Replacement of all windows at our head
office in Manchester, for better insulation
5 Installation of the solar panels currently
at planning application stage
Additional actions being considered to reduce
emissions include identifying opportunities to
reduce business travel and investigating the
purchase of more energy efficient machinery.
36
MATERIALS
As previously mentioned, we signed up to
WRAP’s Sustainable Clothing Action Plan and
are working on taking the learnings from this
to reduce the carbon, waste, and water impact
of our garments. WRAP have helped us to
map the impacts of the different fibres we use
to make our clothes and understand where we
can reduce those impacts, and in particular
by increasing our use of recycled fibres and by
moving to improved fibres, such as sustainably
sourced cotton.
As polyester is the largest component of
our fibre mix, we have focussed to date on
introducing and sourcing more recycled
polyester. Accordingly, a first step towards
reducing our carbon impact has been our
2019 launch of various collections made from
recycled fibres – including boohoo’s ‘For
the Future’ collection. We have also started
to introduce recycled fibres into our ‘best-
selling’ main line ranges. This helps us quickly
increase the number of products available to
our customers that are made from recycled
materials. As a group, we have committed
to giving these collections prominence on
our website and have set ourselves a group
target of significantly increasing our use of
recycled fibres.
Alongside progressing this goal, we are now
exploring moving to more sustainably-sourced
viscose and cotton.
Minimising waste
We recognise our responsibility to ensure that
all of the impacts embedded in our clothing
are not wasted at the end of its life. Our ‘test
and repeat’ model means that, compared to
many bricks-and-mortar retailers, we have
very little ‘post-production’ waste. We order
very small quantities of each item, and then
only re-order the lines that are selling well.
(1) Source: Bespoke survey via OnePulse of 500 16-24
year old females in the UK, March 2020.
14.6t
GARMENTS DONATED TO
BRITISH HEART FOUNDATION
We manage our stocks very closely using our
industry-leading technology to ensure we
only produce what we need. The small amount
of stock left over that we cannot sell to our
customers is sold either to other retailers
or is sent to other countries by our partner
reGAIN. Our PrettyLittleThing brand partners
with British Heart Foundation (BHF x Pretty
Little Thing) and donates samples to BHF
for re-sale through its shops.
BHF reports that it raised £282,050 from
sales of the sample donations, in doing so
helping to divert 14.62 tonnes from landfill.
No stock or samples are sent to landfill.
We are often accused of making ‘single-use’
clothing that customers wear once and then
discard. Consumer research does not bear this
out; in fact, only 2% of fast fashion buyers say
they wear items only once before disposing,
while 51% say they wear these items until they
fall apart. 72% of fast fashion wearers dispose
of unwanted garments via charity shops, and
fast fashion wearers are less likely than non-
fast-fashion wearers to throw clothes away
at the end of their use (19% vs 26%)(1).
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
We are working with our suppliers to come up
with new and innovative ways to reduce the
environmental impact of our packaging and
are exploring some alternative substitutes.
As outlined in our previous annual report, we
have been exploring alternatives to packaging
– for example, moving to a fully biodegradable
plastic product. We explored this product
with its developers and concluded that
unfortunately it was not suitable for clothing
packaging, as it is designed for products likely
to be littered and will only biodegrade when
exposed to air (which would not be the case
for clothes packaging, which is either put into
landfill or preferably, recycled). However, in
line with our ‘test and repeat’ model we will
continue to explore such initiatives.
WATER USE
We are looking at the water consumption
embedded in our fibre mix. Once we have
completed this, the next step will be to
undertake further work to understand the
impact of dyeing and bleaching in our supply
chain and identify some guidelines we can
work towards with our suppliers to minimise
our impact on water supplies local to our
production sites.
MICROFIBRES
In keeping with our ethos to engage with
industry associations that can and do have a
material impact on how our industry tackles
environmental challenges, we have joined
the Microfibre Consortium and look forward
to working with them to understand what
modifications we can and should make to
reduce the release of microfibres from our
garments throughout their lifecycle.
On behalf of the board
John Lyttle
Neil Catto
21 April 2020
37
Promoting reuse
However, we can do more to promote re-use.
We want to use our size, scale and reach for
good. We use our sites, our influencers and
experts to guide and inspire our customers to
get the most out of their purchases. From how
to wear guides to laundry guidance, we are
committed to encouraging our customers
to always ‘wear it out’ and make the most
of their purchases.
We will continue to provide guidance for
customers on how best to dispose of garments
that they no longer wish to wear. In 2020 we
will explore new ways to incentivise responsible
disposal, working with suppliers, our customers
and experts to find workable solutions.
This could include enabling our customers
to return goods to us for repurposing.
PACKAGING
We continue to develop our packaging goals
and hope to announce concrete targets
in the coming months. These will include
commitments around increased recycled and
sustainability-sourced packaging substitutes,
moving to reusable packaging where possible
and phasing out unnecessary packaging and
difficult to recycle plastics.
Alongside these plans, work is already in train
to reduce our plastic impacts. Our garment
bags are currently made from LDPE (Low-
Density Polyethylene), with no recycled
content, but by the end of 2020, we will
have moved to a minimum of 60% recycled
content. Our dispatch bags already contain
a minimum of 80% recycled content. All of
our bags are, and will remain, fully recyclable,
but because not every local authority recycles
them we are establishing a closed loop
recycling scheme where customers can send
back to us empty polybags and dispatch bags
(together with any garment returns) and we
will recycle them into new bags.
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC BOARD OF DIRECTORS
STRONG LEADERSHIP
MAHMUD KAMANI
Group Executive Chairman
Mahmud founded boohoo with
Carol Kane in 2006, leveraging
over 30 years of experience in
the fashion and clothing industry.
Mahmud is an entrepreneur,
with expertise encompassing all
areas of the supply chain from
sourcing, to import and wholesale.
Mahmud is an inspirational leader,
having built a strong team and
engendered loyalty from many
long-serving employees.
CAROL KANE
Group Co-founder and
Executive Director
Carol has over 30 years of
experience in the fashion industry.
Starting her career as a designer,
then fashion buyer, Carol has
worked with Mahmud Kamani
for the past 26 years supplying
high street retailers. Carol co-
founded boohoo in 2006 and
since inception has worked on
marketing, product and brand
strategy both domestically
and abroad.
JOHN LYTTLE
Chief Executive
NEIL CATTO
Chief Financial Officer
John joined the board on
15 March 2019. John spent
eight years at Primark, a division
of Associated British Foods, as
Chief Operating Officer. During
his tenure, turnover grew 158% to
£7 billion. Prior to joining Primark,
John held senior roles at Matalan
and Arcadia group.
Neil qualified as a chartered
accountant with Ernst & Young
and spent nine years working
in their Manchester, Palo Alto
and Reading offices. He was
previously Finance Director of
dabs.com plc and has held senior
financial positions in BT plc and
The Carphone Warehouse
Group plc.
BOARD STATS
COMMITTEE KEY
male
female
0-1 year (2)
2-4 years (3)
5-6 years (3)
BOARD DIVERSITY
BOARD TENURE
38
A
Chairman of the
Audit Committee
N Chairman of the
Nomination Committee
R
Chairman of the
Remuneration Committee
A Member of the
Audit Committee
N
Member of the
Nomination Committee
R Member of the
Remuneration Committee
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
BRIAN SMALL
Deputy Chairman,
non-executive director,
and Senior Independent
Director
Brian is Deputy Chairman
and Chairman of the Audit
and Nomination Committees
and sits on the Remuneration
Committee.
Brian was most recently CFO
of JD Sports plc for nearly 15
years. Prior to this role, he was
Operations Finance Director
at Intercare Group Plc and has
also been Finance Director of
a number of other companies.
Brian is also a non-executive
director and Audit Committee
Chair at Mothercare plc and
Pendragon plc. He qualified
as an accountant with Price
Waterhouse in 1981.
A
N
R
PIERRE CUILLERET
Non-executive director
IAIN MCDONALD
Non-executive director
Pierre sits on the Audit,
Nomination and Remuneration
Committees.
Pierre founded The Phone House
in 1996, a large European mobile
phone retailer. Between 2005
and 2014, Pierre was CEO and
shareholder of Micromania, the
number one video game retailer
in France. From 2011 to 2014,
he was Senior VP of GameStop
Europe to whom he had sold
Micromania. Other previous
non-executive directorships
include DIA, listed on the Madrid
Stock Exchange and part of Ibex,
and fashion retailer Desigual.
Pierre currently supports and
invests in rapid growth companies
in Europe and the US and serves
on the advisory boards of Antwort
Capital in Luxembourg and Diana
Capital in Spain.
A
N
R
Iain is Chairman of the
Remuneration Committee and
sits on the Audit and Nomination
Committees.
Iain is the founder of Belerion
Capital, a specialist technology
& e-commerce company
and was an early investor in a
number of technology businesses
including Asos, The Hut Group,
Eagle Eye Solutions, Anatwine
and Metapack. Iain is a non-
executive director of one of the
leading e-commerce businesses
in Europe, the Hut Group,
and also AIM-listed software
business CentralNic. Prior to
founding Belerion Capital, Iain
was a partner of the William
Currie Group, a technology
and e-commerce private family
office.
A
N
R
SARA MURRAY
Non-executive director
and Senior Independent
Director (resigned
22 April 2020)
Sara was Chairman of the
Nomination Committee and sat
on the Audit and Remuneration
Committees.
Sara is founder and CEO of
buddi, a provider of mobile
location solutions. Sara was the
founder and CEO of Inspop.com
Limited (trading as confused.
com), a non-executive director
of Schering Healthcare for
five years and member of the
governing board of Innovate UK
(Technology Strategy Board).
She is a Member of the Council
of Imperial College London
and was awarded an OBE for
services to entrepreneurship
and innovation in 2012.
39
ANRANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC CORPORATE GOVERNANCE REPORT
BOARD GOVERNANCE
The board is committed to ensuring high standards of governance for the company. The company welcomed the changes to AIM Rule 26 in
2018 requiring all AIM-listed companies to adopt and comply with a recognised corporate governance code and publish a corporate governance
statement on their website. The company has adopted the 2018 Quoted Companies Alliance Corporate Governance Code (“QCA Code”).
The board believes that the QCA Code provides the most appropriate framework of governance arrangements for the company for a public
company of boohoo’s size and complexity. The following link to the company’s website sets-out in detail the company’s current corporate
governance statement and approach to its compliance of the QCA Code: https://www.boohooplc.com/investors/aim-admission-documents
THE BOARD
The directors’ biographies appear on pages 38 and 39.
The board comprised eight directors (up to 22 April 2020, when Sara Murray stepped down from the board), four of whom are executive directors
and four of whom are non-executive directors, reflecting a blend of different experience and backgrounds. It is the board’s intention to appoint
two further non-executive directors to maintain the balance of the board. Each of Pierre Cuilleret, Iain McDonald, Sara Murray and Brian Small
is considered to be “independent” non-executive directors under the criteria identified in the QCA Corporate Governance Code. In addition,
Brian Small in his role as Deputy Chairman, will act as Senior Independent Director from the date of Sara’s resignation.
THE ROLE OF THE BOARD
The board as a whole is collectively responsible for the success of the group and provides entrepreneurial leadership of the group within the
framework of effective controls, which enable risk to be assessed and managed. It sets out the group’s values and standards and ensures that its
obligations to shareholders and other stakeholders are understood and met.
The board has a formal schedule of matters reserved to it for decision, including approval of strategic plans and the annual operating plan, significant
investments and capital projects, treasury and risk management policies. All directors take decisions objectively in the interests of the group.
Guidelines are in place concerning the content, presentation and timely delivery of papers by management to directors for each board meeting
so that the directors have enough information to be properly briefed. Where issues arise at board meetings, the Chairman and Deputy Chairman
ensure that all directors are properly briefed and, when necessary, appropriate further enquiries are made. The division of responsibilities between
the Executive Chairman and Chief Executive and Executive Chairman and Deputy Chairman is clearly established and has been agreed by the board.
All directors have access to the advice and services of the Chief Financial Officer and Company Secretary, who are responsible for ensuring that
the board procedures are followed and that applicable rules and regulations are complied with. In addition, procedures are in place to enable the
directors to obtain independent professional advice in the furtherance of their duties, if necessary, at the company’s expense.
The board is kept informed on an ongoing basis by the Company Secretary about their duties and any update in relation to legal and governance
requirements for the group. Training is provided to the board each year regarding market and AIM regulations. Further information regarding each
current director’s experience, skills and capabilities is contained in their biographies above.
The position of Deputy Chairman, a non-executive function, was created in January 2020 to lead the non-executive directors on matters where
independence is required and to assist the Executive Chairman.
BOARD COMMITTEES
The company has three committees, namely Audit, Nomination and Remuneration Committees.
AUDIT COMMITTEE
Brian Small is the Chairman of the Audit Committee. It is intended that Brian Small will continue to perform this role until the annual report and
financial statements for the year ended 29 February 2020 are finalised and published and a new Chair of the Audit Committee can be appointed.
The Committee has primary responsibility for monitoring the quality of internal controls, ensuring that the financial performance of the company is
properly measured and reported on and reviewing reports from the company’s auditors relating to the company’s accounting and internal controls,
in all cases having due regard to the interests of shareholders. The Audit Committee meets three times a year. Brian Small has recent and relevant
financial experience. Pierre Cuilleret and Iain McDonald are the other members of the Audit Committee. Sara Murray was a member of the Audit
Committee until she stepped down in April 2020.
The Audit Committee met three times during the year and also met after the year end. Matters considered at these meetings included: reviewing
and approving the annual report and financial statements for the year ended 28 February 2019, the half year results to 31 August 2019 and the
annual report and financial statements for the year ended 29 February 2020; discussion with the external auditors to confirm their independence
and scope for audit work; considering the reports from external auditors identifying any accounting or judgemental issues requiring the board’s
attention and the auditors’ assessment of internal controls; reviewing and approving the group’s tax strategy; reviewing the company’s risk register
and business continuity procedures; considering the work of the corporate social responsibility and supplier conformance functions; reviewing
compliance with minimum pay legislation and fairness at work procedures; and considering the adequacy of the whistle-blowing facility, the
anti-bribery training and monitoring and data protection policy and procedures.
The Audit Committee Chairman has maintained dialogue with the auditors outside of the scheduled meetings and meets with the auditors without
the presence of executive directors and members of the finance team.
40
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
The group’s internal audit function is now well-established, having been operating since 2017. Internal audit’s work is overseen by the Audit
Committee. The Audit Committee approves the Annual Internal Audit Plan and updates to that plan are approved at each Audit Committee
meeting. The internal audit function operates using a mix of dedicated in house resource and outsourcing, for specialist areas of review.
The scope of internal audit’s coverage is based upon its group-wide risk assessment and in the year has included reviews of financial processes,
warehouse operational processes, IT controls and cyber security, GDPR, business continuity, supplier compliance, product compliance and adherence
to employment laws. The Audit Committee assesses the outcome of each audit and has oversight via internal audit of any improvement actions.
During 2020, internal audit will continue to deliver a risk-based audit plan and supplement that plan with cyclical controls compliance reviews.
NOMINATION COMMITTEE
Brian Small is the Chairman of the Nomination Committee, which will identify and nominate, for the approval of the board, candidates to fill board
vacancies as and when they arise. The committee also considers matters of succession planning. The Nomination Committee meets at least once
a year and otherwise as required. Pierre Cuilleret and Iain McDonald are the other members of the Nomination Committee. Sara Murray was the
Chairman of the Nomination Committee until she stepped down in April 2020.
Matters considered at these meetings included: appointment of Brian Small as independent non-executive director and Audit Committee
Chairman in April 2019 and his subsequent appointment as Deputy Chairman in January 2020.
REMUNERATION COMMITTEE
The Chairman of the Remuneration Committee is Iain McDonald. This committee reviews the performance of the executive directors and
determines their terms and conditions of service, including their remuneration and the grant of share awards, having due regard to the interests
of shareholders. The Remuneration Committee meets at least twice a year. Pierre Cuilleret and Brian Small are the other members of the
Remuneration Committee. Sara Murray was a member of the Remuneration Committee until she stepped down in April 2020.
The responsibilities and activities of the Remuneration Committee are set out in more detail in the directors’ remuneration report.
EXECUTIVE COMMITTEE
The Executive Committee comprises the four executive directors and selected members of the senior executive management. The committee
meets at least monthly and has the responsibility for dealing with the day-to-day management of the group and developing and executing strategy.
BOARD AND COMMITTEE MEETINGS
It is intended that the board meets at least eight times a year, the Audit Committee at least three times a year, the Nomination Committee at least
once a year and the Remuneration Committee at least twice a year.
RISK MANAGEMENT AND INTERNAL CONTROL
The board has overall responsibility for the group’s systems of internal control and risk management and for reviewing the effectiveness of those
systems. Such systems are designed to manage rather than eliminate the risk of failure to achieve business objectives. Any system can only provide
reasonable and not absolute assurance against material misstatement or loss.
The board confirms that there are ongoing procedures for identifying, evaluating and managing significant risks faced by the group and that it has
reviewed these risks and the procedures with management before the financial year end.
The board has an internal risk management procedure to identify, with relevant management, the major business risks facing the group and to put
in place appropriate policies and procedures to manage those risks. Internal and external risks, which are assessed on a continual basis, may be
associated with a variety of internal or external sources, including control breakdowns, disruption in information systems, competition, inadequate
financing, poor business performance, natural catastrophe and regulatory requirements. These involve a process of control, self-assessment and
reporting that will be established to provide a documented trail of accountability, which will be reported to the board.
Management reports on its review of the risks and how they are managed to both the board and Audit Committee, whose role it is to review the key
risks inherent in the business and the systems of control necessary to manage those risks. The Audit Committee presents its findings to the board as
appropriate. Management also reports to the board on major changes in the business and external environment, which affect significant risks. Where
areas for improvement in the systems are identified, the board considers the recommendations made by management and the Audit Committee.
Detailed policies ensure the accuracy and reliability of financial reporting and the preparation of the financial statements including the consolidation
process. The board reviews the system of internal controls during the year to identify any significant failures or weaknesses.
PERFORMANCE EVALUATION
An internal evaluation of the board (including sub-committees and individual board members) is planned for spring 2020. This will involve
anonymous questionnaires formulated to enable the board to confirm that its performance and the contribution of each of the executive and non-
executive directors demonstrate commitment to their respective roles and that the board members’ respective skills complement each other and
enhance the overall operation of the board. This evaluation will be led by the Chairman and Deputy Chairman to ensure that the board continues
to operate effectively.
41
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC CORPORATE GOVERNANCE REPORT (CONTINUED)
RELATIONS WITH SHAREHOLDERS
The company maintains an active dialogue with its shareholders through a planned programme of investor relations. This activity is a keystone
of the company’s corporate communications programme and is headed by the Chief Executive, Group Executive Chairman, Group Co-founder
and Executive Director and the Chief Financial Officer, with support from an investor relations team and the Company Secretary. The company’s
non-executive Deputy Chairman (who is also Senior Independent Director) acts as an additional link between the shareholders and the company’s
executive directors. The board is informed of shareholder views as part of the regular reporting process and matters for discussion.
The programme includes formal presentations of the company’s full-year and interim results and meetings between institutional investors, analysts
and senior management on a regular basis. Regular communication with shareholders also takes place through the company’s annual and interim
report and via the company website (www.boohooplc.com), which contains up-to-date information on the group’s activities.
The board recognises that the annual general meeting is an important opportunity for communication with both institutional and private
shareholders. Due to the current restrictions and social distancing requirements presented by the COVID-19 pandemic, the board is considering
delaying the annual general meeting until there is greater openness that will allow shareholders to ask questions of the full board, including the
chairs of the Audit, Remuneration and Nomination Committees. Further details of the format and date of the annual general meeting will be
communicated to shareholders in due course and in the usual way.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
The table below shows the attendance of individual directors at board meetings and committee meetings of which they are members during the year.
Board
Audit
Committee
Remuneration
Committee
Nomination
Committee
Eligible to
attend
Attended
Eligible to
attend
Attended
Eligible to
attend
Attended
Eligible to
attend
Attended
8
8
8
8
8
8
8
6
7
7
8
8
8
8
8
6
–
–
–
–
3
3
3
2
–
–
–
–
3
3
3
2
–
–
–
–
2
2
2
–
–
–
–
–
2
2
2
–
–
–
–
–
2
2
2
1
–
–
–
–
2
2
2
1
Mahmud Kamani
Carol Kane
John Lyttle
Neil Catto
Pierre Cuilleret
Iain McDonald
Sara Murray
Brian Small
As at 21 April 2020, the board has met twice since the end of the financial year.
AUDITORS’ INDEPENDENCE
The Audit Committee reports to the board on the effectiveness, value and independence of the auditors on an annual basis. The Audit Committee
also approves the extent of non-audit work undertaken by the auditors to ensure that it does not interfere with their independence and has
established guidelines for the value of non-audit services permitted to be undertaken by the auditors. The board is satisfied with the independence
and objectivity of the auditors, PricewaterhouseCoopers LLP, and is expected to recommend their reappointment at the AGM.
42
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
The directors present their directors’ report and annual report and financial statements for the year ended 29 February 2020.
REGISTERED OFFICE
The registered office is 12 Castle Street, St Helier, Jersey, JE2 3RT.
PRINCIPAL ACTIVITIES
The principal activity of the company is that of a holding company. The principal activity of its subsidiary undertakings is that of online clothing retailers.
BUSINESS REVIEW
The directors are required by Company Law to set out a fair review of the business, its position at the year end and a description of the principal risks
and uncertainties facing the group and to prepare the financial statements in accordance with applicable law and International Financial Reporting
Standards (IFRS) as adopted by the European Union. The strategic report on pages 2 to 37 provides this review and financial position and these are
incorporated by cross-reference and form part of this report. The corporate governance report on pages 40 to 42 should be read as forming part
of the directors’ report.
RESULTS AND DIVIDENDS
Group profit after tax for the year to 29 February 2020 was £72.9 million (2019: £47.5 million). The audited financial statements for the year
for the group and company are set out on pages 63 to 98.
The directors do not recommend the payment of a dividend (2019: no dividend) so that cash is retained in the group for capital expenditure projects
that are required for the rapid growth and efficiency improvements of the business and for suitable business acquisitions.
DIRECTORS AND COMPANY SECRETARY
The biographies of the directors who held office throughout the year and subsequently are set out on pages 38 and 39. The Company Secretary
is Keri Devine.
The interests of the directors in the shares of the company and their share options and awards are detailed in the remuneration report on page 55.
The company maintains directors’ and officers’ liability insurance, which gives appropriate cover for any legal action brought against the directors.
The company has also provided an indemnity for its directors, which is a qualifying third-party indemnity provision for the purposes of section 234
of the Companies Act 2006 and was in place during the year and up to the date of approval of the financial statements.
SHARE CAPITAL AND RESTRICTIONS ON SALE OF SHARES
The authorised and issued share capital of the company and details of shares issued during the year are shown in note 22. The issued share capital
at 29 February 2020 was 1,168,033,762 shares of 1p.
Powers related to the issue and buy-back of the company’s shares are included in the company’s articles of association and such authorities are
renewed annually by shareholders at the annual general meeting.
SHARE INCENTIVE PLAN TRUST
The Share Incentive Plan (“SIP”) trust is used by the company to provide free shares as share incentives to its employees. The trustees are Link
Asset Services, an independent UK professional body. The SIP trustee buys shares and holds them in trust for the benefit of employees who remain
with the company for three years. The trust held 8,048,026 shares as at 29 February 2020. The trustees may vote on the beneficiaries’ shares in
accordance with the beneficiaries’ instructions.
43
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC DIRECTORS’ REPORT (CONTINUED)
SUBSTANTIAL SHAREHOLDERS
Shareholders holding more than 3% of the company’s shares as at 2 April 2020:
Shareholder
Mahmud Kamani*
Merian Global Investors
Invesco (Oppenheimer Funds)
Rabia Kamani*
Baillie Gifford & Co
Aberdeen Standard Investments
Eleva Capital
Number of ordinary shares held
Percentage held
152,679,880
146,427,203
70,729,412
56,930,659
53,225,674
41,882,218
35,165,961
13.07%
12.54%
6.06%
4.87%
4.56%
3.58%
3.01%
Shareholders marked as * are considered to be a concert party.
ASSESSMENT OF PROSPECTS AND VIABILITY
The group’s business activities together with the factors that are likely to affect the future development, performance, position and risks of the
group are set out in the strategic report on pages 2 to 37.
The impact of the COVID-19 crisis on the future prospects of the group is not quantifiable at the date of this report, as the length of restrictions
and impact on consumers globally is outside of what any business is able to predict. However, we have modelled a scenario with a substantial
reduction in revenue from April until June, with some recovery from July to September. We have also modelled a shut-down of the business until
February 2021, as an unlikely, but worst possible, case. Both scenarios show the group has sufficient funds to continue trading solvently, even
before obtaining any potential government loans. As of the date of this report, we are continuing to operate, with the warehouses functioning
under very different working conditions and many office staff working from home, although trading has not surprisingly been more uneven during
the second half of March and early April.
Before the COVID-19 crisis, the directors considered the prospects of the group through an analysis of the markets for the group’s product
offering online in the UK and overseas and concluded that potential growth rates remain strong as the markets continue to develop as more
customers become comfortable with online shopping. This provides great opportunities for future expansion. There is a diverse supply chain with
no key dependencies, enabling sourcing to be dynamic. Major expense categories relate to carriage and marketing services, which are widely
diversified amongst suppliers. The business model affords a great deal of flexibility in responding to demand and economic changes: the wide range
of products and relatively low buy quantities reduce inventory risk; a large customer base across many countries reduces specific economic and
fashion dependencies; retail customers pay at the time of order with a small risk of default; and the high marketing expenditure is very controllable
over a short time period.
The group operates a regular budgeting, forecasting and long-range planning cycle, which is integrated with strategic plans and objectives.
This planning cycle, in which the board is substantively involved, ensures, as far as is possible, that the profitability, cash flow and capital
requirements of the business are sufficient to ensure its ongoing viability. Annual budgets, against which performance is compared, are prepared
in advance of the next financial year. A cadence of weekly, monthly and quarterly forecasts is operated to monitor, control and report on
performance in the current financial year. These forecasts form the basis upon which the board satisfies its requirements to update stakeholders
with relevant financial performance and prospects. Once a year, three-year financial plans are prepared to assess the medium and longer-term
prospects of the group and its finance requirements, based on its strategic plans.
The directors have reviewed the group’s profitability in the three-year plans prepared before the COVID-19 crisis, the annual budgets and
medium-term forecasts, including assumptions concerning capital expenditure and expenditure commitments and their impact on cash flow.
The directors consider that a three-year plan is the appropriate period to project financial plans with a reasonable level of certainty in line with
their current strategic objectives.
Based on their assessment of prospects and viability, and having forecast a worst-case scenario arising from the COVID-19 pandemic with
a return to normality in March 2021, the directors confirm that they have a reasonable expectation that the group will be able to continue in
operation and meet its liabilities as they fall due in the three-year period ending February 2023.
GOING CONCERN
Having considered the prospects and viability as detailed above, the directors considered it appropriate to prepare the financial statements
on the going concern basis, as explained in the basis of preparation in note 1 to the financial statements.
44
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
FINANCIAL RISK MANAGEMENT
Financial risk management is detailed in note 24 to the financial statements.
ENGAGEMENT WITH STAKEHOLDERS – EMPLOYEES, SUPPLIERS AND CUSTOMERS, COMMUNITY AND ENVIRONMENT
AND SHAREHOLDERS
The board’s responsibilities to promote the success of the group under section 172 of the Companies Act 2006, as modified by the Companies
(Miscellaneous Reporting) Regulations 2018 are outlined as follows:
a. Employee engagement
The quality, commitment and effectiveness of the group’s employees are crucial to its continued success. Employee policies and programmes
are designed to encourage employees to become interested in the group’s activities and to reward employees according to their contribution and
capability and the group’s financial performance. Employee communications are a priority and regular briefings are used to disseminate relevant
information. Employee surveys are undertaken to allow employees to express their views anonymously on many aspects of their work lives.
Suggestion boxes are used to allow employees to voice their opinions for improvements and change. Employee share ownership is encouraged
through free share schemes and employee share option plans. Further information about employee engagement is contained within the social
responsibility section of this report and accounts.
Employment policies do not discriminate between employees or potential employees on the grounds of colour, race, ethnic or natural origin, sex,
marital status, sexual orientation, religious beliefs or disability. If an employee were to become disabled whilst in employment and as a result was
unable to perform his or her duties, every effort would be made to offer suitable alternative employment and assistance with retraining.
b. Suppliers and customers
The group maintains an ongoing dialogue with its customers and suppliers through news announcements on the group’s website and through
the regulated market announcements. In addition, the group engages in supplier face-to-face meetings, email and telephone conversations
with executive directors and senior management and annual social events for key suppliers. Engagement with customers is a major part of the
group’s communication activities performed through the brands’ social media sites and via email where customers have opted in to receive such
communication.
c. Community and environment
The group has active community and environmental policies, referred to in detail in the social responsibility section of this report and accounts.
d. Shareholders
The group has an active programme of investor relations, which is described in detail in the Corporate Governance section of this report and accounts.
HEALTH AND SAFETY
The group is committed to providing a safe place of work for employees. Group policies are reviewed on a regular basis to ensure that policies
regarding training, risk assessment, safe working and accident management are appropriate. There are designated officers responsible for health
and safety and issues are reported at each board and executive meeting.
GREENHOUSE GAS EMISSIONS
The group measures its operational carbon footprint in order to limit and control its environmental impact. Only the impact of the group’s direct
activities are included, as the full impact of the entire supply chain of large numbers of suppliers cannot be measured practically. The section on
social responsibility on pages 24 to 37 is incorporated into this report by cross-reference.
STATEMENT ON DISCLOSURE OF INFORMATION TO AUDITORS
The directors who held office at the date of approval of this directors’ report confirm that, so far as they are each aware, there is no relevant audit
information of which the company’s auditors are unaware and each director has taken all the steps that he/she ought to have taken as a director to
make himself/herself aware of any relevant audit information and to establish that the company’s auditors are aware of that information.
INDEPENDENT AUDITORS
The auditors, PricewaterhouseCoopers LLP, have indicated their willingness to continue in office and a resolution that they be reappointed will be
proposed at the annual general meeting.
ANNUAL GENERAL MEETING
Due to the current restrictions and social distancing requirements presented by the COVID-19 pandemic, the board is considering delaying the
annual general meeting until there is greater openness that will allow shareholders to ask questions of the full board, including the chairs of the
Audit, Remuneration and Nomination Committees. Further details of the format and date of the annual general meeting will be communicated to
shareholders in due course and in the usual way and the notice of the meeting will be available to view on the group’s website boohooplc.com at least
21 days before the meeting.
On behalf of the board
John Lyttle
Neil Catto
21 April 2020
45
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC DIRECTORS’ REMUNERATION REPORT ANNUAL STATEMENT BY THE CHAIRMAN OF THE REMUNERATION COMMITTEE
Dear shareholder,
I am pleased to present the report of the Remuneration Committee on behalf of the directors. This directors’ remuneration report will be put
to an advisory shareholder vote at the forthcoming annual general meeting.
REMUNERATION POLICY
The Remuneration Committee is committed to complying with the principles of good corporate governance in relation to the design of its
remuneration policy, and as such, our policy will take account of the UK Corporate Governance Code and in particular the QCA Corporate
Governance Code as adopted by the board. The Committee also considers other best practice guidance (for example, the QCA Remuneration
Guidance and the Investment Association’s Principles of Remuneration), as far as is appropriate to the group’s management structure,
size and listing.
Our approach to remuneration is governed by our directors’ remuneration policy. The primary objectives of the policy continue to be to attract and
retain the highest calibre directors and to design remuneration, which promotes the long-term success of the group. In order to put these objectives
into effect, we provide the opportunity for executives to receive short-term and long-term variable pay, dependent upon appropriate performance
conditions, ensuring a clear link is established between shareholder value creation and the pay of our directors.
The Committee also reviewed overall levels of pay and the operation of the incentive arrangements for executive directors to ensure they remain
appropriate in light of the current business strategy and the interests of shareholders. The Committee concluded that the current overarching
framework of base salary (plus modest pension and benefits provision), annual bonus and the operation of a long-term incentive plan (“LTIP”)
remains best suited to the business.
Remuneration for the year ending 28 February 2021
The key points in relation to how we are implementing our policy for the financial year ending February 2021, including details of the changes,
are as follows:
5 Maximum bonus opportunity, dependent upon stretching revenue and EBITDA growth targets, will continue to be up to 100% of salary
for executive directors, up to 150% for John Lyttle and up to 200% for Mahmud Kamani and Carol Kane.
5 The LTIP for John Lyttle remains the same. At the end of a five-year performance period, starting on John’s appointment date in
March 2019, John is expected, subject to the attainment of stretching market capitalisation growth targets, to be issued shares in boohoo
group plc. The maximum value that may be paid to John under this plan is capped at £50 million. Further details are provided at page 48.
5 Long-term share incentive awards will continue to be made to executive directors under an LTIP plan based on stretching three-year
performance targets. Personal limits remain unchanged and are detailed in the remuneration policy. John Lyttle will not participate in these
arrangements.
PERFORMANCE AND REWARD FOR THE YEAR ENDED 29 FEBRUARY 2020
For the year ended 29 February 2020, in relation to the annual bonus plan, the group achieved outstanding revenue growth at the upper end of the
target range. EBITDA performance over the year also resulted in the achievement at the upper end of the target range. As a result, in combination,
the executive directors received 100% of their bonus potential.
ENCOURAGING EQUITY OWNERSHIP
We are committed to encouraging all our employees, as well as our senior executives, to be shareholders in the business. As part of facilitating this
policy objective, we made awards to all employees under a UK HMRC-approved Share Incentive Plan during the 2015, 2016, 2019 and 2020
financial year ends and intend to make another award in the financial year ending 2021. Discounted options were issued under an HMRC-approved
Save As You Earn (“SAYE”) plan in each of the financial years ended 2016 to 2020, which have achieved a high level of participation by employees,
and are intended to continue in subsequent years. We have a formal shareholding requirement for the executive directors to support the alignment
of the interests of executive directors with those of shareholders.
SHAREHOLDER FEEDBACK
The Remuneration Committee recognises that dialogue with shareholders plays a key role in informing the design of the remuneration policy and
welcomes any feedback that shareholders may have. The Remuneration Committee will consider shareholder feedback received in relation to the
remuneration policy and the remuneration report at the AGM each year. Any such feedback, plus any additional feedback received from time
to time, will be considered as part of the company’s annual review of remuneration policy. Shareholders will be informed of any future changes in
remuneration policy in the remuneration report. In addition, where such changes are considered major, having taken advice from relevant advisers,
significant shareholders will be consulted in advance.
We hope you will support the advisory vote on the directors’ remuneration report at the forthcoming annual general meeting, as the directors will do
in respect of their own beneficial shareholdings.
Iain McDonald
Chairman of the Remuneration Committee
46
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
DIRECTORS’ REMUNERATION REPORT POLICY REPORT
PAY PHILOSOPHY
The Remuneration Committee (“Committee”) is responsible for determining, on behalf of the board, the group’s pay philosophy and the policy
on the remuneration of the executive directors, the Chairman and other senior executives of the group.
The aim of the remuneration policy is to ensure that high calibre senior executives are provided with remuneration, which is designed to promote
the long-term success of the group. The policy includes performance-related elements, which are transparent, stretching and rigorously applied
so as to encourage enhanced performance and to reward, in a fair and responsible manner, individual contributions to the success of the group.
The remuneration policy is designed to be compatible with risk policies and systems and to be aligned to the group’s long-term strategic goals.
The policy framework is structured so as to adhere to the principles of good corporate governance and has been developed taking into account
the principles of the UK Corporate Governance Code and the QCA Corporate Governance Code.
The performance-related variable pay component makes up a significant proportion of the overall package for senior executives and is designed to
incentivise the delivery of the group’s growth strategy and other strategic and business objectives. The interests of the executives are designed to
align with the interests of shareholders through encouraging equity ownership and, in support of this, awards under the group’s equity incentive plans
are made where appropriate.
CONSIDERATION OF EMPLOYMENT CONDITIONS ELSEWHERE IN THE GROUP
When setting the remuneration policy for executive directors, the Committee takes into account the overall approach to reward for, and the pay
and employment conditions of, other employees in the group, especially when determining annual salary increases. This process ensures that any
increase to the pay of executive directors is set in an appropriate context and is appropriate relative to increases proposed for other employees.
The Committee is also provided with periodic updates on employee remuneration practices and trends across the group.
The principle of encouraging our senior executives to be shareholders in the business is reflected across the group as a whole and a key aim of the
remuneration policy is to encourage widespread equity ownership across the whole employee base. In support of this objective, we operate an
HMRC-approved Share Incentive Plan and an approved SAYE option plan.
CHANGES TO THE REMUNERATION POLICY
Our pay philosophy and the broad structure of our remuneration policy will remain the same, since the Remuneration Committee believes it is
serving the company well. The policy is as follows:
SUMMARY OF OUR REMUNERATION POLICY
The table below provides a summary of the key aspects of the group’s remuneration policy for executive directors.
REMUNERATION POLICY TABLE FOR EXECUTIVE DIRECTORS
BASE
SALARY
PURPOSE AND
LINK TO STRATEGY
5 To aid recruitment and retention
5 To reflect experience and expertise
5 To provide an appropriate level of fixed basic income
OPERATION
5 Normally reviewed annually, with any increase usually becoming effective 1 May
5 Set initially at a level required to recruit suitable executives reflecting their experience
and expertise
5 Any subsequent increase influenced by:
5 Scope of the role
5 Experience and personal performance in the role
5 Average change in total workforce salary
5 Performance of the group
5 External economic conditions, such as inflation
5 Account taken of practice in comparable companies (e.g. those of a similar size
and complexity)
5 No recovery or withholding provisions apply
MAXIMUM
OPPORTUNITY
5 Annual increases will generally be restricted to those of the average of the
wider workforce
5 Increases beyond those awarded to the wider workforce (in percentage of salary terms)
may be awarded in certain circumstances such as where there is a change in responsibility
or experience, or a significant increase in the scale or complexity of the role and/or size
and value of the company
5 The Committee reviews the salaries of executive directors each year taking due account
of all the factors described in the salary policy
FRAMEWORK
USED TO ASSESS
PERFORMANCE
47
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC DIRECTORS’ REMUNERATION REPORT POLICY REPORT (CONTINUED)
ANNUAL
BONUS
PURPOSE AND
LINK TO STRATEGY
5 To reward the annual delivery of short to medium-term objectives relating to the
business strategy
OPERATION
5 All bonus payments are at the discretion of the Committee
5 Not pensionable
5 Normally payable in cash following the end of the year based on targets set at the start
of the year
5 Targets are set and/or reviewed annually
5 Recovery provisions apply in certain circumstances at the discretion of the Committee
(including where there has been a misstatement of accounts, an error in assessing
any applicable performance condition, or in the event of misconduct on the part
of the participant)
MAXIMUM
OPPORTUNITY
5 Up to 200% of salary for Mahmud Kamani and Carol Kane, up 150% of salary for John
Lyttle and up to 100% of salary for all other executive directors, dependent on performance
FRAMEWORK
USED TO ASSESS
PERFORMANCE
5 Bonuses are based on performance measures with appropriate targets set and assessed
by the Committee at its discretion
5 Those financial measures which are identified as the key indicators of success against
the strategy (e.g. EBITDA and revenue) will represent the majority of bonus, with
any other measures (e.g. strategic and/or personal objectives), where appropriate,
representing the balance
5 Performance is measured over a single financial year
5 30% of maximum bonus will be payable for achievement of a threshold level
of performance, rising to 100% of maximum bonus for reaching stretch target
5 Measures and weightings may change each year to reflect any year-on-year changes
to business priorities at the discretion of the Committee
LONG-TERM
INCENTIVE PLAN
(“LTIP”)
PURPOSE AND
LINK TO STRATEGY
5 Intended to align the long-term interests of senior executives with those
of shareholders
5 To incentivise the delivery of key strategic objectives over the longer term
OPERATION
5 Awards are normally granted in the form of nominal cost options, however, the structure
MAXIMUM
OPPORTUNITY
of John Lyttle’s LTIP required him to pay an amount to the company on grant of the award.
This investment is intended to reflect his commitment to the group
5 Ability to exercise is dependent on performance targets being met during the
performance period and continued service of the directors
5 Recovery and withholding provisions apply in certain circumstances at the discretion of
the Committee (including where there has been a misstatement of accounts, an error in
assessing any applicable performance condition, or in the event of misconduct on the part
of the participant)
5 The maximum value that can be paid out under John Lyttle’s LTIP is £50 million (satisfied
at the discretion of the company by either cash or in boohoo group plc shares valued at
the end of the five-year performance period)
5 In respect of the LTIP applicable to other directors below CEO level, the maximum limit
contained within the plan rules is 150% of annual salary for executive directors
5 Awards are at the discretion of the Committee and may be made at lower levels
than this
5 Exceptionally, at the discretion of the Committee, awards may be made in excess
of 150% of salary per annum
48
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
LONG-TERM
INCENTIVE
PLAN (“LTIP”)
(CONTINUED)
FRAMEWORK
USED TO ASSESS
PERFORMANCE
5 The performance measure attaching to John Lyttle’s LTIP is based on the compound
annual growth rate of the company’s market capitalisation measured over a five-year
performance period
5 Awards to other executives vest based on challenging targets measured over a three-year
period and are dependent upon continued service
5 At least half of awards to other executives will normally be based on financial performance
metrics (such as, inter alia, PBT or EPS)
5 Prior to each award the Committee will set threshold and stretch targets along with
an intermediate vesting range. Details of this will be disclosed in the annual report
on remuneration for the year in which the award was granted unless the targets are
commercially sensitive, in which case they will be disclosed retrospectively
PENSION
PURPOSE AND
LINK TO STRATEGY
5 To aid recruitment and retention
5 To provide an appropriate level of fixed income
OPERATION
5 Executive directors may receive an employer’s pension contribution or cash allowance
MAXIMUM
OPPORTUNITY
5 Employer’s defined contribution or cash allowance up to 6.2% of salary
FRAMEWORK
USED TO ASSESS
PERFORMANCE
N/A
OTHER BENEFITS PURPOSE AND
5 Provide competitive benefits package
LINK TO STRATEGY
OPERATION
MAXIMUM
OPPORTUNITY
5 Executive directors may receive benefits including health care, income protection and life
assurance, as well as other standard group-wide benefits offered by the company from
time to time
5 Executive directors are also eligible to participate in any all-employee share plans
operated by the company on the same basis as for other eligible employees (and in line
with relevant HMRC rules)
5 The value of benefits may vary from year to year depending on the cost to the company
FRAMEWORK
USED TO ASSESS
PERFORMANCE
N/A
SHAREHOLDING
REQUIREMENT
PURPOSE AND
LINK TO STRATEGY
5 To support long-term commitment to the company and the alignment of executive
director interests with those of shareholders
OPERATION
5 The Remuneration Committee has adopted formal shareholding guidelines that will
encourage executive directors to build up over a five-year period and then subsequently
hold a shareholding equivalent to a percentage of base salary. Adherence to these
guidelines is a condition of continued participation in the equity incentive arrangements
MAXIMUM
OPPORTUNITY
5 150% of salary for executives and 150% of salary rising to 300% of salary for John Lyttle
on maturity of his LTIP
FRAMEWORK
USED TO ASSESS
PERFORMANCE
N/A
49
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC DIRECTORS’ REMUNERATION REPORT POLICY REPORT (CONTINUED)
CHOICE OF PERFORMANCE MEASURES AND APPROACH TO TARGET SETTING
The performance measure selected for John Lyttle’s LTIP is solely based on market capitalisation growth over a five-year period. The targets reflect
the ambitious growth plans for the group and the LTIP performance measure ensures that John’s interests are fully aligned with shareholders.
The performance metrics and targets that are set for the executive directors via the annual bonus plan and current LTIP are carefully selected to
align closely with the group’s strategic plan and key performance indicators.
In terms of annual performance targets, the bonus is determined on the basis, primarily, of performance against financial measures, which are
identified as the key indicators of success against the strategy set annually. The precise metrics chosen, along with the weightings of each, may vary
from year to year. The Committee will review the performance measures and targets each year and vary them as appropriate to reflect the priorities
for the business in the year ahead.
In terms of the long-term performance targets, metrics for the LTIP awards will be set at the time of each grant but will normally include at least
half based on financial performance in line with our key objectives of delivering returns to shareholders through achievement of our growth strategy.
The Committee will disclose the targets for each award to the executive directors in advance in the annual report on remuneration unless the targets
are commercially sensitive, in which case they will be disclosed retrospectively. The Committee will review the choice of performance measures and
the appropriateness of the performance targets prior to each LTIP grant.
Challenging targets are set whereby modest rewards are payable for the delivery of threshold levels of performance, rising to maximum rewards
for the delivery of substantial out-performance of our financial and operating plans.
DIFFERENCES IN REMUNERATION POLICY FOR EXECUTIVE DIRECTORS COMPARED TO OTHER EMPLOYEES
The Committee has regard to pay structures across the wider group when setting the remuneration policy for executive directors. The Committee,
in particular, considers the general basic salary increase for the broader workforce when determining the annual salary review for the executive
directors.
Overall, the remuneration policy for the executive directors is more heavily weighted towards performance-related pay than for other employees.
Performance-related long-term incentives are provided for those employees considered to have the greatest potential to influence overall levels
of performance and those whose retention within the group is regarded as important. That said, whilst the use of the LTIP is confined to the more
senior management in the group, there is a commitment to encouraging widespread equity ownership through, for example, our use of an HMRC-
approved Share Incentive Plan and SAYE share option scheme.
The level of performance-related pay varies within the group by grade of employee and is informed by the specific responsibilities of each role
as appropriate.
SERVICE CONTRACTS AND LOSS OF OFFICE PAYMENTS
Service contracts normally continue until the executive director’s agreed retirement date or such other date as the parties agree. The company’s
policy is that executive directors will be employed on a contract that can be terminated by the company on giving no more than one year’s notice,
with the executive director required to give up to one year’s notice of termination.
A director’s service contract may be terminated without notice and without any further payment or compensation, except for sums earned up to
the date of termination, on the occurrence of certain events such as gross misconduct. The circumstances of the termination (taking into account
the individual’s performance) and an individual’s duty and opportunity to mitigate losses are taken into account by the Committee when determining
amounts payable on/following termination. Our policy is to reduce compensatory payments to former executive directors where they receive
remuneration from other employment during the compensation period. The Committee will consider the particular circumstances of each leaver on
a case-by-case basis and retains flexibility as to at what point, and the extent to which, payments would be reduced. Details will be provided in the
relevant annual report on remuneration should such circumstances arise.
In summary, the contractual provisions are as follows:
Provision
Notice period
Termination payment
Detailed terms
Maximum of 12 months from both the company and the executive director.
Payment in lieu of notice of base salary only, normally subject to
mitigation and paid monthly(1), subject to the discretion of the Committee.
In addition, any statutory entitlements would be paid as necessary.
Change of control
There will be no enhanced provisions on a change of control.
(1) The Committee may elect to make a lump sum termination payment (up to a maximum of 12 months’ base salary) as part of an executive director’s termination arrangements where it considers it
appropriate to do so.
Annual bonus on termination
There is no contractual entitlement to annual bonus on termination. At the discretion of the Committee, in certain circumstances a pro rata bonus
may become payable at the normal payment date for the period of active service only.
50
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
LTIP on termination
Any share-based entitlements granted under the company’s share plans will be determined on the basis of the plan rules. In determining whether an
executive director should be treated as a good leaver under the plan rules the Committee will take into account the performance of the individual and the
reasons for his/her departure and, in the event of this determination being made, will set out its rationale in the following annual report on remuneration.
APPROACH TO RECRUITMENT AND PROMOTIONS
The remuneration package for a new executive director would generally be set in accordance with the terms of the company’s remuneration policy
in force at the time of appointment. In addition, with specific regard to the recruitment of new executive directors (whether by external recruitment
or internal promotion), the remuneration policy will allow for the following:
5 Where new joiners or recent promotions have been given a starting salary at a discount to the mid-market level, a series of increases above those
granted to the wider workforce (in percentage of salary terms) may be awarded over the following few years, subject to satisfactory individual
performance and development in the role.
5 The Committee may offer additional cash and/or share-based elements when it considers these to be in the best interests of the company and
shareholders. Any such additional payments would aim to reflect the terms and value of remuneration relinquished when leaving the former
employer.
5 The annual bonus would operate in accordance with the terms of the policy, subject to the overriding discretion of the Committee. Depending
on the timing and responsibilities of the appointment, it may be necessary to set different performance measures and targets in the first year.
5 For an internal executive appointment, any variable pay element awarded in respect of the former role would be allowed to pay out according
to its terms, adjusted as relevant to take into account the appointment. In addition, any other ongoing remuneration obligations existing prior
to appointment would continue.
5 For external and internal appointments, the Committee may agree that the company will meet certain relocation expenses as appropriate.
For the appointment of a new chairman or non-executive director, the fee arrangement would generally be set in accordance with the fee policy
in force at that time.
EXTERNAL NON-EXECUTIVE DIRECTOR POSITIONS
The company allows executive directors to hold external directorships subject to agreement by the Chairman on a case-by-case basis and, at the
discretion of the Committee, to retain the fees received from those roles.
NON-EXECUTIVE DIRECTORS’ LETTERS OF APPOINTMENT
The non-executive directors do not have service contracts with the company, but instead have letters of appointment. The letters of appointment
are usually renewed every three years. Termination of the appointment may be earlier at the discretion of either party on one month’s written notice
for non-executive directors. None of the non-executive directors is entitled to any compensation if their appointment is terminated. Appointments
will be subject to re-election at the annual general meeting by rotation.
FEES
PURPOSE AND
LINK TO STRATEGY
5 To recruit and retain high calibre non-executives
OPERATION
5 Fees are determined by the board, with non-executive directors abstaining from any
discussion or decision in relation to their fees
5 Non-executive directors are paid an annual fee for all board duties, which will include
an annual award of shares (with the value of shares normally determined at the market
price in February of each year)
5 In relation to the cash element, fees are normally paid monthly
5 In relation to the share element there will be certain restrictions which prevent the
director selling these shares during the period of their appointment
5 Non-executive directors will not receive awards under any of the company’s incentive
arrangements or receive any pension provision
5 The fee levels are reviewed on a periodic basis, with reference to the time commitment
of the role and market levels in companies of comparable size and complexity
5 In exceptional circumstances, if there is a temporary yet material increase in the time
commitment for non-executive directors, the board may pay extra fees to recognise
the additional workload
5 Non-executive directors shall be entitled to have reimbursed all expenses that they
reasonably incur in the performance of their duties, including taxes payable thereon
5 There is no cap on fees
5 Fees may be increased to ensure they continue to appropriately recognise the time
commitment of the role, increases to fee levels for non-executive directors in general
and fee levels in companies of a similar size and complexity
51
MAXIMUM
OPPORTUNITY
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC DIRECTORS’ REMUNERATION REPORT ANNUAL REPORT ON REMUNERATION
This section of the remuneration report contains details as to how the group’s remuneration policy was implemented during the year ended
29 February 2020.
DISCLOSURE OF DIRECTORS’ SINGLE-FIGURE TOTAL REMUNERATION FOR THE YEAR – AUDITED INFORMATION
The total single-figure remuneration of the directors during the year ended 29 February 2020 is set out below:
Fixed remuneration
Variable remuneration
Base salary
and fees
£
Benefits
£
Pension
£
Other
£
–
–
–
–
6,498
–
6,498
1,999
Annual
bonus
£
Long-term
incentives
£
Total
£
900,000
700,000
900,000
700,000
922,500
–
300,000
260,000
–
–
–
–
1,040,168
–
401,688
705,200
1,345,400
1,061,874
1,365,372
1,071,564
2,585,663
–
1,020,311
1,236,074
12,996 3,022,500
1,660,000
1,999
1,441,856
705,200
6,316,746
3,369,512
12,067
20,207
8,572
12,814
4,283
–
2,925
2,750
27,847
35,771
–
–
14,167
17,083
202
–
9,667
12,708
24,036
29,791
–
–
–
–
–
–
–
–
–
–
10,000
10,000
10,000
10,000
10,000
10,000
20,000
–
50,000
30,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
66,667
50,000
75,000
50,00
85,000
50,000
79,679
–
306,346
150,000
Executive directors
Mahmud Kamani
Carol Kane
John Lyttle
Neil Catto
Total executive directors
Non-executive directors
Pierre Cuilleret
Iain McDonald
Sara Murray
Brian Small
Total non-executive directors
Total
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
433,333
341,667
442,633
341,667
612,012
–
299,533
253,417
1,787,511
936,751
56,667
40,000
65,000
40,000
75,000
40,000
59,679
–
256,346
120,000
2020 2,043,857
1,056,751
2019
27,847
35,771
24,036
29,791
62,996 3,022,500
1,660,000
31,999
1,441,856 6,623,092
3,519,512
705,200
Figures in the single total figure remuneration include the following for the financial year:
BASE SALARY
AND FEES
The amount of salary or non-executive directors’ fees. Where an executive has elected to forego company pension
contributions, due to pension cap restrictions, the base salary has been increased by 6.2%, being the company
cost-neutral equivalent of the pension cost and employer’s NI foregone.
OTHER
The value of SIP awards and SAYE options granted in the financial period for executive directors (SAYE option
calculated as the 20% discount at grant on the three-year plan) and the value of free shares issued to non-executive
directors as part of their fees.
ANNUAL BONUS
The amount of performance-related bonus receivable. Further details of the performance outcome can be found below.
LONG-TERM
INCENTIVES
The value of long-term incentives vesting based on performance ending in the year under review. Further details
of the share options granted in 2017 and vesting on 13 June 2020 based on performance measured to 29 February 2020
can be found below. A share price of 291p (the closing share price on 28 February 2020) has been used for the purposes
of valuing the gain.
BENEFITS
The value of private medical insurance, income protection, life assurance, company car and driver services.
52
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ANNUAL BONUS
For the year ended 29 February 2020, Mahmud Kamani’s and Carol Kane’s maximum potential bonus was 200% of basic salary, John Lyttle’s
150% and Neil Catto’s 100%. 40% of the potential bonus related to a revenue target and 60% of the potential bonus related to an adjusted
EBITDA target. Bonus entitlement targets were as follows:
Financial target range
Revenue target:
Threshold £1,035 million
Upper limit £1,110 million or more
Adjusted EBITDA target:
Threshold £102 million
Upper limit £111 million or more
Bonus entitlement %
12.0%
40.0%
18.0%
60.0%
The amount of bonus payable varies on a sliding scale between the threshold and upper limit shown above. For the financial year ended 29 February
2020, both revenue and adjusted EBITDA were at the upper limits, resulting in payments of 40% and 60% of bonus entitlement respectively.
The payment of the FY20 bonuses will be deferred until such time as the board considers it is prudent to do so, taking into consideration the impact
of the COVID-19 pandemic. Bonuses payable were as follows:
Name
Mahmud Kamani
Carol Kane
John Lyttle
Neil Catto
Bonus % of salary
200%
200%
150%
100%
LONG-TERM SHARE INCENTIVES
Neither Mahmud Kamani nor Carol Kane received share option awards either on Admission or as part of any subsequent grants. Of the executive
directors, John Lyttle has share options as described on page 56 and Neil Catto holds options under the LTIP subject to the achievement of
performance conditions as follows:
Name
Neil Catto
Neil Catto
Neil Catto
Neil Catto
Option scheme
2016 LTIP
2017 LTIP
2018 LTIP
2019 LTIP
No. of
ordinary shares
under option
Exercise price
pence
Date of grant
Exercise period
404,822
138,037
128,744
168,570
1
1
1
1
30/06/16
13/06/17
28/06/18
11/12/19
30/06/19 to 30/06/26
13/06/20 to 13/06/27
28/06/21 to 28/06/28
01/03/22 to 01/03/29
The performance targets for the shares granted on 30/06/16 are based upon the achievement of two key criteria, Three-Year Aggregate Adjusted
Earnings per Share (67%) and Total Shareholder Return (33%) over a three-year period. Minimum “threshold” and “stretch” targets have been
established by the Committee against these criteria. The EPS element vests on a straight-line basis between target intervals from 1.6p for a 25%
vesting to 2.4p for 100% vesting for the EPS element of the performance criteria. The actual vesting was 100%. The TSR element vests on a
straight-line basis between target intervals from 50% growth in TSR for a 25% vesting to 125% growth in TSR for a 100% vesting for the TSR
element of the performance criteria. The actual vesting was 100%.
The performance targets for the shares granted on 13/06/17 are based upon the achievement of two key criteria, Three-Year Aggregate Adjusted
Earnings per Share (67%) and Total Shareholder Return (33%) over a three-year period. Minimum “threshold” and “stretch” targets have been
established by the Committee against these criteria. The EPS element vests on a straight-line basis between target intervals from 7.5p for a 25%
vesting to 12p for 100% vesting for the EPS element of the performance criteria. The TSR element vests on a straight-line basis between target
intervals from 50% growth in TSR for a 25% vesting to 125% growth in TSR for a 100% vesting for the TSR element of the performance criteria.
The performance targets for the shares granted on 28/06/18 are based upon the achievement of two key criteria, Three-Year Aggregate Adjusted
Earnings per Share (67%) and Total Shareholder Return (33%) over a three-year period. Minimum “threshold” and “stretch” targets have been
established by the Committee against these criteria. The EPS element vests on a straight-line basis between target intervals from 11.3p for a 20%
vesting to 14.9p for 100% vesting for the EPS element of the performance criteria. The TSR element vests on a straight-line basis between target
intervals from 20.4% growth in TSR for a 25% vesting to 73.9% growth in TSR for a 100% vesting for the TSR element of the performance criteria.
The performance targets for the shares granted on 11/12/19 are based upon the achievement of two key criteria, Three-Year Aggregate Adjusted
Earnings per Share (67%) and Total Shareholder Return (33%) over a three-year period. Minimum “threshold” and “stretch” targets have been
established by the Committee against these criteria. The EPS element vests on a straight-line basis between target intervals from 16p for a 20%
vesting to 19p for 100% vesting for the EPS element of the performance criteria. The TSR element vests on a straight-line basis between target
intervals from 55.3% growth in TSR for a 25% vesting to 84.1% growth in TSR for a 100% vesting for the TSR element of the performance criteria.
53
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
DIRECTORS’ REMUNERATION REPORT ANNUAL REPORT ON REMUNERATION (CONTINUED)
ALL-EMPLOYEE SHARE INCENTIVE PLAN (“SIP”)
The HMRC-approved all-employee Share Incentive Plan purchases shares and holds them in trust for the benefit of employees who remain with
the company for three years. There are no performance criteria for the SIP shares. The directors hold the following options over shares under this
scheme:
Name
Neil Catto
Neil Catto
Neil Catto
Neil Catto
John Lyttle
No. of ordinary
shares held in trust
Purchase price
pence
Date of grant
Maturity date
6,000
3,571
938
884
884
50
28
213
226
226
14/03/14
19/06/15
27/09/18
23/08/19
23/08/19
14/03/17
19/06/18
27/09/21
23/08/22
23/08/22
SAVE AS YOU EARN SHARE SCHEME (“SAYE”)
The HMRC-approved all-employee Save As You Earn scheme allows employees to purchase shares at a 20% discount to market price at date of
grant on the future option date. There are no performance criteria for the SAYE shares. The directors hold the following options over shares under
this scheme:
Name
Neil Catto
John Lyttle
Estimated shares to be
purchased at option date
Option price
pence
Date of grant
Option date
8,297
8,297
216.9
216.9
30/10/19
30/10/19
30/10/22
30/10/22
OTHER BENEFITS
A one-off conditional award over shares was made to John Lyttle in compensation for the loss of short and long-term incentive awards, which lapsed
on leaving his previous employer. The award has vested since John has stayed in role as Chief Executive for a period of 12 months to 15 March 2020
and was over 357,446 ordinary shares with a value of £1,040,168 (calculated based on the closing price of the company’s shares on 28 February 2020).
CHIEF EXECUTIVE’S REMUNERATION COMPARED TO ALL OTHER EMPLOYEES OF THE GROUP
As the Chief Executive joined the group during the financial year, there is no comparison of his percentage change in salary compared to that
of all employees.
The Chief Executive's pay ratio to the equivalent pay for the lower quartile, median and upper quartile UK employees, calculated using option A of
the Companies (Miscellaneous Reporting) Requirements 2018 is as follows:
Year
2020
25th percentile
pay ratio
50th percentile
pay ratio
75th percentile
pay ratio
34:1
32:1
24:1
Option A was chosen, as it represents the most accurate means of identifying the percentiles. The workforce comparison is based on data for the
year ended 29 February 2020.
Pay data £000
Chief Executive remuneration
UK employees 25th percentile
UK employees 50th percentile
UK employees 75th percentile
Base salary
Total pay and benefits
615
18
19
26
2,586
19
23
31
54
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
DIRECTORS’ INTERESTS IN SHARES
The table below sets out the beneficial and non-beneficial interests in the number of ordinary shares as at the year end.
Beneficially
owned at
28 February
2019
Free
share award
under NED
remuneration
policy
Shares
acquired
during
the year
Shares
disposed of
during
the year
Beneficially
owned at
29 February % of share
capital
2020
As a Outstanding
share
options
Shares
held
SAYE
under options
SIP granted
Total
interests in
shares at
29 February
2020
187,679,880
46,330,421
–
64,773
111,096
440,096
17,921
–
– (35,000,000) 152,679,880
–
31,330,421
–
–
–
–
–
73,910
9,137
–
214,481
100,000
3,385
468,481
25,000
3,385
121,306
3,385
100,000
46,770
6,770 40,000
(15,000,000)
–
–
–
–
–
–
13.07%
2.68%
–
0.01%
0.02%
0.04%
0.01%
0.00%
–
–
357,446
840,173
–
–
–
–
–
–
– 152,679,880
– 31,330,421
366,627
933,773
214,481
468,481
121,306
46,770
884 8,297
11,393 8,297
–
–
–
–
–
–
–
–
Name of director
Mahmud Kamani
Carol Kane
John Lyttle
Neil Catto
Pierre Cuilleret
Iain McDonald
Sara Murray
Brian Small
John Lyttle, Chief Executive, has subscribed for 195 A ordinary shares of 1 pence each ("A Ordinary Shares") in boohoo Holdings Limited,
an intermediary holding company of the group, as part of a Growth Share Plan ("the Plan").
The value of the award under the Plan is directly linked to the creation of significant growth in shareholder value as set out below:
5 The value of the award will be determined by the compound annual growth rate ("CAGR") in market capitalisation of the group over the five year
period starting on the date John joined as Chief Executive, 15 March 2019 ("the Period").
5 The CAGR will be calculated using a base market capitalisation of £2.037 billion, being the market capitalisation on the date of the
announcement on 17 September 2018 that John would be joining the group.
5 The value of the award under the Plan is capped at £50 million of gross value before tax in the event of achieving CAGR of at least 23% at the
end of the Period. CAGR of less than 10% yields nil value.
5 The Plan provides for adjustments to be made for increases in market capitalisation arising from corporate events, such as the issue of shares for
acquisitions, so that the benefits derived from the Plan only arise from organic growth and the Plan also provides clawback provisions, which allow
repayment in defined circumstances.
SERVICE CONTRACTS AND LETTERS OF APPOINTMENT
Each of the executive directors has a service contract, under which there is a 12-month notice period from both the company and the director.
Details of the remuneration of the non-executive directors is set out herein.
COMPOSITION OF THE REMUNERATION COMMITTEE
The members of the Committee are Iain McDonald, Pierre Cuilleret and Brian Small. Executive directors are invited to attend meetings, if requested
by the Committee, in order to provide information and advice, to enable the Committee to make informed decisions. Each director is, however,
specifically excluded from any matter concerning his own remuneration. Representatives of PricewaterhouseCoopers LLP, the Committee’s
retained adviser, may also attend meetings by invitation. The Company Secretary attends meetings as secretary to the Committee.
ADVISERS TO THE REMUNERATION COMMITTEE
During the year, the Committee received advice from PricewaterhouseCoopers LLP. The total fees paid to PricewaterhouseCoopers LLP in respect
of its services during the year were £13,000 (2019: £22,000). PricewaterhouseCoopers LLP is a signatory to the Remuneration Consultants
Group Code of Conduct and operates voluntarily under this Code, which sets out the scope and conduct of the role of executive remuneration
consultants when advising UK listed companies. The Committee regularly reviews the external adviser relationship and is comfortable that
PricewaterhouseCoopers’ advice remains objective and independent. The Committee also received advice from KPMG in regard of the creation of
the growth share plan for John Lyttle. KPMG’s fees were £61,850 (2019: £28,000).
55
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
DIRECTORS’ REMUNERATION REPORT ANNUAL REPORT ON REMUNERATION (CONTINUED)
IMPLEMENTATION OF REMUNERATION POLICY FOR THE YEAR ENDING 28 FEBRUARY 2021 – UNAUDITED
Remuneration for the executive directors comprises the following elements, not all of which are currently provided to each executive director:
5 base salary
5 pension and other benefits
5 annual bonus
5 awards under the Long-Term Incentive Plans
5 opportunity to participate in the all-employee Share Incentive Plan and Save As You Earn scheme
BASE SALARY
The annual base salaries (excluding any substitution allowance for a company pension foregone) of the executive directors are as follows:
Mahmud Kamani
Carol Kane
John Lyttle
Neil Catto
Group Executive Chairman
Group Co-founder and Executive Director
Chief Executive
CFO
From 1 May 2020
From 1 May 2019
£450,000
£450,000
£615,000
£300,000
£450,000
£450,000
£615,000
£300,000
PENSION AND OTHER BENEFITS
Carol Kane, John Lyttle and Neil Catto received a company pension contribution of 7% of salary for part of the year and then received a 6.2%
compensatory increase on basic pay upon electing to discontinue receiving a company pension due to the pension cap provisions. Mahmud Kamani
does not receive a company pension contribution. Carol Kane, John Lyttle and Neil Catto receive company health care benefits and life assurance.
Carol Kane receives driver services and Mahmud Kamani driver services and a company car.
ANNUAL BONUS
All of the executive directors are eligible to participate in the company-wide annual cash bonus plan. The Committee oversees the bonus plan, and
any bonus payments are at the discretion of the Committee. The maximum bonus payable for the year ending 28 February 2021 will be as follows:
Mahmud Kamani and Carol Kane 200%, John Lyttle 150% and Neil Catto 100%. The maximum bonus payable to performance will be measured
over the single financial year ending 28 February 2021. The performance targets are based on a combination of revenue and EBITDA metrics
(as defined in the plan), with a 40/60 weighting respectively. This choice of metrics reflects that these measures have been identified as the key
indicators of the group’s success against its growth strategy. The amount of bonus payable will be calculated as a percentage of base salary modified
by a factor linked to the revenue and EBITDA metrics, for which there is a sliding scale set between upper and lower thresholds. The bonus will be
payable in cash immediately after the announcement of the financial results.
The annual bonus targets, in relation to the financial year ending 28 February 2021, are considered to be commercially sensitive. Details of the
targets, performance against those targets, and any payments resulting, will be disclosed in next year's annual report on remuneration.
LONG-TERM INCENTIVE PLAN (“LTIP”)
Awards will be made to Neil Catto and other members of our senior management team under the LTIP in line with the limits detailed in the
remuneration policy. Neil Catto's award for the financial year ending 2021 has not yet been agreed but will be subject to performance targets
relating to EPS and other financial measures measured over a three-year period. John Lyttle is expected to be issued shares in boohoo group plc
at the end of a five-year performance period, starting on John’s appointment date, subject to the attainment of stretching market capitalisation
growth targets. The maximum value that may be paid to John under this plan is capped at £50 million.
ALL-EMPLOYEE SHARE PLANS
The board granted free shares in the financial year 2020. It is intended to grant a further issue of free shares to all employees in the financial year
ending 2021. The company offered HMRC-approved SAYE plans in each of the financial years ended from 2016 to 2020 and it is intended that a
further SAYE grant be offered for the financial year ending 2021. The executive directors are eligible to participate in the schemes on the same basis
as other employees.
56
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
TOTAL POTENTIAL REMUNERATION FOR EXECUTIVE DIRECTORS FOR 2021
Mahmud Kamani
Carol Kane
John Lyttle
Neil Catto
Fixed remuneration
Variable remuneration
Base salary
£000
Benefits
£000
450
450
615
300
15
12
–
3
Pension
equivalent
£000
–
28
38
19
Other
£000
–
–
2
2
Annual
bonus(1)
£000
Long-term
incentives(2)
£000
900
900
922
300
–
–
–
324
Total
£000
1,365
1,390
1,577
948
(1) The annual bonus element is assumed to be the maximum.
(2) The long-term incentive element is based upon the LTIP 2018 with a TSR element of a 50% increase in the share price and full achievement of the EPS element and a monetary value of the shares
to be issued calculated using a share price at as 29 February 2020.
REMUNERATION FOR NON-EXECUTIVE DIRECTORS
The non-executive directors all receive a fee and annual allocation of shares each year to cover all their duties. The current annual remuneration is:
From 1 March 2020
From 1 March 2019
Share awards
Fees
Share awards
£10,000
£10,000
£60,000
£70,000
£10,000
£10,000
Fees
£60,000
£70,000
£20,000
£120,000
£20,000
£70,000
Pierre Cuilleret
Iain McDonald
Brian Small
NED
NED and Chairman of Remuneration Committee
Deputy Chairman, SID, Chairman of Audit
and Nomination Committees
The above remuneration will be reviewed annually by the board.
Iain McDonald
Chairman of the Remuneration Committee
21 April 2020
57
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND FINANCIAL STATEMENTS
The directors are responsible for preparing financial statements for each financial year, which give a true and fair view, in accordance with applicable
Jersey law and International Financial Reporting Standards, of the state of affairs of the company and of the profit or loss of the company for that
period. In preparing those financial statements, the directors are required to:
5 select suitable accounting policies and then apply them consistently;
5 make judgements and estimates that are reasonable and prudent;
5 state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial
statements; and
5 prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the
company and enable them to ensure that the financial statements comply with the Companies (Jersey) Law, 1991. They are also responsible for
safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
John Lyttle
Neil Catto
21 April 2020
58
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF BOOHOO GROUP PLC
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
OPINION
In our opinion, boohoo group plc’s group financial statements and company financial statements (the “financial statements”):
5 give a true and fair view of the state of the group’s and of the company’s affairs as at 29 February 2020 and of the group’s profit, the company’s
loss and the group’s and the company’s cash flows for the year then ended;
5 have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union; and
5 have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991.
We have audited the financial statements, included within the Annual report and financial statements (the “Annual Report”), which comprise: the
consolidated and company statements of financial position as at 29 February 2020; the consolidated and company statements of comprehensive
income, the consolidated and company cash flow statements, and the consolidated and company statements of changes in equity for the year then
ended; and the notes to the financial statements, which include a description of the significant accounting policies.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under
ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the
UK, which includes the FRC’s Ethical Standard, as applicable to listed entities, and we have fulfilled our other ethical responsibilities in accordance
with these requirements.
OUR AUDIT APPROACH
Overview:
MATERIALITY
5 Overall group materiality: £4.6 million (2019: £3 million), based on 5% of profit before tax
5 Overall company materiality: £2.2 million (2019: £1.5 million), based on the lower of component and statutory
materiality (statutory materiality based on 1% of total assets)
AUDIT SCOPE
KEY AUDIT
MATTERS
5 We have audited both of the group’s material trading entities (boohoo.com UK Limited and PrettyLittleThing.com
Limited) together with boohoo group plc (the parent company of the group) which account for 91% and 88% of
consolidated revenue and profit before tax respectively
5 Valuation of inventory (Group)
5 Valuation of provision for returns (Group)
5 Consideration of the impact of COVID-19 (Group and Company)
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular,
we looked at where the directors made subjective judgements, for example in respect of significant accounting estimates that involved making
assumptions and considering future events that are inherently uncertain. As in all of our audits we also addressed the risk of management override
of internal controls, including evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due
to fraud.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial statements
of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the
auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the
efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters. This is not a complete list of all risks identified by our audit.
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
59
59
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF BOOHOO GROUP PLC (CONTINUED)
KEY AUDIT MATTER
VALUATION OF INVENTORY
Refer to note 16 Inventories
The gross value of inventory at the year end was £107.6 million
(2019: £71.2 million), against which a provision of £7.4 million
(2019: £5.2 million) was recorded. The group operates in a
dynamic and fast moving fashion market which inherently means
there is a risk of inventory falling out of fashion and therefore
becoming difficult to sell above cost.
The provisioning policy is primarily based on the age of items,
with additional amounts recognised against stock lines that
management expect to be discounted. Stock items that
management expect to sell at a discount via alternatives to its
website are written down to reflect this discounted sales price.
The quantity of individual inventory lines and the rate at which new
lines are added, combined with the total value of gross inventory,
makes the calculation of the related provision material to the
financial statements.
VALUATION OF PROVISION FOR RETURNS
Refer to note 19 Trade and other payables
Included in trade and other payables is a provision for returns
relating to sales made pre year end that are expected to be
returned post year end.
The group offers a returns policy on all sales which is extended for
faulty items. Management calculated the returns provision using
historical returns data, combined with the gross value of sales
made in the final two months of the year.
CONSIDERATION OF THE IMPACT OF COVID-19
Refer to the Review of the Business (page 12) and the Directors’
Report (page 43) which disclose the impact of the COVID-19
pandemic.
The existence of COVID-19 was a condition that existed as at
the balance sheet date. Management considered its impact on
the Group and Company’s financial statements and concluded
that there was no material impact on the financial statements,
including in respect of the impairment of certain assets, or on
provisions or estimates made.
Since the UK Government’s announcement of the nationwide
lockdown, the potential impact of COVID-19 has become more
significant. As a result, management has invested a significant
amount of time to fully consider the implications on the Group’s
and Company’s going concern assessment by modelling severe
but plausible downside scenarios. Management has concluded
that the Group and Company expect to trade solvently under
these scenarios for at least 12 months from the date of this report.
The Directors have therefore prepared the Group and Company
financial statements on a going concern basis, and believe this
assumption remains appropriate.
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
We have reviewed management’s provisioning policy, compared
it to the prior year and assessed its appropriateness given our
knowledge of the group.
We have tested the validity of the data used as the basis for
management’s inventory provision calculation, including the aged
stock listing, and found it to be accurate and complete.
We have reviewed the post year end financial information to
identify any significant unprovided inventory write offs with none
noted.
We have tested management’s calculation of the inventory
provision based on the underlying data and group accounting policy
and found this to be accurate.
We have reviewed management’s provisioning policy and found
it to be consistent with the prior year and appropriate given the
circumstances. In doing this we have reviewed the group’s published
returns policy and ensured this is accurately reflected in the
calculation.
We have tested the validity of the inputs to management’s provision
for returns calculations and found these to be accurate and
complete. This specifically included listings of sales and credit notes
during the year.
We have compared the year end provision to actual credit notes
raised subsequent to the year end related to sales made prior to the
year end and found no significant differences.
We have considered the potential impact of COVID-19 on the
balance sheet, specifically around the valuation of inventory, the
provisioning for future returns and recoverability of receivables and
concluded that there were no indicators of a material impact on
amounts included in the Group or Company financial statements.
We evaluated management’s severe but plausible downside
scenarios, including actions available to management to mitigate
the potential impacts of COVID-19. Based on the information
available at the time of the approval of the Annual reports and
financial statements, we consider the scenarios to be appropriate
as a means to assess the impact of COVID-19 on future sales
and other inputs to the Group’s business model. We challenged
management on the key assumptions included within the scenarios
modelled and confirmed management’s mitigatory actions are
within their control.
We reviewed management’s disclosures in relation to the potential
impact of COVID-19 and concluded they are consistent with the
downside scenarios which have been modelled.
Our conclusions relating to going concern are set out in the
‘Conclusions related to going concern’ section below.
60
60
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
HOW WE TAILORED THE AUDIT SCOPE
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole,
taking into account the structure of the group and the company, the accounting processes and controls, and the industry in which they operate.
The group comprises the following entities: boohoo group plc, parent company of the group; boohoo.com UK Limited, PrettyLittleThing.com
Limited, Nasty Gal Limited, MissPap UK Limited, Karenmillen.com Limited, CoastLondon.com Limited, which are trading entities that are based
in the UK; and eleven non-trading entities. The group audit team in the UK performed an audit of the complete financial information of boohoo
group plc, boohoo.com UK Limited and PrettyLittleThing.com Limited, which we regarded as financially significant components of the group.
These components accounted for 91% of the consolidated revenue and 88% of consolidated profit before tax for the group.
MATERIALITY
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with
qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial
statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
OVERALL MATERIALITY
£4.6 million (2019: £3 million).
£2.2 million (2019: £1.5 million).
GROUP FINANCIAL STATEMENTS
COMPANY FINANCIAL STATEMENTS
HOW WE DETERMINED IT
5% of profit before tax.
RATIONALE FOR BENCHMARK
APPLIED
Profit before tax is the key measure
used both internally by the Board and,
we believe, through reading Directors’
presentations to analysts, externally
by shareholders in evaluating the
performance of the group.
Based on the lower of component and
statutory materiality (statutory materiality
based on 1% of total assets).
Total assets is appropriate, as it is not a
profit-oriented company. The company
holds all investments in subsidiaries and
therefore total assets is deemed the most
appropriate benchmark.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range of materiality
allocated across components was between £2.2 million and £4.4 million. Certain components were audited to a local statutory audit materiality that
was also less than our overall group materiality.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £231,000 (Group audit)
(2019: £150,000) and £110,000 (Company audit) (2019: £75,000) as well as misstatements below those amounts that, in our view, warranted
reporting for qualitative reasons.
CONCLUSIONS RELATING TO GOING CONCERN
We have nothing to report in respect of the following matters in relation to which ISAs (UK) require us to report to you where:
5 the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
5 the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group’s
and company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the
financial statements are authorised for issue.
However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the group’s and company’s ability to
continue as a going concern.
REPORTING ON OTHER INFORMATION
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon.
The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and,
accordingly, we do not express an audit opinion or any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be
materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude
whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to
report based on these responsibilities.
61
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF BOOHOO GROUP PLC (CONTINUED)
RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS AND THE AUDIT
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of directors’ responsibilities in respect of the annual report and financial statements set out on page 58,
the directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that
they give a true and fair view. The directors are also responsible for such internal control as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and 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 group or the company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether
due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Article 113A of the
Companies (Jersey) Law 1991 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
OTHER REQUIRED REPORTING
Companies (Jersey) Law 1991 exception reporting
Under the Companies (Jersey) Law 1991 we are required to report to you if, in our opinion:
5 we have not received all the information and explanations we require for our audit; or
5 proper accounting records have not been kept by the company, or proper returns adequate for our audit have not been received from branches
not visited by us; or
5 the company financial statements are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
PricewaterhouseCoopers LLP
Chartered Accountants
Manchester
21 April 2020
62
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 29 FEBRUARY 2020
Revenue
Cost of sales
Gross profit
Distribution costs
Exceptional distribution costs
Other distribution costs
Administrative expenses
Exceptional administrative expenses
Amortisation of acquired intangibles
Other administrative expenses
Other income
Operating profit
Finance income
Finance expense
Profit before tax
Taxation
Profit for the year
Profit for the year attributable to:
Owners of the parent company
Non-controlling interests
Total other comprehensive income/(expense) for the year
Impact of adoption of IFRS 16
Loss/(gain) reclassified to profit and loss during the year
Fair value (loss)/gain on cash flow hedges during the year (1)
Total comprehensive income for the year
Total comprehensive income attributable to:
Owners of the parent company
Non-controlling interests
Earnings per share
Basic
Diluted
Note
2
3
4
6
10
7
2020
£000
1,234,876
(568,640)
666,236
(278,252)
–
(278,252)
(297,326)
–
(5,120)
(292,206)
238
90,896
1,716
(390)
92,222
(19,339)
72,883
63,669
9,214
72,883
(532)
1,280
(13,617)
60,014
50,800
9,214
60,014
5.48p
5.35p
2019
(restated)
£000
856,920
(387,926)
468,994
(207,083)
(6,162)
(200,921)
(203,470)
(505)
(4,449)
(198,516)
239
58,680
1,320
(144)
59,856
(12,397)
47,459
43,584
3,875
47,459
–
(2,337)
2,229
47,351
43,476
3,875
47,351
3.78p
3.71p
(1) Net fair value gains on cash flow hedges will be reclassified to profit or loss during the three years to 28 February 2023.
The 2019 figures have been restated to adjust the non-controlling interest in PrettyLittleThing.com Limited from £9,687,000 to £3,875,000
and restate the basic earnings per share from 3.27p to 3.78p and diluted earnings per share from 3.22p to 3.71p (see note 1). All activities relate
to continuing operations. The notes on pages 67 to 90 form part of these financial statements.
63
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 29 FEBRUARY 2020
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Financial assets
Deferred tax
Current assets
Inventories
Trade and other receivables
Financial assets
Current tax receivable
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Interest-bearing loans and borrowings
Lease liabilities
Financial liabilities
Current tax liability
Total current liabilities
Non-current liabilities
Interest-bearing loans and borrowings
Lease liabilities
Financial liabilities
Deferred tax
Total liabilities
Net assets
Equity
Share capital
Share premium
Capital redemption reserve
Hedging reserve
EBT reserve
Translation reserve
Reconstruction reserve
Non-controlling interest
Retained earnings
Total equity
Note
2020
£000
11
12
13
24
15
16
17
24
18
19
20
21
24
20
21
24
15
22
42,255
119,216
14,591
4,467
5,980
186,509
99,107
31,828
6,599
–
245,448
382,982
569,491
(194,810)
(2,382)
(5,400)
(8,678)
(6,636)
(217,906)
(2,382)
(10,753)
(6,922)
(3,593)
(241,556)
327,935
11,680
608,447
100
(4,534)
(17,075)
11
(515,282)
17,262
227,326
327,935
2019
(restated)
£000
27,165
108,498
-
3,756
4,034
143,453
66,806
22,576
5,883
3,186
197,872
296,323
439,776
(154,351)
(2,382)
-
(1,421)
(3,939)
(162,093)
(4,764)
-
(415)
(2,102)
(169,374)
270,402
11,631
606,086
100
7,803
(2,174)
–
(515,282)
8,381
153,857
270,402
The 2019 figures have been restated to adjust the non-controlling interest in PrettyLittleThing.com Limited from £19,064,000 to £8,381,000
and increase retained earnings by the same (see note 1). The notes 1 to 28 form part of these financial statements.
These financial statements of boohoo group plc, registered number 114397, on pages 63 to 90 were approved by the board of directors on
21 April 2020 and were signed on its behalf by:
John Lyttle
Neil Catto
Directors
64
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Share
capital
£000
Share
premium
£000
Capital
redemption
premium
£000
Hedging
reserve
£000
EBT
reserve
£000
Translation
reserve
£000
Recon-
struction
reserve
£000
Non-
controlling
interest
£000
Retained
earnings
£000
Total
equity
£000
Balance at 28 February 2018
11,496 602,578
100
7,911
(351)
168
(515,282)
4,018
102,141
212,779
Profit for the year
Other comprehensive
income/(expense):
Gain reclassified to profit
and loss in revenue
Fair value gain on cash flow
hedges during the year
Total comprehensive income
for the year
Issue of shares
Share-based payments credit
Excess deferred tax on
share-based payments
Non-controlling interests’
increase in share of net assets
Translation of foreign operations
–
–
–
–
135
–
–
–
–
–
–
–
–
3,508
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(2,337)
2,229
–
–
–
(108)
–
–
–
(1,823)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(168)
–
3,875
43,584
47,459
–
–
–
–
–
–
–
–
–
–
–
–
(2,337)
2,229
3,875
–
246
43,584
–
5,032
47,351
1,820
5,278
–
3,342
3,342
242
–
(242)
–
–
(168)
Balance at 28 February 2019
11,631 606,086
100
7,803
(2,174)
–
(515,282)
8,381
153,857 270,402
Impact of adoption of IFRS 16
Profit for the year
Other comprehensive
income/(expense):
Loss reclassified to profit
and loss in revenue
Fair value loss on cash flow
hedges during the year
Total comprehensive income
for the year
Issue of shares
Share-based payments credit
Excess deferred tax on share-
based payments
Translation of foreign operations
Non-controlling interests’
increase in share of net assets
Dividend paid to non-controlling
interests
–
–
–
–
–
49
–
–
–
–
–
–
–
–
–
–
2,361
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,280
(13,617)
–
–
–
–
(12,337)
–
–
–
(14,901)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
11
–
–
–
–
–
–
–
–
–
–
–
–
–
(18)
9,214
(514)
63,669
(532)
72,883
–
–
–
–
1,280
(13,617)
9,196
250
512
63,155
–
10,445
60,014
(12,241)
10,957
20
–
2,172
–
2,192
11
2,303
(2,303)
–
(3,400)
–
(3,400)
Balance at 29 February 2020 11,680 608,447
100
(4,534)
(17,075)
11
(515,282)
17,262
227,326
327,935
The 2019 figures have been restated to adjust the non-controlling interest in PrettyLittleThing.com Limited of £8,761,000 as at 28 February 2018
to £4,018,000 and the NCI share of the profit for the year to 28 February 2019 from £9,687,000 to £3,875,000. In addition, there is an adjustment
for the share of net assets attributable to the non-controlling interest increasing each year (see note 1).
The notes on pages 67 to 90 form part of these financial statements.
65
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 29 FEBRUARY 2020
Cash flows from operating activities
Profit for the year
Adjustments for:
Share-based payments charge
Depreciation charges and amortisation
Loss on sale of fixed assets
Finance income
Finance expense
Tax expense
Increase in inventories
Increase in trade and other receivables
Increase in trade and other payables
Cash generated from operations
Tax paid
Net cash generated from operating activities
Cash flows from investing activities
Acquisition of intangible assets
Acquisition of property, plant and equipment
Proceeds from the sale of fixed assets
Finance income received
Net cash used in investing activities
Cash flows from financing activities
Proceeds from the issue of ordinary shares
Purchase of own shares by EBT
Finance expense paid
Dividend paid to non-controlling interests
Lease payments
Repayment of borrowings
Net cash used in financing activities
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Notes 1 to 28 form part of these financial statements.
Note
2020
£000
2019
£000
72,883
47,459
16
17
19
11
12
10,957
24,650
294
(1,716)
390
19,339
126,797
(32,301)
(9,434)
42,219
127,281
(11,610)
115,671
(23,158)
(22,404)
–
1,807
(43,755)
2,665
(14,906)
(286)
(3,400)
(6,031)
(2,382)
(24,340)
47,576
197,872
245,448
5,278
13,921
24
(1,320)
144
12,397
77,903
(18,558)
(4,935)
57,513
111,923
(10,361)
101,562
(3,237)
(43,630)
59
1,249
(45,559)
3,653
(1,833)
(144)
–
–
(2,382)
(706)
55,297
142,575
197,872
66
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
1 ACCOUNTING POLICIES
General information
boohoo group plc is a public limited company incorporated and domiciled in Jersey and listed on the Alternative Investment Market (AIM) of
the London Stock Exchange. Its registered office address is: 12 Castle Street, St Helier, Jersey, JE2 3RT. The company was incorporated on
19 November 2013.
Basis of preparation
The consolidated financial statements of the group have been approved by the directors and prepared on a going concern basis in accordance with
International Financial Reporting Standards as adopted by the European Union (Adopted IFRSs), IFRS IC Interpretations and the Companies
(Jersey) Law 1991.
The financial statements have been approved on the assumption that the group and company remain a going concern as explained on page 44.
The impact of the COVID-19 crisis on the future prospects of the group is not quantifiable at the date of this report, as the length of restrictions
and impact on consumers globally is outside of what any business is able to predict. However, we have modelled a scenario with a substantial
reduction in revenue from April 2020 until June 2020, with some recovery from July 2020 to September 2020. We have also modelled a shut-
down of the business until February 2021, as an unlikely, but worst possible, case. Both scenarios show the group and company has sufficient funds
to continue trading solvently, even before obtaining any potential government loans.
Change of accounting policy, non-controlling interest – restatement of 2019 financial statements
Following a review of the accounting treatment of the non-controlling interest of shareholders in PrettyLittleThing.com Limited (PLT), it has been
determined that the restrictions imposed by the Shareholders’ Agreement require the proportion of the non-controlling interests’ share of the
profits of PLT to accrue in accordance with certain terms of the agreement and not as 34% as previously stated. The accumulated profit attributable
to non-controlling interests of £8,761,000 as at 28 February 2018 has been adjusted to £4,018,000 and the share of profits for the year to
28 February 2019 from £9,687,000 to £3,875,000 and the difference added to retained earnings. The share of profits recognised by the
non-controlling interest increases each year by 20% of 34% of the earnings of PLT from 20% of 34% to 100% of 34% over the five-year period
of the agreement, as does the non-controlling interests’ share of the net assets.
Basic earnings per share of boohoo group plc in 2019 has changed from 3.27p to 3.78p and diluted earnings per share from 3.22p to 3.71p.
The adjusted diluted earnings per share is calculated on the same basis as in previous years at 34% of the net assets and profits, reflecting the
fact that the reported non-controlling interest will accumulate to 34% at the end of the five-year period of the Shareholders’ Agreement in
February 2022.
67
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC NOTES TO THE FINANCIAL STATEMENTS (FORMING PART OF THE FINANCIAL STATEMENTS) (CONTINUED)
1 ACCOUNTING POLICIES (CONTINUED)
The impact of the restatement of non-controlling interest on the opening balance sheet is shown below:
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Financial assets
Deferred tax
Current assets
Inventories
Trade and other receivables
Financial assets
Current tax receivable
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Interest-bearing loans and borrowings
Lease liabilities
Financial liabilities
Current tax liability
Total current liabilities
Non-current liabilities
Interest-bearing loans and borrowings
Lease liabilities
Financial liabilities
Deferred tax
Total liabilities
Net assets
Equity
Share capital
Share premium
Capital redemption reserve
Hedging reserve
EBT reserve
Translation reserve
Reconstruction reserve
Non-controlling interest (restated)
Retained earnings (restated)
Total equity
2018
(restated)
£000
2018
(reported)
£000
30,877
71,994
–
2,445
6,479
111,795
48,248
17,499
6,770
–
142,575
215,092
326,887
30,877
71,994
–
2,445
6,479
111,795
48,248
17,499
6,770
–
142,575
215,092
326,887
(96,670)
(2,382)
–
(837)
(4,505)
(96,670)
(2,382)
–
(837)
(4,505)
(104,394)
(104,394)
(7,146)
–
(467)
(2,101)
(114,108)
212,779
11,496
602,578
100
7,911
(351)
168
(515,282)
8,761
97,398
212,779
(7,146)
–
(467)
(2,101)
(114,108)
212,779
11,496
602,578
100
7,911
(351)
168
(515,282)
4,018
102,141
212,779
68
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
New and amended standards adopted by the group
The following new standards, and amendments to standards, have been adopted by the group for the first time for the financial year beginning on
1 March 2019:
5 IFRS 16, ‘Leases’;
5 IFRIC 23, Uncertainty over income tax treatment;
5 Annual improvements IFRS 3 ‘Business Combinations’, IAS 12 ‘Income taxes’, IAS 23 ‘Borrowing costs’;
5 Amendments to IFRS 9 ‘Financial Instruments’ – Prepayment features and negative compensation; and
5 Amendments to IAS 39 and IFRS 7 interest rate benchmark reform.
Other than IFRS 16, ‘Leases’, the adoption of these standards did not have a material impact on the group consolidated financial statements.
The group has adopted IFRS 16, ‘Leases’, effective for accounting periods commencing 1 January 2019 and applied the modified retrospective
approach and the exemption for low value or short leases. Comparatives have not been restated and the cumulative impact of adoption has been
recognised as a decrease in net assets and a corresponding decrease in retained earnings as at 1 March 2019. The right-of-use asset has been
measured at the carrying amount as if the standard had been applied since the commencement of the lease, discounted using the incremental
borrowing rate of 1.8% at transition. The present value of the lease liabilities is discounted at the group’s incremental borrowing cost.
The lease liability brought on to the balance sheet at transition is £18.5 million and the right-of-use asset £16.1 million. The overall decrease in
retained earnings is £0.5 million. The impact on the income statement had no material effect on profit before tax for the year to 29 February 2020,
with adjusted EBITDA increasing by £4.9 million, depreciation increasing by £4.7 million and finance costs increasing by £0.2 million. Within the
cash flow statement, there are changes in the classification of cash flows, with £2.6 million of lease payments classified as financing cash flows and
£0.1 million as interest payments.
The impact on the opening balance sheet is as follows:
Non-current assets
Right-of-use assets – property, plant and equipment
Deferred income tax asset
Current liabilities
Financial liabilities – lease liabilities
Accruals
Non-current liabilities
Financial liabilities – lease liabilities
Total decrease in retained earnings at 1 March 2019
Reconciliation of the lease liabilities at 1 March 2019 to the operating lease commitments at 28 February 2019:
Operating lease commitments disclosed at 28 February 2019
Third-party warehouse services contract – revised treatment as operating lease
Restated operating lease commitments at 28 February 2019
Discounted using the lessee’s incremental borrowing rate at the date of initial application
Additional lease liability recognised as at 1 March 2019
Analysed as:
Current lease liabilities
Non-current lease liabilities
1 March 2019
£000
16,116
109
(4,933)
1,791
(13,615)
(532)
£000
6,259
12,800
19,059
(511)
18,548
4,933
13,615
69
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (FORMING PART OF THE FINANCIAL STATEMENTS) (CONTINUED)
1 ACCOUNTING POLICIES (CONTINUED)
From 1 March 2019, the group’s lease policy is summarised as follows:
A right-of-use asset and lease liability is recognised at the lease commencement date. The right-of-use asset is initially recognised at cost,
comprising the initial amount of the lease liability plus any initial direct costs incurred, less any lease incentives received. The right-of-use asset is
subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the asset or
the end of the lease term. The lease liability is initially measured as the present value of the lease payments at the commencement date, discounted
using the incremental borrowing rate. The lease liability is measured at amortised cost using the effective interest method. It is re-measured when
there is a change in future lease payments arising from a change in an index or a rate or a change in the group’s assessment of whether it will exercise
an extension or termination option. When the lease liability is re-measured, a corresponding adjustment is made to the right-of-use asset.
Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the group
and/or company
The following standards have been published and are mandatory for accounting periods beginning after 1 March 2020 but have not been early
adopted by the group or company and could have an impact on the group and company financial statements:
5 Amendments to IFRS 3, ‘Business combinations’, definition of a business;
5 Amendments to IAS 1, ‘Presentation of financial statements’, and IAS 8, ‘Accounting policies, changes in accounting estimates and errors’
definition of material
Measurement convention
The consolidated financial statements have been prepared under the historical cost convention, excluding financial assets and financial liabilities
(including derivative instruments) held at fair value through profit or loss. The principal accounting policies adopted in the preparation of these
financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of consolidation
The group financial statements consolidate those of its subsidiaries and the Employee Benefit Trust. All intercompany transactions between group
companies are eliminated.
Subsidiaries are entities controlled by the group. The group controls an entity when the group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those returns through its power over the entity.
In assessing control, the group takes into consideration potential voting rights that are currently exercisable. The acquisition date is the date on
which control is transferred to the acquirer. Subsidiary undertakings acquired during the year are accounted for using the acquisition method of
accounting. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences
until the date that control ceases. The cost of the acquisition is the aggregate of the fair values of the assets and liabilities and equity instruments
issued on the acquisition date. The excess of the cost of acquisition over the group’s share of the fair values of the identifiable net assets acquired
is recorded as goodwill. If the cost of acquisition is less than the fair value of the assets, the difference is recognised directly in the statement of
comprehensive income.
The Employee Benefit Trust is considered to be a special purpose entity in which the substance of the relationship is that of control by the group
in order that the group may benefit from its control. The assets held by the trust are consolidated into the group.
Business combinations
The group uses the acquisition method of accounting for business combinations of entities not under common control. Separable identifiable assets
and liabilities are measured initially at their fair values on the acquisition date. Any non-controlling interest is measured at either fair value or at
the non-controlling interest’s share of the acquiree’s net assets. Acquisition costs are expensed as incurred. The excess of any consideration paid
over the fair value of the net assets is recognised as goodwill and any shortfall of consideration paid against the fair value of net assets is recognised
directly in the statement of comprehensive income.
Intangible assets
Trademarks and licences are stated at cost less accumulated amortisation and impairment losses and are amortised over their expected lives of ten
years and charged to administrative expenses. Customer lists are amortised over expected customer lifetime value of three years.
The costs of acquiring or developing software are recorded as intangible assets and stated at cost less accumulated amortisation and impairment
losses. The costs include the payroll costs of employees directly associated with the project and other direct external material and service costs.
Costs are capitalised only where there is an identifiable project that will bring future economic benefit. Other website development and
maintenance costs are expensed in the statement of comprehensive income. Software costs are amortised over three to five years based
on their estimated useful lives and charged to administrative expenses in the statement of comprehensive income.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Where parts of an item of property, plant
and equipment have different useful lives, they are accounted for as separate property, plant and equipment. Cost includes expenditures that are
directly attributable to the acquisition of the asset. The cost of each item of property, plant and equipment is written off evenly over its estimated
remaining useful life. Depreciation is charged to the statement of comprehensive income on a straight-line basis over the estimated useful lives of
each part of an item of property, plant and equipment, as follows: short leasehold assets over the life of the lease or 2%; buildings 2%; motor vehicles
and computer equipment 33%; and fixtures and fittings 33%, 20%, 10% or 7%. The assets’ residual values and useful lives are reviewed and adjusted,
if appropriate, at each reporting date.
70
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Financial instruments
Financial instruments are recognised at fair value and subsequently re-measured at fair value at the end of each reporting date.
Derivative financial instruments and cash flow hedges
The group holds derivative financial instruments to hedge its foreign currency exposures. These derivatives, classified as cash flow hedges, are initially
recognised at fair value and then re-measured at fair value at the end of each reporting date. Hedging instruments are documented at inception and
effectiveness is tested throughout their duration. Changes in the value of cash flow hedges are recognised in other comprehensive income and any
ineffective portion is immediately recognised in the income statement. If the firm commitment or forecast transaction that is the subject of a cash
flow hedge results in the recognition of a non-financial asset or liability, then at the time the asset is recognised, the associated gains or losses on
the derivative that had been previously recognised in other comprehensive income are included in the initial measurement of the asset or liability.
For hedges that do not result in the recognition of an asset or liability, amounts deferred in other comprehensive income are recognised in the
statement of comprehensive income in the same period in which the hedged item affects net profit.
Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision
for impairment. Under IFRS 9, effective from 1 January 2018, the group elected to use the simplified approach to measure the loss allowance at an
amount equal to lifetime expected credit losses for trade receivables and contract assets that result from transactions that are within the scope of
IFRS 15, irrespective of whether they contain a significant financing component or not. Under the new accounting standard, the group continues to
establish a provision for impairment of trade receivables when there is objective evidence that the group will not be able to collect all amounts due
according to the original terms of the receivables. Significant financial difficulties of the counterparty, probability that the counterparty will enter
bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired. In
addition, IFRS 9 requires the group to consider forward looking information and the probability of default when calculating expected credit losses.
The measurement of expected credit losses reflects an unbiased and probability-weighted amount that is determined by evaluating the range of
possible outcomes as well as incorporating the time value of money. The group considers reasonable and supportable customer-specific and market
information about past events, current conditions and forecasts of future economic conditions when measuring expected credit losses. The amount
of the provision is the difference between the carrying amount and the present value of estimated future cash flows of the asset, discounted, where
material, at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount
of the loss is recognised in the income statement within administrative expenses. When a trade receivable is uncollectable, it is written off against
the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against administrative expenses
in the income statement.
Trade and other payables
Trade and other payables are recorded initially at fair value. Subsequent to this, they are measured at amortised cost.
Inventories
Inventories are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items. Inventories are
valued on a first in first out basis. Inventory includes the cost price of estimated returns.
Cash and cash equivalents
Cash and cash equivalents, for the purpose of the cash flow statement and the statement of financial position, comprises cash in bank.
Revenue
Revenue is attributable to the one principal activity of the business. Revenue represents net invoiced sales of goods including postage and packing
receipts, excluding value added tax. Revenue from the sale of goods is recognised when the customer has received the products, which is when it is
considered that the performance obligations have been met, and is adjusted for actual returns and a provision for expected returns. Internet sales
are paid by customers at the time of ordering using a variety of payments methods. Wholesale sales are paid in accordance with agreed credit terms
with business customers. A provision for returns, based on historical customer return rates, is deducted from revenue.
Rebates
Retrospective rebates from suppliers are accounted for in the period to which the rebate relates to the extent that it is reasonably certain that the
rebate will be received. Early settlement discounts are taken when payment is made.
Leasing commitments
Rentals paid under low value and short-term operating leases are charged to the statement of comprehensive income on a straight line basis over
the period of the lease.
Finance costs
Interest payable is recognised in the statement of comprehensive income as it accrues in respect of the effective interest rate method.
Finance income
Interest receivable is recognised in the statement of comprehensive income as it is earned.
Pension costs
The group contributes to a Group Personal Pension Scheme for certain employees under a defined contribution scheme. The costs of these
contributions are charged to the statement of comprehensive income on an accruals basis as they become payable under the scheme rules.
71
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC NOTES TO THE FINANCIAL STATEMENTS (FORMING PART OF THE FINANCIAL STATEMENTS) (CONTINUED)
1 ACCOUNTING POLICIES (CONTINUED)
Share-based payments
The group issues equity-settled share-based payments in the parent company to certain employees in exchange for services rendered. These awards
are measured at fair value on the date of the grant using an option pricing model and expensed in the statement of comprehensive income on a
straight-line basis over the vesting period after making an allowance for the estimated number of shares that are estimated will not vest. The level
of vesting is reviewed and adjusted annually. Free shares awarded are expensed immediately.
Taxation
Tax on the profit for the year comprises current and deferred tax. Tax is recognised in the statement of comprehensive income except to the extent
that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date,
and any adjustments to tax payable in respect of previous years.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the reporting date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised.
Deferred tax is provided for on the fair value of intangible assets acquired in subsidiaries.
Foreign currency translation
The results and cash flows of overseas subsidiaries are translated at the average monthly exchange rates during the period. The statement of
financial position of each overseas subsidiary is translated at the year end rate. The resulting exchange differences are recognised in a translation
reserve in equity and are reported in other comprehensive income.
Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates on the day of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the year end rate and exchange
differences are recognised in the statement of comprehensive income.
Exceptional items
Items of expenditure or income that are material and out of the ordinary course of business are separately identified and labelled as “exceptional”
so the reader of the financial statements can understand the underlying business performance as well as the exceptional items.
Significant estimates and judgements
The preparation of financial statements in conformity with IFRS as adopted by the EU requires management to make judgements, estimates
and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. The estimates and
assumptions are based on historical experience and various other factors believed to be reasonable under the circumstances. Actual results could
differ from these estimates and any subsequent changes are accounted for when such information becomes available. The judgements, estimates
and assumptions that are the most subjective or complex are discussed below:
Returns provision
The provision for sales returns is estimated based on recent historical returns and management’s best estimates and is allocated to the period in
which the revenue is recorded. Actual returns could differ from these estimates. The historic difference between the provision estimate and the
actual results, known at a later stage, has never been, nor is expected to be, material. A difference of 1%pt in the percentage of sales returns rate
would have an impact of +/- £1 million on reported revenue and +/- £0.4 million on operating profit.
Inventory valuation
Inventory is carried at the lower of cost or net realisable value. The judgement of net realisable value may be different from the future actual value
realised, but that difference is not expected ever to be material. A difference of 1%pt in the provision as a percentage of gross inventory would give
rise to a difference of +/- £1.0m in gross margin.
Option to acquire the minority stake in PrettyLittleThing.com Limited
The company has an option to buy the 34% non-controlling interest in PrettyLittleThing.com Limited (“PrettyLittleThing”, formerly 21Three
Clothing Company Limited) for market value or a lesser sum, depending upon financial performance over the five years to 2022. The performance
period for the option commenced on 1 March 2017 and has attracted an equity-settled share-based payment charge over the five-year
performance period in accordance with IFRS 2, as detailed in note 25.
72
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
2 SEGMENTAL ANALYSIS
IFRS 8, ‘Operating Segments’, requires operating segments to be determined based on the group’s internal reporting to the chief operating decision
maker. The chief operating decision maker is considered to be the executive board, which has determined that the primary segmental reporting
format of the group for 2020 is by business unit. This is based on the group’s management and internal reporting structure, i.e. boohoo including
boohooMAN, PrettyLittleThing (“PLT”), Nasty Gal and other brands.
The executive board assesses the performance of each segment based on revenue and gross profit after distribution expenses and before
administrative expenses.
Revenue
Cost of sales
Gross profit
Distribution costs
Segment result
Administrative expenses – other
Amortisation of acquired intangibles
Other income
Operating profit
Finance income
Finance expense
Profit before tax
Revenue
Cost of sales
Gross profit
Distribution costs
Exceptional distribution costs
Segment result
Administrative expenses – other
Exceptional administrative expenses
Amortisation of acquired intangibles
Other income
Operating profit
Finance income
Finance expense
Profit before tax
Year ended 29 February 2020
boohoo PrettyLittleThing
£000
£000
Nasty Gal
£000
600,733
(284,937)
315,796
(127,322)
188,474
–
–
–
–
–
–
–
516,334
(229,122)
287,212
(127,752)
159,460
–
–
–
–
–
–
–
98,833
(45,301)
53,532
(20,532)
33,000
–
–
–
–
–
–
–
Other
£000
18,976
(9,280)
9,696
(2,646)
7,050
–
–
–
–
–
–
–
Year ended 28 February 2019
boohoo
£000
PrettyLittleThing
£000
Nasty Gal
£000
Other
£000
434,565
(204,474)
230,091
(98,901)
–
131,190
–
–
–
–
–
–
–
–
374,445
(162,687)
211,758
(90,000)
(6,162)
115,596
–
–
–
–
–
–
–
–
47,910
(20,765)
27,145
(12,020)
–
15,125
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
£000
1,234,876
(568,640)
666,236
(278,252)
387,984
(292,206)
(5,120)
238
90,896
1,716
(390)
92,222
Total
£000
856,920
(387,926)
468,994
(200,921)
(6,162)
261,911
(198,516)
(505)
(4,449)
239
58,680
1,320
(144)
59,856
Due to the nature of its activities, the group is not reliant on any individual customers.
No analysis of the assets and liabilities of each operating segment is provided to the chief operating decision maker in the monthly management
accounts, therefore no measure of segmental assets or liabilities is disclosed in this note. Non-current assets located outside the UK comprise
offices in the USA with a net book value of £2.6 million.
73
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (FORMING PART OF THE FINANCIAL STATEMENTS) (CONTINUED)
2 SEGMENTAL ANALYSIS (CONTINUED)
Revenue by geographic region
UK
Rest of Europe
USA
Rest of world
3 OTHER INCOME
Property rental income
4 FINANCE INCOME AND EXPENSE
Finance income: Bank interest received
Finance expense: Loan interest paid
Finance expense: IFRS 16 lease interest
5 AUDITORS’ REMUNERATION
Audit of these financial statements
Disclosure below based on amounts receivable in respect of services to the group
Amounts receivable by auditors and their associates in respect of:
Audit of financial statements of subsidiaries pursuant to legislation
Other services relating to taxation
Other advisory services
6 PROFIT BEFORE TAX
Profit before tax is stated after charging:
Short-term operating lease rentals for buildings
Equity-settled share-based payment charges
Acquisition and restructuring costs
Exceptional items – warehouse relocation
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation of intangible assets
Amortisation of acquired intangible assets
2020
£000
679,275
188,424
263,622
103,555
1,234,876
2019
£000
488,199
115,124
166,262
87,335
856,920
2020
£000
238
2020
£000
1,716
(128)
(262)
2020
£000
10
225
141
13
389
2020
£000
176
10,957
1,261
–
11,483
5,099
2,948
5,120
2019
£000
239
2019
£000
1,320
(144)
–
2019
£000
10
138
96
81
325
2019
£000
2,235
5,278
–
6,667
6,972
–
2,500
4,449
The exceptional items relate to the additional costs of relocation of all the inventory held by PrettyLittleThing to a third-party managed warehouse
in July 2018.
74
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
7 EARNINGS PER SHARE
Basic earnings per share is calculated by dividing profit after tax attributable to members of the holding company by the weighted average number
of shares in issue during the year. Own shares held by the Employee Benefit Trust are eliminated from the weighted average number of shares.
Diluted earnings per share is calculated by dividing the profit after tax attributable to members of the holding company by the weighted average
number of shares in issue during the year, adjusted for potentially dilutive share options.
Weighted average shares in issue for basic earnings per share
Dilutive share options
Weighted average shares in issue for diluted earnings per share
Earnings (£000)
Basic earnings per share
Diluted earnings per share
Earnings (£000)
Adjusting items:
Amortisation of intangible assets arising on acquisitions
Share-based payment charges
Exceptional items – warehouse relocation
Adjustment for tax
Pro-forma non-controlling interest adjustment to 34%
Adjustment for non-controlling interest
Adjusted earnings
Adjusted basic earnings per share
Adjusted diluted earnings per share
2020
2019
(restated)
1,161,374,887
27,741,137
1,154,130,568
20,304,294
1,189,116,024
1,174,434,862
63,669
5.48p
5.35p
43,584
3.78p
3.71p
63,669
43,584
5,120
10,957
–
(2,973)
(6,143)
(691)
69,939
6.02p
5.88p
4,449
5,278
6,667
(3,050)
(5,812)
(2,335)
48,781
4.23p
4.15p
Basic earnings per share in 2019 has been restated from 3.27p to 3.78p and diluted earnings per share from 3.22p to 3.71p, following the revised
non-controlling interest accounting.
Adjusted earnings and adjusted earnings per share gives a more consistent measure of the underlying performance of the business excluding non-
cash accounting charges relating to the amortisation of intangible assets valued upon acquisitions, non-cash share-based payment charges, other
exceptional items and increasing the non-controlling interest in PrettyLittleThing.com Limited to 34% of net profit for the year, as in previous years
(see note 1).
8 STAFF NUMBERS AND COSTS
The average monthly number of persons employed by the group (including directors) during the year, analysed by category, was as follows:
Number of employees
Administration
Distribution
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Social security costs
Post-employment benefits
Equity-settled share-based payment charges
2020
1,599
1,020
2,619
2020
£000
84,892
8,721
1,715
10,957
106,285
2019
1,303
885
2,188
2019
£000
62,505
6,419
1,123
5,278
75,325
75
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (FORMING PART OF THE FINANCIAL STATEMENTS) (CONTINUED)
9 DIRECTORS’ AND KEY MANAGEMENT COMPENSATION
Short-term employee benefits
Post-employment benefits
Equity-settled share-based payment charges
2020
£000
15,087
180
2,204
17,471
2019
£000
10,616
217
907
11,740
Directors’ and key management compensation comprises the group directors and executive committee members. Directors’ emoluments and
pension payments of boohoo group plc are detailed in the directors’ remuneration report on page 52.
10 TAXATION
Analysis of charge in year
Current tax on income for the year
Adjustments in respect of prior year taxes
Deferred taxation
Tax on profit
2020
£000
18,766
628
(55)
19,339
2019
£000
12,409
(54)
42
12,397
Income tax expense computations are based on the jurisdictions in which taxable profits were earned at prevailing rates in those jurisdictions.
The company is subject to Jersey income tax at the standard rate of 0%. The reconciliation below relates to tax incurred in the UK where the group is
tax resident. The total tax charge differs from the amount computed by applying the UK rate of 19.0% for the year (2019: 19.0%) to profit before tax
as a result of the following:
Profit before tax
Profit before tax multiplied by the standard rate of corporation tax of the UK of 19.0% (2019: 19.0%)
Effects of:
Expenses not deductible for tax purposes
Change in deferred tax rate
Adjustments in respect of prior year taxes
Overseas tax differentials
Depreciation on ineligible assets
Tax on profit
Tax recognised in the statement of changes in equity
Deferred tax credit on movement in tax base of share options
No current tax was recognised in other comprehensive income (2019: £nil).
2020
£000
92,222
17,522
419
49
628
12
709
2019
£000
59,856
11,373
454
–
(54)
5
619
19,339
12,397
2,192
3,342
76
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
11
INTANGIBLE ASSETS
Cost
Balance at 28 February 2018
Additions
Disposals
Balance at 28 February 2019
Additions
Disposals
Balance at 29 February 2020
Accumulated amortisation
Balance at 28 February 2018
Amortisation for year
Disposals
Balance at 28 February 2019
Amortisation for year
Disposals
Balance at 29 February 2020
Net book value
At 29 February 2018
At 28 February 2019
At 29 February 2020
Patents and
licences
£000
Trademarks
£000
Customer lists
£000
Computer
software
£000
319
307
–
626
–
(12)
614
211
74
–
285
133
(12)
406
108
341
208
25,070
–
–
25,070
19,070
–
44,140
2,674
2,507
–
5,181
3,355
–
8,536
22,396
19,889
35,604
5,826
–
–
5,826
300
–
6,126
2,209
1,942
–
4,151
1,765
–
5,916
3,617
1,675
210
11,044
2,930
(2,096)
11,878
3,788
(1,118)
14,548
6,288
2,426
(2,096)
6,618
2,815
(1,118)
8,315
4,756
5,260
6,233
Total
£000
42,259
3,237
(2,096)
43,400
23,158
(1,130)
65,428
11,382
6,949
(2,096)
16,235
8,068
(1,130)
23,173
30,877
27,165
42,255
Within the statement of comprehensive income, amortisation of acquired intangible assets (trademarks and customer lists) of £5,120,000 (2019:
£4,449,000) is shown separately. The amount of amortisation included in distribution costs is £393,000 (2019: £648,000) and in administrative
expenses is £2,555,000 (2019: £1,852,000).
77
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (FORMING PART OF THE FINANCIAL STATEMENTS) (CONTINUED)
12 PROPERTY, PLANT AND EQUIPMENT
Short
leasehold
£000
Fixtures and
fittings
£000
Computer
equipment
£000
Motor
vehicles
£000
Cost
Balance at 28 February 2018
Additions
Exchange differences
Disposals
Balance at 28 February 2019
Additions
Exchange differences
Disposals
Balance at 29 February 2020
Accumulated depreciation
Balance at 28 February 2018
Depreciation charge for the year
Exchange differences
Disposals
Balance at 28 February 2019
Depreciation charge for the year
Exchange differences
Disposals
Balance at 29 February 2020
Net book value
At 28 February 2018
At 28 February 2019
At 29 February 2020
2,223
3,896
–
(94)
6,025
3,639
–
(509)
9,155
711
566
–
(94)
1,183
1,788
–
(270)
2,701
1,512
4,842
6,454
35,444
36,775
–
(375)
71,844
15,663
–
(618)
86,889
5,093
4,646
–
(364)
9,375
7,176
–
(563)
15,988
30,351
62,469
70,901
3,537
1,575
–
(592)
4,520
2,123
–
(330)
6,313
1,734
1,144
–
(592)
2,286
1,573
–
(330)
3,529
1,803
2,234
2,784
439
115
–
(123)
431
437
–
–
868
133
127
–
(51)
209
170
–
–
379
306
222
489
Land &
buildings
£000
38,980
1,269
(73)
–
40,176
542
94
–
40,812
958
489
(2)
–
1,445
776
3
–
2,224
Total
£000
80,623
43,630
(73)
(1,184)
122,996
22,404
94
(1,457)
144,037
8,629
6,972
(2)
(1,101)
14,498
11,483
3
(1,163)
24,821
38,022
38,731
38,588
71,994
108,498
119,216
The amounts of depreciation included in the statement of comprehensive income in distribution costs is £7,065,000 (2019: £4,003,000) and in
administrative expenses is £4,418,000 (2019: £2,969,000).
13 RIGHT-OF-USE ASSETS
Cost
Transition on adoption of IFRS 16 on 1 March 2019
Additions
Balance at 29 February 2020
Accumulated depreciation
Depreciation for year
Balance at 29 February 2020
Net book value
At 1 March 2019
At 29 February 2020
Short leasehold
£000
23,524
3,554
27,078
7,388
5,099
12,487
16,136
14,591
78
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
14 INVESTMENTS
The subsidiaries held and consolidated in these financial statements are set out below:
Name of company
Principal activity
Country of
incorporation
Address
Percentage
ownership
Holdings
Direct investment
Boohoo Holdings Limited
Indirect investments
ABK Limited
boohoo.com UK Limited
Boo Who Limited
boohoo.com USA Limited
boohoo.com USA Inc
boohoo.com Australia Pty Ltd
boohoo France SAS
boohoo Germany GmbH
PrettyLittleThing.com Limited
21Three Clothing Company Limited Dormant
PrettyLittleThing.com USA Inc
Nasty Gal.com Limited
Nasty Gal.com USA Inc
MissPap UK Limited
Karenmillen.com Limited
CoastLondon.com Limited
Dormant
Trading
Dormant
Dormant
Marketing office
Marketing office
Marketing office
Marketing office
Trading
Marketing office
Trading
Marketing office
Trading
Trading
Trading
UK
49-51 Dale St, Manchester
Jersey
UK
UK
UK
USA
Australia
France
Germany
UK
UK
USA
UK
USA
UK
UK
UK
12 Castle St, St Helier, Jersey
49-51 Dale St, Manchester
49-51 Dale St, Manchester
49-51 Dale St, Manchester
8431 Melrose Pl, Los Angeles
468 St Kilda Road, Melbourne
15, rue Bachaumont, Paris
Tucholskystrasse 13, Berlin
Wellington Mill, Pollard Street East, Manchester
Wellington Mill, Pollard Street East, Manchester
1209 Orange Street, Wilmington
49-51 Dale St, Manchester
2135 Bay Street, Los Angeles
49-51 Dale St, Manchester
49-51 Dale St, Manchester
49-51 Dale St, Manchester
100%
100%
100%
100%
100%
100%
100%
100%
100%
66%
66%
66%
100%
100%
100%
100%
100%
15 DEFERRED TAX
Assets
Asset at 28 February 2018
Recognised in statement of comprehensive income
Debit in equity
Asset at 28 February 2019
Recognised in statement of comprehensive income
Credit in equity
Asset at 29 February 2020
Liabilities
Liability at 28 February 2018
Recognised in statement of comprehensive income
Liability at 28 February 2019
Recognised in statement of comprehensive income
Liability at 29 February 2020
Depreciation
in excess of capital
allowances
£000
Share-based
payments
£000
160
(73)
–
87
158
–
245
6,319
32
(2,404)
3,947
1,388
400
5,735
Capital
allowances in
excess of
depreciation
£000
–
(495)
(495)
(1,935)
(2,430)
Business
combinations
£000
(2,101)
494
(1,607)
444
(1,163)
Total
£000
6,479
(41)
(2,404)
4,034
1,546
400
5,980
Total
£000
(2,101)
(1)
(2,102)
(1,491)
(3,593)
Recognition of the deferred tax assets is based upon the expected generation of future taxable profits. The deferred tax asset is expected to be
recovered in more than one year’s time and the deferred tax liability will reverse in more than one year’s time as the intangible assets are amortised.
79
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (FORMING PART OF THE FINANCIAL STATEMENTS) (CONTINUED)
16 INVENTORIES
Finished goods
Finished goods – returns
2020
£000
89,826
9,281
99,107
2019
£000
59,005
7,801
66,806
The value of inventories included within cost of sales for the year was £566,514,000 (2019: £386,895,000). An impairment provision of
£7,411,000 (2019: £5,181,000) was charged to the statement of comprehensive income. There were no write-backs of prior period provisions
during the year.
17 TRADE AND OTHER RECEIVABLES
Trade receivables
Prepayments
Accrued income
Taxes and social security receivable
2020
£000
20,603
7,309
295
3,621
31,828
2019
£000
14,201
5,126
386
2,863
22,576
Trade receivables represent amounts due from wholesale customers and advance payments to suppliers.
The fair value of trade and other receivables is not materially different from the carrying value.
Where specific trade receivables are not considered to be at risk and requiring a provision, the trade receivables impairment provision is calculated
using the simplified approach to the expected credit loss model, based on the following percentages:
Age of trade receivable
60 – 90 days past due
91 – 120 days past due
Over 121 days past due
2020
%
1
5
90
2019
%
1
5
90
The provision for impairment of receivables is charged to administrative expenses in the statement of comprehensive income. The maturing profile
of unsecured trade receivables and the provisions for impairment are as follows:
Due within 30 days
Provision for impairment
Due in 31 to 90 days
Provision for impairment
Past due
Provision for impairment
Total amounts due and past due
Total provision for impairment
2020
£000
13,157
(2,392)
9,971
(1,010)
877
–
24,005
(3,402)
20,603
2019
£000
7,943
–
7,972
(1,714)
295
(295)
16,210
(2,009)
14,201
80
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
18 CASH AND CASH EQUIVALENTS
At start of year
Net movement during year
Effect of exchange rates
At end of year
19 TRADE AND OTHER PAYABLES
Trade payables
Amounts owed to related party undertakings (note 23)
Other creditors
Accruals
Provision for liabilities
Deferred income
Taxes and social security payable
2020
£000
197,872
46,889
687
245,448
2020
£000
33,915
2
2,735
99,300
29,291
10,702
18,865
194,810
The fair value of trade payables is not materially different from the carrying value.
The provision for liabilities comprises:
Provision at 1 March 2019
Movements in provision charged/(credited) to income statement:
Prior year provision utilised
Increase in provision in current year
Provision at 29 February 2020
Dilapidations
£000
1,550
–
2,650
4,200
Returns
£000
17,362
(17,362)
25,091
25,091
2019
£000
142,575
55,350
(53)
197,872
2019
£000
33,930
–
1,730
81,930
18,912
8,453
9,396
154,351
Total
£000
18,912
(17,362)
27,741
29,291
81
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (FORMING PART OF THE FINANCIAL STATEMENTS) (CONTINUED)
20 INTEREST-BEARING LOANS AND BORROWINGS
This note provides information about the contractual terms of the group’s interest-bearing loans and borrowings, which are measured at amortised cost.
Non-current liabilities
Secured bank loans
Current liabilities
Current portion of secured bank loans
2020
£000
2019
£000
2,382
4,764
2,382
2,382
Terms and debt repayment schedule
Currency
Nominal
interest
rate
Secured bank loan
GB£ LIBOR + 0.95%
Year of
maturity
2022
2020
£000
4,764
2019
£000
7,146
The loan is repayable in instalments over the five years to 2022. The loan is secured by a debenture comprising fixed and floating charges over all the
assets and undertakings of boohoo.com UK Limited of £164.6 million (2019: £131.7 million), including all present and future freehold property, book
and other debts, chattels and goodwill, both present and future.
Movement in financial liabilities
Opening balance
Interest accrued
Interest paid
Capital paid
Closing balance
21 LEASE LIABILITIES
Minimum lease payments due
Within 1 year
£000
1-2 years
£000
2-5 years
£000
5-10 years
£000
5,597
(197)
5,400
4,599
(125)
4,474
6,353
(74)
6,279
–
–
–
29 February 2020
Lease payments
Finance charges
Net present value
Current lease liability
Non-current lease liability
Total
2020
£000
7,146
128
(128)
(2,382)
4,764
More than
10 years
£000
–
–
–
2020
£000
5,400
10,753
16,153
2019
£000
9,528
144
(144)
(2,382)
7,146
Total
£000
16,549
(396)
16,153
2019
£000
–
–
–
82
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
22 SHARE CAPITAL AND RESERVES
1,168,033,762 authorised and fully paid ordinary shares of 1p each
(2019: 1,163,143,830)
2020
£000
11,680
2019
£000
11,631
During the year, a total of 5,109,478 shares were issued under the share incentive plans (2019: 13,574,314). On 27 February 2020, 16,925
(2019: 31,223) new ordinary shares were issued to non-executive directors as part of their annual remuneration.
The directors do not recommend the payment of a dividend so that cash is retained in the group for capital expenditure projects that are required
for the rapid growth and efficiency improvements of the business and for suitable business acquisitions (2019: £nil).
23 RELATED PARTY DISCLOSURES
Company transacting
with the related party
Nature of relationship
2020
£000
2019
£000
Related party
Amounts included in the statement
of financial position
Amounts owed to related
party undertakings
Kamani Commercial Property Limited
boohoo.com UK Limited
Common directors and shareholders
2
Lease liabilities
Kamani Commercial Property Limited
Common directors and shareholders
Kamani Commercial Property Limited PrettyLittleThing.com Limited Common directors and shareholders
boohoo.com UK Limited
3,068
86
Amounts included in the statement
of comprehensive income
Purchases
The Pinstripe Property Investment
Common directors and shareholders
Co. Limited
Kamani Construction Limited
Common directors and shareholders
Kamani Commercial Property Limited PrettyLittleThing.com Limited Common directors and shareholders
boohoo.com UK Limited
boohoo.com UK Limited
Admin costs – marketing
The White Cube Creative Limited
boohoo.com UK Limited
Kamani Global Investments Limited
boohoo.com UK Limited
Director of supplier is the husband of
Carol Kane, boohoo group plc director
Common directors and shareholders
Depreciation – right of use assets
Kamani Commercial Property Limited
Common directors and shareholders
Kamani Commercial Property Limited PrettyLittleThing.com Limited Common directors and shareholders
Common directors and shareholders
Pinstripe Hong Kong Limited
boohoo.com UK Limited
boohoo.com UK Limited
1
207
–
65
8
762
127
60
The company has an option to buy the non-controlling interest of 34% of the share capital of PrettyLittleThing.com Limited (formerly 21Three
Clothing Company Limited) on 14 March 2022 for market value or less, subject to performance criteria. Umar Kamani, the son of Mahmud
Kamani, executive chairman and director of boohoo group plc, is a director and shareholder of PrettyLittleThing.com Limited. Related party
transactions are considered to be on arm’s length commercial terms.
–
–
–
–
–
23
86
12
675
145
58
83
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (FORMING PART OF THE FINANCIAL STATEMENTS) (CONTINUED)
24 FINANCIAL INSTRUMENTS
(a) Fair values of financial instruments
Trade and other receivables
The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the
reporting date if the effect is material.
Trade and other payables
The fair value of trade and other payables is estimated as the present value of future cash flows, discounted at the market rate of interest at the
reporting date if the effect is material.
Cash and cash equivalents
The fair value of cash and cash equivalents is estimated as its carrying amount where the cash is repayable on demand. Where it is not repayable on
demand then the fair value is estimated at the present value of future cash flows, discounted at the market rate of interest at the reporting date.
Interest-bearing borrowings
Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the
reporting date.
Cash flow hedges
Fair value is calculated using forward interest rate points to restate the hedge to fair market value.
Fair values
Financial assets
Cash and cash equivalents
Cash flow hedges
Trade and other receivables
Financial liabilities
Cash flow hedges
Trade and other payables
Interest-bearing loans and borrowings
2020
£000
245,448
11,066
24,519
281,033
2020
£000
15,600
184,108
4,764
204,472
2019
£000
197,872
9,639
17,450
224,961
2019
£000
1,836
145,898
7,146
154,880
(b) Credit risk
Financial risk management
Credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and
arises principally from the group’s receivables from customers and hedging and other financial activities.
The group faces minimal credit risk from trade receivables as customers pay for their orders in full at the time of purchase and third-party sales are
to a small number of large established corporations. The risk of default from related party undertakings is considered low.
(c) Liquidity risk
Financial risk management
Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due.
The group’s approach to managing liquidity is to use both short-term and long-term cash forecasts to assist in monitoring cash flow requirements.
84
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
(d) Capital risk
Financial risk management
Capital risk is the risk that the group will not be able to continue as a going concern.
The group’s approach to managing capital risk is to safeguard the group’s ability to continue as a going concern by securing an appropriate mix of
debt and equity funding, a strong credit rating and sufficient headroom. The capital structure is regularly reviewed to ensure it is appropriate to the
group’s strategic objectives. The funding requirements of the group are ascertained by regular cash flow forecasts and projections. At 29 February
2020, the group had capital of £568.6 million (2019: £461.1 million), comprising equity of £327.9 million (2019: £270.4 million) and net cash of
£240.7 million (2019: £190.7 million).
(e) Foreign currency risk
Financial risk management
The group trades internationally and is exposed to exchange rate risk on purchases and sales, primarily in Australian dollars, euros and US dollars.
The group’s results are presented in sterling and are exposed to exchange rate risk on translation of foreign currency assets and liabilities.
The group’s approach to managing foreign currency risk is to use financial instruments in the form of forward foreign exchange contracts to hedge
foreign currency cash flows.
The fair value of forward foreign exchange contracts recognised in the statement of financial position within financial assets at 29 February 2020
was £11,066,000 (2019: £9,639,000) and within financial liabilities was £15,600,000 (2019: £1,836,000). The non-current element of the
financial assets is £4,467,000 (2019: £3,756,000) and of financial liabilities is £6,922,000 (2019: £415,000). Cash flows related to these
contracts will occur during the three years to 28 February 2023 and gains or losses will be recognised in the statement of comprehensive income
during those periods. The amount recognised in other comprehensive income during the year is a loss of £13,617,000 (2019: £2,229,000 profit)
and the amount reclassified from other comprehensive income to profit and loss in revenue during the year is a loss of £1,280,000 (2019:
£2,337,000 gain).
25 SHARE-BASED PAYMENTS
Summary of movements in awards
Number of shares
ESOP
LTIP
SIP
SAYE
Total
Outstanding at 28 February 2018
Granted during the year
Lapsed during the year
Exercised during the year
18,839,734
8,682,705
(1,616,806)
(9,243,008)
2,734,192
1,462,212
(747,445)
–
2,040,788
1,878,814
(22,512)
(977,752)
8,315,998
1,395,314
(736,837)
(4,331,306)
31,930,712
13,419,045
(3,123,600)
(14,552,066)
Outstanding at 28 February 2019
16,662,625
3,448,959
2,919,338
4,643,169
27,674,091
Exercisable at 28 February 2019
2,579,226
–
1,070,540
33,644
3,683,410
Granted during the year
Lapsed during the year
Exercised during the year
10,890,334
(1,107,247)
(2,294,250)
2,288,000
(44,565)
(845,465)
2,074,748
(84,855)
(413,251)
2,018,980
(545,710)
(1,556,512)
17,272,062
(1,782,377)
(5,109,478)
Outstanding at 29 February 2020
24,151,462
4,846,929
4,495,980
4,559,927
38,054,298
Exercisable at 29 February 2020
2,195,821
434,971
654,910
525,535
3,811,237
Weighted
average
exercise
price
pence
69.56
148.40
135.86
24.97
123.25
24.32
165.43
183.06
46.22
150.52
35.97
The group recognised a total expense of £10,957,000 during the year (2019: £5,278,000) relating to equity-settled share-based payment
transactions.
85
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (FORMING PART OF THE FINANCIAL STATEMENTS) (CONTINUED)
25 SHARE-BASED PAYMENTS (CONTINUED)
Employee Stock Ownership Plan (ESOP)
The 2014 ESOP allows the grant of options to selected employees and executive directors of the group, based on a predetermined aggregate
EBITDA target for the three financial years 2015 to 2017. The 2015 ESOP allows the grant of options to selected employees and executive
directors of the group. With the exception of Neil Catto (CFO), there are no performance criteria. Neil Catto’s options are subject to achieving
performance criteria based on a predetermined aggregate EBITDA target and a measure of Total Shareholder Return for the four financial years
ending 2016 to 2019. The 2016 to 2019 ESOPs allow the grant of options to selected employees of the group, without any performance criteria.
Options may be granted by either the board or the trustees of the Employee Benefit Trust.
Date of grant
14/03/14
27/03/14
22/05/15
09/06/16
13/06/17
28/06/18
03/10/18
30/04/19
23/07/19
28 February Granted during
the year
no. of shares
2019
no. of shares
Lapsed during
the year
no. of shares
Exercised
during the year
no. of shares
851,870
73,320
1,654,036
1,930,000
4,117,500
8,001,164
34,735
–
–
–
–
–
–
–
–
–
102,834
10,787,500
–
–
–
(75,000)
(234,270)
(432,982)
–
–
(364,995)
(239,800)
(73,320)
(816,200)
(1,109,085)
(35,730)
(20,115)
–
–
–
29 February
2020
no. of shares
612,070
–
837,836
745,915
3,847,500
7,548,067
34,735
102,834
10,422,505
16,662,625
10,890,334
(1,107,247)
(2,294,250)
24,151,462
Exercise price
pence
50.00
50.00
25.75
57.75
244.50
201.95
230.18
266.95
219.65
Exercise period
14/03/17 – 13/03/24
27/03/17 – 26/03/24
22/05/18 – 21/05/25
09/06/19 – 08/06/26
13/06/20 – 12/06/27
28/06/21 – 28/06/28
03/10/21 – 03/10/28
30/04/22 – 30/04/29
23/07/22 –23/07/29
The ESOP options were valued using a Black-Scholes model. The inputs into the model were as follows:
Grant date
Share price at grant date
Exercise price
Number of employees
Shares under option
Vesting period (years)
Expected volatility
Option life (years)
Expected life (years)
Risk free rate
Expected dividends expressed
as a dividend yield
Possibility of ceasing employment
before vesting
Expectations of meeting
performance criteria
Fair value per option (pence)
14/03/14
50.00
50.00
26
612,070
3
33.33%
10
3
0.976%
0%
26%
78%
11.93
22/05/15
25.75
25.75
56
837,836
3
36.33%
10
3
0.966%
0%
16%
100%
6.64
09/06/16
57.75
57.75
102
13/07/17
244.50
244.50
168
745,915 3,847,500
3
40.85%
10
3.5
0.192%
3
36.75%
10
3
0.523%
28/06/18
201.95
201.95
336
7,548,067
3
44.17%
10
3.5
0.723%
03/10/18
239.00
230.18
4
23/07/19
219.65
219.65
405
34,735 10,422,505
3
41.85%
10
3.5
0.434%
3
43.37%
10
3.5
0.869%
0%
0%
0%
0%
0%
30%
30%
30%
30%
25%
100%
14.76
100%
73.35
100%
66.47
100%
80.92
100%
68.10
30/04/19
245.70
266.95
13
102,834
3
43.14%
10
3.5
0.787%
0%
30%
85%
72.40
Expected volatility was found using a historical volatility calculator with reference to the share price of competitors over a three-year period for
grant dates up to 2016 and from the company’s share price volatility from 2017.
86
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Long Term Incentive Plan (“LTIP”)
The LTIPs allow the grant of options to executive directors and senior management of the group, based on a predetermined aggregate Earnings per
Share and Total Shareholder Return targets for three financial years. Options may be granted by either the board or the trustees of the Employee
Benefit Trust.
Date of grant
30/06/16
13/06/17
28/06/18
03/10/18
11/12/19
28 February Granted during
the year
no. of shares
2019
no. of shares
Lapsed during
the year
no. of shares
Exercised
during the year
no. of shares
1,280,436
783,062
1,132,947
252,514
–
–
–
–
–
–
(44,565)
–
(845,465)
–
–
–
29 February
2020
no. of shares
434,971
783,062
1,088,382
252,514
–
2,288,000
–
–
2,288,000
3,448,959
2,288,000
(44,565)
(845,465)
4,846,929
Exercise price
pence
1.00
1.00
1.00
1.00
1.00
Exercise period
30/06/19 – 29/06/26
13/06/20 – 12/06/27
28/06/21 – 28/06/28
03/10/21 – 03/10/28
21/04/22 – 21/04/29
The LTIP options were valued using a Black-Scholes model. The inputs into the model were as follows:
Grant date
Share price at grant date
Exercise price
Number of employees
Shares under option
Vesting period (years)
Expected volatility
Option life (years)
Expected life (years)
Risk free rate
Expected dividends expressed as a dividend yield
Possibility of ceasing employment before vesting
Expectations of meeting performance criteria
Fair value per option (pence)
30/06/16
57.25
1.00
5
434,971
3
37.06%
10
3
0.173%
0%
41%
97%
56.26
13/06/17
244.50
1.00
13
783,062
3
40.85%
10
3.5
0.192%
0%
43%
65%
243.51
28/06/18
201.95
1.00
14
1,088,382
3
44.17%
10
3.5
0.723%
0%
34%
75%
200.97
03/10/18
230.18
1.00
5
252,514
3
43.37%
10
3.5
0.869%
0%
34%
75%
238.03
11/12/19
245.70
1.00
25
2,288,000
3
43.14%
10
3.5
0.787%
0%
35%
85%
244.70
Expected volatility was found using a historical volatility calculator with reference to the share price of competitors over a three-year period for
grant dates up to 2016 and from the company’s share price volatility from 2017.
Share Incentive Plan (“SIP”)
Under the terms of the SIP, the board or the trustees of the Employee Benefit Trust grant free shares to every employee under an HMRC
approved SIP. Awards must be held in trust for a period of at least three years after grant date and become exercisable at this date. There are no
performance criteria.
Date of grant
14/03/14
02/04/14
19/06/15
27/09/18
25/07/19
28 February Granted during
the year
no. of shares
2019
no. of shares
Lapsed during
the year
no. of shares
Exercised
during the year
no. of shares
432,405
27,395
610,740
1,848,798
–
–
–
–
–
2,074,748
–
–
(10,713)
(44,086)
(30,056)
(232,322)
(21,916)
(150,679)
(6,566)
(1,768)
29 February
2020
no. of shares
200,083
5,479
449,348
1,798,146
2,042,924
2,919,338
2,074,748
(84,855)
(413,251) 4,495,980
Exercise price
pence
nil
nil
nil
nil
nil
Exercise period
14/03/17 – 13/03/24
02/04/17 – 01/04/24
19/06/18 – 18/06/25
27/09/21 – 27/09/28
25/07/22 – 25/07/29
87
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (FORMING PART OF THE FINANCIAL STATEMENTS) (CONTINUED)
25 SHARE-BASED PAYMENTS (CONTINUED)
Share Incentive Plan (“SIP”) (continued)
The SIP options were valued using a Black-Scholes model. The inputs into the model were as follows:
Grant date
Share price at grant date
Exercise price
Number of employees
Shares under option
Vesting period (years)
Expected volatility
Option life (years)
Expected life (years)
Risk free rate
Expected dividends expressed as a dividend yield
Possibility of ceasing employment before vesting
Expectations of meeting performance criteria
Fair value per option (pence)
14/03/14
50.00
nil
78
200,083
3
33.33%
10
3
0.976%
0%
44%
100%
50.00
02/04/14
54.75
nil
5
5,479
3
33.20%
10
3
1.143%
0%
37%
100%
54.75
19/06/15
28.00
nil
178
449,348
3
35.89%
10
3
0.979%
0%
30%
100%
28.00
27/09/18
213.10
nil
1,971
25/07/19
226.00
nil
2,347
1,798,146 2,042,924
3
41.77%
10
3.5
0.462%
0%
35%
100%
226.00
3
42.75%
10
3.5
0.883%
0%
34%
100%
213.10
Expected volatility was found using a historical volatility calculator with reference to the share price of competitors over a three-year period up to
2016 and from the company’s share price volatility from 2017.
Save As You Earn (“SAYE”) scheme
Under the terms of the SAYE scheme, the board or the trustees of the Employee Benefit Trust grants options to purchase ordinary shares in the
company to employees who enter into an HMRC-approved SAYE scheme for a term of three years. Options are granted at up to a 20% discount
to the market price of the shares on the day preceding the date of offer and are exercisable for a period of six months after completion of the SAYE
contract.
Date of grant
29/06/15
25/10/16
13/11/17
31/10/18
30/10/19
28 February Granted during
the year
no. of shares
2019
no. of shares
Lapsed during
the year
no. of shares
Exercised
during the year
no. of shares
33,644
2,085,074
1,172,446
1,352,005
–
–
–
–
–
2,018,980
–
(48,432)
(168,584)
(244,076)
(84,618)
(33,644)
(1,511,107)
(10,057)
(1,704)
–
29 February
2020
no. of shares
–
525,535
993,805
1,106,225
1,934,362
Exercise price
pence
21.40
78.80
169.00
189.88
216.92
4,643,169
2,018,980
(545,710)
(1,556,512)
4,559,927
Exercise period
29/06/18 – 28/12/18
25/10/19 – 24/04/20
13/11/20 – 12/05/21
31/10/21 – 01/05/22
30/10/22 – 30/10/23
The SAYE options were valued using a Black-Scholes model. The inputs into the model were as follows:
Grant date
Share price at grant date
Exercise price
Number of employees
Shares under option
Vesting period (years)
Expected volatility
Option life (years)
Expected life (years)
Risk free rate
Expected dividends expressed as a dividend yield
Possibility of ceasing employment before vesting
Expectations of meeting performance criteria
Fair value per option (pence)
25/10/16
119.25
78.80
297
525,535
3
38.40%
3.5
3
0.277%
0%
30%
100%
51.02
06/11/17
209.25
169.00
539
993,805
3
41.67%
3.5
3
0.513%
0%
43%
100%
76.86
31/10/18
212.90
189.88
570
1,106,225
3
43.36%
3.5
3
0.760%
0%
43%
100%
72.90
30/10/19
271.15
216.92
791
1,934,362
3
40.39%
3.5
3
0.463%
0%
42%
100%
93.90
Expected volatility was found using a historical volatility calculator with reference to the share price of competitors over a three-year period for
grant dates up to 2016 and from the company’s share price volatility from 2017.
88
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Share-based payment charge for option to acquire shares in PrettyLittleThing
Under the terms of the Shareholders’ Agreement relating to 21 Three Clothing Company Limited (company name now changed to
PrettyLittleThing.com Limited) (“PLT”), boohoo group plc has the option to acquire the remaining 34% of the share capital of PLT at any time after
28 February 2022. As there are performance conditions that determine the price boohoo will pay for the shares, if the option is exercised, this
gives rise to a share-based payments charge in the accounts of PLT and hence in the group accounts also. This charge is not for the issue of shares
in boohoo group plc but for the shares that are already held by the directors of PLT and which boohoo has the option to acquire at the end of the
option period in 2022 or sooner if the directors leave or default. The price payable for the shares could be based on 100% of the market value if
maximum performance conditions are met or £1.2 million plus 74% of the market value if none of the performance criteria are met. Performance
between minimum and maximum is calculated on a pro-rata basis. The market value used in the calculation will take into account a minority interest
discount of up to 30%. The performance criteria are a range of EBITDA targets and sales targets as follows:
Fiscal year ending
28/02/2018
28/02/2019
28/02/2020
28/02/2021
28/02/2022
Minimum threshold
Maximum threshold
EBITDA
£2,462,000
£3,201,000
£4,001,000
£4,801,000
£5,522,000
Sales
£57,789,000
£69,347,000
£79,749,000
£91,711,000
£100,882,000
EBITDA
£2,645,000
£3,702,000
£4,998,000
£6,498,000
£8,122,000
Sales
£62,412,000
£81,136,000
£101,420,000
£126,775,000
£154,665,000
The share price was calculated using a discounted cash flow method using a discount rate of 40% and perpetuity growth rate of 2.1% on
management’s four-year projections as at March 2017.
The option was valued using a Monte-Carlo simulation model. The inputs into the model were as follows:
Grant date
Share price at grant date, discounted for minority interest
Minority interest discount factor
Number of employees
Shares under option
Vesting period (years)
Expected volatility
Option life (years)
Expected life (years)
Risk free rate
Expected dividends expressed as a dividend yield
Possibility of ceasing employment before vesting
Expectations of meeting performance criteria
Total option fair value
01/03/17
£26,329
45%
2
340
5
60.00%
5
5
0.42%
0%
0%
Ranging from 15% to 90% depending on the year
£206,764
Expected volatility was found using a historical volatility calculator with reference to the share price of comparators over a five-year period.
89
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (FORMING PART OF THE FINANCIAL STATEMENTS) (CONTINUED)
26 CAPITAL COMMITMENTS
Capital expenditure contracted for at the end of the reporting year but not yet incurred is as follows:
Property, plant and equipment
2020
£000
9,797
2019
£000
–
27 OPERATING LEASES
The group has lease agreements in respect of property, plant and equipment, for which the payments extend over a number of years. The totals of
future minimum lease payments under non-cancellable operating leases due in each period are:
Within one year
Within two to five years
In more than five years
2020
£000
4
–
–
4
2019
£000
1,966
4,032
261
6,259
28 CONTINGENT LIABILITIES
From time to time, the group can be subject to various legal proceedings and claims that arise in the ordinary course of business, which may include
cases relating to the group’s brand and trading name. All such cases brought against the group are robustly defended and a liability is recorded only
when it is probable that the case will result in a future economic outflow and that the outflow can be reliably measured.
As at 29 February 2020, there are no pending claims or proceedings against the group, which are expected to have a material adverse effect on its
liquidity or operations.
90
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
COMPANY STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 29 FEBRUARY 2020
Administrative expenses
Operating loss
Finance income
Loss before tax
Taxation
Loss and total comprehensive loss for the year
The notes on pages 95 to 98 form part of these financial statements.
Note
3
2020
£000
(6,415)
(6,415)
1,379
(5,036)
929
(4,107)
2019
£000
(3,424)
(3,424)
1,942
(1,482)
274
(1,208)
91
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
COMPANY STATEMENT OF FINANCIAL POSITION AT 29 FEBRUARY 2020
ASSETS
Non-current assets
Investments
Total non-current assets
Current assets
Other receivables
Current tax receivable
Cash and cash equivalents
Total current assets
Total assets
LIABILITIES
Current liabilities
Other payables
Total current liabilities
Net assets
Equity
Share capital
Share premium
EBT reserve
Accumulated losses
Total equity
Note
2020
£000
2019
£000
4
5
6
8
319,994
319,994
56,342
944
20,854
78,140
312,195
312,195
60,264
275
31,871
92,410
398,134
404,605
(1,726)
(1,726)
(36)
(36)
396,408
404,569
11,680
608,447
(17,075)
(206,644)
396,408
11,631
606,086
(2,174)
(210,974)
404,569
The notes on pages 95 to 98 form part of these financial statements.
These financial statements of boohoo group plc, registered number 114397, on pages 91 to 98 were approved by the board of directors on
21 April 2020 and were signed on its behalf by:
John Lyttle
Neil Catto
Directors
92
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
COMPANY STATEMENT OF CHANGES IN EQUITY
Balance at 28 February 2018 (restated)
Issue of shares
Purchase of shares by EBT
Share-based payments credit
Loss for the year and total comprehensive loss
Balance at 28 February 2019
Issue of shares
Purchase of shares by EBT
Share-based payments credit
Loss for the year and total comprehensive loss
Share
capital
£000
11,496
135
–
–
–
11,631
49
–
–
–
Share
premium
£000
602,578
3,508
–
–
–
606,086
2,361
–
–
–
EBT
reserve
£000
(351)
10
(1,833)
–
–
(2,174)
5
(14,906)
–
–
Accumulated
losses
£000
(213,888)
–
–
4,122
(1,208)
(210,974)
–
–
8,437
(4,107)
Total
equity
£000
399,835
3,653
(1,833)
4,122
(1,208)
404,569
2,415
(14,906)
8,437
(4,107)
Balance at 29 February 2020
11,680
608,447
(17,075)
(206,644)
396,408
The notes on pages 95 to 98 form part of these financial statements.
93
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
COMPANY CASH FLOW STATEMENT FOR THE YEAR ENDED 29 FEBRUARY 2020
Cash flows from operating activities
Loss for the year
Adjustments for:
Share-based payments
Finance income
Tax income
Loss before tax before changes in working capital and provisions
Decrease in other receivables
Decrease in other payables
Net cash outflow from operating activities
Cash flows from investing activities
Interest received
Tax received
Net cash inflow from investing activities
Cash flows from financing activities
Proceeds from the issue of ordinary shares
Purchase of own shares by EBT
Net cash (outflow)/ inflow from financing activities
(Decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
The notes on pages 95 to 98 form part of these financial statements.
2020
£000
(4,107)
637
(1,379)
(929)
(5,778)
3,871
1,690
(217)
1,431
260
1,474
2,415
(14,906)
(12,491)
(11,017)
31,871
20,854
2019
£000
(1,208)
–
(1,942)
(274)
(3,424)
2,935
–
(489)
1,902
120
1,533
3,653
(1,833)
1,820
3,353
28,518
31,871
94
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS (FORMING PART OF THE FINANCIAL STATEMENTS)
1 ACCOUNTING POLICIES
General information
boohoo group plc is a public limited company incorporated and domiciled in Jersey and listed on the Alternative Investment Market (AIM)
of the London Stock Exchange. Its registered office address is: 12 Castle Street, St Helier, Jersey, JE2 3RT. The company was incorporated
on 19 November 2013.
Basis of preparation
The financial statements of the company have been prepared in accordance with International Financial Reporting Standards (IFRS) and
International Financial Reporting Interpretations Committee (“IFRIC”) interpretations, as adopted by the European Union and the Companies
(Jersey) Law 1991. As at the year end, these are the standards, subsequent amendments and related interpretations issued and adopted by the
International Accounting Standards Board (“IASB”) that have been endorsed by the European Union.
These financial statements are prepared on a going concern basis as explained on page 44 of the directors’ report, under the historical cost
convention.
The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the company's accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 1 of the
consolidated financial statements.
A summary of the more important policies adopted in dealing with items that are considered material to the company and are not specifically
included in the policies in the notes to the consolidated financial statements are shown below. Further required disclosures are included in note 1
of the consolidated financial statements on page 67.
Income
Dividend income is recognised when the right to receive payment is established.
Investments
Investments are accounted for at cost unless there is evidence of a permanent diminution in value, in which case they are written down to their
estimated realisable value. Any such provision, together with any realised gains and losses, is included in the statement of comprehensive income.
boohoo group plc is required to recognise share-based payment arrangements involving equity instruments where boohoo group plc has
remunerated those providing services to the entity in this way. boohoo group plc makes contributions to boohoo.com UK Limited equal to the
charge for the share-based payment arrangement, which is reflected as an increase in boohoo group plc’s investment in boohoo.com UK Limited.
Significant estimates and judgements
The preparation of financial statements in conformity with IFRS as adopted by the EU requires management to make judgements, estimates
and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. The estimates and
assumptions are based on historical experience and various other factors believed to be reasonable under the circumstances. Actual results could
differ from these estimates and any subsequent changes are accounted for when such information becomes available. There are no significant
judgements, estimates and assumptions.
2 DIRECTORS’ EMOLUMENTS AND STAFF COSTS
Directors’ emoluments and pension payments are detailed in the directors’ remuneration report on page 52. Directors’ emoluments incurred by the
parent company are as follows:
Short-term employee benefits
2020
£000
5,313
2019
£000
2,628
95
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS (FORMING PART OF THE FINANCIAL STATEMENTS) (CONTINUED)
3 TAXATION
Analysis of credit in year
Current tax on income for the year
Adjustments in respect of prior year taxes
Tax on loss
2020
£000
(944)
15
(929)
2019
£000
(275)
1
(274)
The total tax charge differs from the amount computed by applying the UK rate of 19% for the year (2019: 19%) to loss before tax as a result of the
following:
Loss before tax
Loss before tax multiplied by the standard blended rate of corporation tax of the UK of 19% (2019: 19%)
Effects of:
Expenses not deductible for tax purposes
Adjustments in respect of prior year taxes
Tax on loss
The company’s loss for this financial year is taxed at an effective UK rate of 19%. There is no tax payable in Jersey.
2020
£000
(5,036)
(957)
13
15
(929)
2019
£000
(1,482)
(282)
7
1
(274)
4
INVESTMENTS
Cost
Balance at 28 February 2018
Additions
Balance at 28 February 2019
Additions
Balance at 29 February 2020
Impairment
Balance at 28 February 2018
Balance at 28 February 2019
Balance at 29 February 2020
Net book value
At 28 February 2018
At 28 February 2019
At 29 February 2020
Investments
£000
Capital
contribution
£000
521,223
–
521,223
–
521,223
218,000
218,000
218,000
303,223
303,223
303,223
4,851
4,121
8,972
7,799
16,771
–
–
–
4,851
8,972
16,771
Total
£000
526,074
4,121
530,195
7,799
537,994
218,000
218,000
218,000
308,074
312,195
319,994
The capital contribution represents the value of the share-based payment charges that are expensed in the subsidiary’s financial statements for
shares issued under the share option schemes in the company.
96
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
At 29 February 2020, the company’s subsidiaries were as follows:
Name of company
Principal activity
Country of
incorporation
Address
Holdings
Direct investment
Boohoo Holdings Limited
Indirect investments
ABK Limited
boohoo.com UK Limited
Boo Who Limited
boohoo.com USA Limited
boohoo.com USA Inc
boohoo.com Australia Pty Ltd
boohoo France SAS
boohoo Germany GmbH
PrettyLittleThing.com Limited
21Three Clothing Company Limited Dormant
PrettyLittleThing.com USA Inc
Nasty Gal.com Limited
Nasty Gal.com USA Inc
MissPap UK Limited
Karenmillen.com Limited
CoastLondon.com Limited
Dormant
Trading
Dormant
Dormant
Marketing office
Marketing office
Marketing office
Marketing office
Trading
Marketing office
Trading
Marketing office
Trading
Trading
Trading
UK
49-51 Dale St, Manchester
Jersey
UK
UK
UK
USA
Australia
France
Germany
UK
UK
USA
UK
USA
UK
UK
UK
12 Castle St, St Helier, Jersey
49-51 Dale St, Manchester
49-51 Dale St, Manchester
49-51 Dale St, Manchester
8431 Melrose Pl, Los Angeles
468 St Kilda Road, Melbourne
15, rue Bachaumont, Paris
Tucholskystrasse 13, Berlin
Wellington Mill, Pollard Street East, Manchester
Wellington Mill, Pollard Street East, Manchester
1209 Orange Street, Wilmington
49-51 Dale St, Manchester
2135 Bay Street, Los Angeles
49-51 Dale St, Manchester
49-51 Dale St, Manchester
49-51 Dale St, Manchester
Percentage
ownership
100%
100%
100%
100%
100%
100%
100%
100%
100%
66%
66%
66%
100%
100%
100%
100%
100%
5 OTHER RECEIVABLES
Prepayments and accrued income
Receivable from subsidiary undertaking
2020
£000
133
56,209
56,342
2019
£000
189
60,075
60,264
The fair value of other receivables is not materially different to their carrying value. The receivable is due on demand and attracts interest at
commercial rates as described in the related party note below. The directors believe that the receivable from the subsidiary undertaking of
£56,209,000 as at 29 February 2020 is fully recoverable.
6 OTHER PAYABLES
Accruals and deferred income
The fair value of other payables is not materially different to their carrying value.
2020
£000
1,726
2019
£000
36
97
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS (FORMING PART OF THE FINANCIAL STATEMENTS) (CONTINUED)
7 FINANCIAL INSTRUMENTS
(a) Fair values of financial instruments
Trade and other receivables
The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the
reporting date if the effect is material.
Trade and other payables
The fair value of trade and other payables is estimated as the present value of future cash flows, discounted at the market rate of interest at the
reporting date if the effect is material.
Cash and cash equivalents
The fair value of cash and cash equivalents is estimated as its carrying amount where the cash is repayable on demand. Where it is not repayable on
demand then the fair value is estimated at the present value of future cash flows, discounted at the market rate of interest at the reporting date.
Fair values
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
2020
£000
20,854
56,209
77,063
2020
£000
1,726
2019
£000
31,871
60,075
91,946
2019
£000
36
(b) Credit risk
Financial risk management
Credit risk is the risk of financial loss to the group if a counterparty to a financial instrument fails to meet its contractual obligations and arises
principally from the company’s receivables from related parties.
The company faces minimal credit risk from trade receivables and the risk of default from related party undertakings is considered low.
8 SHARE CAPITAL
1,168,033,762 authorised and fully paid ordinary shares of 1p each (2019: 1,163,143,830)
2020
£000
11,680
2019
£000
11,631
During the year, 5,109,478 shares were issued under the share incentive plans (2019: 13,574,314). On 27 February 2020, 16,925 new ordinary
shares were issued to non-executive directors as part of their annual remuneration (2019: 31,223).
9 RELATED PARTY TRANSACTIONS
During the year, the company entered into transactions in the ordinary course of business with related parties as follows:
Costs recharged by subsidiary undertakings
Interest recharged to subsidiary undertakings
2020
£000
(4,033)
946
(3,087)
2019
£000
(4,140)
1,547
(2,593)
Administrative expenses incurred by boohoo.com UK Limited on behalf of the company were recharged to the company and interest on the
company’s loan to boohoo.com UK Limited was recharged at commercial rates to boohoo.com UK Limited.
98
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Other income
Operating profit
Net finance income
Profit before tax
Taxation
Profit for the year
Other comprehensive income/(expense) for the year,
net of income tax
Impact of adoption of IFRS 16
Net fair value gain/(loss) on cash flow hedges
Total comprehensive income for the year
Total comprehensive income (restated) attributable to:
Owners of the parent
Non-controlling interests
Total comprehensive income
Earnings per share (restated)
Basic
Diluted
2016
£000
195,394
(82,483)
112,911
(45,501)
(53,756)
1,392
15,046
628
15,674
(3,236)
12,438
–
(5,661)
6,777
6,777
–
6,777
1.11p
1.10p
2017
£000
294,635
(133,806)
160,829
(66,849)
(68,534)
4,862
30,308
637
30,945
(6,284)
24,661
–
(6,747)
17,914
17,873
41
17,914
2.20p
2.17p
2018
£000
579,800
(273,445)
306,355
(126,757)
(137,072)
159
42,685
628
43,313
(7,313)
36,000
–
19,497
55,497
54,627
870
55,497
3.09p
3.01p
2019
£000
856,920
(387,926)
468,994
(207,083)
(203,470)
239
58,680
1,176
59,856
(12,397)
47,459
–
(108)
47,351
43,476
3,875
47,351
3.78p
3.71p
2020
£000
1,234,876
(568,640)
666,236
(278,252)
(297,326)
238
90,896
1,326
92,222
(19,339)
72,883
(532)
(12,337)
60,014
50,800
9,214
60,014
5.48p
5.35p
99
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
FIVE-YEAR GROUP STATEMENT OF FINANCIAL POSITION – UNAUDITED
Non-current assets
Current assets
Total assets
Equity attributable to the owners of the parent
Non-controlling interest
Current liabilities
Non-current liabilities
Total liabilities, capital and reserves
2016
(restated)
£000
26,227
84,081
110,308
73,427
–
36,271
610
110,308
2017
(restated)
£000
72,190
116,933
189,123
96,721
3,775
74,425
14,202
189,123
2018
(restated)
£000
111,795
215,092
326,887
208,761
4,018
104,394
9,714
326,887
2019
(restated)
£000
143,453
296,323
439,776
262,021
8,381
162,093
7,281
439,776
2020
£000
186,509
389,333
575,842
310,673
17,262
224,257
23,650
575,842
FIVE-YEAR GROUP CASH FLOW STATEMENT – UNAUDITED
Net cash generated from operating activities
Net cash used in investing activities
Net cash generated from/(used in) financing activities
Net movement in cash and cash equivalents
Opening cash and cash equivalents
Closing cash and cash equivalents
2016
£000
17,456
(12,990)
(331)
4,135
54,146
58,281
2017
£000
29,491
(29,406)
11,964
12,049
58,281
70,330
2018
£000
69,014
(45,772)
49,003
72,245
70,330
142,575
2019
£000
101,562
(45,559)
(706)
55,297
142,575
197,872
2020
£000
120,943
(43,755)
(24,340)
52,848
197,872
250,720
100
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
SHAREHOLDER INFORMATION
SOLICITORS
TLT LLP
3 Hardman Square
Manchester
M3 3EB
Pannone Corporate LLP
378-380 Deansgate
Manchester
M3 4LY
Ogier
Ogier House
The Esplanade
St Helier
Jersey
JE4 9WG
FINANCIAL PR
Buchanan
107 Cheapside
London
EC2V 6DN
COMPANY REGISTRARS
Link Asset Services (Jersey) Limited
12 Castle Street
St Helier
Jersey
JE2 3RT
PRINCIPAL BANKERS
HSBC Bank
4 Hardman Square
Spinningfields
Manchester
M3 3EB
REGISTERED ADDRESS
OF COMPANY
Registered in Jersey, number 114397
12 Castle Street
St Helier
Jersey
JE2 3RT
HEAD OFFICE
49-51 Dale Street
Manchester
M1 2HF
COMPANY SECRETARY
Keri Devine
CORPORATE WEBSITE
www.boohooplc.com
NOMINATED ADVISER AND
JOINT BROKER
Zeus Capital
82 King Street
Manchester
M2 4WQ
Berkeley Square
Mayfair
London
W1J 6HE
JOINT BROKER
Jefferies International
100 Bishopsgate
London
EC2N 4JL
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
1 Hardman Street
Manchester
M3 3EB
Design and Production
www.carrkamasa.co.uk
This report is printed on materials which are FSC® certified
from well-managed forests.
These materials contain ECF (Elemental Chlorine Free)
pulp and are 100% recyclable.
101
ANNUAL REPORT AND ACCOUNTS 2020 / BOOHOO GROUP PLC BOOHOO GROUP PLC
12 CASTLE STREET
ST HELIER
JERSEY JE2 3RT UK