The Group's statement of comprehensive income and segmental analysis separately identify adjusted results before adjusting items. The adjusted results are not intended to be a replacement for the IFRS results. The Directors believe that presentation of the Group's results in this way provides stakeholders with additional helpful analysis of the Group's financial performance. This presentation is consistent with the way that financial performance is measured by management and reported to the Board and the Executive Committee. It is also consistent with the way that management is incentivised.

In determining whether events or transactions are treated as adjusting items, management considers quantitative as well as qualitative factors such as the frequency or predictability of occurrence. Adjusting items are identified by virtue of their size, nature or incidence.

Examples of charges or credits meeting the above definition, and which have been presented as adjusting items in the current and/or prior years include:

-- Acquisitions/disposals of significant businesses and investments (including related to the jointventure);

-- Impact on deferred tax assets/liabilities for changes in tax rates.

-- Business restructuring programmes.

-- Derecognition of deferred tax assets.

-- Asset impairment charges and onerous property related contracts provision.

-- The movement in the fair value of unrealised financial derivatives; and

-- IFRS 2 charges in respect of Founder Share Plan ("FSP").

If other items meet the criteria, which are applied consistently from year to year, they are also treated as adjusting other items.

In previous reporting periods "Adjusting items" were described as "Exceptional and other items"

Adjusting items in this period

The following items have been included within "adjusting items" for the period ended 24 April 2021:

Fair value re-measurement of foreign exchange contracts - financial years 2021 and 2020

The fair value of unrealised financial derivatives is reviewed at the end of each reporting period and unrealised losses/gains are recognised in the Group statement of comprehensive income.

The Directors consider unrealised losses/gains to be adjusting items due to both their size and nature. The size of the movement on the fair value of the contracts is dependent on the spot foreign exchange rate at the balance sheet date and an assessment of future foreign exchange volatility applied to the relevant contract currencies, as such the size of the movements can be substantial. The unrealised foreign exchange contracts have been entered into in order to achieve an economic hedge against future payments and receipts and are not a reflection of historical performance.

Restructuring, strategic change and other costs - financial years 2021 and 2020

Adjusting items include costs resulting from the restructuring programme announced in the FY20 Group Annual Report. The Directors consider these to be adjusting due to their size and their one-off nature.

During the prior year, the Board and Executive Committee reviewed the long-term business plan for the Trendy & Superdry Holding Limited joint venture. Following discussions with the joint venture partner and considering the challenging retail environment due to Covid-19, both parties agreed to end the relationship. Costs for the wind-up of the business totalling GBP1.5m were accrued for; these are adjusting items based on the one-off nature of this decision. A credit of GBP0.4m has been recognised in the current year for unutilised accrual amounts.

Store asset impairment and onerous property related contracts provision - financial years 2021 and 2020

A store asset impairment and onerous property related contracts provision review was performed during the year across the Group's store portfolio. An adjusting net impairment charge of GBP10.7m of fixed assets, intangible assets and right of use assets has been made on the basis that the recoverable amount is less than the carrying value. In addition, an onerous property related contracts provision of GBP5.1m has been charged

A similar exercise was performed in financial year 2020 across all store assets, resulting in a fixed asset impairment of GBP136.8m and an onerous property related contracts provision release of GBP12.0m.

The Directors consider the store impairment and onerous property related contracts provision to be an adjusting item due to the materiality of the charge.

Founder Share Plan ("FSP") - IFRS 2 charge - financial years 2021 and 2020

While there are no cost or cash implications for the Group, the Founder Share Plan ("FSP") falls within the scope of IFRS 2. The Group has included the IFRS 2 charge and related deferred tax movement in relation to the FSP within adjusting items for the current and subsequent periods.

The Directors consider the plan to be one-off in nature and unusual in that the share awards are being funded exclusively by the Founders. The full-year charge for FY21 and FY22 has been estimated between GBP0.2m - GBP0.5m each period. While the charge is spread over a few financial years, the plan is a one-time scheme. Accordingly, the IFRS 2 charge in respect of the FSP is an adjusting item due to the size, nature and incidence of the scheme. There are no known recent examples within quoted companies of incentive arrangements operating in a similar way to the FSP. While unusual in terms of size, the plan is also unusual regarding its treatment in what is essentially a personal arrangement, with no net cost or cash and minimal administrative burden to the Company. There are no other adjustments anticipated in respect of the scheme other than the IFRS 2 charge.

Therefore, the Directors consider the charge to be significant in terms of its potential influence on the readers' interpretation of the Group's financial performance. See note 9 for further details of the FSP.

Intangible asset impairments - financial year 2021

The Group has recognised impairment charges in the period for website and software intangible assets. A review was performed during the period over website and software intangible assets which are likely to be replaced or upgraded in the foreseeable future, leading to an impairment of GBP2.1m.

The Directors consider the website and software intangible asset impairment to be an adjusting item due to the one-off nature of the review. It is the Group's policy to present asset impairment charges as adjusting items.

Adjusted operating profit and margin

In the opinion of the Directors, adjusted operating profit and margin are measures which seek to reflect the performance of the Group that will contribute to long-term sustainable profitable growth. The Directors focus on the trends in adjusted operating profit and margins, and they are key internal management metrics in assessing the Group's performance. As such, they exclude the impact of adjusting items. In previous reporting periods "Adjusted operating profit and margin" was described as "Underlying operating profit and margin." Although the Group is currently making an operating loss, adjusted operating profit and margin remain key metrics monitored by management given the Group's intention to return to profitability.

A reconciliation from operating profit, the most directly comparable IFRS measure, to the adjusted operating profit and margin, is set out below. 


                                  2021   2020 
                                  GBPm     GBPm 
Reported revenue                  556.1  704.4 
Operating loss                    (29.5) (159.4) 
Adjusting items                   24.1   125.1 
Adjusted operating (loss)/profit  (5.4)  (34.3) 
                           2021   2020 
                           GBPm     GBPm 
Operating margin           (5.3)% (22.6)% 
Adjusted operating margin  (1.0)% (4.9)%

Adjusted (loss)/profit before tax

In the opinion of the Directors, adjusted (loss)/profit before tax is a measure which seeks to reflect the performance of the Group that will contribute to long-term sustainable profitable growth. As such, adjusted (loss)/ profit before tax excludes the impact of adjusting items. The Directors consider this to be an important measure of Group performance and is consistent with how the business performance is reported to and assessed by the Board and the Executive Committee.

This is a measure used within the Group's incentive plans.

In previous reporting periods "Adjusted (loss)/profit before tax" was described as "Underlying (loss)/profit before tax."

A reconciliation from loss before tax, the most directly comparable IFRS measure, to the adjusted loss before tax, is set out below. 


                          2021   2020 
                          GBPm     GBPm 
Loss before tax           (36.7) (166.9) 
Adjusting items           24.1   125.1 
Adjusted loss before tax  (12.6) (41.8)

Adjusted tax expense and adjusted effective tax rate

In the opinion of the Directors, adjusted tax expense is the total tax charge for the Group excluding the tax impact of adjusting items. Correspondingly, the adjusted effective tax rate is the adjusted tax expense divided by the adjusted (loss)/profit before tax.

These measures are an indicator of the ongoing tax rate of the Group.

In previous reporting periods "Adjusted tax expense and adjusted effective tax rate" was described as "Underlying tax expense and underlying effective tax rate."

A reconciliation from tax expense, the most directly comparable IFRS measures, to the adjusted tax expense, is set out below: 


                                2021   2020 
                                GBPm     GBPm 
Adjusted loss before tax        (12.6) (41.8) 
Tax credit/(expense)            0.6    23.5 
Adjusting items - current tax   -      (0.1) 
Adjusting items - deferred tax  (3.9)  (17.3) 
Adjusted tax credit/(expense)   (3.3)  6.1 
Adjusted effective tax rate     26.2%  (14.6)%

Net cash/(debt)

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September 16, 2021 02:00 ET (06:00 GMT)