Final Results

FY24 results in line with market expectations, against challenging market backdrop

Investment cycle complete - well positioned to drive future profitable growth

Notes:

• GMV is all merchandise sold to customers after cancellations and returns, including VAT, carriage receipts and premier subscription income
• Net (debt)/cash is cash less borrowings, excluding lease liabilities.
• Adjusted measures, which are not statutory measures, show the underlying performance of the group excluding large, non-cash and exceptional items (see note 1).
• Adjusted loss before tax is calculated as loss before tax, excluding amortisation of acquired intangible assets, share-based payment charges and exceptional items.
• Operating costs is defined as Distribution & Administrative Costs excluding depreciation, amortisation, exceptional items & share based payments

Financial highlights

• GMV down 13% vs FY23 to £1,809 million as group performance continued to be impacted by a difficult macro-economic environment. Positive trend in the performance of Core Brands (boohoo, boohooMAN, PrettyLittleThing, Karen Millen, Debenhams External Marketplace), with decline slowing from (9%) in H124 to (4%) in H224, showing a clear improvement in trajectory
• Revenue of £1,461 million, down 17% vs FY23 reflecting our increased focus on profitability and difficult market conditions. Revenue growth was also impacted by the growth of marketplace with its commission-only revenue model
• Gross margin was 51.8%, up 120bps vs FY23, reflecting growth of marketplace, the impact of our cost savings programme and freight and raw material price decreases
• Operating costs of £699 million, down 16% vs FY23 driven by the actions taken under the ongoing cost savings programme
• Adjusted EBITDA margin improved to 4.0%, up 40bps vs FY23, reflecting improvements in gross margin, cost reduction initiatives and value unlocked from automation investment. Adjusted EBITDA of £58.7 million, down 7% vs FY23
• Inventory has increased by £29.9 million vs FY23, largely driven by the investment in stock levels to support the opening of the US Distribution centre
• £64.8 million capital expenditure invested in infrastructure for future growth, including the Sheffield automation project and the US distribution centre both of which were delivered on time and on budget
• Net Debt of £(95.0) million an increase of £(100.9)m, driven by our investments in US inventory and capital expenditure
• Robust balance sheet with £123.7 million of land and buildings, £200.3 million of fixtures and fittings, £208.0 million of inventory and £29.9 million investment in Revolution Beauty

Operational highlights

• Clear brand strategy with an increased focus on our 5 core brands (boohoo, boohooMAN, PLT, Karen Millen and Debenhams) which generate demand across a diverse, global customer base
• Strong growth of Debenhams marketplace; capital-light, stockless model driving high margin growth and expanding our customer proposition with more than 3,500 brands onboarded, offering exceptional choice across fashion, beauty, and home
• Strategy to improve profitability across our non-core labels by transitioning them to the Debenhams marketplace showing results with improved performance in H224
• Successful completion of two major capex projects:

o Sheffield automation, delivering enhanced efficiency and capacity

o US distribution centre, upgrading our proposition with next day and express delivery options in a large, strategic market

• Leadership team strengthened with appointment of Stephen Morana as CFO in February 2024

Outlook & Guidance

• In FY24, we took significant steps to reposition the group for sustainable, profitable growth
• We are targeting GMV growth, as well as continued improvements in adjusted EBITDA margin
• We remain confident in 6-8% medium term EBITDA margin target
• In FY25, we will continue to leverage the increasing efficiencies generated by our investment in automation and capacity with an ongoing focus on cost reduction. We remain on track to deliver annualised cost savings of £125 million across cost of goods, supply chain and overheads in FY25
• Significant capital expenditure reduction expected in FY25 with investment cycle now complete
• The Group expects to generate positive free cash flow in FY25

John Lyttle, Group CEO, commented:

"We have a highly loyal customer base and throughout the year we remained focused on maintaining our position as an industry leading, fashion-forward group with brands that deliver on-trend, high quality fashion at great value prices. The strength and diversity across our core brands means the Group is well placed to serve a global customer base across fashion, beauty and home.

Despite difficult market conditions, caused by high levels of inflation and weakened consumer demand, we made continued progress in the year. I am particularly encouraged with the ongoing trend of improved performance in our core brands which saw GMV down 9% in H124 and down just 4% in H224 demonstrating increasing momentum and validating our strategy to focus on these brands which are much loved by our customer base.

We continue to take actions to deliver on our goal of bringing the entire group back to profitable growth. In FY24, we completed our investment cycle with the launch of our US distribution centre and the successful delivery of our Sheffield Automation project. Sheffield is already delivering significant efficiency improvements, which, together with the traction of Debenhams marketplace, is generating margin improvement across the group. We have also taken steps to transition several of our labels over onto Debenhams marketplace to drive enhanced profitability. This proved effective during the year and is something that will drive additional profitability going forward. These factors, combined with improving market conditions, give us strong confidence in our medium-term outlook.

The group is now well positioned to return to growth, and we are focused on ensuring that growth is both sustainable and profitable. We will host a capital markets day in due course to provide more detail on our strategy, key growth drivers and the longer-term outlook for the Group".

Investor and analyst meeting

A webcast for analysts & investors will be held at 9am (UK time) today. Following the presentation, there will be a live Q&A session. The webcast is available via the following link: https://brrmedia.news/BOO_PR24

A recording will be made available on the boohoo investor relations website after the webcast here: www.boohooplc.com/investors.htm

Review of the business

Performance during the year

Overview

Notes:

• GMV is a non-statutory measure, defined as: All merchandise sold to customers after cancellations and returns, including VAT, carriage receipts and premier subscription income.
• Adjusted measures, which are not statutory measures, show the underlying performance of the group, excluding large, non-cash and exceptional items (see note 1).
• Adjusted loss before tax is calculated as loss before tax, excluding amortisation of acquired intangible assets, share-based payment charges and exceptional items.
• Adjusted loss per share is calculated as loss per share, adding back amortisation of acquired intangible assets, share-based payment charges and exceptional items.
• Net cash is cash less borrowings, excluding lease liabilities.

Group overview

GMV was down 13% vs FY23 to £1,808.9 million from £2,086.2 million as group performance continued to be impacted by a difficult macro-economic environment. We saw a positive trend in the performance of Core Brands (boohoo, boohooMAN, PrettyLittleThing, Karen Millen, Debenhams External Marketplace), with decline slowing from (9%) in H124 to (4%) in H224. Strong GMV growth was also achieved within the Debenhams marketplace, a capital-light, stockless model, targeting the UK customer, which has driven high margin growth and expanded our customer proposition during the year, with over 3,500 brands onboarded.

Group revenues for the period declined by 17% (17% Constant Exchange Rate = "CER") to £1,461.0 million from £1,768.7 million in 2023. UK revenues declined 16% reflecting the impact of the macro environment on consumer demand, as well as price investments and the previously mentioned increase of the Debenhams marketplace within the sales mix. International revenues declined 20%, with extended delivery times continuing to impact our customer proposition for most of the period and annualisation against strong wholesale comparatives. The group's US distribution centre went live in August with its first brand, PrettyLittleThing, on time and on budget, as part of a phased roll-out of brands into the site. This has transformed the delivery proposition for customers in a key strategic market, and for brands that are operationally live, delivery times have improved by 3 days on average since launch.

The group's core brands, defined as boohoo, boohooMAN, PrettyLittleThing, Karen Millen and Debenhams External Marketplace accounted for 6 percentage points of the group's total revenue decline. The growth of Marketplace resulted in an additional negative 4 percentage points impact on revenue. Marketplace has a commission only revenue model, where for own brand sales the full value of the products sold is recognised as revenue. Labels accounted for 8 percentage points of the group's total revenue decline, following proactive actions taken to target more profitable sales by transitioning them over to the Debenhams marketplace.

Gross margin was 51.8%, up 120bps on the prior period (2023: 50.6%). Adjusted EBITDA was £58.6 million (2023: £63.3 million), a decrease of 7%. Adjusted EBITDA margin was 4.0%, up 40bps on the prior period (2023: 3.6%). Loss before tax was £159.9 million (2023: £90.7 million). Loss per share was 11.48p (2023: 6.13ps). Adjusted loss per share was 2.86p (2023: 0.02p).

The improvement in Adjusted EBITDA margin reflected strong improvements seen across gross margins and distribution costs, which improved by 120bps and 60bps respectively year on year. The improvement in gross margin reflected tighter inventory management and normalisation of freight and other logistics costs. Distribution cost savings were driven by significant efficiencies that have been unlocked from the successful automation of our Sheffield distribution centre and from the rationalisation of the UK warehousing profile following the closure of the group's Daventry site in January.

Other administrative costs reduced by 20% year on year and 50bps as a percentage of net sales, reflective of the action taken as part of the group's cost reduction programme. Marketing costs reduced by 3% as spend was optimised across marketing channels but increased by 190bps as a percentage of sales. This reflects the impact of the macro environment on consumer demand, targeted investments in specific growth opportunities as well as underlying inflationary pressures across digital marketing channels. This will be assessed going forwards through optimisation of marketing channels to drive performance as well as brand activation campaigns to drive higher levels of organic and direct traffic.

During the year, the group incurred significant non-recurring costs, which are shown as exceptional items in the financial statements and have not been included in the adjusted performance measures. These items relate to restructuring costs and impairment of assets associated with the closure of the Daventry warehousing facility, set up costs associated with the opening of a warehousing facility in the USA, impairment of the group's acquired intangible assets, dual technology platform running costs associated with the re-platforming of the group's e-commerce front end to its own in-house developed tech stacks, and redundancy costs associated with the group's cost reduction programme. Additional exceptional costs associated with the restructuring of the UK warehousing facilities and dual technology platform running costs are expected to be incurred in the next financial year. These exceptional items amounted to £103.0 million and are detailed in note 1 of the financial statements.

During the year the group recognised a £10.2m gain within other reserves on transition of its investment in Revolution Beauty plc, which was previously accounted for as a financial asset at fair value through other comprehensive income, as irrevocably designated at the time of investment, in accordance with IFRS 9, and is now classified as an investment in associate in accordance with IAS 28.

In accordance with the acquisition agreement entered into with the non-controlling interests of PrettyLittleThing.com Limited (announced on 28 May 2020), 16,112,331 Ordinary Shares in boohoo group plc were to be issued subject to the group's share price averaging 491 pence per share over a six-month period, up until a longstop date of 14 March 2024. If this was not met, the consideration was to lapse.

As at 29 February 2024 the issuing condition had not been met and could not have been met before the longstop date of 14 March 2024. As a result, the shares to be issued have been derecognised and recycled through other reserves alongside the reserves created upon acquisition of the non-controlling interest in PrettyLittleThing.com Limited.

While trading conditions have remained challenging due to cost inflation, uncertain consumer demand and normalisation of the channel shift online, the group has a strong business model and clear strategy which it is focussed on executing to unlock market share. This will allow it to build on its existing strengths of:

• Test and repeat sourcing model that allows our brands to utilise our diverse sourcing base with agility and flexibility whilst minimising excess inventory risk
• Attractive brand portfolio that combines the latest trends with outstanding value for consumers
• 16 million unique active customers
• A broad target addressable market of up to 500 million potential customers in key global markets
• Well-invested infrastructure that offers best-in-class, efficient logistics and a strong customer proposition with our first international distribution centre now live, and significant capacity for future growth
• Strong balance sheet with significant liquidity headroom
• Numerous growth opportunities through our brand's direct-to-consumer proposition, Debenhams and other routes to market, including strategic partnerships with select partners globally

Key performance indicators

Active customer numbers in the last 12 months decreased by 11% to 16 million whilst the conversion rate to sale increased slightly by 80bps to 3.82% from 3.74%. Average order value decreased by 3% to £51.68 and the number of items per basket decreased slightly from 2.82 to 2.80. Average order frequency decreased by 9% from 3.08 times to 2.79 times per annum, reflecting the impact of the macro environment on consumer demand.

Cash and working capital management

Operating cash inflow was £0.1 million (2023: £130.9 million inflow). The value of inventory held has increased year on year by £29.9 million, in part due to the opening of the warehousing facility in the USA.

Capital expenditure of £64.8 million included investment in property and distribution centres of £26.9 million, mainly around the opening of the warehousing facility in the USA. Net cash outflow was £100.9 million (2023: £229.6 million inflow). Net debt at the year-end increased to £95.0 million (2023: £5.9 million net cash), with total liquidity of £230.0 million.

During the prior year the group secured a new £325 million rolling capital facility, increasing from the previous £100 million facility. The facility remains fully drawn at the end of February 2024.

The group will continue to make selective investments to support its platform and brands, in line with its internal investment criteria and in a manner that reflects the current macro-economic environment.

Performance by market

UK

The UK market continues to be the largest for the group, accounting for 63% of revenue (2023: 62%). Revenue was £921.5 million declining by 16% on 2023 reflecting the impact of the macro environment on consumer demand, as well as price investments and the increase of the Debenhams Marketplace within the sales mix. Gross margin improved from 47.9% to 50.0% and return rates have reduced slightly, which is attributable to product mix, the capturing of deflation in our supply chain and pass-through of lower prices to our consumers.

USA

USA revenues declined 18% on the prior year. Delivery times to the USA for most of the period remained elevated compared to pre-pandemic levels, and this has undoubtedly impacted demand. Successful go-live of the group's US distribution centre on time and on budget in August has transformed the delivery proposition for US customers, and there will be a phased roll-out of brands operating in the facility over time. Return rates have decreased year on year reflecting brand mix. Gross margin reduced from 58.0% to 55.9% reflecting brand mix as well as the impact of duties associated with the new distribution centre.

Rest of Europe

Revenue in the rest of Europe decreased by 20% year on year to £165.8 million (2023: £206.5 million), with performance impacted by annualisation against strong wholesale comparatives. Gross margin improved slightly from 52.0% to 52.7% and return rates decreased year on year.

Rest of world

Revenue in the rest of the world decreased by 30% on the prior year to £74.6 million (2023: £107.0 million). Gross margin improved from 50.7% to 54.8% with return rates decreased year on year.

Financial review

Revenue by geographical market

• Defined as having shopped in the last 12 months on the website and app, including marketplace.
• Defined as number of website and app orders in last 12 months divided by number of active customers.
• Defined as the percentage of website and app orders taken to internet sessions.
• Calculated as gross sales including sales tax divided by the number of orders.

Consolidated income statement

GMV was down 13% vs FY23 to £1,808.9 million from £2,086.2 million and group revenue for the year declined by 17% (17% CER) when compared to the previous year at £1,461.0 million (2023: £1,768.7 million), reflecting the impact of the macro environment on consumer demand.

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 decreased by 7% from £63.3 million to £58.6 million and Adjusted EBITDA margin increased from 3.6% to 4.0%, reflecting strong improvements seen across gross margins and distribution costs, which improved by 120bps and 60bps respectively year on year.

Operating costs, comprising distribution costs and administrative expenses, excluding depreciation and amortisation, have increased by 80bps to 47.8% of revenue. Other administrative costs reduced by 20% year on year and 50bps as a percentage of net sales, reflective of the action taken as part of the group's cost reduction programme. Marketing costs reduced by 3% as spend was optimised across marketing channels but increased by 190bps as a percentage of sales. This reflects the impact of the macro environment on consumer demand, targeted investments in specific growth opportunities as well as underlying inflationary pressures across digital marketing channels.

Adjusted profit / (loss) 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.

The group recognised a total expense of £17.5 million during the year (2023: £32.0 million) relating to equity-settled share-based payment transactions.

Exceptional items amounted to £103.0 million and are shown in more detail in note 1 of the financial statements. These items relate to restructuring costs and impairment of assets associated with the closure of the Daventry warehousing facility, set up costs associated with the opening of a warehousing facility in the USA, impairment of the group's acquired intangible assets, dual technology platform running costs associated with the re-platforming of the group's e-commerce front end to its own in-house developed tech stacks, and redundancy costs associated with the group's cost reduction programme. Additional exceptional costs associated with the restructuring of the UK warehousing facilities and dual technology platform running costs are expected to be incurred in the next financial year.

A tax credit of £19.0m has been recognised, which represents an effective rate of tax for the year of 11.9% (2023: 16.6%). This is lower than the tax credit calculated when multiplying the loss before tax at the blended UK statutory rate of tax for the year of 24.5% (2023: 19.0%), due to expenditure not deductible for tax purposes, being principally depreciation on buildings and fit-out, disallowable legal claims and share-based payment charges on growth shares.

Consolidated statement of financial position

There has been a substantial investment in property and distribution centres to facilitate our next phase of growth. Balance sheet strength is maintained with £134.6 million of unencumbered freehold assets. The value of inventory held has increased year on year by £29.9 million as a result of the opening of the warehousing facility in the USA, necessitating the maintenance of adequate inventory levels across multiple territories.

During the period, the group incurred significant non-recurring costs, which are shown as exceptional items in the financial statements and have not been included in the adjusted performance measures. These items include impairment of assets associated with the closure of the Daventry warehousing facility and impairment of the group's acquired intangible assets.

During the year ended 28 February 2023 26.47% of the issued share capital of Revolution Beauty Group plc ("REVB") was acquired. The equity accounting requirements of IAS 28 (Investments in associates and joint ventures) were considered, and it was determined that significant influence did not exist either at the time of initial recognition or as at 28 February 2023. The equity investment was accounted for as a financial asset under IFRS 9 with the option taken to hold at fair value through other comprehensive income, as irrevocably designated at the date of recognition.

On 18 July 2023 the group entered into a settlement agreement with REVB regarding the reconstitution of the REVB board. The group also increased its shareholding in REVB to 27.13%. The equity accounting requirements of IAS 28 were reconsidered, and it was determined that significant influence did exist as a result of the settlement agreement, access to accounting records and reconstitution of the REVB board (including the appointment of Neil Catto, former group CFO and NED, and Alistair McGeorge, who remains a NED on the group's board). As a result the investment has been accounted for as an associate under IAS 28 from 18 July 2023. The investment, which was previously accounted for under IFRS 9, was derecognised and the cumulative gain recognised in other comprehensive income of £10.2m was reclassified to other reserves as a revaluation adjustment in line with IFRS 9 and the group's accounting policy.

Under the equity accounting requirements of IAS 28 the group's share of the results of associate for the period from 18 July 2023 to 29 February 2024 is included in the carrying value of the associate in the group statement of financial position and included within the group income statement using the equity method of accounting.

Intangible and fixed-asset additions

Liquidity and financial resources

Operating cash inflow was £0.1 million compared to an inflow of £130.9 million in the previous year and free cash outflow after tax was £63.0 million compared to an inflow of £30.7 million in the previous financial year. Capital expenditure and intangible asset purchases were £64.8 million, which includes a £26.9 million investment in our distribution centres to support future growth. The value of inventory held has increased year on year by £29.9 million as a result of the opening of the warehousing facility in the USA, necessitating the maintenance of adequate inventory levels across multiple territories. The closing cash balance for the group was £230.0 million and the net debt balance £95.0 million.

Consolidated cash flow statement

• See note 1, exceptional items.
• 2024 and 2023 total is the IFRS-compliant measure for the consolidated statement of comprehensive income.
• Net fair value gains on cash flow hedges will be reclassified to profit or loss during the two years to 28 February 2026.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

at 29 February 2024

NOTES TO THE FINANCIAL STATEMENTS

(forming part of the financial statements)

1 Accounting policies

General information

The boohoo group plc operates as a multi-brand online retailer, based in the UK, and 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 UK-adopted international accounting standards and the Companies (Jersey) Law 1991.

The financial statements have been approved on the assumption that the group and company remain a going concern. The group has cash resources and credit facilities sufficient to continue solvent trading in the face of an unforeseen downturn in demand.

New and amended statements adopted by the group

The following new standards and amendments to standards have been adopted by the group for the first time during the year commencing 1 March 2023. These standards have not had a material impact on the entity in the current reporting period and are not expected to in future reporting periods.

• Amendments to IFRS 17: Insurance Contracts
• Amendments to IAS 1: Presentation of Financial Statements
• Amendments to IAS 8: Accounting policies, Changes in Accounting Estimates and Errors
• Amendments to IAS 12: Income Taxes
• Amendments to IFRS 17: Insurance Contracts

The following standards have been published for accounting periods beginning after 1 March 2024 but have not been adopted by the UK and have not been early adopted by the group and could have an impact on the group financial statements. These standards are not expected to have a material impact on the entity in the current or future reporting periods.

• Amendments to IAS1: Classification of Liabilities as Current or Non-current
• Amendments to IAS1: Non-current Liabilities with Covenants
• Amendments to IFRS 16: Leases (Lease Liability in a Sale and Leaseback)
• Amendments to IAS 7: Statement of Cash Flows (Supplier Finance Arrangements)
• Amendments to IFRS 7: Financial Instruments (Supplier Finance Arrangements)
• Amendments to IAS 21: The Effects of Changes in Foreign Exchange Rate (Lack of Exchangeability)

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 either fair value through profit or loss or fair value through other comprehensive income, and excluding assets and liabilities acquired through acquisitions and held at fair value. 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.

Exceptional items

The group exercises judgement in assessing whether items should be classified as exceptional. This assessment covers the nature of the item, cause of occurrence and scale of impact of that item on the reported performance. The exceptional costs in these financial statements include:

• restructuring costs and impairment of assets associated with the closure of the Daventry warehousing facility
• set up costs associated with the opening of a warehousing facility in the USA
• impairment of the group's acquired intangible assets
• dual technology platform running costs associated with the re-platforming of the group's e-commerce front end to its own in-house developed tech stacks
• redundancy costs associated with the group's cost reduction programme

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 is by geographic region. The group strategy is to increase market share in each territory using the optimum mix of brands that is appropriate for each market, taking into account factors such as consumer preference, established presence and brand appeal.

Year ended 29 February 2024

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 a right-of-use asset, warehouse fixtures and fittings and offices in the USA with a net book value of £101.9 million (2023: £107.4 million).

3 Other income

Disclosure below based on amounts receivable in respect of services to the group

Amounts receivable by auditors and their associates in respect of:

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 result 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, except when there is a loss, in which case the basic measure is used.

Adjusted earnings and adjusted earnings per share is a non-IFRS measure, which, in management's opinion, gives a more consistent measure of the underlying performance of the business excluding non-cash accounting charges and gains relating to the amortisation of intangible assets valued upon acquisitions, non-cash share-based payment charges, exceptional items and the group's share of results of associate.

8 Staff numbers and costs

Number of employees

The aggregate payroll costs of these persons were as follows:

Directors' and key management compensation comprises the group directors and executive committee members.

10 Taxation

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 primarily tax resident. The total tax charge differs from the amount computed by applying the UK rate of 24.5% for the year (2023: 19.0%) to profit before tax as a result of the following:

No current tax was recognised in other comprehensive income (2023: £nil). The UK corporation tax rate changed effective April 2023 from 19% to 25% as enacted by the UK Government resulting in an effective rate of 24.5% for the year ended 29 February 2024.

In May 2023, the IASB issued International Tax Reform - Pillar Two Model Rules - Amendments to IAS 12 Income Taxes to clarify the application of IAS12 to tax legislation enacted or substantively enacted to implement Pillar Two of the Organisation for Economic Co-operation and Development's Base Erosion and Profit Shifting project, which aims to address the tax challenges of the digitalisation of the economy. The amendments include a mandatory temporary exception from accounting for deferred tax on such tax law. In July 2023, the UK government enacted legislation to implement the Pillar Two rules. The legislation is designed to ensure a minimum effective tax rate of 15% in each country in which the group operates. Similar legislation is being enacted by other governments around the world. In line with the amendments to IAS 12, the exception from accounting for deferred tax for the Pillar Two rules has been applied and there is no impact on the consolidated financial statements for the year ended 29 February 2024. Based on an assessment of historic data and forecasts for future years the group does not expect a material exposure to Pillar Two income taxes.

11 Intangible assets

Within the statement of comprehensive income, amortisation and impairment of acquired intangible assets (trademarks and customer lists) of £30.8 million (2023: £12.2 million) is shown separately. The amount of amortisation and impairment of the other intangible assets included in distribution costs is £0.4 million (2023: £0.3 million) and in administrative expenses is £28.2 million (2023: £16.6 million).

The intangible assets impaired during the year ended 29 February 2024 relate to the group's non-core labels which have seen significant declines in revenue during the year, following proactive actions taken to target more profitable sales.

12 Property, plant and equipment

The amounts of depreciation included in the statement of comprehensive income in distribution costs is £22.9 million (2023: £16.0 million) and in administrative expenses is £10.8 million (2022: £10.7 million). The amounts of impairment included in the statement of comprehensive income in distribution costs is £19.1 million (2023: £3.3 million) and in administrative expenses is £nil (2023: £6.5 million).

The assets impaired relate to leasehold alterations and fixtures and fittings located in facilities which are no longer in use, where the assets' value in use has been determined to be lower than the carrying value. Assets have been impaired to their estimated recoverable amount, being the lower of value in use or fair value less costs of disposal. The residual value of the impaired assets is £nil.

13 Right-of-use assets

Short leasehold properties £million

Cost

The amounts of depreciation included in the statement of comprehensive income in distribution costs is £10.0 million (2023: £4.6 million) and in administrative expenses is £4.3 million (2022: £8.2 million). The amounts of impairment included in the statement of comprehensive income in distribution costs is £34.2 million (2022: £3.6 million) and in administrative expenses is £nil (2023: £nil).

The assets impaired relate to short leasehold properties at facilities that are no longer in use. The residual value of the impaired assets is £nil.

Some leases contain break clauses or extension options to provide operational flexibility. Potential future undiscounted lease payments not included in the reasonably certain lease term and, hence, not included in right-of-use assets or lease liabilities, total £2.3 million (2023: £2.3 million).

14 Investment in associate

Investment in associate

£ million

Cost

Under the equity accounting requirements of IAS 28 the group's share of the results of associate is included in the carrying value of the associate in the group statement of financial position and included within the group income statement using the equity method of accounting.

Set out below is the material associate of the group. The entity listed below has share capital consisting of ordinary shares, which are held directly by the group. The country of incorporation or registration is the principal place of business, and the proportion of ownership interest is the same as the proportion of voting rights held.

The table below provides the summarised profit and loss and balance sheet for REVB. As at the date of publishing these financial statements REVB's results for the period 18th July 2023 to 29 February 2024 have not been publicly disclosed by REVB and the audit of REVB's financial statements for the year ended 29 February 2024 has begun but not been completed by REVB's auditors. The group has reviewed analyst notes prepared by REVB's NOMAD, Liberum dated 27 March 2024, the management accounts of REVB for the period ending 29 February 2024 and post year end RNS notes published by REVB. These estimated results have been amended to reflect adjustments made by the group when using the equity method, including fair value adjustments and modifications for differences in accounting policy.

Recognition of the deferred tax assets is based upon the expected generation of future taxable profits. The deferred tax liability will reverse in more than one year's time as the intangible assets are amortised. Deferred tax is calculated at 25% as enacted from April 2023 by the UK Government.

16 Inventories

The value of inventories included within cost of sales for the year was £709.6 million (2023: £872.0 million). The finished goods returns is the estimated value of stock at customers but expected to be returned. An impairment provision of £18.5 million (2023: £21.6 million) 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 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.

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:

There is no material credit risk associated with the cash at bank due to the healthy credit ratings of the banks of BBB+ and higher.

19 Trade and other payables

Trade payables include £7.6m (2023: £nil) that suppliers have chosen to early-fund under supplier financing arrangements. The supplier financing arrangement does not change the suppliers agreed payment terms directly with the group.

The fair value of trade payables is not materially different from the carrying value.

20 Provisions

The dilapidation provision represents the estimated exit cost of leased premises and is expected to unwind in more than ten years. Returns provision represents the revenue reduction of estimated customer returns, which occur over the two-to-three months after the date of sale; and the claims represents the estimate of claims against the group that are expected to settle in the period within nine-to-twelve months after the year end.

21 Interest-bearing loans and borrowings

Terms and debt repayment schedule

Nominal

Reconciliation of movements in cash flows from financing activities to movements in liabilities:

The lease liabilities relate to leasehold properties.

23 Share capital

During the year, a total of 7.0 million shares were issued under the share incentive plans (2023: 4.2 million). On 8 February 2024, 206,309 (2023: 99,824) 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 (2023: £nil).

24 Shares to be issued

The shares to be issued represents the fair value of the contingent shares to be issued to the non-controlling interests of PrettyLittleThing.com Limited, in accordance with the acquisition agreement entered into and announced on 28 May 2020. Under this agreement, 16,112,331 Ordinary Shares in boohoo group plc were to be issued subject to the group's share price averaging 491 pence per share over a six-month period, up until a longstop date of 14 March 2024. If this was not met, the consideration was to lapse.

As at 29 February 2024 the issuing condition had not been met and could not have been met before the longstop date of 14 March 2024. As a result the shares to be issued have been derecognised and recycled through Other reserves alongside the reserves created upon acquisition of the non-controlling interest in PrettyLittleThing.com Limited.

25 Other reserves

26 Financial instruments

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.

Investments in equity instruments

During the year ended 28 February 2023 26.47% of the issued share capital of Revolution Beauty Group plc ("REVB") was acquired. The equity accounting requirements of IAS 28 (Investments in associates and joint ventures) were considered and it was determined that significant influence did not exist either at the time of initial recognition or as at 28 February 2023. The equity investment was accounted for as a financial asset under IFRS 9 with the option taken to hold at fair value through other comprehensive income, as irrevocably designated at the date of recognition.

On 18th July 2023 the group entered into a settlement agreement with REVB resulting in the reconstitution of the REVB board. The group also increased it's shareholding in REVB to 27.13%. The equity accounting requirements of IAS 28 were reconsidered and it was determined that significant influence did exist as a result of the settlement agreement, access to accounting records and the reconstitution of the REVB board (including the appointment of Neil Catto, former group CFO and NED, and Alistair McGeorge, who remains a NED on the group's board). As a result the investment has been accounted for as an associate under IAS 28 from 18th July 2023. The investment, which was previously accounted for under IFRS 9, was derecognised and the cumulative gain recognised in other comprehensive income of £10.2m was reclassified to profit or loss as a revaluation adjustment.

Fair values

27 Capital commitments

Capital expenditure contracted for at the end of the reporting year, but not yet incurred, is as follows:

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.

Appendices

Growth rates on prior period revenue by region

Revenue by period for the year to 29 February 2024 (FY24)

Revenue by period for the year to 28 February 2023 (FY23)

CER in this appendix for the year ended 28 February 2023 is calculated using exchange rates prevailing during the year ending 29 February 2024. CER in this appendix for the year ended 28 February 2022 is calculated using exchange rates prevailing during the year ending 28 February 2023.

Nomenclature: ROE - rest of Europe; ROW - rest of world; yoy - year-on-year; CER - constant exchange rate.