TIDMDEB
RNS Number : 1935B
Debenhams plc
22 October 2009
22 October 2009
DEBENHAMS PLC
FULL YEAR RESULTS FOR YEAR ENDED 29 AUGUST 2009
Financial Highlights
* Gross transaction value up 0.2%; like-for-like sales down 3.6%
* Gross margin up 70bps
* Headline profit before tax1 up 13.7% to GBP125.2 million
* Net income up 23.3% to GBP95.1 million
* Net debt down by GBP403.7 million to GBP590.3 million
* Balance sheet restructured following capital raising; further GBP100m debt
repayment made on 21 October 2009
* Current trading for 7 weeks to 17 October 2009: gross transaction value up 2.8%,
like-for-like sales up 0.6%
1 Before non-cash amortisation of capitalised bank fees of GBP4.4m (2008:
GBP4.2m)
Operational Highlights
* Total fashion market share up 10bps2
* Strategic focus on own bought ranges resulting in strong performance, especially
Designers at Debenhams
* Largest space move in Debenhams' history now complete; c530,000 sq ft converted
from concession to own bought ranges
* New range introductions including Butterfly by Matthew Williamson and Mantaray
in womenswear, Ben de Lisi Home, Bluezoo for kids and sports & leisure
* 5 new department stores opened creating 800 new jobs
* 11 new international franchise stores opened in 8 countries
* Further developments in multi-channel business
2 Source: TNS Worldpanel Fashion 24 weeks market share data to 13 September 2009
vs. 2008
Rob Templeman, chief executive of Debenhams, said:
"We are very pleased with the outcome for 2009, especially given the difficult
economic and retail environment. Achieving profit growth in these circumstances
is, we believe, a creditable performance.
"The store space moves have now been completed and early indications are that
customers are finding favour with the new ranges and departments. We look
forward to further developments in our own bought ranges in 2010 and will
continue to focus on improving the design, quality and value of our entire
customer offer.
"The outlook for consumer behaviour remains hard to predict. However, we are
encouraged by the response of customers to the changes we have made to our
offer. Our focus will continue to be on the drivers of cash profit. We will
also be investing for future growth through the opening of new stores,
development of our multi-channel business and recommencing the store
refurbishment programme."
FINANCIAL SUMMARY
+----------------------------------------+-------------+-------------+------------+
| | 2009 | 2008 | Change |
+----------------------------------------+-------------+-------------+------------+
| Gross transaction value (GTV) | GBP2,339.7m | GBP2,336.0m | +0.2% |
+----------------------------------------+-------------+-------------+------------+
| Like-for-like sales | | | -3.6% |
+----------------------------------------+-------------+-------------+------------+
| Operating profit | GBP182.2m | GBP176.1m | +3.5% |
+----------------------------------------+-------------+-------------+------------+
| Gross margin | | | +70bps |
+----------------------------------------+-------------+-------------+------------+
| Headline profit before tax* | GBP125.2m | GBP110.1m | +13.7% |
+----------------------------------------+-------------+-------------+------------+
| Profit before tax | GBP120.8m | GBP105.9m | +14.1% |
+----------------------------------------+-------------+-------------+------------+
| Profit attributable to equity | GBP95.1m | GBP77.1m | +23.3% |
| shareholders | | | |
+----------------------------------------+-------------+-------------+------------+
| Earnings per share | 10.0p | 9.0p | +11.1% |
+----------------------------------------+-------------+-------------+------------+
| Full year dividend per share | Nil | 3.0p | -100.0% |
+----------------------------------------+-------------+-------------+------------+
| | 29-08-09 | 30-08-08 | Change |
+----------------------------------------+-------------+-------------+------------+
| Net debt | GBP590.3m | GBP994.0m | GBP403.7m |
+----------------------------------------+-------------+-------------+------------+
*After adding back GBP4.4m of amortisation of capitalised bank fees (2008:
GBP4.2m); includes GBP13.1m deduction for flat lining of lease rentals,
GBP138.3m before deduction (2008: deduction of GBP13.5m; PBT of GBP123.6m before
deduction).
Enquiries
+--------------------------------------+--------------------------------------+
| Debenhams plc | |
+--------------------------------------+--------------------------------------+
| Rob Templeman, Chief Executive | |
+--------------------------------------+--------------------------------------+
| Chris Woodhouse, Finance Director | 020 7408 3302 |
+--------------------------------------+--------------------------------------+
| Lisa Williams, Investor Relations | 020 7408 3304/07908 483841 |
+--------------------------------------+--------------------------------------+
| | |
+--------------------------------------+--------------------------------------+
| Financial Dynamics | |
+--------------------------------------+--------------------------------------+
| Jonathon Brill | 020 7269 7170 |
+--------------------------------------+--------------------------------------+
| Billy Clegg | 020 7269 7157 |
+--------------------------------------+--------------------------------------+
| Caroline Stewart | 020 7269 7227 |
+--------------------------------------+--------------------------------------+
High resolution images are available for media to view and download free of
charge from www.prshots.com/Debenhams.
REVIEW OF THE YEAR
MARKET CONDITIONS
2009 was characterised by a high degree of volatility arising out of wider
economic factors and the financial year coincided with the worst of the "credit
crunch" period almost in its entirety. Trading in the first half in particular
was influenced by high profile collapses in the financial services sector which
negatively impacted an already fragile consumer confidence. However, the
important Christmas trading period held up reasonably well. There were a number
of competing influences on consumer confidence in the second half. On the
negative side, concerns over unemployment depressed confidence. On the positive
side, lower mortgage payments due to record low interest rates gave rise to
higher disposable income for some consumers. In the Republic of Ireland, trading
conditions were difficult throughout the year in light of the sharp economic
decline.
FINANCIAL PERFORMANCE
Debenhams delivered a good financial performance in 2009 despite the difficult
trading environment with increases in gross transaction value, market share,
gross margin and profit.
Gross transaction value (GTV) was 0.2% higher than the previous year at
GBP2,339.7 million. Market share gains were achieved during the year (source:
TNS Worldpanel Fashion 24 weeks market share data to 13 September 2009 vs.
2008).
During the last quarter of the year, the largest space moves in Debenhams'
history commenced which resulted in c530,000 sq ft of trading space being
converted from concession to own bought ranges. As expected, this programme
caused disruption to sales in the latter part of the period and like-for-like
sales for the year were 3.6% lower than last year. The shortfall in
like-for-like sales was more than offset by a strong gross margin performance
which improved significantly as the year progressed.
Gross margin increased by 70 basis points over last year. This was driven by
higher own bought sales and an ongoing focus on the drivers of cash profit,
including the tight management of costs and stock, and historically low terminal
stock levels which resulted in lower markdown in sale periods. The adverse
impact of sterling's deflation against the US dollar was reduced to a
considerable degree by the company's hedging policy.
Headline profit before tax and amortisation of capitalised bank fees was
GBP125.2 million, an increase of 13.7% over the GBP110.1 million achieved last
year. Profit before tax of GBP120.8 million grew by 14.1% (2008: GBP105.9
million) and profit attributable to equity shareholders increased by 23.3% to
GBP95.1 million. EBITDA increased by 3.6% from GBP268.8 million in 2008 to
GBP278.5 million in 2009.
Basic earnings per share of 10.0 pence (949 million weighted average shares in
issue) compared with 9.0 pence last year (860 million weighted average shares in
issue), an increase of 11.1%.
Cash flow from operating activities before financing, tax and interest during
the year was GBP156.5 million compared with GBP160.2 million a year ago.
Net debt at year end on 29 August 2009 was GBP590.3 million. This was an
improvement of GBP403.7 million over the position at the start of the financial
year.
The scheduled GBP100.0 million amortisation payment of the term loan was made in
May 2009 from cash flow. In June 2009, Debenhams raised GBP303.8 million (net)
in a placing and open offer capital raising. Subsequently, a pre-payment of
GBP50.0 million was made against the GBP150.0 million amortisation payment due
in May 2010. A further GBP61.4 million of debt was bought back in the market at
an average discount of 5.6%.
The board did not declare an interim dividend and has not proposed a final
dividend for 2009. It is, however, the board's intention to return to paying a
dividend as soon as it is financially prudent to do so.
OPERATING REVIEW
Brand and Product Strategy
Debenhams gained market share throughout the year. In the most recently
available data for the UK, Debenhams' total market share in clothing, footwear
and accessories increased by 10 basis points (source for all market share data:
TNS Worldpanel Fashion 24 weeks market share data to 13 September 2009 vs.
2008). The strongest market share performances were delivered by menswear (up 20
basis points) and childrenswear (up 40 basis points). Womenswear market share
for the period was flat and was impacted by weak concession performance and the
disruption to sales in the fourth quarter from space moves. Debenhams has
continued to gain a greater share of the market over the past two years and
customers have responded positively to the significant improvements made to the
design, quality and value of Debenhams' own bought products, as well as an
enhanced shopping experience on the back of improved instore presentation.
Own bought products accounted for 76.0% of sales in 2009, up from 71.8% last
year and in line with the strategic aim to increase the own bought product mix.
The increase in own bought mix was largely driven by the introduction of a
number of new own bought ranges and departments, the expansion of some existing
brands (both in terms of trading space and product breadth) and higher own
bought mix in new stores.
Designers at Debenhams made a strong contribution to sales during 2009 of some
GBP432 million, an increase of 11.4% over the prior year. Overall, own bought
sales increased by 3.4%. The weakest category was concessions which saw sales
decline by 16.5%.
Towards the end of financial year 2009, a major programme of space moves
commenced. In total, c530,000 sq ft of trading space was converted from
concessions to own bought. This included the loss of c215,000 sq ft from
womenswear concessions (including Principles), c200,000 sq ft from home
concessions and c120,000 sq ft from women's accessories concessions. The largest
increases in own bought space were womenswear (c165,000 sq ft), sports and
leisure (c140,000 sq ft), women's accessories (c120,000 sq ft) and childrenswear
(c60,000 sq ft). The programme was completed post period end in September 2009
and we are pleased with the response of customers to date.
New ranges introduced during 2009 include Butterfly by Matthew Williamson and
Mantaray in womenswear, Bluezoo in childrenswear, sports and leisure for women,
men and children and Ben de Lisi in home. Although it is early days as many of
these brands were launched during the final month of the year, initial reactions
from customers have been very positive.
In March, a quantity of stock and fixtures and fittings was acquired from the
administrators of Principles, as well as a licence to trade the brand through
that stock. This was done to ensure continuity of supply to Debenhams through
the spring/summer season.
Since the end of the financial year we have announced the launch of two new own
bought brands which will be introduced in the spring of 2010. H! by Henry
Holland will be a new addition to Designers at Debenhams focusing on young
fashion. Having now acquired the brand, Principles will return exclusively to
Debenhams in conjunction with designer Ben de Lisi.
Stock Management
Stock levels were managed tightly during the year. Terminal stock was at a
historically low level at the end of the financial year of 2.7%, arising mainly
from very aggressive discounting in the post-Christmas sale. At year end, total
stock was 14.1% higher than the previous year, of which 10.0% related to the
increase in own bought space allocation. Like-for-like stock density decreased
by 5.1%.
Store Portfolio
At the end of 2009, the store portfolio consisted of 144 department stores and
ten Desire by Debenhams stores. The total trading space of the portfolio was
11,046,000 sq ft, an increase of 3.1% since the start of the year.
Five new stores were opened during the year. These were: Livingston (60,000 sq
ft) in August 2008; Westfield London (109,000 sq ft), Wrexham (60,000 sq ft) and
Great Yarmouth (20,000 sq ft) all in October 2008; and Bury St Edmunds (59,000
sq ft) in March 2009. Overall, new stores have performed in line with or ahead
of expectations.
The new store pipeline for 2010 is secure with six new stores, comprising three
department stores and three Desire by Debenhams stores, adding some 300,000 sq
ft of trading space. Two of these stores have opened since the end of the year:
Kidderminster Desire in September and Monks Cross Desire in October.
The programme to refurbish core stores remained largely on hold in 2009,
although the Cardiff store was refurbished, including a sizeable extension which
provides an entrance into the new St. David's Shopping Centre. Improvements were
made in all stores with the introduction of new shop fits for several ranges
across the chain, especially in womenswear including J by Jasper Conran, Star by
Julien Macdonald and Collection in 2009. It is management's intention to
recommence the core store refurbishment programme in the second half of 2010.
International Franchise Stores
Debenhams' business outside the UK and Republic of Ireland takes the form of
franchise stores operated by a number of regional franchise partners.
During 2009, a further 11 international franchise stores were opened in eight
countries. These included market entry in Iran and Moldova. There were 52
franchise stores in 17 countries by the end of the year, representing 1.7
million sq ft of trading space.
Whilst some of the international markets have experienced a slowdown in consumer
activity, overall we are pleased with the performance of the international
business. Sales attributable to the international business increased by 13.6% to
GBP63.3 million (2008: GBP55.7 million). Its contribution to total GTV increased
from 2.4% in 2008 to 2.7% in 2009.
Multi-Channel
Debenhams Direct, the online business, continued to grow in 2009. Sales were up
31% to GBP55.1 million (2008: GBP42.1 million), resulting in a contribution to
GTV of 2.4% (2008: 1.8%). EBITDA increased by 133%. Visitors to Debenhams
Direct increased by 36.8% during 2009.
During 2009 a change was made to the online fulfilment provider which has
improved service levels for customers and reduced delivery times. New features
added to the website in 2009 include: zoom, video and catwalk/outfit projection;
the online outlet which provides access to all current offers and promotions;
shop by size; product reviews and surveys; and social networking capability.
Priorities going forward will be to develop a full multi-channel offering
alongside the existing online operation. Integrating the instore and online
businesses will be an important part of this, seeking to extend ranging for
smaller stores and availability for all stores. Other opportunities include
international online business and the use of affiliates to drive additional
footfall to online activities.
Marketing
Launched in Autumn 2009, Debenhams has recently unveiled its new brand
manifesto, "design in every department", symbolising the importance of design
across all aspects of the business. New branding has been rolled out throughout
all communications, stores and the website. A key pillar of this campaign is a
TV/digital campaign running in October and November 2009, with a subsequent
product campaign continuing into 2010.
Complementing this focus of great product design and quality, Debenhams will
continue to offer its customers exceptional value for money via product offers,
promotions and spectaculars. We are committed to ensuring we support our
customers when the economic outlook remains challenging.
The Debenhams Beauty Club was launched in April and not only allows customers to
earn points on their purchases at Debenhams for money-off rewards but it also
gives them access to cosmetics samples/free gifts, makeovers/skincare
consultations, instore events, exclusive products and offers.
BALANCE SHEET
Net debt stood at GBP590.3 million at year end, GBP403.7 million lower than at
the start of the year.
The board had said for some time that reducing leverage for Debenhams was an
important aim. To this end, a capital raising was launched on 4 June 2009 and
subsequently approved by shareholders at a General Meeting on 23 June 2009 with
new shares issued on 26 June 2009. The capital raising took the form of a
placing and open offer which was chosen due to the unusually concentrated nature
of Debenhams' shareholder register which contained a number of large
shareholders who were unlikely to participate. The choice of this structure was
vindicated as the firm placing element was several times oversubscribed and the
discount was one of the lowest seen amongst the raft of capital raisings
undertaken across the market during the first half of the calendar year 2009.
The purpose of the capital raising was four-fold. First, to reduce net debt and
enhance the ability to refinance in the future. Secondly, to provide an
opportunity to amend existing covenants resulting in greater headroom and
operational and financial flexibility. Thirdly, to provide funds to buy back
debt at below par in the market should it become available. Finally, to improve
the ability to pursue opportunistic acquisitions.
In line with these aims, the covenants on the term loan and revolving credit
facility were reset as follows: net debt/EBITDA of 3.75 times; fixed charge
cover of 1.60 times (NB the metrics used in these covenants are based on UK GAAP
as adjusted for covenant purposes).
A GBP50.0 million pre-payment was made in July against the GBP150.0 million
amortisation payment on the term loan which is due in May 2010. A further
pre-payment of GBP100.0 million was made after the end of the year on 21 October
2009. In addition, GBP61.4 million of debt was acquired in the market at an
average discount of 5.6%.
We will continue to look for accretive acquisitions. These could take the form
of adding operating units to leverage our existing infrastructure or acquiring
brands which would be reversed into Debenhams. Any acquisition must maintain or
improve our leverage ratios.
BOARD OF DIRECTORS
Martina King and Sophie Turner Laing both joined the board as non-executive
directors on 1 August 2009. Michael Sharp was appointed Deputy Chief Executive
on 3 November 2008. Paul Pindar has been appointed Senior Independent Director
and the Remuneration Committee is now chaired by Adam Crozier.
Richard Gillingwater retired from the board on 16 April 2009 and Peter Long
retired on 1 August 2009. Philippe Costeletos and Jonathan Feuer resigned from
the board on 3 June 2009. Angela Spindler resigned from the board on 30 November
2008.
It has today been announced that John Lovering, Chairman, will retire on 31
March 2010 thereby providing ample time for the appointment of his successor.
Further, Nigel Northridge will join the board as a non-executive director on 1
January 2010.
CURRENT TRADING
For the seven weeks to 17 October 2009, gross transaction value increased by
2.8% and like-for-like sales increased by 0.6%.Gross margin and cash margin are
both higher than for the same period last year.
OUTLOOK
The outlook for consumer behaviour remains hard to predict. However, we are
encouraged by the response of customers to the changes we have made to our
offer. Our focus will continue to be on the drivers of cash profit. We will also
be investing for future growth through the opening of new stores, development of
our multi-channel business and recommencing the store refurbishment programme.
Statements made in this announcement that look forward in time or that express
management's beliefs, expectations or estimates regarding future occurrences and
prospects are "forward-looking statements" within the meaning of the United
States federal securities laws. These forward-looking statements reflect
Debenhams' current expectations concerning future events and actual results may
differ materially from current expectations or historical results. Any such
forward-looking statements are subject to various risks and uncertainties which
are detailed at the end of this document.
Notes to Editors
Debenhams is a leading department stores group with a strong presence in key
product categories including womenswear, menswear, childrenswear, health and
beauty, accessories, lingerie and home. Debenhams is the second largest
department store chain in the UK.
Debenhams has a total of 144 department stores in the UK and the Republic of
Ireland and 12 Desire by Debenhams stores, which is a small store concept
featuring a mix of womenswear, health and beauty, accessories, lingerie and
childrenswear. Debenhams has 52 international franchise stores in 17 countries
and an online store, www.debenhams.com, through which much of the Debenhams
range is available.
Designers at Debenhams include Ted Baker, Jeff Banks, Jasper Conran, Erickson
Beamon, Pip Hackett, Betty Jackson, Ben de Lisi, Julien Macdonald, Melissa
Odabash, Jane Packer, Pearce Fionda, Janet Reger, John Rocha and Matthew
Williamson.
Consolidated Income Statement
For the financial year ended 29 August 2009
+--------------------------------------------------+---------+------+---+----------------+----+--------------+
| | | | | For the financial year ended: |
+--------------------------------------------------+---------+------+---+------------------------------------+
| | | Note | | 29 August | | 30 August |
| | | | | 2009 | | 2008 |
+--------------------------------------------------+---------+------+---+----------------+----+--------------+
| | | | | GBPm | | GBPm |
+--------------------------------------------------+---------+------+---+----------------+----+--------------+
| | | | | | | |
+--------------------------------------------------+---------+------+---+----------------+----+--------------+
| Revenue | | 2 | | 1,915.6 | | 1,839.2 |
+--------------------------------------------------+---------+------+---+----------------+----+--------------+
| | | | | | | |
+--------------------------------------------------+---------+------+---+----------------+----+--------------+
| Cost of sales | | | | (1,650.7) | | (1,571.6) |
+--------------------------------------------------+---------+------+---+----------------+----+--------------+
| | | | | | | |
+--------------------------------------------------+---------+------+---+----------------+----+--------------+
| Gross profit | | | | 264.9 | | 267.6 |
+--------------------------------------------------+---------+------+---+----------------+----+--------------+
| | | | | | | |
+--------------------------------------------------+---------+------+---+----------------+----+--------------+
| Distribution costs | | | | (45.3) | | (50.0) |
+--------------------------------------------------+---------+------+---+----------------+----+--------------+
| | | | | | | |
+--------------------------------------------------+---------+------+---+----------------+----+--------------+
| Administrative expenses | | | | (37.4) | | (41.5) |
+--------------------------------------------------+---------+------+---+----------------+----+--------------+
| | | | | | | |
+--------------------------------------------------+---------+------+---+----------------+----+--------------+
| | | | | | | |
+--------------------------------------------------+---------+------+---+----------------+----+--------------+
| Operating profit | | | | 182.2 | | 176.1 |
+--------------------------------------------------+---------+------+---+----------------+----+--------------+
| | | | | | | |
+--------------------------------------------------+---------+------+---+----------------+----+--------------+
| | | | | | | |
+--------------------------------------------------+---------+------+---+----------------+----+--------------+
| Interest receivable and similar income | | 4 | | 1.3 | | 4.8 |
+--------------------------------------------------+---------+------+---+----------------+----+--------------+
| Interest payable and similar charges | | 5 | | (62.7) | | (75.0) |
+--------------------------------------------------+---------+------+---+----------------+----+--------------+
| | | | | | | |
+--------------------------------------------------+---------+------+---+----------------+----+--------------+
| Profit before taxation | | | | 120.8 | | 105.9 |
+--------------------------------------------------+---------+------+---+----------------+----+--------------+
| | | | | | | |
+--------------------------------------------------+---------+------+---+----------------+----+--------------+
| Taxation | | 6 | | (25.7) | | (28.8) |
+--------------------------------------------------+---------+------+---+----------------+----+--------------+
| | | | | | | |
+--------------------------------------------------+---------+------+---+----------------+----+--------------+
| Profit for the financial year attributable to equity | 9 | | 95.1 | | 77.1 |
| shareholders | | | | | |
+------------------------------------------------------------+------+---+----------------+----+--------------+
| | | | | | | |
+--------------------------------------------------+---------+------+---+----------------+----+--------------+
+--------------------------------------+-------+-+-------+---+-----------+-+----+------------+
| | | | | | | |
+--------------------------------------+-------+---------+---+-----------+------+------------+
| Earnings per share attributable to the equity shareholders |
+--------------------------------------------------------------------------------------------+
| | | | | | | |
+--------------------------------------+---------+-------+---+-------------+----+------------+
| | | | Pence per share | Pence per share |
+--------------------------------------+---------+-------+-----------------+-----------------+
| | | | | | | |
+--------------------------------------+---------+-------+---+-------------+----+------------+
| Basic | | 8 | | 10.0 | | 9.0 |
+--------------------------------------+---------+-------+---+-------------+----+------------+
| | | | | | | |
+--------------------------------------+---------+-------+---+-------------+----+------------+
| Diluted | | 8 | | 10.0 | | 9.0 |
+--------------------------------------+---------+-------+---+-------------+----+------------+
| | | | | | | |
+--------------------------------------+-------+-+-------+---+-----------+-+----+------------+
Dividends per share
+----------------------------------------+---------+-------+---+------------+----+------------+
| | | | Pence per | Pence per share |
| | | | share | |
+----------------------------------------+---------+-------+----------------+-----------------+
| | | | | | | |
+----------------------------------------+---------+-------+---+------------+----+------------+
| | | | | | | |
+----------------------------------------+---------+-------+---+------------+----+------------+
| Proposed final dividend per share | | 7 | | - | | 0.5 |
+----------------------------------------+---------+-------+---+------------+----+------------+
All Group operations during the financial years were continuing operations.
Consolidated Statement of Recognised Income & Expenses
For the financial year ended 29 August 2009
+--------------------------------------+-+-+-+-+------+----+------------+----+------------+
| | | | | For the financial year |
| | | | | ended: |
+--------------------------------------+---+----------+----+------------------------------+
| | | | | 29 August | | 30 August |
| | | | | 2009 | | 2008 |
+--------------------------------------+---+----------+----+------------+----+------------+
| | | | | GBPm | | GBPm |
+--------------------------------------+---+----------+----+------------+----+------------+
| | | | | | | |
+--------------------------------------+---+----------+----+------------+----+------------+
| Profit for the financial year | | | | 95.1 | | 77.1 |
+--------------------------------------+---+----------+----+------------+----+------------+
| | | | | | | |
+--------------------------------------+---+----------+----+------------+----+------------+
| Actuarial loss recognised in the pension | | | (93.6) | | (79.8) |
| scheme | | | | | |
+------------------------------------------+----------+----+------------+----+------------+
| | | | | | | |
+--------------------------------------+---+----------+----+------------+----+------------+
| Movement on deferred tax relating to the | | | 26.2 | | 22.3 |
| pension scheme | | | | | |
+----------------------------------------------+------+----+------------+----+------------+
| | | | | | |
+------------------------------------------+----------+----+------------+----+------------+
| Currency translation | | | (0.3) | | 1.3 |
+------------------------------------------+----------+----+------------+----+------------+
| | | | | | |
+------------------------------------------+----------+----+------------+----+------------+
| Change in the valuation of the available-for-sale | | (2.2) | | (9.3) |
| investments | | | | |
+-----------------------------------------------------+----+------------+----+------------+
| | | | | | |
+--------------------------------------------+--------+----+------------+----+------------+
| | | | | | | |
+--------------------------------------+-----+--------+----+------------+----+------------+
| Cash flow hedges | | | | | | |
+--------------------------------------+-----+--------+----+------------+----+------------+
| - net fair value losses (net of | | | | (9.2) | | (5.0) |
| tax) | | | | | | |
+--------------------------------------+-----+--------+----+------------+----+------------+
| - recycled and adjusted against | | | (20.1) | | 0.9 |
| the initial | | | | | |
| measurement of the acquisition | | | | | |
| cost of inventory | | | | | |
+--------------------------------------------+--------+----+------------+----+------------+
| - reclassified and reported in net | | | | - | | (0.5) |
| profit | | | | | | |
+----------------------------------------+---+--------+----+------------+----+------------+
| | | | | | | |
+----------------------------------------+---+--------+----+------------+----+------------+
| Net expense recognised directly in | | | | (99.2) | | (70.1) |
| equity | | | | | | |
+----------------------------------------+---+--------+----+------------+----+------------+
| | | | | | | |
+----------------------------------------+---+--------+----+------------+----+------------+
| | | | | | | |
+----------------------------------------+---+--------+----+------------+----+------------+
| Total recognised (expense)/income attributable to | | (4.1) | | 7.0 |
| the equity shareholders of the Group | | | | |
+-----------------------------------------------------+----+------------+----+------------+
| | | | | | | |
+--------------------------------------+-+-+-+-+------+----+------------+----+------------+
Consolidated Balance Sheet
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| At 29 August 2009 | | Note | | 29 August | | 30 August |
| | | | | 2009 | | 2008 |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| | | | | GBPm | | GBPm |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| | | | | | | |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| ASSETS | | | | | | |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Non-current assets | | | | | | |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Intangible assets | | | | 839.9 | | 840.8 |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Property, plant and equipment | | | | 669.2 | | 693.3 |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Financial assets | | | | | | |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| - Available-for-sale investments | | | | 8.8 | | 11.0 |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| - Derivative financial instruments | | | | 0.2 | | 8.2 |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Retirement benefit assets | | | | - | | 25.0 |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Deferred tax assets | | | | 80.6 | | 57.4 |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| | | | | | | |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| | | | | 1,598.7 | | 1,635.7 |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| | | | | | | |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Current assets | | | | | | |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Inventories | | | | 270.9 | | 237.5 |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Trade and other receivables | | | | 68.5 | | 58.5 |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Derivative financial instruments | | | | 9.5 | | 10.5 |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Cash and cash equivalents | | 11 | | 188.2 | | 42.1 |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| | | | | | | |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| | | | | 537.1 | | 348.6 |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| | | | | | | |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| LIABILITIES | | | | | | |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Current liabilities | | | | | | |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Financial liabilities | | | | | | |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| - Bank overdraft and borrowings | | | | (92.6) | | (144.5) |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| - Derivative financial instruments | | | | (24.2) | | - |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Trade and other payables | | | | (458.6) | | (470.2) |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Current tax liabilities | | | | (34.0) | | (29.9) |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Provisions for liabilities and | | | | (2.1) | | (0.7) |
| charges | | | | | | |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| | | | | | | |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| | | | | (611.5) | | (645.3) |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Net current liabilities | | | | (74.4) | | (296.7) |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| | | | | | | |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Non-current liabilities | | | | | | |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Financial liabilities | | | | | | |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| - Bank overdraft and borrowings | | | | (685.9) | | (891.6) |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| - Derivative financial instruments | | | | (8.0) | | (0.7) |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Deferred tax liabilities | | | | (78.3) | | (95.3) |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Other non-current liabilities | | | | (273.0) | | (225.8) |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Provisions for liabilities and | | | | (0.2) | | (0.3) |
| charges | | | | | | |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Retirement benefit obligations | | | | (53.6) | | - |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| | | | | | | |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| | | | | (1,099.0) | | (1,213.7) |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| | | | | | | |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Net assets | | | | 425.3 | | 125.3 |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| | | | | | | |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| SHAREHOLDERS' EQUITY | | | | | | |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Share capital | | | | 0.1 | | 0.1 |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Share premium | | | | 682.9 | | 682.9 |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Merger reserve | | | | 1,504.7 | | 1,200.9 |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Reverse acquisition reserve | | | | (1,199.9) | | (1,199.9) |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Hedging reserve | | | | (18.5) | | 10.8 |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Other reserves | | | | 2.6 | | 5.1 |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Retained earnings | | | | (546.6) | | (574.6) |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| | | | | | | |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| Total equity | | 9 | | 425.3 | | 125.3 |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| | | | | | | |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
| | | | | | | |
+--------------------------------------+-----------+--------+----+------------+----+-----------+
Consolidated Cash Flow Statement
For the financial year ended 29 August 2009
+---------------------------------------+-+-+-+-+------+--+------------+----+------------+
| | | | | For the financial year |
| | | | | ended: |
+---------------------------------------+-----+--------+--+------------------------------+
| | | Note | | 29 August | | 30 August |
| | | | | 2009 | | 2008 |
+---------------------------------------+-----+--------+--+------------+----+------------+
| | | | | GBPm | | GBPm |
+---------------------------------------+-----+--------+--+------------+----+------------+
| | | | | | | |
+---------------------------------------+-----+--------+--+------------+----+------------+
| Cash flows from operating | | | | | | |
| activities | | | | | | |
+---------------------------------------+-----+--------+--+------------+----+------------+
| Cash generated from | | 10 | | 241.0 | | 285.8 |
| operations | | | | | | |
+---------------------------------------+-----+--------+--+------------+----+------------+
| Interest received | | | | 1.1 | | 4.8 |
+---------------------------------------+-----+--------+--+------------+----+------------+
| Interest paid | | | | (58.4) | | (71.6) |
+---------------------------------------+-----+--------+--+------------+----+------------+
| Tax paid | | | | (25.3) | | (27.6) |
+---------------------------------------+-----+--------+--+------------+----+------------+
| | | | | | | |
+---------------------------------------+-----+--------+--+------------+----+------------+
| Net cash generated from operating | | | 158.4 | | 191.4 |
| activities | | | | | |
+---------------------------------------------+--------+--+------------+----+------------+
| | | | | | | |
+---------------------------------------+-----+--------+--+------------+----+------------+
| Cash flows from investing | | | | | | |
| activities | | | | | | |
+---------------------------------------+-----+--------+--+------------+----+------------+
| Purchase of property, plant | | | | (77.0) | | (124.9) |
| and equipment | | | | | | |
+---------------------------------------+-----+--------+--+------------+----+------------+
| Purchase of intangible | | | | (7.5) | | (4.2) |
| assets | | | | | | |
+---------------------------------------+-----+--------+--+------------+----+------------+
| Proceeds from sale of property, plant | | | - | | 3.5 |
| and equipment | | | | | |
+---------------------------------------------+--------+--+------------+----+------------+
| | | | | | | |
+---------------------------------------+-----+--------+--+------------+----+------------+
| Net cash used from investing | | | (84.5) | | (125.6) |
| activities | | | | | |
+---------------------------------------------+--------+--+------------+----+------------+
| | | | | | | |
+-----------------------------------------+---+--------+--+------------+----+------------+
| Cash flows from financing | | | | | | |
| activities | | | | | | |
+-----------------------------------------+---+--------+--+------------+----+------------+
| Repayment of term loan | | | | (150.0) | | (100.0) |
| facility | | | | | | |
+-----------------------------------------+---+--------+--+------------+----+------------+
| Repurchase of term loan | | | | (35.5) | | - |
| facility | | | | | | |
+-----------------------------------------+---+--------+--+------------+----+------------+
| Proceeds from issue of | | | | 323.2 | | - |
| ordinary shares | | | | | | |
+-----------------------------------------+---+--------+--+------------+----+------------+
| Share issue costs | | | | (14.7) | | - |
+-----------------------------------------+---+--------+--+------------+----+------------+
| Dividends paid | | 7 | | (2.4) | | (44.4) |
+-----------------------------------------+---+--------+--+------------+----+------------+
| Purchase of shares by Debenhams Retail Employee | | - | | (1.1) |
| Trust 2004 ('DRET') | | | | |
+------------------------------------------------------+--+------------+----+------------+
| Finance lease payments | | | | (0.1) | | (0.7) |
+-------------------------------------------+---+------+--+------------+----+------------+
| Capitalised debt issue costs | | | | (3.3) | | (1.8) |
+-------------------------------------------+---+------+--+------------+----+------------+
| | | | | | | |
+-------------------------------------------+---+------+--+------------+----+------------+
| Net cash generated/(used) in | | | | 117.2 | | (148.0) |
| financing activities | | | | | | |
+-------------------------------------------+---+------+--+------------+----+------------+
| | | | | | | |
+-------------------------------------------+---+------+--+------------+----+------------+
| Net increase/(decrease) in cash and cash | | | 191.1 | | (82.2) |
| equivalents | | | | | |
+-----------------------------------------------+------+--+------------+----+------------+
| | | | | | | |
+---------------------------------------+-------+------+--+------------+----+------------+
| Net cash and cash equivalents at beginning | | | (2.9) | | 79.3 |
| of financial year | | | | | |
+-----------------------------------------------+------+--+------------+----+------------+
| | | | | | | |
+---------------------------------------+-------+------+--+------------+----+------------+
| Net cash and cash equivalents at end of | 11 | | 188.2 | | (2.9) |
| financial year | | | | | |
+-----------------------------------------------+------+--+------------+----+------------+
| | | | | | | |
+---------------------------------------+-+-+-+-+------+--+------------+----+------------+
Notes to the Accounts
At 29 August 2009
1. Basis of preparation
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted in the European
Union and those parts of the Companies Act 2006 applicable to those companies
reporting under IFRS.
The consolidated financial statements have been prepared on the basis of the
accounting policies set out in the financial statements of Debenhams plc for the
financial year ended 29 August 2009. Accounting policies have been consistently
applied.
The financial information set out in this document does not constitute the
statutory accounts of the Group for the years ended 29 August 2009 and 30 August
2008 but is derived from the 2009 annual report and financial statements. The
annual report and financial statements for 2008, which were prepared under IFRS,
have been delivered to the Registrar of Companies and the Group annual report
and financial statements for 2009, prepared under IFRS, will be delivered to the
Registrar of Companies in due course. The auditors have reported on those
accounts and have given an unqualified report which does not contain a statement
under section 498 (2) or (3) of the Companies Act 2006.
2. Turnover
The Group has one class of business, retailing, and all material operations are
in the UK.
3. Gross transaction value
Revenue from concessions is required to be shown on a net basis, being the
commission received rather than the gross value achieved by the concessionaire
on the sale. Management believes that gross transaction value, which presents
revenue on a gross basis before adjusting for concessions, staff discounts and
the cost of loyalty scheme points, represents a good guide to the value of the
overall activity of the Group.
+---------------------------------------+------+----------+--+-------------+-----+----------+
| | | | | 29 August | | 30 |
| | | | | 2009 | | August |
| | | | | | | 2008 |
+---------------------------------------+------+----------+--+-------------+-----+----------+
| | | | | GBPm | | GBPm |
+---------------------------------------+------+----------+--+-------------+-----+----------+
| | | | | | | |
+---------------------------------------+------+----------+--+-------------+-----+----------+
| Gross transaction value | | | | 2,339.7 | | 2,336.0 |
+---------------------------------------+------+----------+--+-------------+-----+----------+
| | | | | | | |
+---------------------------------------+------+----------+--+-------------+-----+----------+
4. Interest receivable and similar income
+-------------------------------------+----+-----------+----+---------------+----+------------+
| | | | | 29 August | | 30 August |
| | | | | 2009 | | 2008 |
+-------------------------------------+----+-----------+----+---------------+----+------------+
| | | | | GBPm | | GBPm |
+-------------------------------------+----+-----------+----+---------------+----+------------+
| | | | | | | |
+-------------------------------------+----+-----------+----+---------------+----+------------+
| Interest on bank deposits | | | | 1.3 | | 4.8 |
+-------------------------------------+----+-----------+----+---------------+----+------------+
| | | | | | | |
+-------------------------------------+----+-----------+----+---------------+----+------------+
| | | | | | | |
+-------------------------------------+----+-----------+----+---------------+----+------------+
5. Interest payable and similar charges
+----------------------------------------+--+---+---+---+---+---+---+----+---+----+----+---+---+
| | | | | 29 August | | 30 |
| | | | | | | August |
| | | | | 2009 | | 2008 |
+----------------------------------------+------+-------+-------+------------+----+--------+
| | | | | GBPm | | GBPm |
+----------------------------------------+------+-------+-------+------------+----+--------+
| | | | | | | |
+----------------------------------------+------+-------+-----------+--------+----+--------+
| Bank loans and overdrafts | | | | (55.0) | | (67.1) |
+----------------------------------------+------+-------+-----------+--------+----+--------+
| Amortisation of issue costs on loans | | | | (4.4) | | (4.2) |
| | | | | | | |
+----------------------------------------+------+-------+-----------+--------+----+--------+
| Interest payable on finance leases | | | | (3.3) | | (3.0) |
+----------------------------------------+------+-------+-----------+--------+----+--------+
| Charges arising from ineffective cash flow hedges | | - | | (0.7) |
+-------------------------------------------------------+-----------+--------+----+--------+
| | | | | | | |
+----------------------------------------+------+-------+-----------+--------+----+--------+
| | | | | (62.7) | | (75.0) |
+----------------------------------------+------+-------+-----------+--------+----+--------+
| | | | | | | |
+----------------------------------------+--+-------+-------+------------+-------------+-------+
| | | | | | | |
+----------------------------------------+--+---+---+---+---+---+---+----+---+----+----+---+---+
6. Taxation
+------------------------------------------+------------+----+------------+----+------------+
| Analysis of tax charge for the financial | | | 29 August | | 30 August |
| year | | | 2009 | | 2008 |
+------------------------------------------+------------+----+------------+----+------------+
| | | | GBPm | | GBPm |
+------------------------------------------+------------+----+------------+----+------------+
| | | | | | |
+------------------------------------------+------------+----+------------+----+------------+
| Current tax: | | | | | |
+------------------------------------------+------------+----+------------+----+------------+
| UK corporation tax charge on profit | | | 39.8 | | 26.0 |
| for the year | | | | | |
+------------------------------------------+------------+----+------------+----+------------+
| Adjustments in respect of prior | | | (10.5) | | (0.2) |
| periods | | | | | |
+------------------------------------------+------------+----+------------+----+------------+
| | | | | | |
+------------------------------------------+------------+----+------------+----+------------+
| Current tax expense | | | 29.3 | | 25.8 |
+------------------------------------------+------------+----+------------+----+------------+
| | | | | | |
+------------------------------------------+------------+----+------------+----+------------+
| Deferred taxation: | | | | | |
+------------------------------------------+------------+----+------------+----+------------+
| Origination and reversal of timing | | | (8.5) | | (3.6) |
| differences | | | | | |
+------------------------------------------+------------+----+------------+----+------------+
| Pension cost relief in excess of pension charge | | 4.2 | | 7.0 |
+-------------------------------------------------------+----+------------+----+------------+
| Adjustments in respect of prior | | | 0.7 | | (0.4) |
| periods | | | | | |
+------------------------------------------+------------+----+------------+----+------------+
| | | | | | |
+------------------------------------------+------------+----+------------+----+------------+
| Deferred tax (credit)/expense | | | (3.6) | | 3.0 |
+------------------------------------------+------------+----+------------+----+------------+
| | | | | | |
+------------------------------------------+------------+----+------------+----+------------+
| Tax charge for the financial year | | | 25.7 | | 28.8 |
+------------------------------------------+------------+----+------------+----+------------+
| | | | | | |
+------------------------------------------+------------+----+------------+----+------------+
7. Dividends
+------------------------------------------------------+---+-------+----------------+---+--------------+
| | | | 29 August | | 30 August |
| | | | 2009 | | 2008 |
+------------------------------------------------------+---+-------+----------------+---+--------------+
| | | | GBPm | | GBPm |
+------------------------------------------------------+---+-------+----------------+---+--------------+
| | | | | | |
+------------------------------------------------------+---+-------+----------------+---+--------------+
| | | | | | |
+------------------------------------------------------+---+-------+----------------+---+--------------+
| Final paid 0.5 pence (2008: 3.8 pence) per GBP0.0001 share | | | |
+------------------------------------------------------------------+----------------+---+--------------+
| Settled in cash | | | 2.4 | | 32.6 |
+------------------------------------------------------+---+-------+----------------+---+--------------+
| Settled in scrip issue | | | 1.9 | | - |
+------------------------------------------------------+---+-------+----------------+---+--------------+
| | | | | | |
+------------------------------------------------------+---+-------+----------------+---+--------------+
| Interim paid nil pence (2008: 2.5 pence) per GBP0.0001 share | | | |
+------------------------------------------------------------------+----------------+---+--------------+
| Settled in cash | | | - | | 11.8 |
+------------------------------------------------------+---+-------+----------------+---+--------------+
| Settled in scrip issue | | | - | | 9.7 |
+------------------------------------------------------+---+-------+----------------+---+--------------+
| | | | | | |
+------------------------------------------------------+---+-------+----------------+---+--------------+
| | | | 4.3 | | 54.1 |
+------------------------------------------------------+---+-------+----------------+---+--------------+
The directors have not proposed a final dividend in respect of the financial
year ended 29 August 2009 (2008: 0.5 pence per share).
8. Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of ordinary shares
outstanding during the year.
For diluted earnings per share, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all dilutive potential ordinary
shares. The Group has one class of dilutive potential ordinary shares, those
share options granted to employees where the exercise price is less than the
market price of the Company's ordinary shares during the year.
+--------------------------+-+---------+--------+-----------+---------+--------+----------+
| Basic and diluted earnings per | | 29 August | 30 |
| share | | 2009 | August |
| | | | 2008 |
+--------------------------------------+--------+---------------------+-------------------+
| | | | Basic | Diluted | Basic | Diluted |
+--------------------------+-----------+--------+-----------+---------+--------+----------+
| | | | GBPm | GBPm | GBPm | GBPm |
+--------------------------+-----------+--------+-----------+---------+--------+----------+
| Profit for the financial year after | | 95.1 | 95.1 | 77.1 | 77.1 |
| taxation | | | | | |
+--------------------------------------+--------+-----------+---------+--------+----------+
| | | | | | | |
+--------------------------+-----------+--------+-----------+---------+--------+----------+
| | | Number | Number | Number | Number |
| | | m | m | m | m |
+--------------------------------------+--------+-----------+---------+--------+----------+
| Weighted average number of shares | | 950.8 | 950.8 | 861.5 | 861.5 |
+--------------------------------------+--------+-----------+---------+--------+----------+
| Shares held by ESOP | | | (1.4) | (1.4) | (1.1) | (1.1) |
| (weighted) (weighted) | | | | | | |
| | | | | | | |
+----------------------------+---------+--------+-----------+---------+--------+----------+
| Shares issuable (weighted) | | - | - | - | - |
+--------------------------------------+--------+-----------+---------+--------+----------+
| Adjusted weighted average number of | | 949.4 | 949.4 | 860.4 | 860.4 |
| shares | | | | | |
+--------------------------------------+--------+-----------+---------+--------+----------+
| | | | | | |
+--------------------------------------+--------+-----------+---------+--------+----------+
| | | Pence | Pence | Pence | Pence |
| | | per share | per | per | per |
| | | | share | share | share |
+--------------------------------------+--------+-----------+---------+--------+----------+
| Earnings per share | | 10.0 | 10.0 | 9.0 | 9.0 |
+--------------------------------------+--------+-----------+---------+--------+----------+
| | | | | | | |
+--------------------------+-----------+--------+-----------+---------+--------+----------+
| | | | | | | |
+--------------------------+-----------+--------+-----------+---------+--------+----------+
| | | | | | | |
+--------------------------+-+---------+--------+-----------+---------+--------+----------+
The total number of shares in issue as at 29 August 2009 was 1,286,806,299.
9. Consolidated statement of changes in shareholders' equity
+-----------------------------------------------+--+----+--+--+--+----------+---+----------+
| | | | | | | 29 | | 30 |
| | | | | | | August | | August |
| | | | | | | 2009 | | 2008 |
| | | | | | | GBPm | | GBPm |
+-----------------------------------------------+--+----+--+--+--+----------+---+----------+
| | | | | | | | | |
+-----------------------------------------------+--+----+--+--+--+----------+---+----------+
| Opening shareholders' equity | | | | | | 125.3 | | 163.0 |
+-----------------------------------------------+--+----+--+--+--+----------+---+----------+
| | | | | | | | | |
+-----------------------------------------------+--+----+--+--+--+----------+---+----------+
| Profit for the financial year | | | | | | 95.1 | | 77.1 |
+-----------------------------------------------+--+----+--+--+--+----------+---+----------+
| Currency translation differences | | | | | | (0.3) | | 1.3 |
+-----------------------------------------------+--+----+--+--+--+----------+---+----------+
| Actuarial loss in pension schemes | | | | | | (93.6) | | (79.8) |
+-----------------------------------------------+--+----+--+--+--+----------+---+----------+
| Movement in deferred tax relating to | | | | | | 26.2 | | 22.3 |
| pension schemes | | | | | | | | |
+-----------------------------------------------+--+----+--+--+--+----------+---+----------+
| Change in valuation of available for | | | | | | (2.2) | | (9.3) |
| sale investments | | | | | | | | |
+-----------------------------------------------+--+----+--+--+--+----------+---+----------+
| Cash flow hedges | | | | | | (29.3) | | (4.6) |
+-----------------------------------------------+--+----+--+--+--+----------+---+----------+
| Employee share ownership plans | | | | | | 0.3 | | 0.8 |
+-----------------------------------------------+--+----+--+--+--+----------+---+----------+
| Purchase of treasury shares for DRET | | | | | | - | | (1.1) |
+-----------------------------------------------+--+----+--+--+--+----------+---+----------+
| Dividends paid | | | | | | (4.3) | | (54.1) |
+-----------------------------------------------+--+----+--+--+--+----------+---+----------+
| Shares issued in lieu of dividend | | | | | | 1.9 | | 9.7 |
+-----------------------------------------------+--+----+--+--+--+----------+---+----------+
| Merger reserve arising on issue of | | | | | | 303.8 | | - |
| shares | | | | | | | | |
+-----------------------------------------------+--+----+--+--+--+----------+---+----------+
| Discount arising on repurchase of term loan facility | | 2.4 | | - |
| (net of tax) | | | | |
+-------------------------------------------------------------+--+----------+---+----------+
| | | | | | | | | |
+-----------------------------------------------+--+----+--+--+--+----------+---+----------+
| Closing shareholders' equity | | | | | | 425.3 | | 125.3 |
+-----------------------------------------------+--+----+--+--+--+----------+---+----------+
| | | | | | | | | |
+-----------------------------------------------+--+----+--+--+--+----------+---+----------+
On 4 June 2009 the Company announced a share issue to raise additional funds
through a firm placing and placing and open offer to raise gross proceeds of
GBP323.2 million. New ordinary shares issued in respect of the open offer
amounted to 73.4 million and 330.6 million new ordinary shares were issued
though the placing, both at an issue price of 80 pence per share. This share
issue was approved by shareholders on 23 June 2009 and all issued shares had a
nominal value of GBP0.0001 each. The share issue was effected through a
structure which resulted in a merger reserve arising under section 612 of the
Companies Act 2006.
The Company raised proceeds of GBP303.8 million, net of issue costs of
approximately GBP19.4 million. The shares were issued and commenced trading on
the London Stock Exchange on 26 June 2009.
10. Cash generated from operations
+------------------------------------------+--+-+-+-+----+------+----------+-------------+
| | | | | 29 | 30 August |
| | | | | August | 2008 |
| | | | | 2009 | |
+------------------------------------------+------+------+------+----------+-------------+
| | | | | GBPm | GBPm |
+------------------------------------------+------+------+------+----------+-------------+
| | | | | | |
+------------------------------------------+------+------+------+----------+-------------+
| Profit for the financial year | | | | 95.1 | 77.1 |
+------------------------------------------+------+------+------+----------+-------------+
| Taxation (note 6) | | | | 25.7 | 28.8 |
+------------------------------------------+------+------+------+----------+-------------+
| Depreciation | | | | 87.9 | 87.5 |
+------------------------------------------+------+------+------+----------+-------------+
| Accelerated depreciation | | | | 0.1 | 0.8 |
+------------------------------------------+------+------+------+----------+-------------+
| Amortisation | | | | 8.1 | 7.5 |
+------------------------------------------+------+------+------+----------+-------------+
| Loss/(profit) on disposal of property, plant | | | 0.2 | (3.1) |
| and equipment | | | | |
+-------------------------------------------------+------+------+----------+-------------+
| Employee options granted during the year | | 0.3 | 0.8 |
+--------------------------------------------------------+------+----------+-------------+
| Fair value gains on derivative instruments | | (0.6) | (3.7) |
+--------------------------------------------------------+------+----------+-------------+
| Net movements in provisions for liabilities and | | 1.3 | (1.8) |
| charges | | | |
+--------------------------------------------------------+------+----------+-------------+
| Interest income (note 4) | | | | (1.3) | (4.8) |
+------------------------------------------+--+----------+------+----------+-------------+
| Interest expense (note 5) | | | | 62.7 | 75.0 |
+------------------------------------------+--+----------+------+----------+-------------+
| Difference between pension charge and contributions | | (15.0) | (17.5) |
| paid | | | |
+--------------------------------------------------------+------+----------+-------------+
| Net movement in other non-current | | | | 47.2 | 18.8 |
| liabilities | | | | | |
+-----------------------------------------------+---+----+------+----------+-------------+
| | | | | | |
+-----------------------------------------------+---+----+------+----------+-------------+
| Changes in working capital | | | | | |
+-----------------------------------------------+---+----+------+----------+-------------+
| (Increase)/decrease in inventories | | | | (33.4) | 7.1 |
+-----------------------------------------------+---+----+------+----------+-------------+
| (Increase)/decrease in trade and other | | | | (7.3) | 8.0 |
| receivables | | | | | |
+-----------------------------------------------+---+----+------+----------+-------------+
| (Decrease)/increase in trade and other | | | | (30.0) | 5.3 |
| payables | | | | | |
+-----------------------------------------------+---+----+------+----------+-------------+
| | | | | | |
+-----------------------------------------------+---+----+------+----------+-------------+
| Cash generated from operations | | | | 241.0 | 285.8 |
+-----------------------------------------------+---+----+------+----------+-------------+
| | | | | | |
+------------------------------------------+--+-+-+-+----+------+----------+-------------+
11. Analysis of changes in net debt
+----------------------------------+-----------+----------+---------+-------------+----------+
| | | At | Cash | Non cash | At |
| | | 30 | flow | movements | 29 |
| | | August | | | August |
| | | 2008 | | | 2009 |
+----------------------------------+-----------+----------+---------+-------------+----------+
| | | GBPm | GBPm | GBPm | GBPm |
+----------------------------------+-----------+----------+---------+-------------+----------+
| | | | | | |
+----------------------------------+-----------+----------+---------+-------------+----------+
| Analysis of net debt | | | | | |
+----------------------------------+-----------+----------+---------+-------------+----------+
| Cash | | 42.1 | 146.1 | - | 188.2 |
+----------------------------------+-----------+----------+---------+-------------+----------+
| Bank overdrafts | | (45.0) | 45.0 | - | - |
+----------------------------------+-----------+----------+---------+-------------+----------+
| | | | | | |
+----------------------------------+-----------+----------+---------+-------------+----------+
| Cash and cash equivalents and bank | (2.9) | 191.1 | - | 188.2 |
| overdrafts | | | | |
+----------------------------------------------+----------+---------+-------------+----------+
| | | | | | |
+----------------------------------+-----------+----------+---------+-------------+----------+
| Debt due within one | | (96.2) | 100.0 | (92.7) | (88.9) |
| year | | | | | |
+----------------------------------+-----------+----------+---------+-------------+----------+
| Debt due after one year | | (844.3) | 88.8 | 112.7 | (642.8) |
+----------------------------------+-----------+----------+---------+-------------+----------+
| Finance lease obligations due | (3.3) | 0.1 | (0.5) | (3.7) |
| within one year | | | | |
+----------------------------------------------+----------+---------+-------------+----------+
| Finance lease obligations due after | (47.3) | - | 4.2 | (43.1) |
| one year | | | | |
+----------------------------------------------+----------+---------+-------------+----------+
| | | | | | |
+----------------------------------+-----------+----------+---------+-------------+----------+
| | | (994.0) | 380.0 | 23.7 | (590.3) |
+----------------------------------+-----------+----------+---------+-------------+----------+
| | | | | | |
+----------------------------------+-----------+----------+---------+-------------+----------+
The Group has taken advantage of current credit market conditions to buy back
its debt in the market. During the year the Group purchased debt with a par
value of GBP61.4 million.
12. Financial information
The statutory accounts will be filed with the Registrar of Companies and sent to
the holders of the Company's listed securities in December. Copies will be
available at the Company's registrars, Equiniti, Aspect House, Spencer Road,
Lancing, West Sussex BN99 6DA (0870 607 6838), and at the Company's registered
office 1 Welbeck Street, London, W1G 0AA from the date of posting.
Statement of Directors' Responsibilities
The 2009 Annual Report, which will be published on 9 December 2009, contains a
responsibility statement pursuant to Disclosure and Transparency Rule 4.1.12.
This states that the directors confirm that to the best of their knowledge:
* the Group Financial Statements, which have been prepared in accordance with IFRS
as adopted by the EU, give a true and fair view of the assets, liabilities,
financial position and profit of the Group; and
* the Directors' Report includes a fair review of the development and performance
of the business and the position of the Company and the Group, together with a
description of the principal risks and uncertainties that it faces.
The directors of Debenhams plc are set out in the Group's 2009 Annual Report.
A list of current directors is maintained on the Investors section of the
Debenhams website at www.debenhamsplc.com.
By order of the board
Paul Eardley
Company Secretary
22 October 2009
PRINCIPAL BUSINESS RISKS AND UNCERTAINTIES
Introduction
The board has overall responsibility for risk management and internal control in
terms of achieving Debenhams' objectives. This is carried out through a regular
and systematic assessment of the risks facing the business in order to provide
assurance that strategic targets can be met. The board is responsible for the
company's system of internal control and for reviewing its effectiveness. Such a
system is designed to manage rather than eliminate the risk of failure to
achieve business objectives and can only provide reasonable and not absolute
assurance against material misstatement or loss.
Both external factors, such as the economic environment, and internal factors,
such as the retention of key management, are included in the risks and
uncertainties that could substantially impact performance. Whilst it is not
possible to list them all, the key risks in no particular order, as determined
by the board, their impact and relevant mitigation are detailed in the table
below.
+----------------------+-------------------------------+-------------------------------------+
| |
+----------------------+
| Risk | Impact | Examples of mitigation |
+----------------------+-------------------------------+-------------------------------------+
| STRATEGIC RISK |
+--------------------------------------------------------------------------------------------+
| Consistent fall in | Reduction in gross | * Strategic business |
| customer spending as | transaction value and a | reviews conducted* |
| a result of economic | decline in sales on | Business focused on key |
| downturn, inflation | discretionary purchases | priorities and costs* |
| or deflation | | Brand awareness programme |
| | | strengthened* |
| | | Growth through new stores, |
| | | developing strong targeted |
| | | power brands, accelerating |
| | | development of |
| | | multi-channel offer and |
| | | developing international |
| | | opportunities with |
| | | franchise partners |
| | | |
+----------------------+-------------------------------+-------------------------------------+
| Ineffective brand | Loss of market share, | * Range of discrete media |
| awareness and | customer loyalty, reduction | used to target specific |
| marketing programmes | in gross transaction value | segments of the market* |
| | and a decline in sales on | Brand awareness programme |
| | discretionary purchases | strengthened* |
| | | Effectiveness measured |
| | | regularly by management |
| | | through key performance |
| | | indicators |
| | | |
+----------------------+-------------------------------+-------------------------------------+
| Failure to develop | Reduced growth or a decline | * Research of key markets |
| and implement new | in gross transaction value | and demographics* |
| store roll out | and may be required to write | Cost benefit analysis |
| successfully | down the value of any stock | conducted |
| | acquired for sale in an | pre-investment* |
| | uncompleted store | Market and trend |
| | | awareness* |
| | | Thorough end to end |
| | | management of project* |
| | | Drive growth through new |
| | | space and improved visual |
| | | merchandising |
| | | |
+----------------------+-------------------------------+-------------------------------------+
| REPUTATIONAL RISK |
+--------------------------------------------------------------------------------------------+
| Failure of ethical | Negative effect on reputation | * Active member of |
| trading policy or | leading to loss of | Ethical Trading Initiative |
| poor perception in | stakeholder trust and | (ETI) and expect all |
| the market on | confidence, with subsequent | suppliers to follow the |
| Corporate Social | impact on performance and | ETI base code* |
| Responsibility | results | Excellent supplier |
| (CSR) matters | | relationships maintained |
| | | to ensure ethical |
| | | sourcing* |
| | | Executive body, the CSR |
| | | committee, works on the |
| | | key objectives for the |
| | | organisation in this area |
| | | (i.e. Waste Electrical and |
| | | Electronic Equipment |
| | | (WEEE), reducing energy |
| | | usage and transportation |
| | | costs)* |
| | | Membership of key industry |
| | | bodies to provide |
| | | awareness of changes to |
| | | standards and legislation |
| | | * |
| | | Code of Business Conduct |
| | | Policy in place and |
| | | compliance noted* |
| | | Whistleblowing policy in |
| | | place |
| | | |
+----------------------+-------------------------------+-------------------------------------+
| Negative impact to | Material adverse effect on | * Quality Assurance |
| brand due to product | the ability to attract and | process in place to ensure |
| quality, supply | retain third party brands, | the integrity of own |
| chain practices, | suppliers, designers, | bought products* |
| health and safety | concessionaires and | Active member of Ethical |
| etc. | franchisees with subsequent | Trading Initiative (ETI) |
| | impact on performance and | and expect all suppliers |
| | results | to follow the ETI base |
| | | code* |
| | | Excellent supplier |
| | | relationships maintained |
| | | to ensure ethical sourcing |
| | | and compliance* |
| | | Executive body, the CSR |
| | | committee, works on the |
| | | key objectives for the |
| | | organisation in this area |
| | | (i.e. WEEE, reducing |
| | | energy usage and |
| | | transportation costs)* |
| | | Membership of key industry |
| | | bodies to provide |
| | | awareness of changes to |
| | | standards and legislation |
| | | * |
| | | Executive Health and |
| | | Safety committee works to |
| | | review compliance for |
| | | organisation in this |
| | | area* |
| | | Code of Business Conduct |
| | | Policy in place and |
| | | compliance noted |
| | | |
+----------------------+-------------------------------+-------------------------------------+
| PRODUCT RISK |
+--------------------------------------------------------------------------------------------+
| Inability to predict | Gross transaction value will | * Market, trend and |
| or fulfil customer | be lower, market share | customer awareness* |
| demands or | reduced and forced to rely on | Excellent supplier |
| preferences | markdowns and sales to | relationships maintained |
| | dispose of excess or slow | to work towards optimising |
| | moving inventory or inventory | fulfilment * |
| | shortfalls on popular | Close management of slow |
| | merchandise | moving/terminal stocks * |
| | | Focus on and improve stock |
| | | file accuracy* |
| | | High operational standards |
| | | in stores* |
| | | Effectiveness measured |
| | | regularly by management |
| | | through key performance |
| | | indicators |
| | | |
+----------------------+-------------------------------+-------------------------------------+
| Competitive | Place pressure on our | * Promotional activity |
| pressures in | pricing strategy, margins | and implementation |
| existing markets | and profitability | reviews* |
| influencing customer | | Product differentiation |
| behaviour | | through "Design in Every |
| | | Department"* |
| | | Listening to customers and |
| | | market intelligence* |
| | | Effectiveness measured |
| | | regularly by management |
| | | through key performance |
| | | indicators |
| | | |
+----------------------+-------------------------------+-------------------------------------+
| FINANCIAL RISK |
+--------------------------------------------------------------------------------------------+
| The risks associated | Hinder ability to adjust | * Treasury function in |
| with currency, | rapidly to changing market | place which is mandated by |
| hedging, interest | conditions and impact | the board and audited |
| rates, credit, | earnings and cash flow | annually* |
| counterparties and | Hedging strategy may not | Treasury policy in place |
| financial covenants | adequately protect operating | which includes |
| under the credit | results from the impact of | counterparty limits and |
| facilities | exchange rate fluctuations or | hedging for foreign |
| | may limit any benefit caused | exchange, interest rates |
| | by favourable movements in | and energy* |
| | exchange rates. | Deleverage balance |
| | May affect available cash and | sheet* |
| | liquidity and could have | Excellent supplier |
| | material effect on the | relationships maintained |
| | business, results of | to work towards optimising |
| | operations and financial | costs* |
| | condition | Close management of costs, |
| | | capital investment, cash |
| | | flow, stocks, banks, |
| | | debtors and creditors* |
| | | Effectiveness measured |
| | | regularly by management |
| | | through key performance |
| | | indicators |
| | | |
+----------------------+-------------------------------+-------------------------------------+
| Shortfall in the | Increases in pension related | * Trustees carefully |
| pension fund | liabilities could impact | monitor the pension fund |
| | profit and cash flow | and adjust the investment |
| | | strategy appropriately |
| | | with any shortfall being |
| | | brought to the board's |
| | | attention |
| | | |
+----------------------+-------------------------------+-------------------------------------+
| OPERATIONAL RISK |
+--------------------------------------------------------------------------------------------+
| Failure to deliver a | Divert financial and | * Cost benefit analysis |
| business critical | management resources from | conducted |
| project | their intended use and have | pre-investment* |
| | an adverse impact on | Project assurance |
| | operations | framework in place for all |
| | | key projects undertaken* |
| | | Steering committees |
| | | monitor all key areas |
| | | involved in project |
| | | |
+----------------------+-------------------------------+-------------------------------------+
| Risks associated | Significant alterations in | * Property team liaises |
| with leasehold | rental terms could have a | closely with landlords* |
| properties, or | material adverse effect on | Close management of |
| former properties | the business, as would | renegotiation and |
| for which Debenhams | failure to re-secure | modernisation processes* |
| may have potential | desirable locations | Cost benefit analysis |
| liabilities in the | Disputes over modernisation | conducted for |
| event of default by | of stores may lead to | modernisations |
| the current tenant | reinstatement costs being | pre-investment* |
| | incurred and termination of | Awareness of market rates |
| | leases may lead to | and trends* |
| | dilapidation costs being | Membership of key industry |
| | incurred | bodies to provide |
| | Failure to manage asbestos in | awareness of changes to |
| | specific properties may lead | standards and legislation |
| | to fines or other liabilities | |
| | affecting Debenhams' | |
| | reputation and the full or | |
| | partial closure of such | |
| | properties | |
| | | |
+----------------------+-------------------------------+-------------------------------------+
| HAZARD |
+--------------------------------------------------------------------------------------------+
| Loss of business or | Adverse effect on inventory | * Executive body ,the |
| additional | and gross transaction value | business continuity |
| expenditure caused | and will also divert | committee, works on key |
| by terrorism, | financial and management | objectives for the |
| increased energy | resources from more | organisation in this |
| costs, natural | beneficial uses | area* |
| disaster, pandemics | In the case of terrorism, | Business continuity plan |
| or tax/ regulatory | customer confidence may also | in place for the |
| changes | be impacted | organisation* |
| | | Executive Health and |
| | | Safety committee works to |
| | | review compliance for |
| | | organisation in this |
| | | area* |
| | | Internal audits conducted |
| | | to assess the degree of |
| | | Health and Safety |
| | | compliance* |
| | | Regulatory/legal changes |
| | | are monitored through |
| | | specialists i.e. Tax, HR, |
| | | Legal, and |
| | | International* |
| | | Insurance placed where |
| | | appropriate for key risks |
| | | |
+----------------------+-------------------------------+-------------------------------------+
| Disruptions or other | Costs associated with the | * Maintain excellent |
| adverse events | transfer of the operations, | supplier relationships to |
| affecting | potential of additional | work towards optimising |
| relationships with | operational cost from a new | fulfilment and costs |
| or the performance | provider | * |
| of major suppliers, | Changes in exclusivity | Maintain excellent |
| store card | arrangements with designers | designer relationships* |
| providers, designers | could affect business | Market, trend and customer |
| or concessionaires | financial condition and | awareness* |
| | results of operations, any | Appropriate contracts in |
| | decline in popularity of one | place |
| | or more of the designers | * |
| | could have a material adverse | Financial status monitored |
| | impact on the business | and contingency plan in |
| | Loss of a number of important | place* |
| | concession partners may have | Grow own bought |
| | an adverse effect on gross | merchandise |
| | transaction value | * |
| | Adverse events within the | Maintain excellent |
| | supply chain could restrict | supplier relationships to |
| | the availability or | work towards optimising |
| | significantly increase the | fulfilment and costs* |
| | cost of merchandise | Development of multiple |
| | Credit insurance difficulties | sourcing routes |
| | for a significant number of | * |
| | suppliers could lead to a | Promote business strategy |
| | detrimental variation of | to suppliers and their |
| | terms or alternative | providers of financial |
| | suppliers used to source some | backing |
| | goods | |
| | | |
+----------------------+-------------------------------+-------------------------------------+
| Abnormal, severe or | Materially adversely affect | * Maintain excellent |
| unseasonal weather | gross transaction value and | supplier relationships to |
| conditions | may be required to write down | work towards optimising |
| | the value of any stock | fulfilment and costs |
| | acquired for sale during this | |
| | period | |
| | | |
+----------------------+-------------------------------+-------------------------------------+
| Personal injury or | Injury or loss of life to | * Executive Health and |
| property damage | staff or customers | Safety committee works to |
| relating to a major | Negative effect on reputation | review compliance for |
| Debenhams or | and will divert financial and | organisation in this |
| supplier location | management resources from | area* |
| | more beneficial uses | High operating standards |
| | | in stores and head |
| | | office* |
| | | Quality Assurance process |
| | | in place to ensure the |
| | | integrity of own bought |
| | | products |
| | | |
+----------------------+-------------------------------+-------------------------------------+
| Theft of customer | Negative effect on reputation | * Information Security |
| data or breach of | leading to loss of | committee reviews projects |
| payment card | stakeholder trust and | and key activities for |
| industry data | confidence, with subsequent | compliance in this area* |
| security standards | impact on performance and | Compliance levels |
| | results and will also divert | monitored by management |
| | financial and management | and reported to Audit |
| | resources from more | Committee* |
| | beneficial uses | Strategy for full |
| | | compliance in place* |
| | | Security tools (i.e. |
| | | encryption) used to |
| | | protect data |
| | | |
+----------------------+-------------------------------+-------------------------------------+
| Fraud | Negative effect on reputation | * Accounting policies and |
| | and will divert financial and | other procedures/ controls |
| | management resources from | in place which are subject |
| | more beneficial uses | to audit activity* |
| | | Code of Business Conduct |
| | | Policy in place and |
| | | compliance for management |
| | | noted* |
| | | Whistleblowing policy in |
| | | place* |
| | | Prevention, control and |
| | | monitoring activities |
| | | undertaken* |
| | | Risk Management |
| | | investigates issues and |
| | | reports findings to the |
| | | Audit Committee |
| | | |
+----------------------+-------------------------------+-------------------------------------+
| PERSONNEL RISK |
+--------------------------------------------------------------------------------------------+
| Departure of key | Significantly delay or | * Succession planning |
| personnel | prevent achievement of | throughout the |
| | business plan | organisation* |
| | | Personal development plans |
| | | in place* |
| | | Targeted performance |
| | | related bonus schemes |
| | | |
+----------------------+-------------------------------+-------------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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