TIDMDEB
RNS Number : 4945Q
Debenhams plc
20 October 2011
20 October 2011
DEBENHAMS PLC
FULL YEAR RESULTS 2011
53 WEEKS ENDED 3 SEPTEMBER 2011
FINANCIAL HIGHLIGHTS
-- Group gross transaction value (GTV) up 4.5%(1)
-- Like-for-like sales up 1.2% including VAT, down 0.3% excluding VAT(2)
-- Headline profit before tax up 10.0% to GBP166.1m(1,3)
-- Net debt at 3 September 2011 GBP383.7m, down GBP133.1m from a year ago
-- Basic earnings per share up 21.3% to 9.1p (2010: 7.5p)(1)
-- Final dividend 2.0p; total dividend 3.0p (last year: nil)
-- Bank facilities refinanced; duration extended to Oct 2015, interest rate reduced by 0.5%
-- Intend to commence share buyback programme in second half of 2012 financial year
OPERATING HIGHLIGHTS
-- Strategic review undertaken by new Chief Executive
-- Market share growth in most key categories: women's
casualwear, menswear, childrenswear and premium health &
beauty
-- Strong multi-channel growth; online GTV up 73.8%(1) to GBP180.4 million
-- Excellent performance from Magasin du Nord: EBITDA up 141.1% to GBP13.5m(4)
-- Sales in international franchise stores up 16.5% to GBP77.0m(1)
-- Continued investment in the estate
o Three new stores opened, creating 350 new jobs; 9 new stores
contracted
o Eleven store modernisations undertaken; 45 more over next 2
years
(1) 53 weeks to 3 September 2011
(2) 52 weeks to 27 August 2011
(3) After adding back amortisation on capitalised bank fees of
GBP5.8m (2010: GBP5.7m) and exceptional items of GBPnil (2010:
GBP5.4m)
(4) 2011: 53 weeks to 3 September 2011, 2010: 42 weeks to 28
August 2010
Michael Sharp, Chief Executive of Debenhams, said:
"Debenhams has had an excellent year with sales and profit
before tax both increasing. We have demonstrated the resilience of
the department store model by trading well in a challenging
market.
"It is right to remain cautious about the strength of consumer
confidence over the next 12 months given the uncertain economic
outlook. We will therefore continue to run the business with tight
management of costs and stocks, retaining as much flexibility as
possible in the supply chain to enable us to deal with whatever the
market presents. We will take a pragmatic approach to trading and
continue to focus on maximising cash profit. Overall we are
optimistic about our prospects and believe we have a clear strategy
to build the business into a leading international, multi-channel
retailer."
FINANCIAL SUMMARY
2011 2011 2010 Change
53 weeks 52 weeks 52 weeks
-------------------------------- ------------ ------------ ------------ -------
Group gross transaction
value (GTV) - including
Magasin GBP2,679.3m GBP2,639.5m GBP2,564.3m +2.9%
-------------------------------- ------------ ------------ ------------ -------
Gross transaction value
(GTV) - excluding Magasin GBP2,432.6m GBP2,397.2m GBP2,373.2m +1.0%
-------------------------------- ------------ ------------ ------------ -------
Statutory revenue GBP2,209.8m GBP2,176.4m GBP2,119.9m +2.7%
-------------------------------- ------------ ------------ ------------ -------
Like-for-like sales (including
VAT) +1.2%
-------------------------------- ------------ ------------ ------------ -------
Like-for-like sales (excluding
VAT) -0.3%
-------------------------------- ------------ ------------ ------------ -------
Gross margin - including -20bps
Magasin
-------------------------------- ------------ ------------ ------------ -------
Gross margin - excluding -20bps
Magasin
-------------------------------- ------------ ------------ ------------ -------
Headline profit before
tax* GBP166.1m GBP157.7m GBP151.0m +4.4%
-------------------------------- ------------ ------------ ------------ -------
Reported profit before
tax GBP160.3m GBP151.9m GBP139.9m +8.6%
-------------------------------- ------------ ------------ ------------ -------
Basic earnings per share 9.1p 8.6p 7.5p +14.7%
-------------------------------- ------------ ------------ ------------ -------
Dividend per share 3.0p 3.0p - +3.0p
-------------------------------- ------------ ------------ ------------ -------
*After adding back amortisation on capitalised bank fees of
GBP5.8m (2010: GBP5.7m) and exceptional items of GBPnil (2010:
GBP5.4m)
CHIEF EXECUTIVE'S STRATEGIC REVIEW
Michael Sharp, Chief Executive of Debenhams, is today setting
out the future vision of the business. Our intention is to build on
the existing successful strategy and make Debenhams a leading
international, multi-channel retailer.
The strategy is focused on four pillars.
Focusing on UK retail
We will be working to improve the performance of the 45 UK core
stores ahead of modernisation, all of which will be undertaken
during the next two years. We will also seek to open new stores in
target locations and continue to believe there is potential for up
to 240 department stores in the UK. One new store will open in 2012
and a further nine are contracted.
Delivering a compelling customer proposition
Our focus will be on the brand and product strategy, instore
execution and communicating the proposition. Designers at Debenhams
will continue to be a real point of difference and the cornerstone
of our brand strategy. Our core brands will remain important as
they provide the lower and middle components of our price
architecture. International and concession brands will complement
the own brand offer. Raising our standards of instore execution
will focus on visual merchandising and product presentation. In
terms of communication, we will be taking a more joined up approach
to marketing which uses both traditional and new media.
Increasing availability and choice through multi-channel
Multi-channel helps us to satisfy demand not currently being met
and to offer customers more choice in terms of products and ways to
shop. We are developing ways to increase availability in all stores
and online for products which are out of stock and in smaller
stores for products which are not ranged. We are adding new online
only brands and product categories. Our range of ways to shop is
continuing to expand, particularly in the areas of mobile, recently
expanded by the launch of a fully mobile website and an iPad app,
and instore ordering, where we have almost finished installing new
generation kiosks on every floor of every store.
Expanding the business internationally
We will continue to use our successful approach of international
franchise stores in distant and emerging markets, owned assets -
such as Magasin - closer to home and online delivery to an
increasing number of countries worldwide. We expect to double the
current number of 65 franchise stores over the next five years.
Acquisitions remain on the agenda: we will continue to assess each
relevant opportunity with the same financial discipline we have
displayed in the past.
REVIEW OF THE YEAR
Note: the 2011 financial year comprised the 53 weeks to 3
September 2011 and the following review uses this basis unless
stated otherwise. It also uses like-for-like sales comparisons for
the 52 weeks to 27 August 2011 where management believes that this
better reflects the underlying performance of the business.
OPERATING REVIEW
Market share
We continued to gain market share in most key categories. Our
position in the premium health and beauty market strengthened
further during the year, growing by 130 basis points (source: NPD
52 weeks to August 2011) to 28.5%. Our total fashion value share
increased by 10 basis points. Women's casualwear - one of the key
areas which we had targeted for share growth - grew by 20 basis
points. Menswear increased by 10 basis points and childrenswear by
20 basis points (source: Kantar Worldpanel Fashion, 52 weeks to 4
September 2011 vs. 2010).
Own bought sales
Own bought product ranges continued to perform well. The own
bought sales mix increased from 80.2% in 2010 to 80.4% in 2011
(excluding Magasin). Designers at Debenhams sales increased by 5.3%
to GBP523.9 million. Overall, own bought sales (excluding Magasin)
increased by 2.9% over the previous year. New ranges introduced in
2011 included Edition, a fresh new concept for Designers at
Debenhams which is investing in some of the best young British
designers, namely Jonathan Saunders, Preen, Roksanda Ilincic and
Jonathan Kelsey. A new range by Julien Macdonald, Diamond, was
launched in womenswear and J Jeans by Jasper Conran in
menswear.
Concession sales
Concession ranges began to perform better in 2011 following
several years of weak performance in some areas. Overall,
concession sales increased by 1.1% versus last year (excluding
Magasin). The Jane Norman concession agreement was terminated in
July following the business going into administration. This store
space is being reallocated to own bought ranges and a number of new
concessions with a view to continuing to meet the needs of Jane
Norman customers.
Magasin du Nord
2011 was our first full year of ownership of Magasin du Nord
which was acquired in November 2009. Gross transaction value
increased in 2011 by 29.1% to GBP246.7 million (53 weeks in 2011
compared with 42 weeks in 2010). Like-for-like sales increased by
6.3% on a Danish kroner basis and by 4.8% on a sterling basis for
the 42 weeks to 27 August 2011. Gross margin increased by 200 basis
points as Magasin continued to benefit from higher own bought sales
and better buying terms through leveraging the Debenhams supply
chain. EBITDA increased by 141.1% to GBP13.5 million meaning the
business was acquired on an EV/EBITDA ratio of less than one
times.
Online
The multi-channel business delivered another year of outstanding
sales growth. Management believes that online sales are a good
indicator of growth in multi-channel as it is the largest non-store
sales channel. Online gross transaction value increased by 73.8% to
GBP180.4 million and contributed 7.4% of total GTV excluding
Magasin (2010: 4.4%). Online like-for-like sales for the 52 week
period increased by 71.9%. New multi-channel developments during
2010 include the launch of mobile shopping through apps for the
iPhone, Nokia and Android, which have so far been downloaded
650,000 times between them, and a mobile website at
m.debenhams.com. We are installing new generation self-service
kiosks in all stores which improve both ranging and availability,
as a result we have effectively doubled the range of products
available in an average Debenhams store and increased it by five
times in a small store.
New stores
The store estate at the end of the year comprised 169 stores in
total of which 163 are in the UK and Republic of Ireland with six
Magasin du Nord stores in Denmark. Three new stores opened during
2011 in Bath (opened September 2010), Wakefield (opened May 2011)
and Fareham (opened June 2011). In total these stores added 177,000
sq ft of trading space. The new stores performed ahead of or in
line with our expectations. One new store is scheduled to open in
2012. Further out, the store pipeline consists of nine contracted
stores, the first of which in Chesterfield will open in 2013, and
nearly 30 more possible new stores under discussion.
Store modernisations
Eleven store modernisations were undertaken during the year with
five were completed during the first half. Six commenced in the
second half and were completed in the early weeks of the 2012
financial year. We are pleased with the post-modernisation
performance of these stores. Today we are announcing a commitment
to modernise the remaining 45 core stores over the next two years,
starting with 20 stores in 2012. The Oxford Streetflagship store
will be modernised in 2013 once the head office relocation has been
completed.
International franchise stores
Gross transaction value for the international franchise stores
increased by 16.5% to GBP77.0 million during the year. Four new
stores opening during the course of the year taking the total at
year end to 64 in 25 countries. Two new markets were entered during
the year, Armenia and Hungary. One store in the Philippines has
opened since the end of the year taking the total to 65.
Supply Chain, Pricing and Stocks
There was significant pressure in the supply chain during 2011
as our buying teams faced substantial increases in commodity
prices. The most significant was for cotton: the calendar year
average in 2011 so far is 175.2 cents/pound compared with 105.4
cents/pound in 2010 and 62.75 cents/pound in 2009 (source: National
Cotton Council of America "A" Index). Action was taken to minimise
average retail prices increases including: realigning range
architecture; changing pack sizes; and re-sourcing some products
from lower cost countries. As a result of this work, we were able
to keep price increases for spring summer 2011 to c.4% (including
the impact of higher VAT). Stock levels were managed very tightly
given the general economic uncertainty and the likely impact on
volumes of higher prices. Like-for-like stock unit density fell by
2.6%. Terminal stock at year end of 2.6% was approaching an
all-time low.
FINANCIAL REVIEW
Sales, Margins and Profits
Gross transaction value for the Group for 53 weeks to 3
September 2011 of GBP2,679.3 million increased by 4.5% over the
previous year. For the 52 weeks to 27 August 2011, Group gross
transaction value grew by 2.9% to GBP2,639.5 million. Excluding
Magasin du Nord, gross transaction value increased by 2.5% and 1.0%
for the 53 and 52 week periods respectively.
Revenue for the 53 week period was GBP2,209.8 million, 4.2%
higher than last year. On a 52 week basis, revenue increased by
2.7% to GBP2,176.4 million.
Like-for-like sales increased by 1.2% during the 52 week period
including VAT and were down slightly by 0.3% excluding VAT. This
was a good result given the difficult economic environment and the
disruption to sales from the adverse winter weather across the UK
in November and December.
Group gross margin fell marginally by 20 basis points during the
year on a 53 week comparison. This was partly a result of a
decision to maximise cash profit by driving sales during the second
half of the year and partly to some one-off benefits in last year's
figure as result of the acquisition of the Faith footwear brand.
Excluding Magasin, gross margin was also 20 basis points lower than
last year.
Headline profit before tax for the year, which adds back
amortisation of capitalised bank fees and exceptionals, for the 53
week year increased by 10.0% from GBP151.0 million to GBP166.1
million. The fifty third week of the year accounted for GBP8.4
million of headline profit before tax. Reported profit before tax
rose by 14.6% to GBP160.3 million from GBP139.9 million.
Basic earnings per share for 2011 were 9.1 pence (2010: 7.5
pence) and diluted earnings per share were also 9.1 pence (2010:
7.5 pence).
Costs
Close management of the cost base continued throughout the year.
Total operating costs increased by 5.3% compared with the previous
year. This includes dual running costs of c.GBP10 million
associated with the new distribution centre at Sherburn in
Yorkshire. We continue to expect dual running costs of c.GBP10
million in the 2012 financial year.
Interest
Interest fell from GBP49.8 million in 2010 to GBP23.4 million in
2011. This was largely due to the reduction in net debt and the
lower interest rates following the refinancing of the Group's
senior credit facility.
Taxation
Taxation increased to GBP43.1 million in 2011 from GBP42.9
million in 2010. The effective tax rate was 26.9% compared with
30.7% last year. The lower effective tax rate is largely due to
reductions in the headline rate of corporation tax (accounting for
1.3% of the 3.8% nominal decrease) and the net effect of overseas
operations (a further 2.4%). The effective rate for 2012 is
expected to decrease further to around 25%.
Cash flow
Once again the business was strongly cash generative, generating
GBP267.6 million from operating activities and free cash flow
before dividends of GBP103.0 million during the year.
Capital Investment
We are continuing to invest in the future of Debenhams. Capital
investment of GBP114.0 million was made in 2011, up from GBP98.8
million in 2010. The increase was largely due to investment in
support of the multi-channel business, principally systems
investment and the new Sherburn DC, along with the acceleration of
the store modernisation programme. Capital investment in 2012 is
expected to be in the region of GBP120 million.
Balance Sheet Management
Net debt has continued to fall, ending the year at GBP383.7
million, a reduction of GBP133.1 million from the start of the
current financial year. The leverage ratio (calculated as net debt
divided by EBITDA) fell from 1.8 times to 1.4 times over the course
of the year.
On 30 November 2010, the Group repaid GBP150 million of debt,
cancelling its existing GBP806 million bank facility and drawing
the GBP650 million forward start facility which had been negotiated
in July 2010. The new facility includes a GBP250 million term loan
and a GBP400 million revolving credit facility that enhances the
Group's ability to manage working capital efficiently and minimise
interest costs of borrowings held alongside surplus cash. On 18
July 2011 a further refinancing of the credit facility was
announced which extended its duration from October 2013 to October
2015 with an option to extend further to October 2016. The
refinancing also reduced the cash interest rate from c.4.5% to
c.4.0% with effect from 18 July 2011.
During the year, the Group cancelled long leases on nine stores
and at the same time entered into new sale and operating lease
contracts on those stores. The combination of the cancellation of
the existing finance leases and the new sale and operating lease
transactions generated a net cash inflow of GBP36.6 million and
reduced net debt by GBP79.2 million.
Dividend
Following reinstatement of the dividend in April 2011, the board
has proposed a final dividend of 2.0 pence per share (2010: nil).
This will result in a total dividend for the year of 3.0 pence and
reflects the board's target dividend cover of three times earnings.
The ex-dividend date is 7 December 2011. The dividend will be paid
to shareholders on the register as at 9 December 2011 on 13 January
2012.
The board sees little benefit in reducing leverage further than
a level approaching 1.0 times EBITDA. In this context our plan for
cash generated is first to invest in the business to achieve our
aim of being a leading international, multi-channel retailer but
secondly to look to return funds to shareholders. Having reinstated
the dividend earlier this year, we expect to grow it broadly in
line with earnings. As we get closer to leverage of 1.0 times
EBITDA it is the board's intention to return surplus funds to
shareholders through a programme of share repurchases. The board
intends to commence this in the second half of the 2012 financial
year.
OUTLOOK
It is clearly right to remain cautious about the strength of
consumer confidence over the next 12 months given the uncertain
economic outlook. We will therefore continue to run the business
with tight management of costs and stocks, retaining as much
flexibility as possible in the supply chain to enable us to deal
with whatever the market presents. We will take a pragmatic
approach to trading and continue to focus on maximising cash
profit. Overall we are optimistic about our prospects and believe
that we have a clear strategy for growth and to meet our aim of
being a leading international, multi-channel retailer.
BOARD OF DIRECTORS
Michael Sharp was appointed Chief Executive of Debenhams on 5
September 2011 following Rob Templeman's retirement.
The board of directors as at 20 October 2011 is as follows:
Nigel Northridge (Chairman), Michael Sharp (Chief Executive), Chris
Woodhouse (Finance Director), Adam Crozier (non-executive
director), Martina King (non-executive director), Dennis Millard
(senior non-executive director), Mark Rolfe (non-executive
director) and Sophie Turner Laing (non-executive director).
Presentation
A presentation for analysts and investors will be held today
(Thursday 20 October 2011) at 9:00am UK time at the Ground Floor
Auditorium, Bank of America Merrill Lynch, 2 King Edward Street,
London EC1A 1HQ. The presentation will be webcast at
www.debenhamsplc.com.
Enquiries
Analysts and Investors
Lisa Williams, Debenhams plc 020 7408 3304, 07908 483841
Media
Jonathon Brill, Financial Dynamics 020 7269 7170
Caroline Stewart, Financial Dynamics 020 7269 7227
High resolution images are available for media to view and
download free of charge from www.prshots.com/Debenhams.
Notes to Editors
Debenhams is an iconic British department store group which was
established over 200 years ago. Debenhams has a strong presence in
key product categories including womenswear, menswear,
childrenswear, health and beauty and home and offers its customers
a unique and differentiated mix of exclusive own bought brands
including Designers at Debenhams, international brands and
concessions.
Debenhams has 169 stores in the UK, the Republic of Ireland and
Denmark as well as 65 international franchise stores in 25
countries. Debenhams products are also available online at
www.debenhams.com and www.debenhams.ie and through iPhone, Android
and Nokia apps.
Designers at Debenhams include Ted Baker, Jeff Banks, Jasper
Conran, Erickson Beamon, FrostFrench, Henry Holland, Roksanda
Ilincic, Betty Jackson, Jonathan Kelsey, Ben de Lisi, Julien
Macdonald, Melissa Odabash, Jane Packer, Pearce Fionda, Preen,
Janet Reger, John Rocha, Jonathan Saunders, Lisa Stickley, Eric Van
Peterson and Matthew Williamson.
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. Neither the content of the Company's website
nor the content of any website accessible from hyperlinks on the
Company's website (or any other website) is (or is deemed to be)
incorporated into or forms (or is deemed to form) part of this
announcement.
Consolidated Income Statement
For the 53 weeks ended 3 September 2011
53 weeks 52 weeks
ended ended
3 September 28 August
Note 2011 2010
GBPm GBPm
---------------------------------------------- ------ ------------------- -----------
Revenue 2 2,209.8 2,119.9
Cost of sales (1,913.1) (1,838.9)
Analysed as:
Cost of sales before exceptional
items (1,913.1) (1,829.5)
Exceptional cost of sales 4 - (9.4)
---------------------------------------------- ------ ------------------- -----------
Gross profit 296.7 281.0
Distribution costs (70.2) (55.1)
Administrative expenses (42.8) (43.0)
Analysed as:
Administrative expenses before
exceptional items (42.8) (40.2)
Exceptional administrative expenses 4 - (2.8)
---------------------------------------------- ------ ------------------- -----------
Other exceptional income 4 - 6.8
Operating profit 183.7 189.7
Analysed as:
Operating profit before exceptional
items 183.7 195.1
Exceptional items 4 - (5.4)
---------------------------------------------- ------ ------------------- -----------
Finance income 5 3.9 6.7
Finance costs 6 (27.3) (56.5)
Profit before taxation 160.3 139.9
Taxation 7 (43.1) (42.9)
Analysed as:
Taxation before exceptional items (43.1) (44.6)
Taxation credit on exceptional
items - 1.7
---------------------------------------------- ------ ------------------- -----------
Profit for the financial period attributable
to equity shareholders 117.2 97.0
Earnings per share attributable to the equity shareholders
Pence
Pence per per
share share
--------- ---------- -------
Basic 9 9.1 7.5
Diluted 9 9.1 7.5
--------- ---------- -------
The notes on pages 14 to 19 form an integral part of this
condensed consolidated interim financial information.
Consolidated Statement of Comprehensive Income
For the 53 weeks ended 3 September 2011
Note 53 weeks 52 weeks
ended ended
3 September 28 August
2011 2010
GBPm GBPm
---------------------------------------------------------------- ------ ------------- ---------------
Profit for the financial year 117.2 97.0
Other comprehensive income/(expense)
Actuarial gains/(losses) recognised in the pension schemes 75.8 (37.1)
Deferred tax movement on actuarial gains/(losses) (22.5) 7.8
Current tax movement on the pension schemes 2.1 -
Sale of available-for-sale investments (2.0) -
Change in the value of available-for-sale investments (0.2) (1.0)
Currency translation differences 4.3 (6.8)
Cash flow hedges
- fair value (losses)/gains (15.7) 24.0
- tax on fair value (losses)/gains 3.9 (6.5)
* reclassified and reported in net profit 4.7 6.8
- tax on items reclassified and reported in net profit (1.2) (1.9)
* recycled and adjusted against cost of sales 1.8 (4.3)
* tax on amounts recycled against cost of sales (0.5) 1.2
Total other comprehensive income/(expense) 50.5 (17.8)
Total comprehensive income for the year 167.7 79.2
The notes on pages 14 to 19 form an integral part of this
condensed consolidated interim financial information.
Consolidated Balance Sheet
As at 3 September 2011
3 September 28 August
2011 2010
Note
GBPm GBPm
---------------------------------- ------- ------------- ----------------
ASSETS
Non-current assets
Intangible assets 858.1 846.2
Property, plant and equipment 634.6 676.1
Available-for-sale investments 2.6 7.8
Derivative financial instruments 1.4 0.9
Other receivables 18.3 17.2
Retirement benefit assets 3.9 -
Deferred tax assets 75.7 92.0
1,594.6 1,640.2
------------------------------------------ ------------- ----------------
Current assets
Inventories 321.3 295.3
Trade and other receivables 72.1 73.4
Derivative financial instruments 1.2 8.9
Cash and cash equivalents 29.0 69.5
423.6 447.1
------------------------------------------ ------------- ----------------
LIABILITIES
Current liabilities
Bank overdraft and borrowings (168.1) (545.7)
Derivative financial instruments (8.5) (1.8)
Trade and other payables (489.1) (494.2)
Current tax liabilities (43.7) (37.5)
Provisions (6.2) (4.4)
(715.6) (1,083.6)
------------------------------------------ ------------- ----------------
Net current liabilities (292.0) (636.5)
------------------------------------------- ------------- ----------------
Non-current liabilities
Bank overdraft and borrowings (244.6) (40.6)
Derivative financial instruments (4.2) (7.5)
Deferred tax liabilities (74.1) (83.8)
Other non-current liabilities (318.9) (285.7)
Provisions (1.2) (2.0)
Retirement benefit obligations - (80.7)
(643.0) (500.3)
------------------------------------------ ------------- ----------------
NET ASSETS 659.6 503.4
SHAREHOLDERS' EQUITY
Share capital 0.1 0.1
Share premium account 682.9 682.9
Merger reserve 1,200.9 1,200.9
Reverse acquisition reserve (1,199.9) (1,199.9)
Hedging reserve (6.2) 0.8
Other reserves (3.1) (5.2)
Retained earnings (15.1) (176.2)
TOTAL EQUITY 659.6 503.4
The notes on pages 14 to 19 form an integral part of this
condensed consolidated interim financial information.
Consolidated Statement of Changes in Equity
As at 3 September 2011
Share capital Merger Reverse Hedging Other Retained Total
and share reserve acquisition reserve reserve earnings
premium reserve
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 29 August 2009 683.0 1,504.7 (1,199.9) (18.5) 2.6 (546.6) 425.3
Profit for the financial
year - - - - - 97.0 97.0
Actuarial losses on
pension
schemes - - - - - (37.1) (37.1)
Deferred tax movement on
actuarial losses - - - - - 7.8 7.8
Change in the value of
available-for-sale
investments - - - - (1.0) - (1.0)
Currency translation
differences - - - - (6.8) - (6.8)
Cash flow hedges
- fair value gains (net of
tax) - - - 17.5 - - 17.5
- reclassified and
reported
in net profit
(net of tax) - - - 4.9 - - 4.9
- recycled and adjusted
against
the cost
of inventory (net of tax) - - - (3.1) - - (3.1)
Total comprehensive income
and expense for the
financial
year - - - 19.3 (7.8) 67.7 79.2
Share based payment charge - - - - - 1.3 1.3
Redemption of preference
shares - (303.8) - - - 303.8 -
Discount arising on
repurchase
of term loan facility
(net
of tax) - - - - - (2.4) (2.4)
Total transactions with
owners - (303.8) - - - 302.7 (1.1)
Balance at 28 August 2010 683.0 1,200.9 (1,199.9) 0.8 (5.2) (176.2) 503.4
Profit for the financial
year - - - - 117.2 117.2
Actuarial gain on pension
schemes - - - - - 75.8 75.8
Deferred tax movement on
pension schemes - - - - - (22.5) (22.5)
Current tax movement on pension
schemes - - - - - 2.1 2.1
Sale of available-for-sale
investments - - - - (2.0) - (2.0)
Change in the value of available-for-sale
investments - - - - (0.2) - (0.2)
Currency translation differences - - - - 4.3 - 4.3
Cash flow hedges
- fair value (losses)/gains
(net of tax) - - - (11.8) - - (11.8)
- reclassified and reported
in net profit
(net of tax) - - - 3.5 - - 3.5
- recycled and adjusted against
the cost
of inventory (net of tax) - - - 1.3 - - 1.3
Total comprehensive income
and expense for the financial
year - - - (7.0) 2.1 172.6 167.7
Share based payment charge - - - - - 1.4 1.4
Dividend paid in the period - - - - - (12.9) (12.9)
Total transactions with owners - - - - - (11.5) (11.5)
Balance at 3 September 2011 683.0 1,200.9 (1,199.9) (6.2) (3.1) (15.1) 659.6
------------------------------------------ ------ -------- ---------- ---------- ---------- -------- ----------
The notes on pages 14 to 19 form an integral part of this
condensed consolidated interim financial information.
Consolidated Cash Flow Statement
For the 53 weeks ended 3 September 2011
53 weeks 52 weeks
ended ended
3 September 28
Note 2011 August
2010
GBPm GBPm
---------------------------------------------- ---------- ------ ------------- -------------
Cash flows from operating activities
Cash generated from operations 10 267.6 299.2
Finance income 6.7 2.7
Finance costs (26.3) (49.6)
Tax paid (48.6) (44.1)
Transaction costs on acquisition
of Magasin - (1.0)
Net cash generated from operating
activities 199.4 207.2
Cash flows from investing activities
Purchase of property, plant and equipment (94.3) (78.5)
Purchase of intangible assets (19.7) (11.2)
Proceeds from sale of property, plant
and equipment - 0.2
Proceeds from sale of available-for-sale 5.0 -
investment
Proceeds from sale of finance lease 12.6 -
Acquisition of subsidiary net of
cash acquired - (9.1)
-
---------------------------------------------- ---------- ------ ------------- -------------
Net cash used in investing activities (96.4) (98.6)
Cash flows from financing activities
Repayment of term loan facility (548.6) (159.7)
Repurchase of term loan facility - (52.3)
Draw-down of new facility 415.0 -
Share issue costs - (4.7)
Dividends paid (12.9) -
Finance lease payments (0.1) (0.5)
Debt issue costs (4.1) (10.1)
Net cash used in financing activities (150.7) (227.3)
Net decrease in cash and cash equivalents (47.7) (118.7)
Cash and cash equivalents at beginning
of financial year 69.5 188.2
Foreign exchange gains on cash and cash 1.0 -
equivalents
Net cash and cash equivalents at end
of financial year 11 22.8 69.5
The notes on pages 14 to 19 form an integral part of this
condensed consolidated interim financial information.
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 53 weeks ended 3 September
2011. 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
3 September 2011 and 28 August 2010 but is derived from the 2011
annual report and financial statements. The annual report and
financial statements for 2010, which were prepared under IFRS, have
been delivered to the Registrar of Companies and the Group annual
report and financial statements for 2011, 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 Gross transaction value
Revenue from concession and consignment sales is required to be
shown on a net basis, being the commission received rather than the
gross value achieved on the sale. Management believes that gross
transaction value, which presents revenue on a gross basis before
adjusting for concessions, consignments, staff discounts and the
cost of loyalty scheme points, represents a good guide to the
overall activity of the Group.
3 September 28
2011 August
2010
GBPm GBPm
------------------------- ------------ --------
Gross transaction value 2,679.3 2,564.3
3 Segmental information
IFRS 8 "Operating Segments" requires disclosure of the operating
segments which are reported to the Chief Operating Decision Maker
("CODM"). The CODM has been identified as the executive management
board, which includes the executive directors and other key
management. It is the executive management board that has
responsibility for planning and controlling the activities of the
Group.
The Group's reportable segment has been identified as Retail.
The operating segment Magasin is not a reportable segment as it
does not exceed 10 per cent of Group revenues, profits or gross
assets; however, this information has been presented voluntarily
within the segmental analysis below as it is regularly provided to
the CODM. The segments are reported to the CODM to operating profit
level, using the same accounting policies as applied to the Group
accounts. No analysis has been provided of the assets and
liabilities of each operating segment as this information is not
regularly provided to the CODM within the monthly operating
pack.
Segmental analysis of results Retail Magasin Total
GBPm GBPm GBPm
-------- --------
53 weeks ended 3 September 2011
Gross transaction value 2,432.6 246.7 2,679.3
Concessions, consignments, staff discounts
and loyalty schemes (359.7) (109.8) (469.5)
----------------------------------------------- -------- -------- --------
External revenue 2,072.9 136.9 2,209.8
Operating profit before exceptional items 175.2 8.5 183.7
Other segment items
-Depreciation 79.5 4.0 83.5
-Amortisation of intangible assets 7.6 0.9 8.5
----------------------------------------------- -------- -------- --------
Year ended 28 August 2010
Gross transaction value 2,373.2 191.1 2,564.3
Concessions, consignments, staff discounts
and loyalty schemes (356.9) (87.5) (444.4)
----------------------------------------------- -------- -------- --------
External revenue 2,016.3 103.6 2,119.9
Operating profit before exceptional items 193.6 1.5 195.1
Exceptional items (3.6) (1.8) (5.4)
----------------------------------------------- -------- -------- --------
Operating profit/(loss) after exceptional
items 190.0 (0.3) 189.7
----------------------------------------------- -------- -------- --------
Other segment items
-Depreciation 82.0 2.9 84.9
-Amortisation of intangible assets 8.3 1.0 9.3
----------------------------------------------- -------- -------- --------
Revenues analysed by country, based on the customer's location,
are set out below:
3 September 28
2011 August
2010
GBPm GBPm
United Kingdom 1,851.8 1,799.8
Republic of Ireland 144.1 150.4
Denmark 136.9 103.6
Rest of world 77.0 66.1
Total 2,209.8 2,119.9
Non-current assets, which comprise intangible assets, property,
plant and equipment and other receivables analysed by country, are
set out below:
3 September 28
2011 August
2010
GBPm GBPm
United Kingdom 1,436.6 1,469.6
Republic of Ireland 39.2 40.8
Denmark 35.2 29.1
Total 1,511.0 1,539.5
4 Exceptional items
There were no exceptional items in the 53 weeks to 3 September
2011.
Exceptional items charged in the 52 weeks ended 28 August 2010
comprise the following (the operating segment of each item is shown
in brackets):
Note 28
August
2010
----------------------------------- ------------- ---------- -------
Exceptional cost of sales
Restructuring costs (Retail) A (9.4)
Exceptional administrative expenses
Restructuring costs (Magasin) B (1.8)
Costs on acquisition of Magasin
(Retail) C (1.0)
-------------------------------------------------------------- ------ --------
(2.8)
Other exceptional income
Bargain purchase credit - Acquisition
of Magasin (Retail) 6.8
Net exceptional items (5.4)
a Restructuring costs included in cost of sales represents the
amount incurred for redundancies within the Republic of
Ireland.
b Restructuring costs recognised in administrative expenses
represents the amount incurred in respect of restructuring costs in
Magasin.
c The total of the directly attributable transaction costs on
the acquisition of Magasin included in exceptional administrative
expenses is GBP1.0 million.
5 Finance income
3 September 28
2011 August
2010
GBPm GBPm
Interest on bank deposits 0.6 2.9
Discount arising on debt repurchase - 3.8
Other financing income 3.3 -
3.9 6.7
6 Finance costs
3 28
September August
2011 2010
GBPm GBPm
-----------------
Bank loans and overdrafts 16.2 41.7
Cash flow hedges reclassified and reported
in net profit 4.7 6.8
Amortisation of issue costs on loans 5.8 5.7
Interest payable on finance leases - 2.3
Other financing charges 0.6 -
27.3 56.5
7 Taxation
Analysis of tax charge in the financial 3 28
year September August
2011 2010
GBPm GBPm
------------------------------------------- ------------------ --------------
Current tax:
UK corporation tax charge on profit
for the year 58.4 47.5
Adjustments in respect of prior
periods (1.6) (0.2)
Current tax expense 56.8 47.3
------------------------------------------- ------------------ --------------
Deferred taxation:
Origination and reversal of timing
differences (13.0) (6.3)
Pension cost relief in excess of pension
charge 0.2 0.6
Adjustments in respect of prior
periods (0.9) 1.3
Deferred tax credit (13.7) (4.4)
------------------------------------------- ------------------ --------------
Tax charge for the financial year 43.1 42.9
------------------------------------------- ------------------ --------------
8 Dividends
An interim dividend of 1.0 pence per share (2010: nil) was paid
during the year. The directors are proposing a final dividend in
respect of the 53 weeks ended 3 September 2011 of 2.0 pence per
share (2010: nil), which will absorb an estimated GBP25.7 million
(2010: nil) of shareholders' funds. It will be paid on 13 January
2012 to shareholders who are on the register of members at close of
business on 9 December 2011. No liability is recorded in the
financial statements in respect of the final dividend as it was not
approved as at the balance sheet date.
3 28
September August
2011 2010
GBPm GBPm
------------------------------------------------- ----------- --------
Interim paid 1.0 pence (2010: nil) per GBP0.0001
share
Settled in cash 12.9 -
9 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 3 September 28 August
share 2011 2010
Basic Diluted Basic Diluted
GBPm GBPm GBPm GBPm
-------------------------- --------------- --- -------- ----------- -------- ----------- -----------
Profit for the financial year
after taxation 117.2 117.2 97.0 97.0
Number Number Number Number
m m m m
------------------------------------------- --- -------- ----------- -------- ----------- -----------
1,286.8 1,286.8 1,286.8 1,286.8
Weighted average number of shares 950.8
Shares held by ESOP (weighted) (0.3) (0.3) (0.9) (0.9)
Shares issuable (weighted) - 0.6 - 0.2
Adjusted weighted average number
of shares 1,286.5 1,287.1 1,285.9 1,286.1
Pence Pence Pence Pence
per share per per share per share
share
------------------------------------------- --- -------- ----------- -------- ----------- -----------
Earnings per share 9.1 9.1 7.5 7.5
10 Cash generated from operations
3 September 28
2011 August
GBPm 2010
GBPm
----------------------------------------------------- ------------ ------------
Profit for the financial year 117.2 97.0
Taxation 43.1 42.9
Depreciation and amortisation 92.0 94.2
Loss on disposal of property, plant and equipment 0.1 0.4
Profit on disposal of available-for-sale (2.0) -
investment
Bargain purchase credit on acquisition on
Magasin net of transaction costs incurred - (5.8)
Employee options granted during the year 1.4 1.3
Fair value losses on derivative instruments 2.7 3.1
Net movements in provisions 1.0 1.8
Finance income (note 5) (3.9) (6.7)
Finance costs (note 6) 27.3 56.5
Difference between pension charge and contributions
paid (8.8) (10.0)
Net movement in other long-term debtors 0.1 (1.1)
Net movement in other non-current liabilities 33.2 12.6
Changes in working capital
Increase in inventories (25.4) (11.0)
(Increase)/decrease in trade and other receivables (4.6) 4.4
(Decrease)/increase in trade and other payables (5.8) 19.6
Cash generated from operations 267.6 299.2
11 Analysis of changes in net debt
At Cash flow Non cash At
28 movements 3 September
August 2011
2010
GBPm GBPm GBPm GBPm
------------------------------- ----------- ---------- ----------- -------------
Analysis of net debt
Cash and cash equivalents 69.5 (41.5) 1.0 29.0
Bank overdrafts - (6.2) - (6.2)
Net cash and cash equivalents 69.5 (47.7) 1.0 22.8
Debt due within one year (541.9) 391.6 (10.3) (160.6)
Debt due after one year - (250.0) 6.8 (243.2)
Finance lease obligations due
within one year (3.8) - 2.5 (1.3)
Finance lease obligations due
after one year (40.6) - 39.2 (1.4)
(516.8) 93.9 39.2 (383.7)
In November 2010 the Group cancelled its existing term loan and
Revolving Credit Facility ("RCF") and drew down on its new GBP650.0
million credit facility comprising a term loan of GBP250.0 million
and an RCF of GBP400.0 million. This facility was due to expire in
2013.
In July 2011 the terms of the credit facility were renegotiated
to extend the expiry date to October 2015, with an option to
further extend to October 2016. At 3 September 2011 the Group's
facilities outstanding comprised the term loan of GBP250.0 million
(2010: GBP555.6 million) and an RCF of GBP165.0 million (2010:
nil).
Additional refinancing costs of GBP3.3 million were incurred
during the year ended 3 September 2011 in respect of the
renegotiation of the new credit facilities, which will be amortised
over the term of the facility. The total amortisation charge
relating to the issue costs of the Group's credit facilities
cancelled and current for the year ended 3 September 2011 was
GBP5.8 million (2010: GBP5.7 million).
12 Related parties
There have been no significant related party transactions during
the year (2010: none).
13 Financial information
Copies of the statutory accounts are available from the
Company's registrars, Equiniti Limited, Aspect House, Spencer Road,
Lancing, West Sussex, BN99 6DA (Tel: 0871 384 2766) and at the
Company's registered office, 1 Welbeck Street, London, W1G 0AA.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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