TIDMDEB
RNS Number : 0387D
Debenhams plc
22 October 2015
22 October 2015
DEBENHAMS PLC - FULL YEAR RESULTS
"Strategic priorities delivering profit in line with
expectations"
Debenhams plc, the leading international, multi-channel brand,
today announces full year results for the 52 weeks to 29 August
2015.
Financial headlines
-- Gross transaction value up 1.3% to GBP2,860.1m
-- Group like-for-like sales up 2.1% in constant currency, up 0.6% as reported
-- Group gross margin rate maintained, with 90bps markdown improvement on last year
-- Operating profit up 4.3% to GBP134.1m reflecting good cost control
-- Profit before tax in line with market expectations, up 7.3%
to GBP113.5m (2014: GBP105.8m(1) )
-- Basic EPS up 7.0% to 7.6p (2014: 7.1p)
-- Final dividend of 2.4p per share; maintaining full year dividend of 3.4p per share
-- Following strong cash generation, net debt reduced by GBP41.7m to GBP319.8m
-- Current net debt/EBITDA 1.3x (2014: 1.6x), medium term
leverage target improved to 0.5x from previous target of 1.0x
Operational headlines
-- Further progress delivered against strategic priorities
underpinning long-term sustainable growth
o Positive sales momentum continued against background of
refocused promotional activity. Own brand full price sell-through
increased by 7%, following a reduction of 17 days in the
promotional calendar in the financial year - a total reduction
since spring 2014 of 42 days
o Market share has improved as expected since the anniversary of
promotional changes
o Tight stock management delivered 4.1% reduction in year-end
closing stock and clean terminal stock position of 3.1% in line
with long-term average
o Successful space optimisation trials moving to roll-out; 35%
of targeted space now filled as planned with new brands, formats
and services and on target to fill 50% by April 2016
-- Multi-channel service improvements delivered to plan. Online
sales grew 11.4%(2) , representing 13.6% of Group sales, with
online EBITDA up 11.5%. Mobile now accounts for over 40% of total
online sales
-- International profit maintained despite adverse foreign
exchange movements, continuing like-for-like momentum at Magasin du
Nord
-- Strongest-ever brand launch with Nine by Savannah Miller now in 65 stores for autumn
-- Five new UK stores opening this autumn as planned, including
Bradford where Debenhams will be the city's only department store;
Rugby and Wandsworth already open and have started well
-- Development in multi-channel model internationally: entering
Australian market with Pepkor SE Asia, a subsidiary of the
Steinhoff Group, and new distribution arrangement for selected
Debenhams brands with VinGroup of Vietnam
Michael Sharp, Chief Executive of Debenhams, said:
"We have delivered profits in line with market expectations,
reflecting further progress against our strategic priorities. We
have had an encouraging start to the year, with strong new product
launches which have been well received by our customers, and we are
in good shape to build on last year's strong performance over peak
trading.
"Consequently, we are increasingly confident in the direction of
the business and as a result we will accelerate our new
initiatives, such as the roll-out of our successful space
optimisation trials and new international growth opportunities.
"We have clear priorities for the uses of cash and our continued
strong cash generation has enabled us to improve our leverage
target and to adopt a progressive dividend policy as future
earnings increase."
_____________
(1) Includes non-recurring finance cost of GBP4.5m
(2) Online sales adjusted for online orders returned to store
Presentation
A presentation for analysts and investors will be held today
(Thursday 22 October 2015) at 9:00am UK time at The Lincoln Centre,
17 Lincoln's Inn Fields, London WC2A 3ED. The presentation will be
webcast live at http://edge.media-server.com/m/p/bs5rgpx2.
Enquiries
Analysts and Investors
Matt Smith, Debenhams plc
Katharine Wynne, Debenhams plc 020 3549 6304
Media
Simon Sporborg, Brunswick Group 020 7404 5959
Jon Drage, Brunswick Group 020 7404 5959
STRATEGIC AND OPERATIONAL REVIEW OF THE YEAR
At the end of the year Debenhams operated from 248 stores in 27
countries and was available online in more than 60 countries. We
set out our strategic priorities 18 months ago to enable the
delivery of our goal: Debenhams as a leading international,
multi-channel brand, and the progress in the last 12 months
underscores our confidence in the strategy.
Delivering a compelling customer proposition
-- We continue to invest in our product and brand strategy to
ensure our customer proposition remains both compelling and
competitive. We have a strong track record of brand development and
are delighted with the positive reception to our latest Designers
at Debenhams brand, Nine by Savannah Miller. This is initially
being launched in 65 stores and online in the UK and has further
growth potential both in the UK and overseas.
-- We enjoyed a successful peak trading period last year with
our "Found it" campaign adopting a multi-channel marketing
strategy, and we will build on this approach for gifting and the
Christmas season in the current year. With the aim of supporting
our full price trading strategy, for our new autumn season we have
launched a cross-brand, multi-media campaign, "A match made in
Debenhams", which showcases successful Designer brands, such as
Hammond & Co, Principles and Nine by Savannah Miller.
-- We set a strategic priority for FY2015 to refocus our
approach to promotions and have made good progress. Over the past
year we have reduced the number of days Debenhams is on promotion
by a further 17 days, being 14 fewer days in the first half and
three fewer days in the second half. This takes the total reduction
in days since spring 2014 to 42, which leaves us in broadly the
right position for the future.
-- We saw increased full price sell-through on own brand
products by 7% with 90bps markdown improvement on last year and we
have reduced stock levels in line with our plan. This is a result
of our focus on the events we are known for, such as Spectaculars
and Blue Cross; the change in timing of some events to align them
more closely with our customers' mindset; reduced lead-times and
more flexibility on stock.
-- Alongside the promotional calendar, we improved the value
proposition in key categories including childrenswear, menswear and
home to ensure "first price, right price", investing 30bps of gross
margin. We continue to review our price positioning but for now we
believe we have completed the action necessary to remain
competitive. Our sourcing work should support any further necessary
price investment.
-- Despite the reduction in promotional activity we have seen a
positive response in both sales and market share as we
anniversaried the changes. Our customers regard quality as the most
important element of value for money, and we continue to rate
highly on this metric, as well as for competitive prices. Our
latest Customer Insight survey confirms they also continue to rate
us more highly for value than our nearest competitors.
-- In the coming year we plan to reduce further the level of
participation in promotions and to optimise promotional trading,
and the effectiveness of new product launches. We are introducing a
0% interest offer ahead of peak which will help our customers
spread the cost of their Christmas shopping, particularly when
purchasing bigger ticket items like furniture. We traded Black
Friday successfully and profitably last year and are well prepared
to deliver further progress in performance over the peak trading
period.
Increasing availability and choice through multi-channel
-- Our ambition is to grow our multi-channel business, so that
online sales reach around 30% of our UK GTV. Online sales increased
by 11.4% to GBP388.2 million, accounting for 13.6% of total sales
in FY2015, up from 12.3% in the previous year. Online EBITDA grew
by 11.5% over the year.
-- In line with a number of department store peers, online
orders returned to our stores have previously been deducted from
store sales, while online orders returned via the online channel
have been deducted from online sales. We have updated our reporting
on online sales so that online orders returned to stores are now
also deducted from online sales. This has no impact on statutory
reported results, but has reduced the reported growth rate of UK
online sales to 11.4% from 13.1%.
-- Debenhams.com is consistently in the Top 10 most visited
non-food UK retail websites, according to Hitwise, with 264 million
customer visits a year. We have made significant progress in
improving the online customer journey, with improved landing pages
and navigation in key categories, such as furniture, childrenswear,
and most recently womenswear.
-- Our mobile and tablet first approach drives everything we do
for our multi-channel strategy. More than 40% of online sales now
come from mobile devices and our redesigned checkout has also
contributed to improved conversion rates, up 14% year-on-year
across all mobile devices.
-- The service we offer to our online and multi-channel
customers has been substantially improved in the last 12 months. In
October 2014 we introduced a next day click & collect service
from stores; we extended order cut-off times for click &
collect on next day delivery; we introduced nominated day, weekend
and evening deliveries; and we extended our Endless Aisle
fulfilment-from-store option, which is now in 150 stores.
(MORE TO FOLLOW) Dow Jones Newswires
October 22, 2015 02:00 ET (06:00 GMT)
-- As a result click & collect peaked at almost 40% of
online orders in the week before Christmas 2014. From average
penetration of 25% in the first half, we have seen further
increases in the second half supported by the roll-out of in-store
service counters. Overall, click & collect accounted for 26% of
online orders in FY2015 and is continuing to increase its
participation.
-- We have also made good progress in our objective to achieve
higher recovery of fulfilment costs, having introduced more
competitive charges for next day delivery to home in H2. Premium
delivery services have increased 32% over the year.
-- We believe the investments we have made take us into the top
quartile of industry service. We are rolling out further service
improvements ahead of peak trading, including increased
participation of our concession partners in next day delivery and
click & collect services. The next day click & collect
cut-offs have been extended to 9pm, and to midnight for next day
delivery to home.
Focusing on UK retail
-- Our stores remain central to our customer proposition. We
have a well-invested, modern store estate with stores in prime
locations. We are a destination for beauty, gifts and occasionwear
and half our sales come from brands exclusive to Debenhams.
-- The UK store estate comprises 161 stores trading from 11.2
million sq ft at the year end, with new stores opened at
Borehamwood and Scunthorpe ahead of Christmas 2014, and the closure
of an outlet store at Newbury.
-- As part of our strategic priority to achieve a better return
from stores, we identified 1m sq ft of space where there was an
opportunity to achieve higher profit densities. We asked customers
what they wanted to buy from Debenhams that we did not already
offer, and what they would like more of. As a result, we have to
date reallocated 35% of the identified space, in line with our
previous guidance, with a combination of own brand extensions, new
concessions offering complementary product and additional service
propositions.
-- Some of our newer brand launches, such as Principles
casualwear and Hammond & Co by Patrick Grant, have been
particularly successful and rolled out to more stores. Our
customers are always looking for newness, and we have extended our
newest Designer launches, Nine by Savannah Miller and Giles Deacon
for Edition, to more stores for their initial season.
-- Following successful initial trials we opened eight Sports
Direct concessions before the year end and established new
partnerships with Monsoon Kids, Danish group Bestseller for their
younger fashion brands, Only and Jack & Jones, and BHS
lighting, among others.
-- We have also added some exciting new branded food offers, to
reflect the trend towards casual dining, establishing partnerships
with Costa Coffee, Insomnia, Joe & The Juice, Patisserie
Valerie, Ed's Easy Diner and Chi Kitchen to extend the range of
choice in our stores.
-- Our space optimisation trial has moved to full roll-out. By
April 2016 we expect to have reallocated at least half the 1
million sq ft, as planned, with our various initiatives. The
changing nature of the retail marketplace is creating a variety of
opportunities. We are also looking at how to apply some of the
lessons learnt to our better-performing space.
-- Five new stores are opening between September and November
2015, at Rugby, Wandsworth, Bradford, Beverley and Newport, adding
287,000 sq ft to our UK trading space. We are also modernising our
Birmingham and Westfield White City stores and incorporating some
of the lessons of the space optimisation programme.
Expanding the brand internationally
-- Debenhams operates both its own and franchised stores
overseas and sells product online in over 60 countries. Over time,
we plan to grow our international business to around a third of
total GTV, exploiting multi- and single channel opportunities as
appropriate to the local market.
-- On a constant currency basis international sales increased
5.3%. On a reported basis, sales declined by 2.2% to GBP536.6
million in FY2015, reflecting adverse foreign exchange translation
effects, particularly the sharp depreciation of the euro from
January 2015. International operating profit held broadly flat at
GBP32.4 million.
-- Our franchised store network has expanded to 70, as we opened
stores in UAE - including our largest franchise store to date in
Yas Island Mall - Egypt, Saudi Arabia, the Philippines, Russia and
Romania. We have also closed five underperforming stores.
-- Our non-franchised stores comprise six Magasin du Nord stores
in Denmark and 11 Debenhams stores in the Republic of Ireland.
Magasin du Nord grew like-for-like sales in constant currency by
8.1%, outperforming the Danish market. ROI traded well despite
challenging markets.
-- We are contracted to open 11 new franchise stores over the
next three years with another 13 in negotiation.
-- International online continues to grow rapidly from a small
base and reaches a number of markets where we have no store
representation. Our new international website launching shortly
will allow us to launch local range, local currency and local
payment options in several markets, including in continental
Europe. Local language websites will follow in 2016.
-- As part of our operational effectiveness programme, we have
increased the proportion of product that is shipped direct to our
international partners, which now accounts for almost half the
total.
-- As we look for opportunities for our brands overseas outside
of Debenhams, we have added to our first trial of Faith footwear
with third party online partners this season, launching Designer
brands Floozie by FrostFrench and Star by Julien Macdonald for this
season.
-- We have also agreed terms to sell some of our brands in
Vietnam through department stores owned by VinGroup and as part of
our international multi-channel development we have signed an
agreement with Pepkor SE Asia, a subsidiary of the Steinhoff group,
to enter the Australian market - initially distributing selected
brands in Pepkor's Harris Scarfe stores and then through Debenhams
franchise stores. This will be coupled with a new localised
Australian website launching in FY2016.
Operational effectiveness
-- We are building an infrastructure that is sustainable and fit
for future growth, to enable us to exploit the continuing channel
shifts in UK retail and drive international growth in a
cost-effective way. Operating cost growth before depreciation was
held to 0.6% in FY2015, an improvement on our guidance and on a
constant currency basis, cost growth was 2.1%.
-- In July the Government announced the introduction of the
national living wage which will be effective from 1 April 2016 and
will apply to employees aged 25 and above. Although we are awaiting
the outcome of consultation with the Low Pay Commission, we have
estimated the cash impact for Debenhams would be approximately GBP3
million in FY2016 and GBP8 million in FY2017. Both estimates
include the cost of maintaining pay differentials. We anticipate
that in the context of our continuing investment in systems and
infrastructure and our focus on operational effectiveness,
productivity gains will mitigate the majority of this impact on our
P&L in these years.
-- The mix of capital investment in FY2015 has shifted as our
spend on new stores and modernisations starts to normalise. We have
invested GBP60m on IT systems this year. Our focus is on extracting
productivity improvements as a result of the continuing programme
of systems and infrastructure investment.
-- We are introducing new buying and merchandising systems,
processes and practices in order to allow us more effectively to
plan and merchandise ranges as we grow in more geographies and
channels.
-- We are developing our sourcing capabilities, recognising the
need to maintain brand clarity whilst maximising the efficiency of
sourcing locations and factories. For example we have consolidated
buying in key volume knitwear lines and will take further
opportunities within other categories across brands where
appropriate.
-- We are also replacing our stock management systems, moving to
a single provider and with the aim of simplifying our warehouse
operations to flow stock more efficiently. As planned, our single
warehouse management system will be in operation from Spring
2016.
-- We have made good progress this year to improve the cost
effectiveness of online order fulfilment, with daily store
deliveries on our own fleet supporting our click & collect
service, which is our lowest cost delivery option for
customers.
-- We continue to restructure our international supply chain,
with direct shipping to international partners now 47% of the
total, reducing handling costs and getting product to market
faster.
-- We see opportunities to introduce further automation to our
warehouses which will bring additional cost savings and
productivity improvements over the medium term.
-- We have strengthened our operational management team further
as we set the right structure for multi-channel growth both in the
UK and overseas, with key new appointments in buying and
design.
FINANCIAL REVIEW
(MORE TO FOLLOW) Dow Jones Newswires
October 22, 2015 02:00 ET (06:00 GMT)
Financial Summary
52 weeks to 52 weeks to % change
29 August 30 August
2015 2014
--------------------------------- -------------- -------------- -------------
Gross transaction value(1,2)
UK GBP2,323.5m GBP2,275.3m +2.1%
International GBP536.6m GBP548.6m (2.2%)
Group GBP2,860.1m GBP2,823.9m +1.3%
--------------------------------- -------------- -------------- -------------
Statutory revenue(1,2)
UK GBP1,922.3m GBP1,902.1m +1.1%
International GBP400.4m GBP410.6m (2.5%)
Group GBP2,322.7m GBP2,312.7m +0.4%
--------------------------------- -------------- -------------- -------------
Group like-for-like sales
movement(3) +0.6%
--------------------------------- -------------- -------------- -------------
Group gross margin movement(4) Flat
--------------------------------- -------------- -------------- -------------
EBITDA(1,5)
UK GBP197.6m GBP188.3m +4.9%
International GBP41.0m GBP42.5m (3.5%)
Group GBP238.6m GBP230.8m +3.4%
--------------------------------- -------------- -------------- -------------
Operating profit(1)
UK GBP101.7m GBP96.3m +5.6%
International GBP32.4m GBP32.3m +0.3%
Group GBP134.1m GBP128.6m +4.3%
--------------------------------- -------------- -------------- -------------
Underlying Profit before tax(6) GBP113.5m GBP110.3m +2.9%
--------------------------------- -------------- -------------- -------------
Non-recurring finance cost(6) - GBP4.5m
--------------------------------- -------------- -------------- -------------
Reported Profit before tax GBP113.5m GBP105.8m +7.3%
--------------------------------- -------------- -------------- -------------
Basic earnings per share 7.6p 7.1p +7.0%
--------------------------------- -------------- -------------- -------------
Dividend per share 3.4p 3.4p -
--------------------------------- -------------- -------------- -------------
29 August 30 August
2015 2014
--------------------------------- -------------- -------------- -------------
Net debt GBP319.8m GBP361.5m (11.5%)
--------------------------------- -------------- -------------- -------------
Net debt : EBITDA (last 12
months) 1.3x 1.6x
--------------------------------- -------------- -------------- -------------
Notes to the above table and to all references in this
statement:
1. UK operating segment comprises stores in the UK and online
sales to UK addresses. International operating segment comprises
the international franchise stores, the owned stores in Denmark and
the Republic of Ireland and online sales to addresses outside the
UK.
2. Gross transaction value (GTV): sales on a gross basis before
adjusting for concessions, consignments and staff discounts.
Statutory revenue: sales after adjusting for these items.
3. Like-for-like sales movement relates to sales from stores
which have been open for more than 12 months plus online sales.
4. Gross margin: GTV less the value of cost of goods sold, as a percentage of GTV.
5. EBITDA is earnings before interest, taxation, depreciation
and amortisation (including loss on disposal of fixed assets).
6. Before non-recurring finance cost, comprising GBP4.5m of
unamortised issue costs which were written-off following the
refinancing of the Group's borrowing facilities in July 2014 (2015:
GBPnil).
SEGMENTAL PERFORMANCE
UK
The UK sector includes sales from UK stores and online sales to
UK addresses. The inter-dependency between stores and online
continues to grow. GTV increased by 2.1% and revenue by 1.1%. This
was a result of continued online sales growth to UK customers and
the benefit of new store openings. Stores experienced a small level
of sales decline from the channel shift into online. As we have
added choice in concessions, the own bought mix has decreased from
79.3% to 78.3%, with a consequent dilution to gross margin rate,
offset by reduced markdown. Operating profit increased by 5.6% to
GBP101.7 million reflecting the benefits from lower markdown and
strong cost control within the Group, as well as sales growth.
International
The sector comprises our Danish and Irish stores, the franchise
stores and online sales to non-UK addresses. In constant currency,
GTV improved by 5.3% reflecting the continued strong performance in
Denmark. In reported currency GTV was 2.2% lower than last year and
revenue decreased by 2.5%, primarily impacted by the effect of the
strengthening pound on the conversion of the Magasin du Nord and
Republic of Ireland results. International operating profit
increased by 0.3% despite the adverse foreign exchange
movements.
GROUP SALES AND PROFITS
Sales and revenue
For the 52 weeks to 29 August 2015 Group GTV increased by 1.3%
to GBP2,860.1 million and Group revenue increased by 0.4% to
GBP2,322.7 million. Group like-for-like sales increased 2.1% on a
constant currency basis and 0.6% on a reported basis. There was
strong growth in online sales, which increased 11.4% to GBP388.2
million, net of online returns to store, and Magasin du Nord, which
grew 8.1% like-for-like in constant currency. The components of the
Group gross transaction growth and like-for-like sales growth are
shown below:
UK stores (0.3%)*
UK online +1.3%*
International +1.1%
Like-for-like sales +2.1%
- constant currency
Exchange rate impact (1.5%)
Like-for-like sales
- reported +0.6%
New UK Space +0.7%
GTV movement +1.3%
----------------------- --------
*As adjusted for the deduction of online orders returned to
stores from online sales. On prior basis UK stores would be (0.9%)
and UK online +1.9%.
Group own bought sales mix decreased to 75.4% from 76.2%
reported in FY2014 largely as a result of the movement in UK sales
mix.
Operating profit
Further progress was made against the strategic priorities as
set out last year. The combination of 17 fewer days on promotion
and tight stock control resulted in reduced markdown and a 90bps
benefit to the gross margin rate. This was offset by the impact of
sales mix from growing sales in the lower margin cosmetics and
concession categories (60 bps) and planned investment in reducing
prices in some categories (30 bps). The net effect on a full year
basis was a flat margin rate compared with FY2014.
Costs were managed tightly throughout the year. Operating costs
before depreciation increased by 0.6% over the prior year, despite
the further shift into online and the investment in expanded online
services such as next day click & collect from stores. Cost of
sales (defined as product costs associated with gross margin,
together with related buying, marketing and store costs) of
GBP2,023.5 million decreased by 0.5% as own bought mix declined and
cost saving initiatives were implemented. Distribution costs
increased by 12.8% to GBP111.1 million, reflecting increased costs
associated with online growth. Administrative expenses increased by
3.4% to GBP54.0 million from additional systems costs. Depreciation
and amortisation, including losses on disposal of property, plant
and equipment, increased by 2.3% to GBP104.5 million reflecting
higher capital expenditure in recent years.
As a result of the foregoing, Group operating profit increased
by 4.3% to GBP134.1 million from GBP128.6 million in the previous
year.
Net finance costs
Net finance costs increased by 12.6% to GBP20.6 million as a
result of increased interest following the refinancing of the
borrowing facilities in 2014. This increase is before a
non-recurring write-off last year to the income statement of GBP4.5
million of unamortised issue costs relating to the refinancing in
2014. Including the impact of this write-off, net finance costs
decreased by 9.6%.
Profit before tax
Increased operating profits resulted in a 7.3% increase in
reported profit before tax from GBP105.8 million to GBP113.5
million. Excluding the non-recurring finance cost of GBP4.5 million
in FY2014, the year-on-year increase was 2.9%.
Taxation
The Group's tax charge of GBP20.0 million equates to an
effective tax rate of 17.6%, in line with 2014. The effective tax
rate benefited from the resolution of prior year tax matters, the
utilisation of losses within Magasin and the reduction in the UK
corporation tax rate. The charge for the year was also marginally
impacted by timing benefit resulting from the adoption of FRS 101
"Reduced Disclosure Framework" by Debenhams Retail plc at the
beginning of the financial year, and by Debenhams Properties
Limited from 1 September 2013.
Profit after tax
Profit after tax increased by 7.2% to GBP93.5 million.
Earnings per share
(MORE TO FOLLOW) Dow Jones Newswires
October 22, 2015 02:00 ET (06:00 GMT)
Increased profits resulted in a 7.0% increase in both basic and
diluted earnings per share (including the non-recurring finance
cost) to 7.6 pence. The basic weighted average number of shares in
issue decreased from 1,226.8 million last year to 1,226.4 million
and diluted weighted average number of shares remained at 1,228.7
million.
CASH FLOW, USES OF CASH AND MOVEMENT IN NET DEBT
Debenhams is a cash generative business and has clear priorities
for the uses of cash. The first priority for cash is to invest in
our strategy to build a leading international, multi-channel brand.
Second, we pay our shareholders a dividend. Third, we have set a
new medium term target for net debt to earnings before tax,
interest, depreciation and amortisation ("EBITDA") of 0.5 times
over the medium term, previously a target of 1.0 times. Operating
cash flow before financing and taxation decreased from GBP112.5
million to GBP102.9 million as a result of a working capital
outflow of GBP2.3 million in FY2015 compared with a GBP9.7 million
inflow in FY2014. Whilst benefiting from the reduction in stocks
held, our reported working capital includes recovery plan payments
to the defined benefit pension schemes of GBP9.6 million (2014:
GBP9.4 million). The movement in working capital from last year is
largely associated with timing of capital invoices in FY2014.
Cash flow generation, the uses of cash and the movement in net
debt are summarised below.
52 weeks to 52 weeks to
29 August 2015 30 August 2014
------------------------------------- ---------------- ----------------
EBITDA GBP238.6m GBP230.8m
Working capital (GBP2.3m) GBP9.7m
------------------------------------- ---------------- ----------------
Cash generated from operations GBP236.3m GBP240.5m
Capital expenditure (GBP133.4m) (GBP128.0m)
------------------------------------- ---------------- ----------------
Operating cash flow before financing GBP102.9m GBP112.5m
& taxation
Taxation GBP1.1m (GBP20.6m)
Financing (GBP19.3m) (GBP13.1m)
Dividends paid (GBP41.7m) (GBP41.7m)
Share buyback - (GBP15.1m)
Other non-cash movements (GBP1.3m) (GBP11.5m)
Change in net debt GBP41.7m GBP10.5 m
------------------------------------- ---------------- ----------------
Opening net debt GBP361.5m GBP372.0m
Closing net debt GBP319.8m GBP361.5m
------------------------------------- ---------------- ----------------
Capital expenditure
Capital expenditure amounted to GBP133.4 million during the
year, slightly higher than last year's expenditure of GBP128.0
million. Capital spend has shifted from a focus on modernisations
in previous years to operational effectiveness, including systems
development, particularly to support the Group's multi-channel
business, and investment in space optimisation initiatives. Spend
in FY2016 is expected to be c.GBP130 million with the mix of spend
broadly in line with 2015, as we continue with investment in
operational effectiveness.
Dividends
An interim dividend of 1.0 pence per share was paid to
shareholders on 3 July 2015 (2014: 1.0 pence). The board is
recommending a final dividend of 2.4 pence per share which will be
paid to shareholders who are on the register on 4 December 2015, on
22 January 2016 taking the total dividend for the year to 3.4 pence
(2014: 3.4 pence). Given the cash generative nature of the business
and confidence in future performance, the board intends to adopt a
progressive dividend policy in future, applying earnings growth to
both dividend increases and the rebuilding of cover towards a
medium term target of 2.5 times.
Net debt
The Group's net debt position on 29 August 2015 was GBP319.8
million, GBP41.7 million lower than at the same point a year ago
(30 August 2014: GBP361.5 million), benefiting from operating cash
flow and reduced tax payments from the adoption of FRS 101 "Reduced
Disclosure Framework". The ratio of reported net debt to EBITDA of
1.3 times improved from last year's position at 1.6 times, moving
towards the new medium term target for net debt to EBITDA of 0.5
times. The medium term target has been reduced from 1.0 times in
FY2014. During the year ended 29 August 2015, the Group repurchased
GBP25.0 million of the GBP225.0 million senior notes, for a
consideration of GBP24.8 million and cancelled GBP75.0 million of
the GBP425.0 million revolving credit facility.
Inventory
Stock levels were managed tightly during the year in line with
our aim of setting more prudent sales targets and reducing our
level of stock. Total stock decreased by 4.1% to GBP331.6 million
reflecting tight control and the benefit of flexible purchasing
strategies. Terminal stock at year end of 3.1% was in line with
historical results.
Treasury management
The board has an established treasury policy which has approved
authority levels within which the treasury function must operate.
Treasury policy is to manage risks within the agreed framework
whilst not taking speculative positions.
Supplier income
The Group receives income from its suppliers, mainly in the form
of settlement discounts, volume based rebates and marketing and
advertising income. Supplier income is recognised as a deduction
from cost of sales, based on the expected entitlement that has been
earned up to the balance sheet date. Included in prepayments and
accrued income is GBP4.7 million (2014: GBP3.9 million) of accrued
supplier income relating to rebates which have been earned but not
yet invoiced.
Pensions
The Group provides a number of pension arrangements for its
employees. These include the Debenhams Retirement Scheme and the
Debenhams Executive Pension Plan (together "the pension schemes")
which both closed for future service accrual from 31 October 2006.
Under IAS 19 revised "Employee benefits", the surplus on the
Group's pension schemes as at 29 August 2015 was GBP26.2 million
(30 August 2014: net deficit of GBP2.4 million). The surplus was
driven by asset returns. During June 2015, the triennial actuarial
valuation was completed and a new agreement was concluded under
which the Group agreed to contribute GBP9.5 million per annum to
the pension schemes (previously GBP8.9 million per annum) for the
period from 1 April 2014 to 31 March 2022 increasing by the
percentage increase in RPI over the year to the previous December.
The Group agreed to continue to cover the non-investment expenses
and levies of the pension schemes, including those payable to the
Pension Protection Fund. Current pension arrangements for
Debenhams' employees are provided by a defined contribution pension
scheme which is administered by Legal & General.
GUIDANCE FOR 2016
Gross margin Flat to +50bps
Total costs +2-4%*
Depreciation & amortisation c.GBP110 million
Net finance costs GBP18-20 million
Taxation c.20%
Capital expenditure c.GBP130 million
Net debt cGBP270-290 million
*including estimated cost
of implementing National
Living Wage proposals
---------------------------- ---------------------
OUTLOOK
As a result of good progress against our strategic priorities we
have delivered profits in line with expectations. This has
underscored our confidence in the strategic direction of the
business. We will continue to focus on delivering our plan to drive
sustainable growth as we build an international multi-channel
brand.
We are maintaining focus on the strategic priorities we outlined
in FY2014 but looking to accelerate new initiatives in FY2016. For
example, we have moved to roll-out of our successful space
optimisation trials and we are testing new international growth
opportunities. The market remains competitive but following the
work we have done, we have seen an encouraging start to the year,
with strong new product launches which have been well received by
our customers, and we are in good operational shape to build on the
successful performance delivered last year over peak trading.
We have clear priorities for the uses of cash and our continued
strong cash generation has enabled us to improve our leverage
target. The board is intending to adopt a progressive dividend
policy in future, applying earnings growth to both dividend
increases and the rebuilding of cover towards a medium term target
of 2.5 times.
BOARD OF DIRECTORS
Matt Smith, Chief Financial Officer, was appointed to the board
as an executive director on 26 January 2015. Terry Duddy, former
Chief Executive of Home Retail Group plc, was appointed an
independent non-executive director on 10 April 2015. Sophie
Turner-Laing stood down as an independent non-executive director on
31 July 2015 following the expiry of her second three year
term.
The board of directors as at 22 October 2015 is as follows:
Nigel Northridge (Chairman), Michael Sharp (Chief Executive), Matt
Smith (Chief Financial Officer), Suzanne Harlow (Group Trading
Director), Dennis Millard (senior independent non-executive
director), Terry Duddy (non-executive director), Peter Fitzgerald
(non-executive director), Stephen Ingham (non-executive director),
Martina King (non-executive director) and Mark Rolfe (non-executive
director).
GOING CONCERN
After making enquiries, the directors of Debenhams plc consider
that the Group has adequate resources to continue in operation for
the foreseeable future. For this reason, they have adopted the
going concern basis in preparing the Group's financial
statements.
NOTES TO EDITORS
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October 22, 2015 02:00 ET (06:00 GMT)
Debenhams is a leading international, multi-channel brand with a
proud British heritage which trades from 248 stores across 27
countries. Debenhams gives its customers around the world a unique,
differentiated and exclusive mix of own brands, international
brands and concessions.
In the UK, Debenhams has a top five market share in womenswear
and menswear and a top ten share in childrenswear. It is a market
leader in premium health and beauty.
Debenhams has been investing in British design for 20 years
through its exclusive Designers at Debenhams portfolio of brands.
Current designers include Abigail Ahern, Ted Baker, Jeff Banks,
Jasper Conran, Giles Deacon, Vicki Elizabeth, FrostFrench, Patrick
Grant, Henry Holland, Betty Jackson, Ben de Lisi, Julien Macdonald,
Savannah Miller, Jenny Packham, Stephen Jones, Todd Lynn, Preen,
Janet Reger, John Rocha, Ashley Thomas, 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 financial year ended 29 August 2015
52 weeks 52 weeks
ended ended
29 August 30 August
2015 2014
Note GBPm GBPm
-------------------------------- -------------- ------ -------------- ------------
Revenue 2, 3 2,322.7 2,312.7
Cost of sales (2,023.5) (2,033.4)
Gross profit 299.2 279.3
Distribution costs (111.1) (98.5)
Administrative expenses (54.0) (52.2)
Operating profit 134.1 128.6
------------------------------------------------ ------ -------------- ------------
Finance income 6 0.2 0.6
Total finance costs (20.8) (23.4)
------------------------------------------------ ------ -------------- ------------
Analysed as:
Recurring finance costs 7 (20.8) (18.9)
Non-recurring finance costs 7 - (4.5)
------------------------------------------------ ------ -------------- ------------
Profit before taxation 113.5 105.8
Taxation 8 (20.0) (18.6)
Profit for the financial year attributable
to owners of the parent 93.5 87.2
Earnings per share attributable to owners of the parent
(expressed in pence per share)
Pence per Pence per
share share
------------------------------------ ----------------- ----- ------------ ------------
Basic earnings per share attributable
to owners of the parent 10 7.6 7.1
Diluted earnings per share attributable
to owners of the parent 10 7.6 7.1
------------------------------------------------- ---- ----- ------------ ------------
The notes on pages 19 to 26 form an integral part of this
condensed consolidated financial information.
Consolidated Statement of Comprehensive Income
For the financial year ended 29 August 2015
52 weeks 52 weeks
ended ended
29 August 30 August
2015 2014
GBPm GBPm
----------------------------------------------------- ------------ --------------
Profit for the financial year 93.5 87.2
Other comprehensive income/(expense)
Items that will not be reclassified to
the income statement
Remeasurements of pension schemes 17.8 8.8
Taxation relating to items which will
not be reclassified (3.6) (1.6)
14.2 7.2
Items that may be reclassified to the
income statement
Currency translation differences (5.2) (4.2)
Change in the valuation of available-for-sale
investments (1.5) 2.5
Gains/(losses) on cash flow hedges 39.2 (24.9)
Transferred to the income statement on
cash flow hedges 1.6 2.7
Recycled and adjusted against cost of inventory (8.7) 8.1
Taxation relating to items that may be reclassified (6.7) 3.0
18.7 (12.8)
Total other comprehensive income/(expense) 32.9 (5.6)
Total comprehensive income for the financial year 126.4 81.6
The notes on pages 19 to 26 form an integral part of this
condensed consolidated financial information.
Consolidated Balance Sheet
As at 29 August 2015
29 August 30 August
2015 2014
Note GBPm GBPm
Assets
Non-current assets
Intangible assets 931.5 892.8
Property, plant and equipment 675.3 689.2
Available-for-sale investments 2.1 3.6
Derivative financial instruments 12.1 3.0
Trade and other receivables 14.9 15.6
Retirement benefit surplus 26.2 6.9
Deferred tax assets 20.8 51.0
1,682.9 1,662.1
---------------------------------------------- ------- ------------- -------------
Current assets
Inventories 331.6 345.7
Trade and other receivables 78.0 74.7
Derivative financial instruments 17.4 1.5
Cash and cash equivalents 32.7 64.4
459.7 486.3
---------------------------------------------- ------- ------------- -------------
Liabilities
Current liabilities
Bank overdraft and borrowings (155.4) (202.1)
Derivative financial instruments (1.3) (11.4)
Trade and other payables (523.6) (529.3)
Current tax liabilities (9.0) (9.2)
Provisions (6.4) (6.0)
(695.7) (758.0)
---------------------------------------------- ------- ------------- -------------
Net current liabilities (236.0) (271.7)
----------------------------------------------- ------- ------------- -------------
Non-current liabilities
Bank overdraft and borrowings (197.1) (223.8)
Derivative financial instruments (1.1) (2.7)
Deferred tax liabilities (54.8) (53.4)
Other non-current liabilities 11 (340.6) (332.7)
Provisions - (1.1)
Retirement benefit obligations - (9.3)
(593.6) (623.0)
---------------------------------------------- ------- ------------- -------------
Net assets 853.3 767.4
Shareholders' equity
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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 17.9 (7.9)
Other reserves (16.5) (9.4)
Retained earnings 167.9 100.7
Total equity 853.3 767.4
The notes on pages 19 to 26 form an integral part of this
condensed consolidated financial information.
Consolidated Statement of Changes in Equity
For the financial year ended 29 August 2015
Share
capital Reverse
and Merger acquisition Hedging Other
share reserve reserve reserve reserves Total
premium GBPm GBPm GBPm GBPm Retained equity
account earnings GBPm
GBPm GBPm
Balance at 31 August 2013 683.0 1,200.9 (1,199.9) 3.2 (7.7) 64.9 744.4
Profit for the financial year - - - - - 87.2 87.2
Other comprehensive
(expense)/income
for the financial year - - - (11.1) (1.7) 7.2 (5.6)
Total comprehensive
(expense)/income
for the financial year - - - (11.1) (1.7) 94.4 81.6
Share-based payment credit - - - - - (1.8) (1.8)
Purchase of treasury shares - - - - - (15.1) (15.1)
Dividends paid - - - - - (41.7) (41.7)
Total transactions with owners - - - - - (58.6) (58.6)
Balance at 30 August 2014 683.0 1,200.9 (1,199.9) (7.9) (9.4) 100.7 767.4
Profit for the financial
year - - - - - 93.5 93.5
Other comprehensive
income/(expense)
for the financial year - - - 25.8 (7.1) 14.2 32.9
Total comprehensive
income/(expense)
for the financial year - - - 25.8 (7.1) 107.7 126.4
Share-based payment charge - - - - - 1.1 1.1
Unallocated dividends - - - - - 0.1 0.1
Dividends paid - - - - - (41.7) (41.7)
Total transactions with
owners - - - - - (40.5) (40.5)
Balance at 29 August 2015 683.0 1,200.9 (1,199.9) 17.9 (16.5) 167.9 853.3
------------------------------ ---------- ---------- ------------- ---------- ---------- ---------- ---------
The notes on pages 19 to 26 form an integral part of this
condensed consolidated financial information.
Consolidated Cash Flow Statement
For the financial year ended 29 August 2015
52 weeks 52 weeks
ended ended
29 August 30 August
2015 2014
Note GBPm GBPm
---------------------------------------------- ----- ------- ----------- --------------
Cash flows from operating activities
Cash generated from operations 12 236.3 240.5
Finance income 0.1 1.2
Finance costs (19.4) (14.3)
Tax received/(paid) 1.1 (20.6)
Net cash generated from operating
activities 218.1 206.8
Cash flows from investing activities
Purchase of property, plant and equipment (79.6) (102.3)
Purchase of intangible assets (54.0) (25.7)
Sale of property, plant and equipment 0.2 -
-
---------------------------------------------- ----- ------- ----------- --------------
Net cash used in investing activities (133.4) (128.0)
Cash flows from financing activities
Issue of senior notes 13 - 225.0
Repurchase of senior notes (24.8) -
(Repayment)/drawdown of revolving
credit facility 13 (65.0) 200.0
Repayment of term loan and revolving
credit facilities 13 - (410.7)
Settlement of term loan facility - 13.3
Purchase of treasury shares - (15.1)
Dividends paid 9 (41.7) (41.7)
Finance lease payments (3.3) (2.2)
Debt issue costs 0.2 (7.1)
Net cash used in financing activities (134.6) (38.5)
Net (decrease)/increase in cash and cash
equivalents (49.9) 40.3
Net cash and cash equivalents at beginning
of financial year 64.4 24.1
Foreign exchange losses on cash and cash (0.1) -
equivalents
Net cash and cash equivalents at end
of financial year 13 14.4 64.4
The notes on pages 19 to 26 form an integral part of this
condensed consolidated financial information.
1 Basis of preparation
The consolidated financial statements have been prepared on the
going concern basis and in accordance with International Financial
Reporting Standards ("IFRSs") as adopted for use in the EU and
those parts of the Companies Act 2006 applicable to 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
2015. 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 2015 and 30 August 2014 but is derived from the 2015
annual report and financial statements. The annual report and
financial statements for 2014, which were prepared under IFRS, have
been delivered to the Registrar of Companies and the Group's annual
report and financial statements for 2015, prepared under IFRS, will
be delivered to the Registrar of Companies in due course. The
Group's external auditors PricewaterhouseCoopers LLP have reported
on these 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 and staff discounts,
represents a good guide to the overall activity of the Group.
29 August 30 August
2015 2014
GBPm GBPm
------------------------- ---------- ----------
Gross transaction value 2,860.1 2,823.9
A reconciliation of gross transaction value to external revenue
is included in note 3.
3 Segmental reporting
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 committee,
which includes the executive directors and other key management. It
is the executive committee that has responsibility for planning and
controlling the activities of the Group.
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The Group's reportable segments have been identified as UK and
International. The segments are reported to the CODM to operating
profit level, using the same accounting policies as applied to the
Group accounts. Current assets, current liabilities and non-current
liabilities are not reported to or reviewed by the CODM on the
basis of operating segment as these are reviewed on a Group-wide
basis and therefore these amounts are not presented below.
Segmental analysis of results UK International Total
GBPm GBPm GBPm
Financial year ended 29 August 2015
Gross transaction value 2,323.5 536.6 2,860.1
Concessions, consignments and staff discounts (401.2) (136.2) (537.4)
-------------------------------------------------- -------- -------------- --------
External revenue 1,922.3 400.4 2,322.7
Operating profit 101.7 32.4 134.1
Other segment items
* Depreciation 80.9 6.8 87.7
* Amortisation 14.9 1.6 16.5
Financial year ended 30 August 2014
Gross transaction value 2,275.3 548.6 2,823.9
Concessions, consignments and staff discounts (373.2) (138.0) (511.2)
-------------------------------------------------- -------- -------------- --------
External revenue 1,902.1 410.6 2,312.7
Operating profit 96.3 32.3 128.6
-------------------------------------------------- -------- -------------- --------
Other segment items
* Depreciation 78.9 8.6 87.5
* Amortisation 11.7 1.6 13.3
Total segmental operating profit may be reconciled to total
profit before taxation as follows:
29 August 30 August
2015 2014
GBPm GBPm
Total operating profit 134.1 128.6
Finance income 0.2 0.6
Recurring finance costs (20.8) (18.9)
Non-recurring finance costs - (4.5)
Total profit before taxation 113.5 105.8
Revenues analysed by country, based on the customers' location,
are set out below:
29 August 30 August
2015 2014
GBPm GBPm
United Kingdom 1,922.3 1,902.1
Denmark 174.7 175.8
Republic of Ireland 126.0 135.5
Rest of the world 99.7 99.3
Total external revenue 2,322.7 2,312.7
Non-current assets, which comprise intangible assets, property,
plant and equipment and other receivables excluding financial
assets, analysed by country, are set out below:
29 August 30 August
2015 2014
GBPm GBPm
United Kingdom 1,561.2 1,532.9
Denmark 22.1 23.1
Republic of Ireland 23.1 25.6
Rest of the world 0.4 0.4
Total non-current assets 1,606.8 1,582.0
Additions to property, plant and equipment and intangible assets
analysed by operating segment are set out below:
UK International Total
GBPm GBPm GBPm
Financial year ended 29 August 2015 125.0 8.0 133.0
Financial year ended 30 August 2014 109.1 9.8 118.9
4 Operating profit
The following items have been included in arriving at operating
profit:
29 August 30 August
2015 2014
GBPm GBPm
The amounts of inventory written down during
the financial year 10.1 10.4
Cost of inventory recognised as an expense 1,164.7 1,165.0
Depreciation of property, plant and equipment 87.7 87.5
Amortisation of intangible assets 16.5 13.3
Loss on disposal of property, plant and
equipment 0.3 1.4
Operating lease rentals 213.9 216.3
Foreign exchange gains (5.7) (1.3)
Auditors' remuneration 0.4 0.5
5 Employment costs
29 August 30 August
2015 2014
GBPm GBPm
Wages and salaries 344.7 334.4
Social security costs 21.7 20.5
Other pension costs 15.1 16.1
Share-based payments 1.1 (1.8)
Employment costs 382.6 369.2
30 August
2014
----------------------- ----------- -----------
6 Finance income
29 August 30 August
2015 2014
GBPm GBPm
Interest on bank deposits 0.1 0.2
Net interest on net defined benefit 0.1 -
pension schemes liability
Other financing income - 0.4
0.2 0.6
7 Finance costs
29 August 30 August
2015 2014
GBPm GBPm
-------------------------------------------------- ----------
Recurring finance costs
Interest payable on bank loans and overdrafts 5.3 10.9
Interest payable on senior notes 11.4 1.9
Cash flow hedges reclassified and reported in
the income statement 1.6 2.7
Amortisation of issue costs on loans
and senior notes 1.6 2.0
Interest payable on finance leases 0.2 0.2
Net interest on net defined benefit pension
schemes liability - 0.6
Other financing costs 1.4 1.2
Capitalised finance costs - qualifying
assets (0.7) (0.6)
20.8 18.9
Non-recurring finance costs
Unamortised issue costs written off on repayment
of term loan and revolving credit facilities - 4.5
8 Taxation
Analysis of taxation charge to the income statement for the
financial year
29 August 30 August
2015 2014
GBPm GBPm
-------------------------------------------------------- --------- ------------
Current taxation
Current taxation charge on profit for the financial
year 3.4 7.7
Adjustments in respect of prior financial years (2.5) (0.8)
Current taxation charge 0.9 6.9
-------------------------------------------------------- ----- --------- ------------
Deferred taxation
Origination and reversal of temporary differences 19.4 13.0
Pension cost relief in excess of pension charge (0.1) (0.4)
Adjustments in respect of prior years (0.2) 0.1
Effects of change in current tax rate
on the net deferred tax asset recognised
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at the beginning of the financial year - (1.0)
Deferred taxation charge 19.1 11.7
---------------------------------------------------------------- --------- ------------
Taxation charge for the financial year 20.0 18.6
9 Dividends
29 August 30 August
2015 2014
GBPm GBPm
---------------------------------- ---------- ------------ --------
Final paid 2.4 pence (2014: 2.4 pence) per
GBP0.0001 share
* Settled in cash 29.4 29.4
Interim paid 1.0 pence (2014: 1.0 pence)
per GBP0.0001 share
* Settled in cash 12.3 12.3
-------------------------------------------------- ------------ --------
41.7 41.7
A final dividend of 2.4 pence per share (2014: 2.4 pence per
share) was paid during the financial year in respect of the
financial year ended 30 August 2014, together with an interim
dividend of 1.0 pence per share (2014: 1.0 pence per share) in
respect of the financial year ended 29 August 2015. The directors
are recommending a final dividend in respect of the financial year
ended 29 August 2015 of 2.4 pence per share (2014: 2.4 pence per
share), which will absorb an estimated GBP29.4 million (2014:
GBP29.4 million) of shareholders' equity. It will be paid on 22
January 2016 to shareholders who are on the register of members at
close of business on 4 December 2015. No liability is recorded in
the financial statements in respect of the final dividend as it was
not approved at the balance sheet date.
10 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 in issue during the financial year,
excluding any shares purchased by the Company and held as treasury
shares. 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 financial year.
29 August 2015
Basic and diluted earnings per 30 August
share 2014
Basic Diluted Basic Diluted
GBPm GBPm GBPm GBPm
-------------------------- -------------- ---- ----- ------------- ---------- ----------- -----------
Profit for the financial year
after taxation 93.5 93.5 87.2 87.2
Number Number Number Number
m m m m
------------------------------------------ ---- ----- ------------- ---------- ----------- -----------
Weighted average number of shares 1,226.7 1,226.7 1,227.1 1,227.1
Shares held by ESOP (weighted) (0.3) (0.3) (0.3) (0.3)
Shares issuable (weighted) - 2.3 - 1.9
Weighted average number of shares
used in calculating earnings per
share 1,226.4 1,228.7 1,226.8 1,228.7
Pence Pence Pence Pence
per share per per share per share
share
------------------------------------------ ---- ----- ------------- ---------- ----------- -----------
Earnings per share 7.6 7.6 7.1 7.1
11 Other non-current liabilities
29 August 30 August
2015 2014
GBPm GBPm
--------------------------------------------- ---------------- ------------
Property lease incentives received 340.6 331.7
Other non-current liabilities - 1.0
Total other non-current liabilities 340.6 332.7
------------------------------------------------------ ------- ------------
Property lease incentives received from landlords either through
developers contributions or rent-free periods are recognised as
non-current liabilities and are credited to the income statement on
a straight line basis over the term of the relevant lease. Property
lease incentives received also relate to the spreading of the
charges in respect of leases with fixed annual increments in rent
(escalating rent clauses) over the term of the relevant lease.
12 Cash generated from operations
29 August 30 August
2015 2014
GBPm GBPm
----------------------------------------------------- ------------------ ------------
Profit before taxation 113.5 105.8
Depreciation and amortisation 104.2 100.8
Loss on disposal of property, plant and equipment 0.3 1.4
Share-based payment charge/(credit) 1.1 (1.8)
Fair value gains on derivative instruments (4.4) (1.1)
Net movements in provisions (0.7) 0.4
Finance income (note 6) (0.2) (0.6)
Finance costs (note 7) 20.8 23.4
Pension current service cost 0.4 1.4
Cash contributions to pension schemes (11.1) (10.8)
Net movement in other long-term receivables (0.5) 0.2
Net movement in other non-current liabilities 7.9 10.6
Changes in working capital
Decrease in inventories 14.3 12.4
(Increase)/ decrease in trade and other receivables (3.9) 2.8
Decrease in trade and other payables (5.4) (4.4)
Cash generated from operations 236.3 240.5
--------------------------------------------------------------- -------- ------------
13 Analysis of changes in net debt
30 August Cash Non-cash 29 August
2014 flow movements 2015
GBPm GBPm GBPm GBPm
-------------------------------- ------------ ------- ------------ ------------
Analysis of net debt
Cash and cash equivalents 64.4 (31.6) (0.1) 32.7
Bank overdrafts - (18.3) - (18.3)
Net cash and cash equivalents 64.4 (49.9) (0.1) 14.4
Debt due within one year (198.8) 65.0 (0.4) (134.2)
Debt due after one year (220.6) 24.6 (0.8) (196.8)
Finance lease obligations due
within one year (3.3) 3.3 (2.9) (2.9)
Finance lease obligations due
after one year (3.2) - 2.9 (0.3)
(361.5) 43.0 (1.3) (319.8)
29.0
-------------------------------- ------------ ------- ------------ ------------
During the year ended 29 August 2015, the Company repurchased
GBP25.0 million of the GBP225.0 million senior notes, for a
consideration of GBP24.8 million. The repurchased senior notes were
cancelled during the financial year. Also during the year ended 29
August 2015, the Company cancelled GBP75.0 million of the GBP425.0
million revolving credit facility. This revolving credit facility
was arranged and an existing term loan and revolving credit
facility were cancelled during the year ended 30 August 2014. The
revolving credit facility at 29 August 2015 of GBP350.0 million
(2014: GBP425.0 million) is due to expire in October 2018 and
contains an option to request an extension to October 2019.
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