Interim Results

23rd Apr 2009 07:00



23 April 2009 

DEBENHAMS PLC

INTERIM RESULTS FOR 26 WEEKS ENDED 28 FEBRUARY 2009

Financial Highlights

*Before non-cash debt fee write-off of £2.0m (H1 2008: £2.1m)

 

Operating Highlights

Rob Templeman, Chief Executive of Debenhams, said:

"The increase in profitability in the first half is a considerable achievement given the difficult trading conditions across the retail sector and reflects our commitment to producing stylish, quality products at exceptional value as well as a continuing focus on the levers that drive cash margin.

"We are pleased with the performance of our own bought ranges and in particular Designers at Debenhams where design excellence and enhanced product quality at great value are continuing to prove popular with consumers. This has led to further market share gains.

"There is much to look forward to in the second half particularly in relation to the development of own bought product ranges with the expansion of some existing brands and the launch of a number of exciting new brands throughout the store at the end of the summer. The second half has started well with improvements in gross transaction value, like-for-like sales and gross margin. That said, we remain cautious about the outlook for consumer confidence for the remainder of the year and we will continue to run the business accordingly, with an ongoing focus on cash profit."

FINANCIAL SUMMARY

	H1 2009	H1 2008	Change
Gross transaction value (GTV)	£1,307.2m	£1,303.6m	+0.3%
Like-for-like sales*			-3.6%
Operating profit	£134.7m	£127.5m	+5.7%
Gross margin			+10bps
Headline profit before tax**	£104.2m	£94.1m	+10.7%
Profit before tax	£102.2m	£92.0m	+11.1%
Earnings per share	9.3p	7.6p	+22.4%
Dividend per share	Nil	2.5p	N/A
	28-02-09	01-03-08
Net debt	£927.2m	£979.3m	£52.1m

*Excluding VAT 

**After adding back £2.0m of capitalised bank fees (H1 08 £2.1m); includes £7.2m deduction (H108 £7.0m) for flat lining of lease rentals (£111.4m before deduction)

Enquiries

Debenhams plc Rob Templeman, Chief Executive Chris Woodhouse, Finance Director Lisa Williams, Investor Relations	020 7408 3302 020 7408 3304 / 07908 483841
Financial Dynamics Jonathon Brill Billy Clegg Caroline Stewart	020 7269 7170 020 7269 7157 020 7269 7227

High resolution images are available for media to view and download free of charge from www.prshots.com/Debenhams.

  

REVIEW OF THE FIRST HALF

MARKET CONDITIONS

Trading conditions across the retail sector were difficult during the first half with a high level of volatility from week to week. Consumers were undoubtedly concerned by issues in the banking sector and economy in general in the autumn but, despite this, trading over Christmas and the winter sale held up well. February was impacted by severe weather across the UK. Debenhams' trading during the half broadly followed this pattern.

FINANCIAL PERFORMANCE

Despite the difficult trading environment, Debenhams delivered a robust financial performance in the first half.

Gross transaction value for the period grew by £3.6 million to £1,307.2 million. Like-for-like sales decreased by 3.6%, excluding VAT.

Gross margin for the 26 week period was 10 basis points higher than last year, partly driven by stronger own bought sales mix versus concessions.

Profitability moved ahead strongly during the first half. Headline profit before tax (which excludes non-cash debt fee write-offs) for the first half was £104.2 million, compared with £94.1 million last year, an increase of 10.7%. Profit before tax of £102.2 million was 11.1% higher than a year ago. EBITDA for the period was 6.7% higher than last year at £183.4 million. The main drivers of this resilient profit performance were the increase in gross transaction value, the continuing tight management of costs and stocks and management's focus on the levers that drive cash margin. It is also a testament to the successful trading strategy executed over the important Christmas trading period.

Basic earnings per share of 9.3 pence compared with 7.6 pence for the first half of last year, an increase of 22.4%. The higher level of growth in earnings per share versus profit before tax is a result of a prior year adjustment to the tax charge increasing net profit after taxation.

Further investment was made in Debenhams' business during the half resulting in capital expenditure of £51.2 million. Of this, 53% relates to the ongoing investment in the store portfolio through the opening of new stores, four of which opened during the first half including the flagship store at Westfield London at the end of October.

The business was strongly cash generative in the half with cash inflow from operating activities of £120.8 million. Net debt at the end of the half on 28 February 2009 was £927.2 million. This was an improvement of £52.1 million over the position at the end of the first half last year (1 March 2008) and £66.8 million better than at the end of the last financial year (30 August 2008). A £100 million amortisation payment is due in May 2009 under the terms of the main bank facility. This payment will be met out of cash flow and the funds are on deposit.

The Board continues to believe that in order to maximise value for shareholders in the current environment it is important that leverage is taken off the agenda whilst prudent capital investment in higher returning projects is maintained across the business, particularly in relation to the new store programme and any opportunistic acquisitions, similar to Principles, that may arise. The Board has therefore decided, despite a robust trading performance, continuing market share gains and strong cash generation in the first half, not to propose an interim dividend.

 

OPERATIONAL REVIEW

Debenhams gained market share throughout the first half. In the most recently available data for the UK (source: TNS Worldpanel Fashion 26 weeks market share data to 1 March 2009 vs. 2008), Debenhams' total market share in clothing, footwear and accessories increased by 10 basis points. The strongest market share performances were delivered by Menswear (up 30 basis points) and Childrenswear (up 20 basis points). Market share gains have now been achieved on a regular basis for 18 months as customers have responded to the significant improvements made to the design, quality and value of Debenhams' own bought products, as well as an enhanced shopping experience on the back of improved in-store presentation.

Own bought products continue to outperform concessions with the sales of own bought ranges increasing by 4.4% whilst concessions declined by 11.8%.

Overall, own bought product sales accounted for 75.6% of total sales during the first half, compared to 72.2% in the same period last year. The medium-term target is 80-85%, although some new stores already carry over 90% own bought stock. To this end, over the next 12 months some 450,000 square feet of trading space will be converted from concession to own bought through a combination of extending existing brands and introducing new brands.

The strongest performing categories in the business during the half were the Designers at Debenhams ranges, where overall sales increased by 11%. Research suggests that in the current economic climate customers are looking for the quality, longevity and versatility that Designers at Debenhams products offer. The investment made in product design and fashionability also continues to find favour with customers across the store. In Womenswear key brands in the first half included Star by Julien Macdonald and J by Jasper Conran and in Menswear Rocha.John Rocha and Jeff Banks both performed well. J by Jasper Conran also recorded a very strong half in Childrenswear, as did Baker by Ted Baker which has recently seen the successful launch of Baby Baker. In Home, the penetration of designer sales has increased significantly particularly in accessories, bedding, bath and china. In Health and Beauty, premium brands such as Chanel, Benefit, Mac and the newly introduced Bare Minerals were amongst the bestselling product ranges.

Stock levels continue to be managed tightly. Overall stock in the business has been reduced, largely as a result of the brand rationalisation work undertaken over the last 12 months to improve the shopping experience by eliminating duplication and creating "power brands" which customer feedback suggests are easier to shop. Stock density on a like-for-like basis was 8.4% lower at the end of the first half than the corresponding time last year. At the end of the half terminal stocks were at a historically low level.

Managing the cost base has been a key management focus during the first half and this has contributed to the increase in profitability seen during the period.

Regionally there was little variation in performance amongst Debenhams' stores during the first half. Northern Ireland has performed strongly as shoppers in the Republic of Ireland take advantage of the strength of the Euro. Conversely there are signs of weakening in the Republic of Ireland in line with the severe economic downturn being experienced in that market.

Since the end of the first half, a quantity of stock and fixtures and fittings has been acquired from the administrators of Principles, as well as a licence to trade the brand through that stock. This will ensure continuity of supply to Debenhams and accords with the strategy of increasing the own bought sales mix. We believe that this acquisition will be beneficial to the business. Given the current shake-out on the high street, it is possible that other such opportunities will arise in the coming months and we will seek to take advantage of these for the benefit of Debenhams as appropriate.

Trading space and new stores

Net new space in the first half was 249,000 square feet, taking total space to just under 11 million square feet at the end of the half. The average space during the half increased by 4.6%.

Four new stores were opened during the first half in Livingston, Great Yarmouth, the Westfield London flagship and Wrexham. Since the end of the half, Bury St Edmunds has been opened taking the total portfolio to 154 stores. Returns from new stores continue to be very attractive and all new stores opened year-to-date are performing in line with or better than expectations.

The pipeline for new stores remains strong despite the economic environment. In the 2010 financial year we are scheduled to open five new department stores and two new Desire stores. In the following year we will open one new department store and one re-sited department store.

Debenhams Direct

Debenhams Direct has continued to grow strongly. Visitors and sales were up by 39.1% and 29.7% respectively during the first half. Overall, the direct business accounted for 2.1% of total sales during the half (H1 2008: 1.6%).

New developments introduced during the first half include: the launch of Debenhams Outlet which brings together all promotional offers and discounts into one place; zoom, video and catwalk/outfit projection which gives customers much closer detail of items and more advice on outfit building; shop by size which enables customers to save time by only viewing items for which their chosen size is available; product reviews and surveys posted by customers; and social networking through Facebook and Twitter.

International franchise stores

At the end of the first half, there were 49 international franchise stores in 18 countries, an increase of nine stores and three countries since the end of the first half last year. Eight of these stores were opened during the first half of the year including stores in Indonesia, India, Iran, Moldova, Malaysia, Romania (2 stores) and Saudi Arabia.

The international business continues to perform well despite some signs of softening in the retail sector in some of the markets of operation. It represented 2.4% of total sales during the half compared with 2.1% last year.

Further new stores are planned in Dubai, Romania and Saudi Arabia in the second half of 2009.

BOARD OF DIRECTORS

On 9 January 2009 it was announced that Richard Gillingwater intended to step down from the Board in order to focus on his new role of Chairman of CDC Group plc. Accordingly, Mr. Gillingwater stepped down on 16 April 2009 and the Board would like to thank him for his valuable contribution over the last three years. Paul Pindar has been appointed Senior Independent Director and the Remuneration Committee will now be chaired by Adam Crozier.

 

RISKS AND UNCERTAINTIES 

The principal risks and uncertainties for the remainder of the year are unchanged from those detailed in the Company's Annual Report and Accounts for 2008 (see page 44 of that document). The most relevant of risks are: factors outside Debenhams' control such as adverse economic conditions or a downturn in the retail industry; competitive pressures in the highly competitive retail sector; and Debenhams' ability to predict or fulfil customer demands or preferences.

CURRENT TRADING AND OUTLOOK

Gross transaction value for the seven weeks to 18 April 2009 was 6.1% higher than the same period last year and like-for-like sales were up by 1.9% (excluding VAT). Gross margin for the seven weeks was also higher than the corresponding period a year ago.

There is much to look forward to in the second half particularly in relation to the development of own bought product ranges with the expansion of some existing brands and the launch of a number of exciting new brands throughout the store at the end of the summer. The second half has started well with improvements in gross transaction value, like-for-like sales and gross margin. That said, we remain cautious about the outlook for consumer confidence for the remainder of the year and we will continue to run the business accordingly, with an ongoing focus on cash profit.

Statements made in this announcement that look forward in time or that express management's beliefs, expectations or estimates regarding future occurrences and prospects are "forward-looking statements" within the meaning of the United States federal securities laws. These forward-looking statements reflect Debenhams' current expectations concerning future events and actual results may differ materially from current expectations or historical results. Any such forward-looking statements are subject to various risks and uncertainties, including: Debenhams' ability to predict customer preferences and demands accurately; the effectiveness of Debenhams' brand awareness and marketing programmes; the occurrence of weak sales during peak selling seasons or extreme or unseasonal weather conditions; difficult market conditions and fragile consumer confidence; competitive factors in the highly competitive retail industry; Debenhams' ability to successfully implement its new store rollout and department store refurbishment/modernisation strategy; Debenhams' ability to maintain its relationships with certain designers and its significant concession partners; and currency fluctuations and currency risk.

* * *

Additional risk factors that you may want to consider are: Debenhams' ability to retain key management and personnel; disruptions or other adverse events affecting Debenhams' relationship with its major suppliers or its store card provider; factors outside Debenhams' control, such as changes in the financial or equity markets, adverse economic conditions or a downturn in the retail industry, or damage or interruptions due to operational disruption, natural disaster, war or terrorist activity; and work stoppages; slowdowns or strikes.

Notes to Editors

Debenhams is a leading department stores group with a strong presence in key product categories including Womenswear, Menswear, Childrenswear, Home and Health and Beauty. Debenhams is the second largest department store chain in the UK.

Debenhams has a total of 144 department stores in the UK and the Republic of Ireland and 10 Desire by Debenhams stores, which is a small store concept featuring a mix of womenswear, accessories, lingerie, cosmetics and childrenswear. Debenhams has 49 international franchise stores in 18 countries and an online store, www.debenhams.com, through which much of the Debenhams range is available.

Designers at Debenhams include Ted Baker, Jasper Conran, Erickson Beamon, Pip Hackett, Betty Jackson, Ben de Lisi, Julien Macdonald, Melissa Odabash, Jane Packer, Pearce Fionda, Janet Reger, John Rocha and Matthew Williamson.

Independent review report to Debenhams plc

Introduction

 

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

 

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the 26 weeks ended 28 February 2009 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

Consolidated Income Statement

For the 26 weeks ended 28 February 2009 

		Note	Unaudited 26 weeks to 28 February 2009	Unaudited 26 weeks to 1 March 2008	Audited 52 weeks to 30 August 2008
			£m	£m	£m
Revenue		2	1,064.8	1,029.3	1,839.2
Cost of sales			(886.0)	(854.5)	(1,571.6)
Gross profit			178.8	174.8	267.6
Distribution costs			(24.9)	(26.9)	(50.0)
Administrative expenses			(19.2)	(20.4)	(41.5)
Operating profit			134.7	127.5	176.1
Interest receivable and similar income		5	0.6	2.6	4.8
Interest payable and similar charges		6	(33.1)	(38.1)	(75.0)
Profit before taxation			102.2	92.0	105.9
Taxation		7	(21.0)	(26.9)	(28.8)
Profit for the financial period attributable to equity shareholders		13	81.2	65.1	77.1

Earnings per share attributable to the equity shareholders (expressed in pence per share)

				Pence per share			Pence per share			Pence per share
Basic	9			9.3			7.6			9.0
Diluted	9			9.3			7.6			9.0

All Group operations during the financial periods were continuing operations.

 

Consolidated Statement of Recognised Income & Expenses

For the 26 weeks ended 28 February 2009

 

				Unaudited 26 weeks to 28 February  2009	Unaudited 26 weeks to 1 March  2008	Audited 52 weeks to 30 August 2008
				£m	£m	£m
Profit for the financial period				81.2	65.1	77.1
Actuarial (loss)/gain recognised in the pension schemes				(41.3)	4.2	(79.8)
Movement on deferred tax relating to the pension schemes				11.6	(1.2)	22.3
Change in the valuation of the available for sale investments				(2.9)	(8.4)	(9.3)
Currency translation				(1.0)	2.5	1.3
Cash flow hedges
- net fair value gains/(losses)(net of tax)				2.2	(14.9)	(5.0)
- recycled and adjusted against the initial measurement of the acquisition cost of inventory				(11.2)	(0.4)	0.9
- reclassified and reported in net profit				0.6	-	(0.5)
Net expense recognised directly in equity				(42.0)	(18.2)	(70.1)
Total recognised income attributable to the equity shareholders of the Group				39.2	46.9	7.0

 

  

 Consolidated Balance Sheet

At 28 February 2009

		Note		Unaudited 28 February 2009	Unaudited 1 March 2008	Audited 30 August 2008
				£m	£m	£m
ASSETS
Non-current assets
Intangible assets		10		838.5	841.6	840.8
Property, plant and equipment		10		677.4	680.9	693.3
Financial assets
- Available-for-sale investments				8.1	11.9	11.0
- Derivative financial instruments				2.9	0.8	8.2
Retirement benefit assets		11		-	100.6	25.0
Deferred tax assets				56.7	55.2	57.4
				1,583.6	1,691.0	1,635.7
Current assets
Inventories				249.9	249.0	237.5
Trade and other receivables				58.6	50.7	58.5
Derivative financial instruments				40.0	2.4	10.5
Cash and cash equivalents				139.3	139.2	42.1
				487.8	441.3	348.6
LIABILITIES
Current liabilities
Financial liabilities
- Bank overdraft and borrowings				(173.5)	(126.0)	(144.5)
- Derivative financial instruments				(0.9)	(0.8)	-
Trade and other payables				(415.5)	(471.6)	(470.2)
Current tax liabilities				(41.7)	(42.7)	(29.9)
Provisions for liabilities and charges				(0.6)	(0.7)	(0.7)
				(632.2)	(641.8)	(645.3)
Net current liabilities				(144.4)	(200.5)	(296.7)
Non-current liabilities
Financial liabilities
- Bank overdraft and borrowings				(893.0)	(992.5)	(891.6)
- Derivative financial instruments				(28.3)	(2.1)	(0.7)
Deferred tax liabilities				(77.9)	(111.7)	(95.3)
Other non-current liabilities				(268.5)	(207.8)	(225.8)
Provisions for liabilities and charges				(0.2)	(0.4)	(0.3)
Retirement benefit obligations		11		(8.7)	-	-
				(1,276.6)	(1,314.5)	(1,213.7)
NET ASSETS				162.6	176.0	125.3
SHAREHOLDERS' EQUITY
Share capital		12		0.1	0.1	0.1
Share premium				682.9	682.9	682.9
Merger reserve				1,200.9	1,200.9	1,200.9
Reverse acquisition reserve				(1,199.9)	(1,199.9)	(1,199.9)
Hedging reserve				2.4	0.1	10.8
Other reserves				1.1	4.7	5.1
Retained earnings				(524.9)	(512.8)	(574.6)
TOTAL EQUITY		13		162.6	176.0	125.3

  Consolidated Cash Flow Statement

For the 26 weeks ended 28 February 2009

					Note	Unaudited 26 weeks to 28 February 2009	Unaudited 26 weeks to 1 March 2008	Audited 52 weeks to 30 August 2008
						£m	£m	£m
Cash flows from operating activities
Cash generated from operations					14	160.4	180.9	285.8
Interest received						0.6	2.6	4.8
Interest paid						(29.3)	(33.8)	(71.6)
Tax paid						(10.9)	(13.7)	(27.6)
Net cash generated from operating activities						120.8	136.0	191.4
Cash flows from investing activities
Purchase of property, plant and equipment						(50.4)	(69.8)	(124.9)
Purchase of intangible assets						(0.8)	(2.1)	(4.2)
Proceeds from sale of property, plant and equipment						-	3.5	3.5
Net cash used in investing activities						(51.2)	(68.4)	(125.6)
Cash flows from financing activities
Repayment of term loan facility						-	-	(100.0)
Dividends paid						(2.4)	(32.6)	(44.4)
Purchase of shares by Debenhams Retail Employee Trust 2004 ("DRET")						-	(1.1)	(1.1)
Payments for reduction in outstanding finance lease liability						(0.1)	(0.7)	(0.7)
Capitalised debt issue costs						-	(1.7)	(1.8)
Net cash used in financing activities						(2.5)	(36.1)	(148.0)
Net increase/(decrease) in cash and cash equivalents						67.1	31.5	(82.2)
Cash and cash equivalents at beginning of financial period						(2.9)	79.3	79.3
Cash and cash equivalents at end of financial period					15	64.2	110.8	(2.9)

1. Basis of preparation

The Group's interim condensed consolidated financial information is not audited and does not constitute statutory financial statements as defined in Section 240 of the Companies Act 1985. Comparative figures for the 52 weeks ended 30 August 2008 have been extracted from the Group's 2008 Annual Report and Financial Statements, on which the auditors gave an unqualified opinion and did not include a statement under Section 237(2) or (3) of the Companies Act 1985. The full financial statements for those 52 weeks have been filed with the Registrar of Companies.

The following new standards and interpretations have been issued but are not effective for the 52 weeks ending on 29 August 2009 and have not been adopted early.

 

International Accounting Standards (IFRS/IAS)		Effective date
IFRS 8	Operating Segments	1 January 2009
IFRIC Interpretations
IFRIC 13	Customer Loyalty Programmes	1 September 2009

2. Turnover

The Group has one class of business, retailing, and all material operations are in the British Isles.

 

3. Gross transaction value

Revenue from concessions is required to be shown on a net basis, being the commission received rather than the gross value achieved by the concessionaire on the sale. Management believes that gross transaction value, which presents revenue on a gross basis before adjusting for concessions, staff discounts and the cost of loyalty scheme points, represents a better guide to the value of the overall activity of the Group.

			26 weeks to 28 February 2009	26 weeks to 1 March 2008	52 weeks to 30 August 2008
			£m	£m	£m
Gross transaction value			1,307.2	1,303.6	2,336.0

 

4. Segmental Information

 

Based on an analysis of risks and returns, the directors consider that the Group has only one identifiable business segment, retailing. All material operations of the Group are carried out in the British Isles and, therefore, no geographical segmentation is disclosed. The Group operates both an internet and an international division, both of which remain immaterial for the purposes of segmental reporting. 

Consequently, the Group has considered business segmentation as the primary segmentation, with a single separately reportable segment, retailing.

 

5. Interest receivable and similar income

		26 weeks to 28 February 2009	26 weeks to 1 March 2008		52 weeks to 30 August 2008
		£m	£m		£m
Interest on bank deposits		0.6	2.6		4.8

6. Interest payable and similar charges

		26 weeks to 28 February 2009 £m	26 weeks to 1 March 2008 £m	52 weeks to 30 August 2008 £m
Interest payable and similar charges
Bank loans and overdrafts		(29.3)	(34.6)	(67.1)
Amortisation of issue costs on loans		(2.0)	(2.1)	(4.2)
Interest payable on finance leases		(1.8)	(1.4)	(3.0)
Charges arising from ineffective cash flow hedges		-	-	(0.7)
Interest payable and similar charges		(33.1)	(38.1)	(75.0)

 

7. Taxation

The taxation charge for the 26 weeks ended 28 February 2009 is based on an estimated effective tax rate for the full year of 19.9% (52 weeks ended 30 August 2008: 27.2%). This is lower than the standard rate of corporation tax (28%) due to a prior year adjustment.

 

8. Dividends

The Company paid a final dividend in respect of the 52 weeks ended 30 August 2008 of 0.5 pence per share on 16 January 2009. The directors are not proposing an interim dividend in respect of the 26 weeks ended 28 February 2009 (26 weeks to 1 March 2008: interim dividend of 2.5 pence which absorbed £21.5 million of shareholders' funds).

 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 period.

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 period. 

Basic and diluted earnings per share		26 weeks to 28 February 2009		26 weeks to 1 March 2008		52 weeks to 30 August 2008
		Basic	Diluted	Basic	Diluted	Basic	Diluted
		£m	£m	£m	£m	£m	£m
Profit for the financial period		81.2	81.2	65.1	65.1	77.1	77.1
		Number m	Number m	Number m	Number m	Number m	Number m
Weighted average number of shares		876.7	876.7	859.0	859.0	861.5	861.5
Shares held by ESOP (weighted)		(1.4)	(1.4)	(0.7)	(0.7)	(1.1)	(1.1)
Shares issuable (weighted)		-	-	-	-	-	-
Adjusted weighted average number of shares		875.3	875.3	858.3	858.3	860.4	860.4
		Pence per share	Pence per share	Pence per share	Pence per share	Pence per share	Pence per share
Earnings per share		9.3	9.3	7.6	7.6	9.0	9.0

10. Tangible and intangible assets and commitments

			Tangible and intangible assets
			28 February 2009	1 March 2008	30 August 2008
			£m	£m	£m
Opening net book amount			1,534.1	1,510.6	1,510.6
Additions			26.3	61.0	118.1
Foreign currency revaluation			4.2	3.8	6.6
Disposals			(0.1)	(5.0)	(5.4)
Depreciation and amortisation			(48.0)	(47.0)	(95.0)
Accelerated depreciation			(0.6)	(0.9)	(0.8)
Closing net book amount			1,515.9	1,522.5	1,534.1

Capital commitments contracted but not provided for by the Group amounted to £1.8 million (30 August 2008: £11.7 million; 1 March 2008: £14.1 million).

 

 

11. Defined benefit pension plans

 

The Group operates defined benefit type pension schemes, being the Debenhams Executive Pension Plan and the Debenhams Retirement Scheme, the assets of which are held in separate trustee-administered funds.

Both pension schemes were closed for future service accrual from 31 October 2006. The closure to future accrual will not affect the pensions of those who have retired or the deferred benefits of those who have left service or opted out before 31 October 2006. Future pension arrangements are provided through a money purchase stakeholder plan or a defined contribution scheme for the employees in the Republic of Ireland. 

Actuarial valuations of the Group's pension schemes using the projected unit basis were carried out at 31 March 2005 and updated as at each relevant period-end for the purposes of IAS 19 'Employee benefits' by Watson Wyatt Limited, a qualified independent actuary. The 31 March 2008 actuarial valuation is in progress and relevant data obtained by the actuary from this valuation has been used when calculating the IAS 19 'Employee benefits' valuation at 28 February 2009 and 30 August 2008.

The major assumptions used by the actuary are given below. The mortality assumptions remain consistent with those disclosed in the Group's 2008 Annual Report and Financial Statements.

			28 February 2009	1 March 2008	30 August 2008
			% pa	% pa	% pa
Discount rate			6.90	6.70	6.35
Price inflation			3.20	3.40	3.80
Rate of increase in salaries			3.20	4.30	3.80
Rate of increase in pension payments			3.20	3.40	3.80
Rate of increase for deferred pensioners			3.20	3.40	3.80

The movement in the pension asset is as follows:

			28 February 2009	1 March 2008	30 August 2008
			£m	£m	£m
Surplus at the start of the period			25.0	87.3	87.3
Contributions			3.6	4.4	8.1
Interest credit			4.0	4.7	9.4
Net actuarial (losses)/gains on change of assumptions			(41.3)	4.2	(79.8)
(Deficit)/surplus at the end of the period			(8.7)	100.6	25.0

12. Share capital

				£	Number
Authorised - At 28 February 2009, 30 August 2008 and 1 March 2008
Ordinary shares of £0.0001 each				128,846	1,288,461,539
				£	Number
Issued and fully paid - Ordinary shares of £0.0001 each
At 1 September 2007 and 1 March 2008				85,897	858,974,359
Shares issued in lieu of dividends				1,580	15,795,966
At 30 August 2008				87,477	874,770,325
Shares issued in lieu of dividends				805	8,054,691
At 28 February 2009				88,282	882,825,016

  13. Consolidated statement of changes in shareholders' equity

	26 weeks to 28 February 2009 £m	26 weeks to 1 March 2008 £m	52 weeks to 30 August 2008 £m
Opening shareholders' equity	125.3	163.0	163.0
Profit for the financial period	81.2	65.1	77.1
Currency translation differences	(1.0)	2.5	1.3
Actuarial (loss)/gain recognised in the pension schemes	(41.3)	4.2	(79.8)
Movement in deferred tax relating to the pension schemes	11.6	(1.2)	22.3
Change in valuation of available-for-sale investments	(2.9)	(8.4)	(9.3)
Cash flow hedges	(8.4)	(15.3)	(4.6)
Employee share ownership plans	0.5	(0.2)	0.8
Purchase of treasury shares for DRET	-	(1.1)	(1.1)
Dividends paid	(4.3)	(32.6)	(54.1)
Shares issued in lieu of dividend	1.9	-	9.7
Closing shareholders' equity	162.6	176.0	125.3

14. Cash generated from operations

		26 weeks to 28 February 2009 £m	26 weeks to 1 March 2008 £m	52 weeks to 30 August 2008 £m
Profit for the financial period		81.2	65.1	77.1
Taxation		21.0	26.9	28.8
Depreciation and amortisation (note 10)		48.0	47.0	95.0
Accelerated depreciation (note 10)		0.6	0.9	0.8
Loss/(profit) on disposal of property, plant and equipment		0.1	(3.5)	(3.1)
Employee options granted during the year		0.5	(0.2)	0.8
Fair value (gains)/losses on derivative instruments		(7.8)	0.1	(3.7)
Net movements in provisions for liabilities and charges		(0.2)	(1.7)	(1.8)
Interest income (note 5)		(0.6)	(2.6)	(4.8)
Interest expense (note 6)		33.1	38.1	75.0
Difference between pension charge and contributions paid		(7.6)	(9.1)	(17.5)
Net movement in other non-current liabilities		42.7	0.7	18.8
Changes in working capital
(Increase)/decrease in inventories		(12.4)	(4.4)	7.1
(Increase)/decrease in trade and other receivables		(1.8)	13.0	8.0
(Decrease)/increase in trade and other payables		(36.4)	10.6	5.3
Cash generated from operations		160.4	180.9	285.8

  15. Analysis of changes in net debt

		At  30 August  2008	Cash flow	Non cash movements	At 28 February 2009
		£m	£m	£m	£m
Analysis of net debt
Cash		42.1	97.2	-	139.3
Bank overdrafts		(45.0)	(30.1)	-	(75.1)
Cash and cash equivalents		(2.9)	67.1	-	64.2
Debt due within one year		(96.2)	-	(0.1)	(96.3)
Debt due after one year		(844.3)	-	(1.8)	(846.1)
Finance lease obligations due within one year		(3.3)	0.1	1.1	(2.1)
Finance lease obligations due after one year		(47.3)	-	0.4	(46.9)
		(994.0)	67.2	(0.4)	(927.2)

16. Related parties

There have been no significant related party transactions during the period.

 

17. 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.

  Statement of Directors' Responsibilities

The directors confirm that this condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union and that the interim management report herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8.

The directors of Debenhams plc are listed on pages 42 and 43 in the Group's 2008 Annual Report and Financial Statements. As disclosed on pages 42 and 43, Angela Spindler left the Company on 30 November 2008. In addition Richard Gillingwater stepped down from the Board on 16 April 2009.

A list of current directors is maintained on the Investors section of the Debenhams website at www.debenhamsplc.com.

By order of the board

Paul Eardley

Company Secretary

23 April 2009

 

 

 

 

ENDIR PUUPGCUPBGRP

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Related Shares:

Debenhams