Original
RNS Number : 7920N
Dunelm Group plc
12 September 2013
 



 

12 September 2013

Dunelm Group plc ("Dunelm")

Preliminary Results for the 52 weeks to 29 June 2013

 

Dunelm Group plc, the leading specialist out-of-town homewares retailer, today announces its preliminary results for the 52 weeks to 29 June 2013.

 

Financial summary


FY13

FY12

Change

 Total revenues

£677.2m

£603.7m

+12.2%

 Like-for-like growth

+1.7%

+3.1%


Gross margin

48.7%

48.3%

+40 basis points

 Operating profit

£106.5m

£95.2m

+11.9%

 Profit before tax

£108.1m

£96.2m

+12.3%

 Basic EPS

40.2p

35.3p

+13.9%

 Fully diluted EPS

40.0p

35.1p

+14.0%

Ordinary dividends

16.0p

14.0p

+14.3%

Year-end net cash

£44.7m

£65.2m


 

Highlights

 

·    Continuing market share gains;  now market leader with 6.9% of UK homewares market (source:  Verdict Research);

 

·    14 new openings in the year (including two relocations and one re-opening) increasing footprint to 126 superstores;

 

·    Contractually committed to 10 more superstores;

 

·    80% growth in multi-channel revenues, now representing over 4% of total business;

 

·    Increasing investment in brand awareness - "There's no place like Dunelm"; 

 

·    Continued investment in customer proposition, infrastructure, IT systems and people,to underpin long-term growth;

 

Dividends

 

·    Recommended final dividend of 11.5p per share (2012: 10.0p), giving full year dividend of 16.0p (2012: 14.0p);

 

·    Special dividend of 25.0p per share to be paid in October, returning a further £50.7m of excess cash to shareholders.

 

 

 

Nick Wharton, Chief Executive, commented:

 

"Dunelm delivered robust trading results over the year, in a demanding retail environment. We have strengthened our specialist proposition, improved customer service in store and increased the profile of our brand. Each of these, together with our traditional product strength, has enabled us to increase sales on a like-for-like basis. We have also made good strategic progress, scaling our business through new stores and multi-channel, and strengthening our infrastructure. I would like to thank all my colleagues for their hard work and commitment in achieving this.

 

While recent economic data, particularly the volume of housing transactions, may suggest some improvement in consumer confidence, a degree of caution in relation to the broader UK economic environment remains appropriate.  Furthermore, the unusually warm summer weather has had a temporary dampening effect on recent trading.

 

With strong plans in place to improve brand awareness and to grow Dunelm further through new stores and multi-channel expansion, we remain confident in the future prospects for the business. Combined with our very strong financial position, this enables us to pay a special dividend equal to 25p per share as well as proposing an increase in the ordinary dividend in line with earnings."

 

 

 

For further information please contact:

 

Dunelm Group plc

0116 2644356

Nick Wharton, Chief Executive


David Stead, Finance Director




MHP Communications

020 3128 8100

John Olsen / Simon Hockridge / Naomi Lane

dunelm@mhpc.com

 

For photography, please contact MHP Communications

 

 

Notes to Editors

 

Dunelm is market leader in the £11bn UK homewares market. The Group currently operates 135 stores, branded Dunelm Mill, of which 126 are out-of-town superstores and 9 are located on high streets, and an on-line store, to be found at www.dunelm.com.

 

Dunelm's customer proposition offers industry-leading choice of quality products at keen prices, with high levels of availability and supported by friendly service. Core ranges include many exclusive designs and premium brands such as Dorma, and are supported by a frequently changing series of special buys. The superstore format provides an average of 30,000 sq ft of selling space with over 20,000 products across a broad spectrum of categories, extending from the Group's home textiles heritage (bedding, curtains, cushions, quilts and pillows) to a complete homewares offer including kitchenware and dining, lighting, wall art, furniture and rugs. Dunelm is one of the few national retailers to offer an authoritative selection of curtain fabrics on the roll, and owns a specialist UK facility dedicated to producing made to measure curtains.

 

Dunelm was founded in 1979 as a market stall business, selling ready-made curtains. The first shop was opened in Leicester in 1984 and over the following years the business developed into a successful chain of high street shops before expanding into broader homewares categories following the opening of the first Dunelm superstore in 1991.

 

Dunelm has been listed on the London Stock Exchange since October 2006 (DNLM.L) and has a current market capitalisation of approximately £1.8bn.

 

CHAIRMAN'S STATEMENT

 

I am pleased to report another year of strong progress. The management team has continued to focus on our well-established strategy for developing the business, as well as keeping tight control on day to day operations. As a result, Dunelm has posted good growth in revenue and profits in the latest financial year, accompanied by further strong cash generation. More details are given by Nick Wharton, our Chief Executive, in his report.

 

Given the continuing strong business performance, the Board is able to recommend a 15% increase in the final dividend to 11.5p per share (2012: 10.0p), bringing the total ordinary dividends for the year to 16.0p (2012: 14.0p). We have also announced a special dividend of 25p per share, returning a further £50.7m of excess cash to shareholders.

 

The Board has continued to evolve over the last financial year with the appointment of a new Non-Executive Director, Liz Doherty. Liz joined the board in May, bringing a wealth of experience across large retail and consumer businesses.

 

Looking ahead, we have a range of exciting development initiatives and in particular continue to see significant potential to expand our store portfolio further within the UK. We remain confident in the Dunelm proposition and look forward to further profitable growth.

 

 

Geoff Cooper

Chairman

 

CHIEF EXECUTIVE'S REVIEW

 

Overview

Against the background of continued pressures on the consumer throughout the last financial year, the business delivered a robust trading performance and made good progress against both its operational and strategic objectives.

 

We remain focused on close operational management and on enhancing our customer experience, while investing confidently in the future growth of the business. This investment, consistent with our four strategic priorities, centres on the further strengthening of our specialist proposition, while at the same time increasing scale through store portfolio and multi-channel expansion.

 

Reflecting the benefit of a particularly strong store opening programme over the last two financial years, our total revenue for the year increased by 12.2%. Within this, like-for-like sales (calculated by comparing stores which have traded throughout the last two financial years) grew by 1.7% as we continued to gain share in amarket which we believe to be broadly flat. During the year we opened 14 new superstores, including two relocations and the reopening of our Coventry store after a major fire in 2011.

 

Our growth has meant that during the past year we have become, according to Verdict Research, market leader for the first time with a share of 6.9% of the UK homewares market.

 

Disciplined inventory management and continued progress with direct sourcing delivered a 40 basis points expansion in gross margin year on year. With operating costs growing slightly ahead of sales, reflecting our on-going investment in the customer proposition as well as building capability across the business for longer term growth, our operating margin remained at a similar level to the previous year, at 15.7%.

 

The business remains highly cash generative, readily funding the capital requirements associated with our growth as well as allowing a 14% year on year increase in the level of the ordinary dividend for the year. In addition we have been able to announce a special dividend totalling £50.7m to be distributed to shareholders in October 2013. This reflects our on-going approach of periodically distributing surplus cash to shareholders.

 

Strategy development

We have continued to make good progress with our four strategic priorities.

 

Priority 1 - develop our specialist proposition

The UK homewares market is estimated by Verdict Research to be worth approximately £11bn. As market leaders, our key differentiator is industry-leading choice, offering quality products over the broadest price spectrum. This is supported by strong availability, customer convenience through an established multi-channel proposition, and friendly knowledgeable service.

 

Our range and choice are complemented by exceptional value for money at all price points together with strong brand representation. The Dunelm brand, with its core attributes of trust and value, is applied to the majority of products across the proposition. In addition we stock a number of key owned brands including Dorma, Hotel and Spectrum alongside major proprietary brands such as Fogarty, Tempur, Kenwood and Brabantia.

 

Our broad price architecture is mirrored across each of our core categories and creates a proposition that is attractive to a very wide customer set. This positioning has continued to help preserve existing footfall and attract new customers during the past financial year. The Dunelm offer ranges from our entry price position, which competes with products offered by grocers and discount multiples but at a higher quality, through a number of mid-market options, to our highest quality products which are comparable with offerings in department stores and higher-end independent retailers but at keener prices.

 

We continue constantly to evolve our offer to ensure it remains contemporary, fresh and relevant. Through two seasonal refreshes we change approximately 25% of our ranges each year; while Special Buys and Miss it Miss Out ('MIMO') promotions emphasise Dunelm's value credentials and provide a seasonal feel to the store.

 

We have a clear opportunity to build further awareness of the Dunelm brand. During the year, in addition to increasing our presence in national press and growing our social media activity, we invested in our first full catalogue. Our initial 200 page edition was distributed to 700,000 people in autumn 2012 and proved extremely effective in showcasing the breadth and authority of the Dunelm product offer. We followed this with a spring catalogue and plan to build on these successful investments with a larger autumn 2013 catalogue which will have a distribution of one million copies.

 

Our next phase of investment in brand awareness incorporates an evolution of the current Dunelm branding. This evolution aims to communicate Dunelm's range authority across all homewares categories and to highlight our strengths in value, convenience and service.  We are introducing a new primary strapline of "There's no place like Dunelm", are migrating to the more user-friendly domain name of www.dunelm.com and will remove our traditional "Mill" suffix from across the business.  Research has shown that these changes will be positively received by both existing and new customer groups. The new strapline in particular is seen as a better reflection of our customers' emotional connection with the home. We will use this evolution in our branding to increase brand awareness and introduce Dunelm to a wider group of homewares shoppers through our first significant TV advertising campaign. Subject to performance in pilot, our planned investment in this campaign will amount to approximately £3m over the current financial year.

 

Excellent customer service, a high quality in-store experience and differentiating services are all important in ensuring that our overall customer experience meets the promise of the "There's no place like Dunelm" campaign. During the last financial year, we invested across each of these dimensions, foremost of which was a significant customer service training programme for store colleagues - Customer First. This has been funded largely by re-assigning colleague time in store from non-customer facing tasks which we have been able to eliminate or reduce through better processes and systems. Initial results are pleasing in terms of both customer satisfaction, where our net promoter score hit new heights after the completion of the training, and external recognition, where Dunelm ranked very positively in the most recent annual survey of customer service undertaken by Which? Magazine

 

Our Window Treatments offer spanning fabrics, readymade and made-to-measure curtains and blinds is a category that relies on high levels of expertise, service and customer interaction. During the year we have successfully developed and piloted a new more intuitive and interactive system to support our made-to-measure service and this will be introduced to all stores this autumn ahead of our peak window treatments season.

 

Our Dunelm At Home service, through which customers can select bespoke, made-to-measure curtains and other window treatments via a free home consultation, is now available from 30 stores, with a further phased roll-out planned over the current financial year. Customers of this service are rightly demanding and we invest significantly in the training and development of our home consultants to ensure good levels of customer satisfaction.

 

Priority 2 - develop the store portfolio

Dunelm trades from two store formats. The bulk of the portfolio comprises out-of-town superstores, with our average new store footprint now targeted towards 30,000 square feet of retail space. This space enables us to offer over 20,000 homewares products with the depth of range and availability that customers expect from a specialist retailer. It also accommodates a Pausa coffee shop, now present in 92 stores, providing an additional reason for customers to visit and increasing their engagement and dwell time. In addition to superstores, we also trade profitably from nine smaller high street locations where there are currently no suitable out-of town alternatives.

 

In the last financial year we again opened over 400,000 square feet of selling space through fourteen new superstores (two being relocations and one a re-opening) taking our superstore chain to 126 stores at the year end, providing 3.8 million square feet of selling space in total. A further 10 new stores are contractually committed. Following a detailed catchment analysis process completed in 2011, which sought to incorporate the impact of the anticipated growth of our multi-channel sales, we believe our mature UK superstore portfolio will consist of approximately 200 stores.

 

Our new stores continue to deliver strong returns on invested capital with the average expected discounted payback for stores opened in the last three financial years being approximately 28 months. We will continue to target the majority of our new store openings to achieve discounted cash flow payback of 36 months. However, as our portfolio becomes more mature our investment criteria will need to reflect some cannibalisation of revenues from existing stores, and going forward we anticipate that a proportion of new stores (perhaps up to 30%) will be targeted to achieve payback in up to 48 months.

 

Our refit programme covered 14 superstores this year of which four were 'major' refits. The programme is designed to improve the shopping environment in our existing stores, and to create a more consistent customer experience in terms of space allocation and department layouts.

 

As a result of this continued investment our portfolio is highly contemporary with 42% of the superstore chain either new or having benefited from a major refit over the past three years.

 

Priority 3 - grow multi-channel

In common with trends elsewhere in UK retail, Dunelm customers are embracing the convenience and value of multi-channel shopping with a significant proportion of shopping journeys now involving some element of on-line activity (browsing, research or purchasing) through our website, www.dunelm.com.

 

The last financial year saw continued investment in both website development, to enhance the customer experience, and in digital marketing where returns remain attractive. Our Reserve and Collect (R&C) proposition, which links our store stock files to the web in real time, enables our customers to check availability and order from over 16,000 products. This was further enhanced during the year to provide for same day collection. R&C customers, who represent approximately a third of multi-channel revenues, pay for their reserved products on collection in store creating a clear opportunity for add-on or incremental sales in store.

 

Development of the core website included the redesign of our homepage as well as key product pages where customers "land" following an internet search. We have also introduced Paypal as a payment alternative and optimised our site for tablet users in response to the rapid increase in the number of customers accessing our site from these devices. Developments such as expert guides, better recommendations for complementary products and enhanced alternative images also ensure that our website stimulates interest, communicates our expertise and provides added value.

 

As a consequence of all of the above, our multi-channel revenues continued to grow strongly, representing over 4% of revenues over the full financial year and approximately 4.5% in the final quarter.

 

Our next targeted development will materially improve speed and choice within our home delivery offering where, despite strong progress elsewhere, our proposition remains below benchmark and therefore provides a clear opportunity for further improvement and revenue growth. The transfer of our fulfilment operation to a scalable facility that will enable us to hold stock of approximately 20,000 lines, each available for next day delivery, is progressing well and is anticipated to be fully operational prior to peak winter trading.

 

While, as outlined above, significant enhancement of our multi-channel model has been possible on our existing web technology platform, our pace of development is restricted due to the configuration of the current software. Accordingly, we have initiated a programme to upgrade the platform and expect this to be completed during the second half of the current financial year, representing a capital investment of £4-5m. This re-platforming will deliver a more customer-friendly website as well as allowing future developments to be achieved over shorter lead times, thus enabling more frequent introductions of improved functionality to our customers.

 

Following a successful trial of extended inventory within furniture, we are targeting further web exclusive ranges and will apply our enhanced e:marketing and promotional capability to drive awareness of both core and extended ranges.

 

Priority 4 - develop and exploit our infrastructure

Focused investment in our business infrastructure across IT systems, distribution facilities and people resources is a key contributor to Dunelm's success and this continued in the past year.

 

Investment in our IT systems has enabled us to improve stock control, make in-store processes more efficient, and, through the upgrade during the year of our till systems, has enabled a better customer experience when they pay for their goods. The project to upgrade our enterprise wide SAP system is progressing well and is expected to be completed this calendar year.

 

The capacity and capability of the Group has been further strengthened by targeted recruitment including a Chief Information Officer who joined the business at the start of the current financial year. Meaningful headcount increases made in our buying, supply and space management teams have enabled us to develop product range options such that the best performing products within each category can be matched to each individual store based on their overall space and configuration. This development will continue in the current financial year, helping to create a more consistent shopping experience for our customers and reducing our lifecycle exposure to discontinued inventory.

 

Summary and outlook

Dunelm delivered robust trading results over the year, in a demanding retail environment. We have strengthened our specialist proposition, improved customer service in store and increased the profile of our brand. Each of these, together with our traditional product strength, has enabled us to increase sales on a like-for-like basis. We have also made good strategic progress, scaling our business through new stores and multi-channel, and strengthening our infrastructure. I would like to thank all my colleagues for their hard work and commitment in achieving this.

 

While recent economic data, particularly the volume of housing transactions, may suggest some improvement in consumer confidence, a degree of caution in relation to the broader UK economic environment remains appropriate.  Furthermore, the unusually warm summer weather has had a temporary dampening effect on recent trading.

 

With strong plans in place to improve brand awareness and to grow Dunelm further through new stores and multi-channel expansion, we remain confident in the future prospects for the business.  Combined with our very strong financial position, this enables us to pay a special dividend equal to 25p per share as well as proposing an increase in the ordinary dividend in line with earnings. 

 

Nick Wharton

Chief Executive

 

FINANCE DIRECTOR'S REVIEW

 

Operating result

The '2013' accounting period represents trading for the 52 weeks to 29 June 2013 and the comparative period '2012' represents trading for the 52 weeks to 30 June 2012.

 

Group revenue for 2013 was £677.2m (2012: £603.7m), an increase of 12.2%. This increase in revenue was achieved through growth in like-for-like sales of 1.7% and contribution from net new space amounting to 10.5%, the latter reflecting the strong store opening programme over the past two years including 14 new openings in 2013 (of which two were relocations and one a re-opening). Like-for-like sales performance was positive in both the first half (+2.2%) and second half (+1.2%) despite very strong comparative sales in the last quarter of 2012.

 

Gross margin increased by 40 basis points to 48.7% (2012: 48.3%) primarily reflecting benefits from direct sourcing initiatives. We will continue to pursue opportunities to drive margin benefits from direct sourcing and from challenging our UK based suppliers to achieve cost efficiencies.

 

Operating costs grew by 13.6% compared with last year. Expansion of the store portfolio was the largest driver of this, but we also made important increases to our investment in customer service, the in-store shopping environment, multi-channel operations, marketing and our overall business infrastructure:

 

Customer service. Thanks to various operational efficiency initiatives, we were able to reduce the time spent in stores on handling stock. We re-invested significantly in colleague hours to provide improved customer service, supported by a major training initiative under the banner of 'Customer First'

 

In-store environment. We introduced improved product display mechanics (such as plastic pallets for walkway displays) and new point-of-sale materials across the estate.

 

Multi-channel operations. As well as bearing the costs of a much higher volume of home-delivered orders than previously, we also invested in developing the website itself and in preparing the ground for transfer of our fulfilment operation to a third party provider this autumn.

 

Marketing. We continued to increase our marketing investment with the launch of the Dunelm catalogue and further focus on digital marketing activities.

 

Business infrastructure. We expanded our capabilities in a number of areas, including functions required to support our increasing focus on direct sourcing.

 

Group operating profit for the financial year was £106.5m (2012: £95.2m), an increase of £11.3m (11.9%).

 

EBITDA

Earnings before interest, tax, depreciation and amortisation were £127.1m (2012: £113.9m). This has been calculated as operating profit (£106.5m) plus depreciation and amortisation (£20.6m) and represents an increase of 11.6% on the previous year. The EBITDA margin achieved was 18.8% of sales (2012: 18.9%).

 

Financial items and PBT

The Group generated £1.5m net financial income for the year (2012: £1.0m). Financial items include interest earned on surplus cash deposits of £0.9m (2012: £0.8m) and foreign exchange gains arising from the translation of dollar denominated assets and liabilities at the end of the period, worth £0.6m (2012: £0.2m). As at 29 June 2013 the Group held $4.8m in US dollar cash deposits and additional forward contracts for $45.9m representing approximately 50% of the anticipated US dollar spend over the next 12 months.

 

After accounting for interest and foreign exchange impacts, profit before tax for the year amounted to £108.1m (2012: £96.2m), an increase of 12.3%.

 

Tax, PAT and EPS

The tax charge for the year was 24.6% of profit before tax compared with 26.0% in the prior year. This reflects the reduction in the headline rate of corporation tax to 23.75% (2012: 25.50%) as well as a one-off benefit received in 2012 as a result of a project that increased the level of assets qualifying for capital allowances. We expect the tax charge to trend approximately 100 bps ahead of the headline Corporation Tax rate going forward. This difference is mainly due to depreciation charged on non-qualifying capital expenditure.

 

Profit after tax was £81.5m (2012: £71.2m), an increase of 14.4%.

 

Basic earnings per share for the year ended 29 June 2013 was 40.2p (2012: 35.3p), an increase of 13.9%. Fully diluted EPS increased by 14.0% to 40.0p (2012: 35.1p).

 

Capital expenditure

Gross capital expenditure in the financial year was £26.5m compared with £38.6m last year. Significant investments were made in order to support continued growth and development of the superstore portfolio with the addition of 14 new stores (58% of capital expenditure) and 14 refits. The remaining investment related mainly to IT activities, including a refresh of till systems, initial work on upgrading our core enterprise system (SAP) due to be completed this autumn, and initial work on implementing a new technology platform for our multi-channel offer.

 

Working capital

Investment in working capital increased by £3.4m over the year, primarily as a result of additional stock to support the expansion in the store estate, partially offset by lower average inventories per store.

 

Cash position and dividend

Dunelm remains a highly cash generative business. In 2013 the Group generated £100.4m (2012: £91.9m) of net cash from operating activities, an increase of 9.2%. Net cash resources at the end of the year were £44.7m (2012: £65.2m) with daily average cleared funds over the course of the financial year £66.2m (2012: £57.6m).

 

An interim dividend of 4.5p was paid in April 2013 (2012: 4.0p). It is proposed to pay a final dividend of 11.5p per share (2012: 10.0p). The total dividend of 16.0p represents a 14.3% increase over last year reflecting the Group's strong financial performance and leaves dividend cover of 2.5x, in line with our target. This dividend will be paid on 20 December 2013 to shareholders on the register at the close of business on 29 November 2013.

 

The Board reviews the Group's funding position on a regular basis and has concluded that access to committed lines of external funding is not required in the short term. Dunelm continues to maintain uncommitted lines of funding with partner banks whilst trading with a positive net cash position.

 

Additional returns to shareholders

The Group's policy is to maintain cash resources such that it is able to invest in the four pillars of its strategy and in addition to take advantage of investment opportunities as and when they arise, for example freehold property acquisitions. It also remains committed to returning excess capital to shareholders from time to time where these cash resources are materially in excess of investment requirements.

 

During the year, the Group returned excess capital of £65.8m (32.5p per share) to shareholders via a B/C share scheme.

 

In keeping with its capital policy and taking into account the Group's current financial strength; anticipated trading performance; its known and anticipated investment plans; and the level of cash available, the Board has also announced that surplus cash amounting to £50.7m (25.0p per share) will be returned to shareholders in the form of a special dividend.  This will be paid on 11 October 2013 to shareholders on the register at the close of business on 20 September 2013. 

 

Share Buyback

The Board has decided to commence the purchase of shares to hold in treasury in order to satisfy future exercises of options granted under incentive plans and other share schemes. This will avoid issuing new shares,which has been our general practice historically. This program will commence in October 2013 and over time we expect to build a holding equivalent to approximately 60% of outstanding options at any time (currently 2.3m options).

 

Financial risk and treasury management

The Group Board has established an overall Treasury Policy, day-to-day management of which is delegated to the Finance Director. This policy ensures the following:

• Effective management of all Clearing Bank operations

• Access to appropriate levels of funding and liquidity

• Optimal investment of surplus cash within approved risk/return profile

• Appropriate management of foreign exchange exposures and cash flows

 

Key performance indicators

In addition to the traditional financial measures of sales and profits, the Directors review business performance each month using a range of other KPIs. These include measures shown below.

 

 

Sales growth

 

2013

+12.2%

2012

+12.1%

2011

+9.3%

 

Like-for-like sales growth

 

2013

+1.7%

2012

+3.1%

2011

-0.6%

 

Gross margin change (basis points)

 

2013

+40bps

2012

+30bps

2011

+120bps

 

New store openings

2013(includes two relocations and one re-opening)

14

2012 (includes two relocations)

14

2011 (includes one relocation)

10

 

Major refits

 

2013

4

2012

4

2011

8

 

Operating margin

 

2013

15.7%

2012

15.8%

2011

15.5%

 

EBITDA £m

 

2013

£127.1m

2012

£113.9m

2011

£97.4m

 

Earnings per share (diluted)

 

2013

40.0p

2012

35.1p

2011

29.3p

 

Dividend (per share)

 

2013

16.0p

2012

14.0p

2011

11.5p

 

 

David Stead

Finance Director

 

 

RESPONSIBILITY STATEMENT

 

We confirm that to the best of our knowledge, within the Annual Report:

 

(a)   The financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and

 

(b)   The management report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties it faces

 

Nick Wharton                                                                              David Stead

Chief Executive                                                                          Finance Director

 

 

CONSOLIDATED INCOME STATEMENT

For the 52 weeks ended 29 June 2013

 

 


Note

2013

£'000

2012

£'000

Revenue

1

677,192

603,729





Cost of sales


(347,448)

(311,992)

Gross profit


329,744

291,737





Operating costs

3

(223,206)

(196,537)

Operating profit

2

106,538

95,200





Financial income

5

1,518

1,048

Financial expenses

5

(1)

-

Profit before taxation


108,055

96,248





Taxation

6

(26,601)

(25,026)

Profit for the period attributable to equity shareholders of the parent


81,454

71,222





Earnings per ordinary share - basic

8

40.2p

35.3p

Earnings per ordinary share - diluted

8

40.0p

35.1p





Dividend proposed per ordinary share

7

11.5p

10.0p

Dividend paid per ordinary share

7

4.5p

4.0p

 

All activities relate to continuing operations.

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the 52 weeks ended 29 June 2013

 


2013

£'000

2012

£'000

Profit for the period

81,454

71,222

Items that may be reclassified subsequently to profit or loss:



Effective portion of movement in fair value of cash flow hedges

443

343

Deferred tax on hedging movements

(102)

(90)

Total comprehensive income for the period

81,795

71,475

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 29 June 2013

 



29 June

2013

£'000

30 June

2012

£'000

Non-current assets




Intangible assets


4,262

3,238

Property, plant and equipment


151,060

146,313

Deferred tax asset


1,460

-

Total non-current assets


156,782

149,551

Current assets




Inventories


92,940

86,221

Trade and other receivables


18,344

17,054

Cash and cash equivalents


44,740

65,190

Financial instruments


387

-

Total current assets


156,411

168,465

Total assets


313,193

318,016

Current liabilities




Trade and other payables


(102,106)

(97,442)

Liability for current tax


(13,393)

(13,195)

Financial instruments


-

(56)

Total current liabilities


(115,499)

(110,693)

Non-current liabilities




Deferred tax liability


-

(297)

Total non-current liabilities


-

(297)

Total liabilities


(115,499)

(110,990)

Net assets


197,694

207,026

Equity




Issued capital


2,028

2,023

Share premium


1,612

1,025

Capital redemption reserve


43,157

43,155

Hedging reserve


299

(42)

Retained earnings


150,598

160,865

Total equity attributable to equity holders of the Parent


197,694

207,026

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

For the 52 weeks ended 29 June 2013



2013

£'000

2012

£'000

Profit before taxation


108,055

96,248

Adjustment for net financing costs


(1,517)

(1,048)

Operating profit


106,538

95,200

Depreciation and amortisation


20,358

18,678

Impairment losses on non-current assets


166

-

(Profit)/loss on disposal of property, plant and equipment


76

(15)

Operating cash flows before movements in working capital


127,138

113,863

(Increase) in inventories


(6,719)

(9,766)

(Increase) in receivables


(1,321)

(2,465)

Increase in payables


4,665

11,955

Net movement in working capital


(3,376)

(276)

Share-based payments expense


2,045

1,803

Foreign exchange gains/(losses)


451

218



126,258

115,608

Interest paid


(1)

-

Interest received


937

756

Tax paid


(26,795)

(24,473)

Net cash generated from operating activities


100,399

91,891





Cash flows from investing activities




Proceeds on disposal of property, plant and equipment


10

634

Acquisition of property, plant and equipment


(23,382)

(37,030)

Acquisition of intangible assets


(3,000)

(1,594)

Net cash utilised in investing activities


(26,372)

(37,990)





Cash flows from financing activities




Proceeds from issue of share capital


589

346

Return of Capital to Shareholders


(65,841)

Dividends paid


(29,386)

(24,248)

Net cash flows utilised in financing activities


(94,638)

(23,902)





Net increase in cash and cash equivalents


(20,611)

29,999

Foreign exchange revaluations


161

52

Cash and cash equivalents at the beginning of the period


65,190

35,139

Cash and cash equivalents at the end of the period


44,740

65,190

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the 52 weeks ended 29 June 2013

 

 


Issued

share

capital

£'000

Share

premium

£'000

Capital

Redemp-tion

reserve

£'000

Hedging

reserve

£'000

Retained

earnings

£'000

Total

equity

£'000

As at 2 July 2011

2,015

681

43,155

(295)

111,662

157,218








Profit for the financial year

-

-

-

-

71,222

71,222

Movement in fair value of cash flow hedges

-

-

-

343

-

343

Deferred tax on hedging movements

-

-

-

(90)

-

(90)

Total comprehensive income for the financial year

-

-

-

253

71,222

71,475








Issue of share capital

8

344

-

-

(6)

346

Share-based payments

-

-

-

-

1,803

1,803

Deferred tax on share-based payments

-

-

-

-

(199)

(199)

Current corporation tax on share options exercised

-

-

-

-

631

631

Dividends

-

-

-

-

(24,248)

(24,248)

Total transactions with owners, recorded directly in equity

8

344

-

-

(22,019)

(21,667)








As at 30 June 2012

2,023

1,025

43,155

(42)

160,865

207,026








Profit for the financial year

-

-

-

-

81,454

81,454

Movement in fair value of cash flow hedges

-

-

-

443

-

443

Deferred tax on hedging movements

-

-

-

(102)

-

(102)

Total comprehensive income for the financial year

-

-

-

341

81,454

81,795








Issue of share capital

5

587

  2

-

(6)

588

Share-based payments

-

-

-

-

2,045

2,045

Deferred tax on share-based payments

-

-

-

-

1,006

1,006

Current corporation tax on share options exercised

-

-

-

-

461

461

Dividends

-

-

-

-

(29,386)

(29,386)

Return of Capital to Shareholders

-

-

-

-

(65,841)

(65,841)

Total transactions with owners, recorded directly in equity

5

587

2

-

(91,721)

(91,127)








As at 29 June 2013

2,028

1,612

43,157

299

150,598

197,694

 

 

Notes to the annual financial statements

For the 52 weeks ended 29 June 2013

 

 

1 Segmental reporting

The Group has one reportable segment, retail of homewares in the UK.

The Chief Operating Decision Maker is the Board of Directors of Dunelm Group plc. Internal management reports are reviewed by them on a monthly basis. Performance of the segment is assessed based on a number of financial and non-financial KPI's as well as on profit before taxation. Management believe that these measures are the most relevant in evaluating the performance of the segment and for making resource allocation decisions.

 

All material operations of the reportable segment are carried out in the UK. The Group's revenue is driven by the consolidation of individual small value transactions and as a result Group revenue is not reliant on a major customer or group of customers.

 

2 Operating profit

Operating profit is stated after charging / (crediting) the following items:


2013

£'000

2012

£'000

Inventories



 Cost of inventories included in cost of sales

341,545

310,971

 Movement on provisions for write down of inventories

(666)

1,021

Amortisation of intangible assets

2,125

2,445

Depreciation of owned property, plant and equipment

18,233

16,233

Impairment losses on non-current assets

166

-

Operating lease rentals



 Land and buildings

30,690

28,287

 Plant and machinery

1,354

1,310

Loss/(profit) on disposal of property, plant and equipment and intangible assets

76

(15)

 

The analysis of auditor's remuneration is as follows:


2013

£'000

2012

£'000

Fees payable to the Company's auditors for the audit of the Parent and consolidated annual accounts

19

17

Fees payable to the Company's auditors and their associates for other services to the Group



- audit of the Company's subsidiaries pursuant to legislation

58

58

- tax compliance

30

28

- other tax services

125

46

 

Total audit fees amounted to £76,900, fees for non-audit services amounted to £155,000.

3 Operating costs


2013

£'000

2012

£'000

Selling and Distribution

183,926

162,097

Administrative

39,037

34,455

(Profit)/loss on disposal of property, plant and equipment and intangible assets

243

(15)


223,206

196,537

 

4 Employee numbers and costs

The average number of people employed by the Group (including Directors) was:


2013

Number

of heads

2013

Full time

equivalents

2012

Number

of heads

2012

Full time

equivalents

Selling

7,429

4,238

6,380

3,823

Distribution

289

284

290

283

Administration

259

252

241

235


7,977

4,774

6,911

4,341

 

The aggregate remuneration of all employees including Directors comprises:


2013

£'000

2012

£'000

Wages and salaries including bonuses and termination benefits

87,534

77,248

Social security costs

5,748

5,370

Share-based payment expense

1,798

1,803

Defined contribution pension costs

375

426


95,455

84,847

 

5 Financial income and expense


2013

£'000

2012

£'000

Finance income



Interest on bank deposits

906

778

Foreign exchange gains (net)

612

270


1,518

1,048

Finance expenses



Interest on bank borrowings and overdraft

-

-

Foreign exchange losses (net)

(1)

-


(1)

-

Net finance income

1,517

1,048

 

6 Taxation


2013

£'000

2012

£'000

Current taxation



UK corporation tax charge for the period

27,715 

26,342

Adjustments in respect of prior periods

(261)

(679)


27,454 

25,663

Deferred taxation



Origination of temporary differences

(1,018) 

(768)

Adjustment in respect of prior periods

165

131


(853) 

(637)

Total taxation expense in the income statement

26,601 

25,026

 

The tax charge is reconciled with the standard rate of UK corporation tax as follows:


2013

£'000

2012

£'000

Profit before taxation

108,055

96,248

UK corporation tax at standard rate of 23.75% (2012: 25.5%)

25,663

24,543

Factors affecting the charge in the period:



Non-deductible expenses

27

78

Ineligible depreciation

1,108

1,206

Lease incentive deductions

(96)

(109)

Adjustments to tax charge in respect of prior years

(96)

(548)

Effect of standard rate of corporation tax change

9

(63)

(Profit)/loss on disposal of ineligible assets

(14)

(81)


26,601

25,026

 

The taxation charge for the period as a percentage of profit before tax is 24.6% (2012: 26.0%).

 

7 Dividends

All dividends relate to the 1p Ordinary Shares.



2013

£'000

2012

£'000

Final for the period ended 2 July 2011

- paid 8.0p

-

(16,158)

Interim for the period ended 30 June 2012

- paid 4.0p

-

(8,090)

Final for the period ended 30 June 2012

- paid 10.0p

(20,259)

-

Interim for the period ended 29 June 2013

- paid 4.5p

(9,127)

-



(29,386)

(24,248)

 

The Directors are proposing a final dividend of 11.5p per Ordinary Share for the period ended 29 June 2013 which equates to £23.3m. The dividend will be paid on 20 December 2013 to shareholders on the register at the close of business on 29 November 2013. The Directors have announced a special dividend amounting to £50.7m (25.0p per share), to be paid on 11 October 2013 to shareholders on the register at the close of business on 20 September 2013.

8 Earnings per share

Basic earnings per share is calculated by dividing the profit for the period attributable to equity shareholders by the weighted average number of Ordinary Shares in issue 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. These represent share options granted to employees where the exercise price is less than the average market price of the Company's Ordinary Shares during the period.

Weighted average numbers of shares:


52 weeks ended

29 June 2013

'000

52 weeks ended

2 July 2012

'000

Weighted average number of shares in issue during the period

202,598

201,968

Impact of share options

1,291

1,008

Number of shares for diluted earnings per share

203,889

202,976

 

9 Basis of preparation

The annual report and financial statements for the year ended 29 June 2013 were approved by the Board of Directors on 12 September 2013 along with this preliminary announcement, but have not yet been delivered to the Registrar of Companies.

The financial information contained in this preliminary announcement does not constitute the Group's statutory accounts within the meaning of Section 434 of the Companies Act 2006.

The auditor's report on the statutory accounts for the year ended 29 June 2013 was unqualified and did not contain a statement under section 498 of the Companies Act 2006.

The statutory accounts of Dunelm Group plc for the year ended 30 June 2012 have been delivered to the Registrar of Companies. The auditor's report on the statutory accounts for the year ended 30 June 2012 was unqualified and did not contain a statement under section 498 of the Companies Act 2006.


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR EAPNFFAXDEFF