TIDMDNLM
RNS Number : 9853M
Dunelm Group plc
20 September 2023
20 September 2023
Dunelm Group plc
Preliminary Results for the 52 weeks ended 1 July 2023
Seizing the opportunity, with another record year of sales
Dunelm Group plc ("Dunelm" or "the Group"), the UK's leading
homewares retailer, today announces its preliminary results for the
52 weeks to 1 July 2023.
FY23 FY22 YoY FY22 YoY
(52 weeks) (52 weeks) (52w vs (53 weeks)
52w)
=================== ============= ============= ========== ============= ========
Total
sales GBP1,638.8m GBP1,553.1m +5.5% GBP1,581.4m +3.6%
------------- ------------- ---------- ------------- --------
Digital
%
total
sales(1) 36% 35% +1%pt 35% +1%pt
------------- ------------- ---------- ------------- --------
Gross
margin 50.1% 51.2% -110bps 51.2% -110bps
------------- ------------- ---------- ------------- --------
Operating
costs:sales
ratio 38.0% 37.5% +50bps 37.4% +60bps
------------- ------------- ---------- ------------- --------
Profit
before
tax
(PBT) GBP192.7m GBP209.0m -7.8% GBP212.8m -9.4%
------------- ------------- ---------- ------------- --------
Diluted
earnings
per
share 75.0p 82.1p -8.6% 83.6p -10.3%
------------- ------------- ---------- ------------- --------
FY23 FY22 YoY
(52 weeks) (53 weeks)
------------- -------------
Free cash flow GBP160.4m GBP153.0m +GBP7.4m
(2)
------------- ------------- ----------
Net debt (3) GBP30.7m GBP23.8m +GBP6.9m
------------- ------------- ----------
Ordinary dividend
per share 42p 40p +5.0%
------------- ------------- ----------
Special dividend
per share 40p 37p n/a
------------- ------------- ----------
Highlights
-- Continuing strong sales growth of 6%(4) , as customers
responded well across the breadth of our expanding curated product
range (up c.20,000 since FY22)
-- Unrelenting focus on offering value at all price points,
passing on cost reductions across over 1,000 products in the
spring
-- Further 40bps market share gain in combined homewares and furniture markets(5)
-- Active customers grew by 2.8%(6) , with improved customer retention
-- Three new stores opened, including one relocation; continuing
to see strong payback underpinning confidence to accelerate
openings over the next two years
-- Progress on our Pathway to Zero commitments(7) , with
reductions in Scope 1 carbon intensity and plastic packaging use,
both ahead of our targets, and increasing use of sustainable
materials
-- Further community engagement with circular solutions, such as
take-back services, a threefold increase in our 'Delivering Joy'
gift campaign for local causes, and over GBP800k raised for
charities
Financial highlights
-- Record sales of GBP1.64bn (FY22: GBP1.55bn(4) )
-- 50.1% gross margin (FY22: 51.2%(8) ), in line with our
expectations, demonstrating tight operational grip
-- Continued to focus on growth, investing more than GBP20m in
digitalising our end-to-end operations and growing capability to
seize multiple future opportunities
-- Profit before tax ("PBT") of GBP193m (FY22: GBP209m(9) ),
reflecting tight control of margin amidst inflation in our
operating costs and our ongoing commitment to investment for the
future
-- GBP160m free cash flow (FY22: GBP153m)(2) , with strong
conversion of operating profit to cash of 81% (FY22: 70%)
-- Final ordinary dividend of 27p per share (FY22: 26p) taking
the full year ordinary dividend to 42p per share (FY22: 40p), an
increase of 5%, reflecting confidence in the future growth
prospects of the business
-- GBP163m in total returned to shareholders during the year,
including special dividend of 40p declared with the interim results
and paid in April. Over GBP1bn returned over the past ten
years(10)
Current trading and outlook
-- Pleased with trading early in the new financial year
-- Consumer behaviour remains unpredictable but value
proposition resonating well and expect to see FY24 sales and PBT
growth, driven by volume
-- Easing freight costs support gross margin
-- Tight operational grip to help mitigate ongoing inflation in operating costs
-- Continuing to invest in our customer offer, total retail
system and marketing ecosystem to support sustainable growth
-- Never been more confident in our plans to seize opportunities
in the short, medium and long term
Nick Wilkinson, Chief Executive Officer, commented :
"In a period of extensive economic uncertainty, we have
maintained our focus on enhancing our customer proposition,
expanding our offer whilst staying fully committed to value and
making every pound count. This has clearly resonated well with our
customers, enabling us to continue growing both sales and market
share. As ever, our amazing colleagues have been at the heart of
this performance and I thank them all for their knowledge,
personality, commitment and enthusiasm.
"As we manage the ongoing challenges, it is crucial that we do
not lose sight of our longer-term ambitions. We are committed to
raising the bar on value and joy for our customers and continuing
to invest where we see good returns, so that we can seize the
various opportunities ahead.
"We are excited about our future growth opportunity and more
confident than ever that our commitment to value and tireless focus
on improving the experience for our home-loving customers will
leave us well placed to deliver sustainable growth in the
future."
1 Digital includes home delivery, Click & Collect and
tablet-based sales in store.
2 Free cash flow is defined as net cash generated from operating
activities less capex (net of disposals) and business combinations,
net interest paid (including leases) and loan transaction costs,
and repayment of principal element of lease liabilities. A
reconciliation of operating profit to free cash flow is included in
the CFO review.
3 Excluding lease liabilities. Full definition provided in the
table of alternative performance measures.
(4) For statutory purposes FY22 included a 53(rd) week. Sales
and sales growth are shown on a comparable 52-week basis. On a
53-week basis FY22 sales were GBP1,581m and sales growth was
4%.
(5) GlobalData UK combined homewares and furniture markets,
excluding kitchen and bathroom furniture. Market share for the
period July 2022 to June 2023 was 7.2%.
(6) Growth in unique active customers who have transacted at
least once in the 12 months to June 2023. Management estimates
using Barclays data.
(7) Our Pathway to Zero commitments are described in more detail
in the sustainability section of our corporate website at
https://corporate.dunelm.com/sustainability .
(8) For statutory purposes FY22 included a 53(rd) week. Gross
margin is shown on a comparable 52-week basis. On a 53-week basis
FY22 gross margin was 51.2%.
(9) For statutory purposes FY22 included a 53(rd) week. PBT is
shown on a comparable 52-week basis. On a 53-week basis FY22 PBT
was GBP213m.
(10) Ordinary dividends plus special dividends plus special
distributions.
Analyst Presentation:
There will be an in-person presentation for analysts and
institutional investors this morning at 9.30am, hosted at Peel Hunt
LLP, 100 Liverpool Street, London, EC2M 2AT, as well as a webcast
and conference call with a facility for Q&A. For details,
please contact pauline.guenot@mhpgroup.com . A copy of the
presentation will be
made available at https://corporate.dunelm.com .
For further information please contact:
Dunelm Group plc investorrelations@dunelm.com
Nick Wilkinson, Chief Executive Officer
Karen Witts, Chief Financial Officer
MHP 07595 461 231
Oliver Hughes / Rachel Farrington / Charles Hirst dunelm@mhpgroup.com
Next scheduled event:
Dunelm will release its first quarter trading update on 19
October 2023.
Quarterly analysis:
52 weeks to 1 July 2023
Q1 Q2 H1 Q3 Q4 H2 FY
---------- ---------- ---------- ---------- ---------- ---------- ------------
Total sales GBP356.7m GBP478.3m GBP835.0m GBP423.3m GBP380.5m GBP803.8m GBP1,638.8m
---------- ---------- ---------- ---------- ---------- ---------- ------------
Total sales
growth -8.3% 17.6% 5.0% 6.1% 6.1% 6.1% 5.5%
---------- ---------- ---------- ---------- ---------- ---------- ------------
Digital % total
sales 33% 35% 34% 36% 39% 37% 36%
---------- ---------- ---------- ---------- ---------- ---------- ------------
52 weeks to 25 June 2022
Q1 Q2 H1 Q3 Q4(11) H2(11) FY(11)
---------- ---------- ---------- ---------- ---------- ---------- ------------
Total sales GBP388.8m GBP406.8m GBP795.6m GBP399.0m GBP358.5m GBP757.5m GBP1,553.1m
---------- ---------- ---------- ---------- ---------- ---------- ------------
Total sales 22.8
growth 8.3% 12.9% 10.6% 68.6% -5.7% % 16.2%
---------- ---------- ---------- ---------- ---------- ---------- ------------
Digital % total
sales 33% 33% 33% 35% 37% 36 % 35%
---------- ---------- ---------- ---------- ---------- ---------- ------------
(11) FY22 results shown on a comparable 52-week basis. On a
53-week basis, Q4 sales were GBP386.7m and full year sales were
GBP1,581.4m.
Notes to Editors:
Dunelm is the UK's market leader in homewares with a purpose 'to
help create the joy of truly feeling at home, now and for
generations to come'. Its specialist customer proposition offers
value, quality, choice and style across an extensive range of
c.70,000 products, spanning multiple homewares and furniture
categories and including services such as Made to Measure window
treatments.
The business was founded in 1979 by the Adderley family,
beginning as a curtains stall on Leicester market before expanding
its store footprint. The business has grown to 180 stores across
the UK and has developed a successful online offer through
dunelm.com which includes home delivery and Click & Collect
options. 152 stores now include Pausa coffee shops, where customers
can enjoy a range of hot and cold food and drinks.
From its textiles heritage in areas such as bedding, curtains,
cushions, quilts and pillows, Dunelm has built a comprehensive
offer as 'The Home of Homes' including furniture, kitchenware,
dining, lighting, outdoor, decoration and DIY. The business
predominantly sells specialist own-brand products sourced from
long-term, committed suppliers.
Dunelm is headquartered in Leicester and employs over 11,000
colleagues. It has been listed on the London Stock Exchange since
October 2006 (DNLM.L) and the business has returned over GBP1bn in
distributions to shareholders in the last ten years(12) .
(12) Ordinary dividends plus special dividends plus special
distributions.
CHAIR'S STATEMENT
In my first set of full year results with Dunelm, I am delighted
to report another year of strong sales growth and market share
gains. The last year has undoubtedly been challenging for UK
consumers and businesses alike. I have been hugely impressed by the
energy and enthusiasm with which our team has approached these
challenges, delivering a strong performance for our stakeholders
whilst continuing to think long-term and investing for the future
in light of the many opportunities we see on the horizon. We have
maintained a focus on all our key stakeholders: delighting our
loyal customers, and attracting new ones, by delivering quality and
value; strengthening relationships with our suppliers and partners;
supporting our colleagues and the communities we serve; as well as
generating strong shareholder returns. Alongside this, we are also
making good progress towards our long-term sustainability
goals.
This performance would not have been possible without the
individual contributions of our more than 11,000 colleagues, across
stores, logistics, manufacturing, customer service and support
centres. I would like to thank them all for their ongoing hard work
and dedication to the business and our customers, and for their
contribution to our unique, inclusive and positive culture which
continues to help us thrive.
Performance
FY23 saw record sales of GBP1.64bn, reflecting a strong
performance in an extremely challenging environment. As ever, we
believe that the strength and relevance of our product range is a
significant advantage, helping us to provide outstanding value to
our customers, to grow our sales and win market share.
Our sales grew by 6%(13) , and our overall market share
increased to 7.2%(14) , with gross margin of 50.1%. Profit before
tax was robust at GBP193m (FY22: GBP209m)(15) , which is
particularly pleasing given the impact of operating cost inflation
and our ongoing investment in the business. Our profit before tax
margin of 11.8% (FY22: 13.5%(15) ) was robust, demonstrating the
underlying resilience of the business and tight operational
controls.
(13) For statutory purposes FY22 included a 53(rd) week. Sales
growth shown is on a comparable 52-week basis. On a 53-week basis
sales growth was 4%.
(14) GlobalData UK combined homewares and furniture markets,
excluding kitchen and bathroom furniture. Market share for the
period July 2022 to June 2023 was 7.2%.
(15) For statutory purposes FY22 included a 53(rd) week. FY22
PBT and PBT margin are shown on a comparable 52-week basis. On a
53-week basis FY22 PBT was GBP213m and PBT margin was 13.5%.
Dividends
Consistent and strong cash generation remains an impressive
quality of Dunelm's business model. This year, the Board has
proposed a final ordinary dividend of 27 pence per share,
reflecting our strong profitability and ongoing confidence in the
business. This brings the full-year ordinary dividend to 42 pence
per share, an increase of 5% and within the range of 1.75x to 2.25x
dividend cover(16) stated in our capital and dividend policy. We
also paid a special dividend of 40 pence per share in April. In
all, we returned GBP163m of cash in dividends during the year.
We have now returned more than GBP1bn(17) to shareholders in the
last ten years, demonstrating our consistent performance and highly
cash generative business model.
(16) Dividend cover is calculated as earnings per share divided
by the total ordinary dividend relating to the financial year.
(17) Ordinary dividends plus special dividends plus special
distributions.
Doing the right thing
We build sustainability into all that we do, embedding a
long-term mindset of doing the right thing through our decisions
and processes, with a view to delivering for all our stakeholders.
You will be able to read more detail in our upcoming 2023
Sustainability Report about our progress, objectives and future
plans.
We strive to achieve product mastery across our categories,
which increasingly involves innovation to make our products more
sustainable. A fantastic example of this is Conscious Choice, a
label we introduced in 2022 to showcase own-brand products that are
made from at least 50% (by weight) more sustainable materials than
their comparable alternatives. Conscious Choice options now account
for c.15% of own-brand products across our categories and we have
plans to expand this further.
We are also working in our stores and supply chain to reduce
carbon emissions, continuing to replace gas fired heating
equipment, putting in place energy management systems, and starting
to use vehicles powered by more sustainable fuel, including
electricity and compressed natural gas, in our distribution fleet.
As a result, we have seen a further reduction in Scope 1 carbon
intensity, ahead of our targets.
Combining sustainability with customer engagement in our
communities is another positive way in which we reduce our impact
on the planet, working towards circularity. We now offer a textiles
take-back service in the majority of our stores, with over 70
tonnes per month of materials being returned by our customers. As
we move towards product circularity, we extended the impact of this
scheme by working with one of our suppliers to turn these recycled
textiles, along with other recycled fibres, into products for our
new 'Remade' range. This year we have also trialled a new Home to
Home initiative, which rehouses our customers' pre-loved
homewares.
We are still at an early stage in our sustainability journey,
and recognise there is much more to do, but we are pleased with the
progress being made and the commitment from colleagues across the
business in this important area.
Board
I was delighted to join the Board as Chair Designate last
September and take on the role of Chair in January. I am very
pleased with the diverse experience we have across both our
Executive and Non-Executive Directors and how this continues to
contribute to our performance.
I would like to thank and congratulate Andy Harrison, who
stepped down as Chair in January having joined the Board in 2014.
Andy oversaw a period of growth, particularly in organisational
capability, which left a very strong base from which we can build
going forward.
Seizing the opportunity
I am proud of what the business has achieved in my first year,
and also of its aspirations for the future. We are very mindful
that the consumer environment remains challenging and uncertain in
the near term. With the support of our brilliant colleagues, we
believe that we are well positioned to seize the opportunity to
bring value and joy to our growing base of customers across our
total retail system. As has been the case throughout Dunelm's
history, we will continue to invest wisely and to deliver for all
our stakeholders, in order to keep growing the business
sustainably, for the long term.
Alison Brittain
Chair
20 September 2023
CHIEF EXECUTIVE OFFICER'S REVIEW
Introduction
I am very pleased by what we have achieved in a trading
environment which continues to present a variety of challenges. The
macro-economic backdrop during the year continued to bring
uncertainty for colleagues, customers and suppliers, with high
levels of inflation presenting particular headwinds. The adaptable
approach we have taken during the last few years continues to serve
us well: executing successfully by pulling the levers within our
control, and maintaining good operational grip. This has allowed us
to deliver strong results for all stakeholders, grow market share,
and also given us the ability to keep investing for the future, so
that we can seize the multiple opportunities ahead of us.
Whether developing our proposition, strengthening our
relationships, improving our operations or serving our customers,
it is the work of every colleague in Dunelm and our partners that
makes this happen. For contributing their knowledge, personality,
commitment and enthusiasm, I would like to sincerely thank all of
my colleagues. Together, we are creating an ever more inclusive
workplace which, alongside our shared values, is driving
performance.
FY23 Review
A strong performance with relevance and value at its core
We delivered another strong performance in FY23. In a difficult
environment for our customers, where cost-of-living pressures were
front and centre, we sharpened our focus on relevance and value. In
the first half of the year we were able to offer customers products
such as heated clothes airers and thermal curtains to help them
keep warm and manage their budgets when energy costs were at their
highest. We continually adapt and evolve our product range, and our
offer was just as relevant in the second half of the year, when
seasonal items such as garden furniture and decorations proved
appealing.
The expansion of our range to approximately 70,000 product lines
allows us to meet more of our customers' needs for their homes, and
our relentless focus on offering outstanding value has remained as
sharp as ever across all price points. A good example of this
during the period was quickly reducing prices to pass freight cost
savings back to our customers, with over 1,000 product lines
dropping in price in the spring.
By keeping relevance and value at the heart of our proposition,
total sales grew by 6% against the comparable 52-week period in
FY22 (which also included a particularly strong Q1 as Covid
restrictions eased). Total sales were 49% higher than FY19 (the
last full year uninterrupted by the pandemic). Compared to FY22, we
had 2.8% more active customers(18) and our market share in the
combined homewares and furniture markets increased by 40bps in
challenging market conditions(19) .
Gross margin of 50.1% (FY22: 51.2%(20) ) was tightly managed
through the year and we stayed true to our principle of instilling
operational grip across the business. We saw more normalised
customer behaviour during our Sale events and carefully balanced
the impact of higher cost prices with our commitment to value. This
resulted in a robust PBT performance of GBP193m (FY22: GBP209m on a
comparable 52-week basis), which was pleasing given the tough
backdrop and reflected both tight control of margin amidst
inflation in our operating costs and our ongoing commitment to
investment for the future.
We generated strong free cash flow of GBP160m (FY22: GBP153m),
allowing us to declare a final dividend of 27p, bringing the total
ordinary dividend for the year to 42p, a year-on-year increase of
5%, reflecting our confidence in the future performance of the
business. We returned a total of GBP163m to shareholders during the
year, including a special dividend of 40p declared at the interim
results. This brings the total returned to shareholders over the
last decade to over GBP1bn(21) .
(18) Growth in unique active customers who have transacted at
least once in the 12 months to June 2023. Management estimates
using Barclays data.
(19) GlobalData UK combined homewares and furniture markets,
excluding kitchen and bathroom furniture. Market share for the
period July 2022 to June 2023 was 7.2%.
(20) For statutory purposes FY22 included a 53(rd) week. Gross
margin is shown on a comparable 52-week basis. On a 53-week basis
FY22 gross margin was 51.2%.
(21) Ordinary dividends plus special dividends plus special
distributions.
Delivering for all our stakeholders
We try to make decisions based on the needs and expectations of
our key stakeholders and are guided by our shared values.
Our committed colleagues are at the heart of our business. We
understand that the current environment is difficult for many of
them, so during the year we increased our support on financial
wellbeing, with progressive pay increases, additional support funds
and advice on a range of financial matters. We have also invested
in learning and development opportunities to promote a 'learning
for life' mindset to help colleagues to develop their careers. This
continued focus on colleague development saw us retain 87% of our
colleagues through the year(22) . Listening and learning is one of
our shared values and we undertake a twice-yearly colleague survey.
In FY23, we upgraded our colleague engagement platform, making it
two-way and encouraging colleagues to give direct feedback to their
line managers. We achieved a participation rate of 82%, making it
our most comprehensive survey to date and enabling us to achieve a
deeper level of understanding of our colleagues and to take more
targeted action.
We relentlessly strive to improve our customer proposition.
Product mastery across our broad range of categories ensures that
our offer remains relevant throughout the year, and that we are
offering quality and value at every price tier. We also continued
to develop our digital channels, giving customers even more choice
by adding c.20,000 lines to our website, and by enabling a more
convenient experience with new payment options such as Apple Pay
and Klarna.
We deepened our relationships with customers in our store
communities with membership of our local Facebook groups increasing
to over 1.1 million. Our Christmas 'Delivering Joy' campaign was
our most successful ever, with a threefold increase in the number
of gifts donated compared to FY22. We significantly increased our
charity fundraising with our customers and colleagues helping to
raise over GBP800k, of which over GBP700k was donated to our
charity partner, Mind.
We have always built long-term relationships with our suppliers
and are committed to offering them a strong partnership based on
mutual growth and respect. Together we are growing our shared
knowledge on topics like supply chain technology and
sustainability, including the use of sustainably sourced
cotton.
As we learn more about how to reduce our impact on the planet,
progress on our Pathway to Zero(23) plan continues. We are making
good progress on reducing our carbon emissions, with our
decarbonisation programme in stores contributing to a further
reduction in Scope 1 carbon intensity this year. We are also
transitioning our company car fleet to hybrid or electric vehicles.
We extended our Conscious Choice ranges, which are made from more
sustainable materials, to c.15% of our own brand range. We launched
our first 'Remade' products, using materials including those from
our take-back schemes, our first step towards product circularity.
During FY23 we moved our environmental accreditation to Better
Cotton, who are industry leaders in this area. As a result this was
a year of transition during which we did not achieve our target. We
expect to see a significant improvement in FY24 as we complete our
transition and remain committed to sourcing c.100% more responsible
cotton by 2025. Finally, we have now reduced our use of virgin
plastic packaging by 36% compared to FY20 by both reducing the
amount of packaging we are using and increasing the recycled
content.
During the year, we submitted our targets to the Science Based
Targets initiative (SBTi) and were pleased to receive confirmation,
after the year end, that our near-term and net-zero targets have
been approved by the SBTi(24) . This will see Dunelm align to the
latest climate science from the Intergovernmental Panel on Climate
Change (IPCC) by limiting the global temperature rise to
1.5degC.
(22) Retention is the percentage of colleagues from the start of
the financial year (July 2022) who remained employed until the end
of the financial year (June 2023), excluding any planned
leavers.
(23) Our Pathway to Zero commitments are described in more
detail in the sustainability section of our corporate website at
https://corporate.dunelm.com/sustainability .
(24) Our targets approved by the SBTi are as follows. Overall
Net-Zero Target: Dunelm Group PLC commits to reach net-zero
greenhouse gas emissions across the value chain by FY40 from a FY19
base year. Near-Term Targets: Dunelm Group PLC commits to reduce
absolute Scopes 1 and 2 GHG emissions by 50% by FY30 from a FY19
base year. Dunelm Group PLC also commits to reduce absolute Scope 3
GHG emissions by 50% within the same timeframe. Long-Term Targets:
Dunelm commits to reduce absolute Scope 1, 2 and 3 GHG emissions by
90% by FY40 from a FY19 base year.
Seizing the opportunity
We are excited and ambitious about seizing the opportunity ahead
of us to continue to grow sustainably. Throughout our history, we
have had a strong track record of growing sales and market share,
both in buoyant markets and in more challenging conditions. Since
our IPO in 2006, our sales have increased by a compound annual
growth rate of 10%, and in the last ten years more than 85% of this
growth has been through market share gains. In the last year,
despite consumers being under considerable pressure, we continued
to grow our sales while the overall homewares market remained
broadly flat, reflecting the gains we made in market share.
Whilst we are the homewares market leader, we still hold only a
c.7% share of the UK homewares and furniture market that is worth a
total of c.GBP24bn(25) . This significant market is highly
fragmented, giving us the opportunity to serve many different
product categories and multiple customer missions. Our most
established categories have higher market shares, which we are
confident of growing further still; at the same time we have an
opportunity to increase our share in those more nascent categories
where we are currently less well established.
We are developing and implementing our plans at a time when
consumer interest in the home remains high despite cost-of-living
pressures. Customers are seeking propositions that meet their
ever-evolving emotional and functional needs. Multi-channel
shopping is now fully established in homewares, and those
businesses that have an effective total retail system with seamless
integration between their online and store channels, as we do, have
a clear advantage. We have a strategic plan which will enable us to
capitalise on all of these themes and seize the opportunity for
sustainable growth. I give an update below on some of our key
priorities.
(25) GlobalData UK combined homewares and furniture markets,
excluding kitchen and bathroom furniture. Market share for the
period July 2022 to June 2023 was 7.2%.
A plan for sustainable growth
With our significant market share runway and deep understanding
of our customers and product categories, I have never been more
excited about our plans for the future as we seize the opportunity
to:
1. Strengthen our customer offer
2. Extend and digitalise our total retail system
3. Evolve our marketing ecosystem
1. Strengthening our customer offer
We are constantly striving to improve all parts of our customer
offer; however we are focusing our efforts in two particular areas:
offering outstanding value and helping to deliver joy to our
customers, through our products, services and customer
experience.
Value
We work tirelessly on our range architecture to offer customers
value at all price points. A good example of this is in our range
of Egyptian cotton towels, where we held prices a year ago despite
cost prices increasing. At the same time, we introduced a new
'Super Soft' range in our lowest priced 'good' quality tier. These
initiatives resulted in gains in our volume share of the bathroom
textiles category. We also demonstrate value across the range by
reducing prices as input costs fall. During the year we reduced
prices on a number of our furniture lines and lowered prices on
many products across other categories in the spring.
For us, and for our customers, value is equally important at
higher price tiers. We can see this in attitudes towards product
quality and also towards sustainability. Where we have introduced
more sustainable materials into many of our ranges we have
typically maintained, or even reduced, retail prices. For example,
we reduced the price of our Dorma 300 thread count fitted sheet
whilst re-sourcing to a more sustainable cotton, and our Teddy
throws are now made from recycled polyester at no extra cost to our
customers. We also extended the higher quality tiers in our
cushions category, with new compositions using beading, sequin
embroidery and wool blends, all hand-crafted in India. These new
and innovative designs enabled us to stretch our price points while
continuing to offer outstanding value for money.
As we grow our offer into new areas, we remain highly focused on
ensuring value at all price points, even within more nascent
categories. We have increased our curated range by approximately
20,000 products in the last year with the same product quality and
price focus. We will continue to grow our ranges in this way, with
further additions in categories such as nursery furniture and live
plants.
Joy
Alongside outstanding value, we are equally focused on
delivering joy for our customers. While shoppers will work hard to
be savvy, looking for ways to save and balancing price and quality
to meet their budget, they are also looking for their experiences
and purchases to bring them joy.
Our efforts to deliver this are reflected in how we talk to
customers in store (we track 'fast' and 'friendly' feedback scores
for every shop), how our marketing content does not take itself too
seriously, and by the selection of food and offers in our Pausa
cafes (for example the giant coronation jammy dodgers). However, we
also offer joy in our product development, in a way that few other
product companies would do. One way to bring joy is through colour,
which we have embraced in our new 'pride and joy' collections for
autumn/winter 2023. We have also extended our collaboration with
the Natural History Museum to bring customers products with
personality, and grown our Disney ranges, introducing Mickey Mouse
designs across a number of categories.
The joy of products also requires us to ensure our customers
have a high-quality shopping experience, so reducing disappointment
when something goes wrong is also a focus. We are growing our home
delivery perfect order rates, shortening lead-times, and resolving
problems efficiently when things do not go as planned.
2. Extending and digitalising our total retail system
One of the key advantages of our business model is what we call
our total retail system, which combines the benefits of physical
stores with the convenience of online shopping, and the reach of
our marketing ecosystem. Whilst digital sales have increased in
recent years (now accounting for 36% of total sales) our stores
remain fundamental to our success, not least by fulfilling an
increasingly important role in marketing to, and being a part of,
their local communities.
We have continued to expand our store estate, with three new
openings last year and our 180(th) store in Greenwich, south-east
London, opening after the year end. The ongoing programme to refit
our older stores to the latest standards for store environment and
layout also continues with good paybacks. The success of our recent
openings and attractive return on investment is encouraging, and we
see opportunity to double the run rate of new (or relocated) stores
in the next two years.
The typical Dunelm superstore has approximately 30,000 sq ft of
trading space (including a 10,000 sq ft mezzanine floor) in an
out-of-town location. We are delighted with the returns we generate
on stores like these, Weymouth being a recent example. In recent
years we have opened four smaller stores, averaging c.15,000 sq ft,
and two town-centre locations of around 30,000 sq ft. We are seeing
the same good returns across all these openings, with payback
periods averaging under three years.
With better data and insights to support location planning for
new store selection, we now expect to open five to ten new stores
(including relocations) in each of the next two years. These are
full-service Dunelm stores, amplifying our online offer and driving
local customer awareness to enable us to benefit fully from our
total retail system. We will continue to apply our usual discipline
and tight operational grip to these investments.
At the same time, we continue to digitalise our total retail
system to improve our customer offer and increase the efficiency of
our operations. In the last six months we have been able to offer
customers more convenient payment options such as Klarna, shortened
lead times through weekend deliveries and improved our
communications with customers. In addition to these improvements to
our customer offer, we have begun to roll out new product master
data management tools which will deliver benefits across our
operations, and our suppliers. Our new ChatBot has automated some
post-sale service communications, enabling more customers to
self-serve.
Over the next 12 months we will further improve our website
experience by using new search tools, introducing faster site
architecture and increasing the options for delivery of furniture
items. We will continue to expand our product offer, with new
ranges and made-to-measure categories as well as launching further
convenient payment options such as long-term credit. To improve the
efficiency of our operations, we will launch new tools for
forecasting and replenishment and improve the management of stock
in our warehouses, with both of these initiatives also increasing
availability for our customers. We will also increase our
personalised communication with customers, which we describe in
more detail below.
3. Evolving our marketing ecosystem
During the year we deepened our understanding of consumer
attitudes to the home and home shopping, giving us greater insight
into the customer opportunity for our next phase of growth.
Comprehensive research has allowed us to better understand the
attitudes of existing and target customers. For example, whilst
home continues be a strong focus for many households, motivators
can be very different, with home variously an expression of
personal style, a place of sanctuary, an opportunity to socialise,
and a place to spend time with family. The opportunity is to reach
target customers with more tailored and personalised messages which
appeal to these motivators. At the same time, growing awareness of
the breadth of our category offer will attract both new customers
and increase the shopping frequency of existing ones. At present,
Dunelm is typically only top of mind (1(st) , 2(nd) or 3(rd)
mention) for around half of the product categories we offer,
demonstrating the breadth of the opportunity.
We can reach these target audiences more effectively through our
ever-evolving marketing ecosystem. We continue to make progress
towards a single combined view of our store and online customers,
with our online payments system to be rolled out to stores in the
first half of this financial year. In the meantime we have a
significant database of online customers and those store customers
who have provided an email address. We are combining data from
multiple sources, including demographics and previous purchasing
behaviour, to begin a more targeted and personalised level of
marketing, including optimising the timing of customer
communications and customer-specific product recommendations within
marketing emails. We are also testing a more customised website,
where paid search will lead to a personalised dunelm.com landing
page with a greater range of options beyond the specifically
searched-for product. This activity is at an early stage and being
approached with our usual test and learn mindset, but we believe it
provides exciting opportunities for a better customer experience
and future growth.
At the same time we continue to develop the effectiveness of our
paid marketing channels and have now performed testing on the
effectiveness of most of our brand and performance marketing spend.
Tests conducted in the year have given us the confidence to
increase our brand marketing investment. Our new brand campaign is
launching this autumn and is our most ambitious ever.
Summary and Outlook
We delivered another strong performance in FY23 in a challenging
environment. We continued to think long term and invest for the
future while delivering a strong performance for our stakeholders.
Record sales, continued growth in market share and customer
numbers, and good strategic progress were underpinned by our tight
operational grip on gross margin and costs.
Consumers are still responding to their own cost-of-living
pressures and there remains uncertainty as to what this means for
discretionary spend. Against this backdrop we remain focused on our
proposition and ensuring our customer offer is as relevant as ever.
In that context, we are pleased with trading early in the new
financial year.
We have a clear plan for sustainable growth and the work we are
doing to strengthen our customer offer, extend and digitalise our
total retail system and evolve our marketing ecosystem leave us
well positioned to capitalise on the opportunities available for
our business. We have never been more confident about our short,
medium and long-term prospects and will therefore continue to
invest where we see good returns, including in accelerating our
store estate growth.
We are excited to continue to deliver our strong performance
record in the year ahead.
Nick Wilkinson
Chief Executive Officer
20 September 2023
CHIEF FINANCIAL OFFICER'S REVIEW
Revenue
Total sales for the period to 1 July 2023 increased by 5.5% to
GBP1,639m on a comparable 52-week basis (FY22 52w: GBP1,553m, FY22
53w: GBP1,581m). Compared to FY19 (the last fully comparable year
before the pandemic), total sales grew by 49% (FY19:
GBP1,100m).
FY23 YoY YoY
(52 weeks) (52w v 52w) (52w v 53w)
Total Group sales GBP1,638.8m +5.5% +3.6%
-------------- -------------- --------------
Digital % total 36% +1ppt +1ppt
sales
--------------
FY23 YoY
-------------- --------------
Active customer
growth(26) N/A +2.8%
-------------- --------------
Homewares market 11.0% +70bps
share(27)
-------------- --------------
Furniture market 2.0% +0bps
share(27)
-------------- --------------
We saw strong sales growth for the year despite the challenging
market conditions and particularly strong comparative in Q1 (due to
our rescheduled Summer Sale and pent-up demand following the final
Covid related lockdown). We were pleased to see growth increasingly
from volume as we progressed through the year. Sales increased both
in stores and online, with digital sales now making up 36% of total
sales, up 16ppts since FY19.
Growth was broad based across categories as we focused on
relevance and value throughout the year. Customers enjoyed shopping
our Winter Warm ranges as they looked for ways to mitigate rising
heating costs. Similarly, our Summer Living collections, in
particular garden furniture and decorations, performed well in the
warmer weather towards the end of the financial year. Our two main
Sale events also resonated with our home-loving customers. We
continued to improve and expand our offering, adding 20,000
carefully curated products online while extending our Conscious
Choice range of sustainability-focused lines.
We continued to focus on offering outstanding value to our
customers across all our categories and price points. As a result
of our relentless focus on value we were pleased to be able to pass
on cost savings from lower freight rates and reduce prices on over
1,000 lines in the final quarter of the year.
Our broad product offer continues to resonate well with our
customers and the number of active customers increased by 2.8%(26)
in FY23, with an increase in customer retention. We were pleased to
see higher growth in the younger (16 to 24 years) and lower income
(<GBP20k) groups, reflecting our growing appeal and focus on
value.
We continued to gain market share, with our sales growing
year-on-year and our share increasing by 40bps to 7.2%(27) against
a combined market for furniture and homewares which was broadly
flat. We were pleased to grow share in homewares by a further 70bps
to 11.0%(27) . Our market share in furniture, where we have been
building a stronger customer offer and operating model, was broadly
flat. Sales across our furniture categories increased by 4%
year-on-year, with a particularly strong performance in upholstery
ranges being partly offset by lower sales in cabinet
categories.
(26) Growth in unique active customers who have transacted at
least once in the 12 months to June 2023. Management estimates
using Barclays data.
(27) GlobalData UK homewares and furniture markets, July 2022 to
June 2023. Furniture excludes kitchen and bathroom furniture. FY22
has been restated.
Gross margin
Gross margin of 50.1% was in line with expectations and 110bps
lower than last year (FY22 52w: 51.2%, FY22 53w: 51.2%), reflecting
both a return to more normal patterns of customer behaviour in our
Sale events as well as the impact of higher input cost prices.
We have good visibility of FY24 input costs. We plan our
purchasing for each season, which helps us manage changes in raw
material prices, freight costs and foreign exchange within our
margin rates. Looking ahead, we will continue to balance the impact
of these with our commitment to offering outstanding value to our
customers. We expect a net tailwind from these factors this year,
as well as the sustainable benefit from the operational actions we
have taken in recent years, and therefore expect gross margin in
FY24 to be c.100bps higher than FY23.
Operating costs
Total operating costs were GBP622m (FY22 52w: GBP582m, FY22 53w:
GBP592m), representing an operating cost:sales ratio of 38.0% (FY22
52w: 37.5%, FY22 53w: 37.4%).
We maintain a tight operational grip on costs and have worked
hard to offset inflationary impacts of c.GBP20m, mainly relating to
wages, through operational efficiencies. Efficiencies in stores and
the supply chain, as well as the removal of excess storage costs,
and other small one-off impacts generated savings of GBP18m.
Volume growth added GBP8m of costs to our distribution network
and performance marketing spend. The annualisation of investments
during FY22 and new store openings added GBP7m to operating costs
in the period. Our investments in recent years have delivered
strong sales growth and so we continued to invest, increasing spend
by GBP22m on digitalisation and building new capability in data,
technology and insight and analytics.
We are focused on seizing opportunities for growth and will
continue to deploy resources thoughtfully in digitalisation,
capability, and accelerating our store roll out plans. We have been
gaining new insight into the effectiveness of our marketing spend
and our data-led approach is giving us confidence to invest more in
areas such as brand marketing in order to expand our reach. We will
continue to invest in digitalising our total retail system as well
as expanding our store portfolio. We also expect inflationary
pressures to continue in FY24, which we will partially mitigate
through productivity improvements. While our focus remains on tight
operational grip and making every pound count, we expect our
operating cost:sales ratio to increase to c.39% in FY24.
Profit and earnings per share
Operating profit of GBP199m was GBP15m lower than the comparable
period in FY22 (FY22 52w: GBP214m, FY22 53w: GBP218m), against a
tough backdrop and reflected both tight control of margin amidst
inflation in our operating costs and our ongoing commitment to
investment for the future.
Net finance costs of GBP6m (FY22 52w: GBP5m, FY22 53w: GBP5m)
included interest on IFRS 16 lease liabilities of GBP5m (FY22 52w:
GBP5m, FY22 53w: GBP5m).
Profit before tax in the period was GBP193m (FY22 52w: GBP209m,
FY22 53w: GBP213m), a reduction of GBP16m year-on-year on a
comparable 52-week basis. Profit after tax of GBP152m (FY22 52w:
GBP168m, FY22 53w: GBP171m) reflected an effective tax rate of
21.2% (FY22: 19.5%). The increase in the effective tax rate is
broadly in line with the increase to the UK headline rate of
corporation tax, which moved from 19% to 25% for the final three
months of the year. The effective tax rate was 70bps higher than
the UK headline rate, due to our usual items of disallowable
expenditures.
In FY24 we expect PBT to be higher than FY23, and the effective
tax rate to continue to trend slightly above the headline rate of
25% from FY24.
Basic earnings per share (EPS) for the period was 75.2 pence
(FY22 52w: 83.0 pence, FY22 53w: 84.5 pence). Diluted earnings per
share was 75.0 pence (FY22 52w: 82.1 pence, FY22 53w: 83.6
pence).
Cash generation and net debt
In the period, the Group generated GBP160m of free cash flow
(FY22: GBP153m), with strong conversion of operating profit to free
cash flow of 81% (FY22: 70%).
FY23 (52 weeks) FY22 (53 weeks)
GBPm GBPm
Operating profit 198.8 217.7
---------------- ----------------
Depreciation and amortisation(28) 79.4 79.3
---------------- ----------------
Net movement in working capital (4.2) (14.8)
---------------- ----------------
Share-based payments 4.8 4.8
---------------- ----------------
Tax paid (38.2) (35.2)
---------------- ----------------
Net cash generated from operating
activities 240.6 251.8
---------------- ----------------
Capex and business combinations (21.8) (41.7)
---------------- ----------------
Net interest and loan transaction costs(29) (1.1) (2.1)
---------------- ----------------
Interest paid on lease liabilities (5.3) (4.8)
---------------- ----------------
Repayment of principal element of lease
liabilities (52.0) (50.2)
---------------- ----------------
Free cash flow 160.4 153.0
---------------- ----------------
(28) Including impairment and loss on disposal.
(29) Excluding interest on lease liabilities.
There was a small working capital outflow of GBP4m in the period
(FY22: GBP15m outflow). The prior year outflow reflected the
decision to build inventory in order to mitigate the risk of
further supply chain disruption. Whilst inventories at the end of
FY23 of GBP211m (FY22: GBP223m) were lower than FY22, the resulting
working capital inflow was broadly offset by a reduction in
payables due to lower accruals, including freight accruals. We
expect working capital in FY24 to be broadly stable.
Total capital investment of GBP22m (FY22: GBP42m) primarily
related to GBP19m spent on the three new stores opened in the
period, refits of ten existing stores, and our decarbonisation
initiatives. FY22 included GBP18m paid to acquire the trade and
assets of Sunflex, a division of Hunter Douglas (UK) Limited. We
expect to increase the rate of new store openings to five to ten
(including relocations) in FY24, therefore capital expenditure will
increase to c.GBP30-40m.
Cash tax paid was GBP38m (FY22: GBP35m) reflecting the higher
effective tax rate. FY22 also included cash receipts in relation to
research and development claims made at the end of FY21.
In the period, the Group spent GBP7m (FY22: GBP28m) purchasing
shares to be held in treasury to satisfy future obligations under
its employee share schemes. The Group held 1.7m shares in treasury
as at 1 July 2023.
After total dividend payments in the period of GBP163m (FY22:
GBP282m), the Group ended the year with net debt(30) of GBP31m
(FY22: GBP24m).
(30) Excluding lease liabilities. Full definition provided in
the table of alternative performance measures.
Banking agreements
At the year end date, the Group had in place a GBP185m
sustainability-linked unsecured revolving credit facility ("RCF").
The terms of the RCF included covenants in respect of leverage (net
debt(31) to be no greater than 2.5× adjusted EBITDA(32) ) and fixed
charge cover (EBITDAR(33) to be no less than 1.75× fixed
charges(34) ), both of which were met comfortably as at 1 July
2023.
Since the year end the Group has renegotiated its RCF, extending
the limit to GBP250m to reflect the growth in the business in
recent years. The maturity date is September 2027 with an option to
extend by a further two years at Dunelm's request, subject to
lender consent. The terms are consistent with normal business
practice and the covenants are unchanged. In addition, the Group
maintains GBP10m of uncommitted overdraft facilities.
(31) Excluding lease liabilities. Full definition provided in
the table of alternative performance measures.
(32) Adjusted EBITDA defined as EBITDA less d epreciation on
right-of-use assets.
(33) EBITDAR defined as EBITDA plus rent.
(34) Fixed charges are defined as net interest costs plus
right-of-use asset depreciation plus rent.
Going concern
At the time of approving the financial statements, the Board of
Directors is required to formally assess that the business has
adequate resources to continue in operational existence and as such
can continue to adopt the 'going concern' basis of accounting. To
support this assessment, the Board is required to consider the
Group's current financial position, its strategy, the market
outlook, and its principal risks.
The key judgement that the Directors have considered in forming
their conclusion is the potential impact on future revenue, profits
and cash flows of a downturn in consumer spending, away from
homewares, due to the current economic environment. This scenario
might result in no growth in Year 1, and lower sales and margin
across all channels throughout the five-year review period. They
have also considered a deeper downturn in consumer spending away
from homewares, resulting in negative growth in Year 1 and lower
sales and margin across all channels throughout the review
period.
In both downside scenarios Dunelm has sufficient liquidity to
continue trading, including maintaining the payment of dividends in
line with its dividend policy, and to comfortably meet its
financial covenants. The Directors continue to assess the risks
that climate change poses to the business and climate change is not
expected to have a significant impact on the Group's going concern
assessment or on the viability of the Group over the next five
years.
Reverse stress modelling has demonstrated that a prolonged sales
reduction of 23% in FY24 and 28% in FY25 is required to breach
covenants by the end of FY25 and a reduction of 47% in both FY24
and FY25 is required to breach the RCF limit by the end of FY25,
assuming reasonable mitigating actions have been implemented. The
Directors do not believe the reverse stress tests represent
plausible scenarios. Even in such an event, management would follow
a similar course of action to that initially undertaken during the
recent Covid-19 pandemic. Such actions could include further
reductions in discretionary spend (e.g. marketing and travel) and
capital investment in new stores and refits, and reducing
headcount.
As a result, the Board believes that the Group is well placed to
manage its financing and other significant risks satisfactorily and
that the Group will be able to operate within the level of its
facilities and meet its liabilities as they fall due, for at least
the next five years. For this reason, the Board considers it
appropriate for the Group to adopt the going concern basis in
preparing its financial statements.
Capital and dividend policies
The Board policy on capital structure targets an average net
debt level (excluding lease obligations and short-term fluctuations
in working capital) of between 0.2× and 0.6× the last 12 months'
EBITDA(35) . The Group's dividend policy targets ordinary dividend
cover of between 1.75× and 2.25× earnings per share during the
financial year to which the dividend relates.
The Board will continue to consider returning surplus cash to
shareholders if average net debt, excluding lease liabilities, over
a period, consistently falls below the minimum target of 0.2×
EBITDA(35) , subject to known and anticipated investment and
expenditure plans at the time.
The Group's full capital and dividend policies are available on
our website at corporate.dunelm.com .
(35) EBITDA defined as operating profit plus d epreciation and
amortisation of property, plant and equipment and intangible assets
plus l oss on disposal and impairment of property, plant and
equipment and intangible assets plus d epreciation on right-of-use
assets.
Dividends
The Board has proposed a final ordinary dividend of 27 pence per
share, recognising our strong performance in the year and our
ongoing confidence in the business. This takes the full year
ordinary dividend to 42 pence per share, 5% ahead of the 40 pence
per share paid in FY22, with dividend cover(36) of 1.8×, which is
within the range of our stated policy. The final dividend will be
paid on 20 November 2023 to shareholders on the register on 27
October 2023, subject to it being approved by shareholders at the
AGM.
We paid total dividends of GBP163m in the year, including a
special dividend of GBP81m.
(36) Dividend cover is calculated as earnings per share divided
by the total ordinary dividend relating to the financial year.
Principal risks and uncertainties
The Board regularly reviews and monitors the risks and
uncertainties which could have a material effect on the Group's
results.
This year we separated 'business change risk' from the 'IT
systems, data, and cyber risk' to reflect our ongoing investment in
change programmes that are key to our strategy and the delivery of
further growth and efficiencies. We consider this an increasing
risk in the short-term as we take on larger and more complex
projects. However, it is anticipated that the risk will stabilise
as we continue to deliver.
We removed 'catastrophic business events' as a standalone
principal risk. The impact of, and approach that we would take, to
large disruptive events has been considered as part of our review
and ongoing management of each of the other principal risks. Our
approach is supported, amongst other things, by learnings from our
response to the pandemic and our business continuity plans.
A summary of the principal risks has been provided below:
Risk Impact
Customer Ongoing external uncertainty and inflationary pressure on
offer consumers has led to significant change in consumer behaviour.
Failure to respond to changing consumer needs and to maintain
a competitive offer (value & choice, friendly & expert,
fast & convenient and good & circular) will undermine our
ambition to increase market share and drive profitable and
sustainable growth.
-----------------------------------------------------------------------
Product Our stakeholders expect us to deliver products that are
reputation safe, compliant with legal and regulatory requirements,
and trust and fit for purpose. Our customers are increasingly aware
of the environmental and social impact of their purchases
and want to know that our products have been responsibly
sourced and that their environmental impact is minimised.
Nonconformance by our suppliers to uphold our approach to
business ethics, human rights (including safety and modern
slavery) and the environment may undermine our reputation
as a responsible retailer.
Failure to meet these expectations could result in reputational
damage and loss of confidence in Dunelm.
-----------------------------------------------------------------------
People Our business could be adversely impacted if we fail to attract,
and culture retain, and develop colleagues with the appropriate skills,
capabilities and diverse background.
Failing to embed and live our values could impact business
performance, the delivery of our purpose and the long-term
sustainability of our business.
-----------------------------------------------------------------------
IT systems, Our IT systems and infrastructure are critical to managing
data and our operations, interacting with customers, and trading
cyber security successfully.
A key system being unavailable or suffering a security breach
could lead to operational difficulties, loss of sales and
productivity, legal and regulatory penalties due to loss
of personal data, reputational damage, and loss of stakeholder
trust.
-----------------------------------------------------------------------
Business Dunelm recognises that there is a huge opportunity in digitalising
change the business and has invested and will continue to invest
in system improvements to drive growth and efficiency.
Failing to successfully introduce and deliver wider technology
and new systems across the business and leverage the data
generated to further improve our proposition and operations
could result in reduced operational efficiency, competitiveness,
relevance and growth. Furthermore, failure to deliver the
expected objectives on time and on budget, could impact
the delivery of the planned business benefits.
-----------------------------------------------------------------------
Regulatory We operate in an increasingly regulated environment and
and compliance must comply with a wide range of laws, regulations, and
standards.
Failure to comply with or to take appropriate steps to prevent
a breach of these requirements could result in formal investigations,
legal and financial penalties, reputational damage and loss
of business.
-----------------------------------------------------------------------
Supply We are dependent on complex global supply chains and fulfilment
chain resilience solutions to deliver products to our customers. Instability
in the global supply chain or failure of a key supplier
may impact our ability to effectively manage stock and satisfy
customer demand.
-----------------------------------------------------------------------
Finance Progress against business objectives may be constrained
and treasury by a lack of short-term funding or access to long-term capital.
-----------------------------------------------------------------------
Climate Failure to positively change our impact on the environment
change would fall short of the expectations of our customers, colleagues,
and environment shareholders, and other stakeholders which could lead to
reputational damage and financial loss.
In addition, an inability to anticipate and mitigate against
climate change and other environmental risks could cause
disruption in the availability and quality of raw materials
such as cotton and timber, affecting production capacity,
product quality, and overall supply chain resilience. This,
and potential transition risks related to environmental
taxation, could result in higher costs, delays, and potential
loss of customers.
-----------------------------------------------------------------------
Alternative performance measures (APMs)
APM Definition, purpose and reconciliation to statutory
measure
Unique active Growth in unique active customers who have shopped in
customers growth a 12-month period compared to the prior 12-month period
, based on Barclays transactional data. Note that Barclays
data represents approximately 10% of total Dunelm transactions.
To measure whether we are continuing to grow our active
customer base - from both new customers and retention
of existing customers.
-----------------------------------------------------------------
Total sales Equivalent to revenue (from all channels). This is net
of customer returns.
-----------------------------------------------------------------
Digital sales Digital sales include home delivery, Click & Collect
and tablet-based sales in store.
-----------------------------------------------------------------
Digital % total Digital sales (as defined above) expressed as a percentage
sales of revenue. This is not a measure that we seek to maximise
in itself, but we measure it to track our adaptability
to changing customer behaviours.
-----------------------------------------------------------------
Ordinary dividend Ordinary dividend cover is calculated as earnings per
cover share divided by the total ordinary dividend relating
to the financial year. This measure is used in our capital
and dividend policy.
-----------------------------------------------------------------
Gross margin Gross profit expressed as a percentage of revenue. Measures
% the profitability of product sales prior to operating
costs.
-----------------------------------------------------------------
Operating costs Operating costs expressed as a percentage of revenue.
to sales ratio To measure the growth of costs relative to sales growth.
-----------------------------------------------------------------
EBITDA Earnings before interest, tax, depreciation, amortisation
and impairment. Operating profit plus depreciation and
amortisation of property, plant and equipment, right-of-use
assets and intangible assets plus loss on disposal and
impairment of property, plant and equipment and intangible
assets. Used in our capital and dividend policy.
-----------------------------------------------------------------
Adjusted EBITDA EBITDA less d epreciation on right-of-use assets. To
measure compliance with bank covenants
-----------------------------------------------------------------
EBITDAR EBITDAR is calculated as EBITDA plus rent. To measure
compliance with bank covenants
-----------------------------------------------------------------
Effective tax Taxation expressed as a percentage of profit before taxation.
rate To measure how close we are to the UK corporation tax
rate and understand the reasons for any differences.
-----------------------------------------------------------------
Capex (net Acquisition of intangible assets and acquisition of property,
of disposals) plant and equipment less proceeds on disposal of property,
plant and equipment and intangibles.
-----------------------------------------------------------------
Free cash flow Free cash flow is defined as net cash generated from
operating activities less capex (net of disposals) and
business combinations, net interest paid (including leases)
and loan transaction costs, and repayment of principal
element of lease liabilities. Measures the cash generated
that is available for disbursement to shareholders.
-----------------------------------------------------------------
Net cash/(debt) Cash and cash equivalents less total borrowings (as shown
in note 12). Excludes IFRS 16 lease liabilities.
-----------------------------------------------------------------
Cash conversion Free cash flow expressed as a percentage of operating
profit.
-----------------------------------------------------------------
Karen Witts
Chief Financial Officer
20 September 2023
Consolidated Income Statement
For the 52 weeks ended 1 July 2023
2023 2022
52 weeks 53 weeks
Note GBP'm GBP'm
Revenue 1,638.8 1,581.4
Cost of sales (817.9) (772.0)
---------------------------------------- ----- ----------- -----------
Gross profit 820.9 809.4
Operating costs 2 (622.1) (591.7)
---------------------------------------- ----- ----------- -----------
Operating profit 3 198.8 217.7
Financial income 5 1.7 1.2
Financial expenses 5 (7.8) (6.1)
---------------------------------------- ----- ----------- -----------
Profit before taxation 192.7 212.8
Taxation 6 (40.8) (41.6)
----------------------------------------
Profit for the period 151.9 171.2
---------------------------------------- ----- ----------- -----------
Earnings per Ordinary Share
- basic 8 75.2p 84.5p
Earnings per Ordinary Share
- diluted 8 75.0p 83.6p
---------------------------------------- ----- ----------- -----------
Consolidated Statement of Comprehensive Income
For the 52 weeks ended 1 July 2023
2023 2022
52 weeks 53 weeks
Note GBP'm GBP'm
----------- -----------
Profit for the period 151.9 171.2
Other comprehensive (expense)/income:
Items that may be subsequently reclassified to profit or loss:
Movement in fair value of cash flow hedges (14.0) 32.4
Deferred tax on hedging movements 6.6 (5.3)
Other comprehensive (expense)/income for the period, net of tax (7.4) 27.1
------------------------------------------------------------------------------------- ----------- -----------
Total comprehensive income for the period 144.5 198.3
------------------------------------------------------------------------------------- ----------- -----------
Consolidated Statement of Financial Position
As at 1 July 2023
Note 1 July 2 July
2023 2022
GBP'm GBP'm
----------------------------------------------------------- ----- -------- --------
Non-current assets
Intangible assets 9 5.3 9.9
Property, plant and equipment 10 169.9 173.7
Right-of-use assets 11 231.3 248.5
Deferred tax assets 6.9 4.1
Derivative financial instruments - 4.6
Total non-current assets 413.4 440.8
------------------------------------------------------------- ----- -------- --------
Current assets
Inventories 211.0 223.0
Trade and other receivables 24.3 22.9
Current tax asset - 1.1
Derivative financial instruments 1.8 19.9
Cash and cash equivalents 46.3 30.2
Total current assets 283.4 297.1
------------------------------------------------------------- ----- -------- --------
Total assets 696.8 737.9
------------------------------------------------------------- ----- -------- --------
Current liabilities
Trade and other payables (208.1) (223.2)
Lease liabilities 11 (53.4) (52.8)
Current tax liability (0.2) -
Derivative financial instruments (7.9) -
Total current liabilities (269.6) (276.0)
------------------------------------------------------------- ----- -------- --------
Non-current liabilities
Bank loans 12 (75.9) (52.8)
Lease liabilities 11 (204.8) (225.3)
Provisions (5.9) (5.5)
Derivative financial instruments (3.1) -
Total non-current liabilities (289.7) (283.6)
------------------------------------------------------------- ----- -------- --------
Total liabilities (559.3) (559.6)
------------------------------------------------------------- ----- -------- --------
Net assets 137.5 178.3
------------------------------------------------------------- ----- -------- --------
Equity
Issued share capital 2.0 2.0
Share premium account 1.7 1.7
Capital redemption reserve 43.2 43.2
Hedging reserve (6.9) 20.2
Retained earnings 97.5 111.2
Total equity attributable to equity holders of the Parent 137.5 178.3
------------------------------------------------------------- ----- -------- --------
Karen Witts
Chief Financial Officer
20 September 2023
Consolidated Statement of Cash Flows
For the 52 weeks ended 1 July 2023
Note 2023 2022
52 weeks 53 weeks
GBP'm GBP'm
----------------------------------------- ---- ---- ----- ----------- -----------
Cash flows from operating activities
Profit before taxation 192.7 212.8
Net financial expense 5 6.1 4.9
----------- -----------
Operating profit 198.8 217.7
Depreciation and amortisation of property,
plant and equipment and intangible assets 3 29.8 30.5
Depreciation of right-of-use
assets 3 49.3 48.6
Loss on disposal and impairment of property,
plant and equipment and intangible assets 3 0.3 0.3
Gain on disposal and impairment
of right-of-use assets 3 - (0.1)
Share-based payments expense 4.8 4.8
----------- -----------
Operating cash flows before movements
in working capital 283.0 301.8
Decrease/(increase) in inventories 12.0 (40.3)
Increase in trade and other receivables (1.6) (7.7)
(Decrease)/increase in trade
and other payables (14.6) 33.2
----------- -----------
Net movement in working capital (4.2) (14.8)
Tax paid (38.2) (35.2)
----------------------------------------------------- ----- ----------- -----------
Net cash generated from operating
activities 240.6 251.8
Cash flows from investing activities
Acquisition of intangible assets (0.4) (0.7)
Acquisition of property, plant
and equipment (21.4) (23.3)
Acquisition of business combination - (17.7)
Interest received 1.1 0.1
----------------------------------------------------- ----- -----------
Net cash used in investing activities (20.7) (41.6)
----------------------------------------------------- ----- ----------- -----------
Cash flows from financing activities
Proceeds from issue of treasury shares
and Ordinary Shares 2.4 3.9
Purchase of treasury shares (7.0) (28.3)
Drawdowns on Revolving Credit
Facility 139.0 85.0
Repayments of Revolving Credit
Facility (116.0) (31.0)
Interest paid and loan transaction
costs (2.2) (2.2)
Interest paid on lease liabilities 11 (5.3) (4.8)
Repayment of principal element
of lease liabilities (52.0) (50.2)
Ordinary dividends paid 7 (163.3) (282.1)
Net cash used in financing activities (204.4) (309.7)
----------------------------------------------------- ----- ----------- -----------
Net increase/(decrease) in cash
and cash equivalents 15.5 (99.5)
Foreign exchange revaluations 5 0.6 1.1
Cash and cash equivalents at the beginning
of the period 30.2 128.6
Cash and cash equivalents at
the end of the period 46.3 30.2
----------------------------------------------------- ----- ----------- -----------
Consolidated Statement of Changes in Equity
For the 52 weeks ended 1 July 2023
Total equity
attributable
Capital to equity
Issued share Share premium redemption Hedging Retained holders of
Note capital account reserve reserve earnings the Parent
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
--------------- ----- -------------- -------------- -------------- -------------- -------------- --------------
As at 27 June
2021 2.0 1.6 43.2 (4.3) 238.7 281.2
Profit for the
period - - - - 171.2 171.2
Movement in
fair value of
cash flow
hedges - - - 32.4 - 32.4
Deferred tax
on hedging
movements - - - (5.3) - (5.3)
--------------- ----- -------------- -------------- -------------- -------------- -------------- --------------
Total
comprehensive
income for
the period - - - 27.1 171.2 198.3
Proceeds from
issue of
shares - 0.1 - - - 0.1
Proceeds from
issue of
treasury
shares - - - - 3.9 3.9
Purchase of
treasury
shares - - - - (28.3) (28.3)
Share-based
payments - - - - 4.8 4.8
Deferred tax
on
share-based
payments - - - - 0.8 0.8
Current tax on
share options
exercised - - - - 2.2 2.2
Movement on
cash flow
hedges
transferred
to inventory - - - (2.6) - (2.6)
Ordinary
dividends
paid 7 - - - - (282.1) (282.1)
Total
transactions
with owners,
recorded
directly in
equity - 0.1 - (2.6) (298.7) (301.2)
--------------- ----- -------------- -------------- -------------- -------------- -------------- --------------
As at 2 July
2022 2.0 1.7 43.2 20.2 111.2 178.3
Profit for the
period - - - - 151.9 151.9
Movement in
fair value of
cash flow
hedges - - - (14.0) - (14.0)
Deferred tax
on hedging
movements - - - 6.6 - 6.6
Total
comprehensive
income for
the period - - - (7.4) 151.9 144.5
Proceeds from
issue of
treasury
shares - - - - 2.4 2.4
Purchase of
treasury
shares - - - - (7.0) (7.0)
Share-based
payments - - - - 4.8 4.8
Deferred tax
on
share-based
payments - - - - (3.1) (3.1)
Current tax on
share options
exercised - - - - 0.6 0.6
Movement on
cash flow
hedges
transferred
to inventory - - - (19.7) - (19.7)
Ordinary
dividends
paid 7 - - - - (163.3) (163.3)
Total
transactions
with owners,
recorded
directly in
equity - - - (19.7) (165.6) (185.3)
--------------- ----- -------------- -------------- -------------- -------------- -------------- --------------
As at 1 July
2023 2.0 1.7 43.2 (6.9) 97.5 137.5
--------------- ----- -------------- -------------- -------------- -------------- -------------- --------------
Accounting Policies
For the 52 weeks ended 1 July 2023
Basis of preparation
The financial statements presented cover a 52 week trading
period for the financial period ended 1 July 2023 (2022: 53 week
period ended 2 July 2022).
The annual report and financial statements for the period ended
1 July 2023 were approved by the Board of Directors on 20 September
2023 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 period
ended 1 July 2023 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 period ended
2 July 2022 have been delivered to the Registrar of Companies. The
auditor's report on the statutory accounts for the period ended 2
July 2022 was unqualified and did not contain a statement under
section 498 of the Companies Act 2006.
1. Revenue
The Group has one reportable segment, in accordance with IFRS 8
'Operating Segments', which is the retail of homewares in the
UK.
Customers access the Group's offer across multiple channels and
their journey often involves more than one channel. Therefore,
internal reporting focuses on the Group as a whole and does not
identify individual segments.
The Chief Operating Decision-maker is the Executive Board of
Directors of Dunelm Group plc. The Executive Board reviews internal
management reports on a monthly basis and performance is assessed
based on a number of financial and non-financial KPIs as well as on
profit before taxation.
Management believes that these measures are the most relevant in
evaluating the performance of the Group and for making resource
allocation decisions.
All material operations of the Group 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.
At the year end the Group had GBP13.8m (2022: GBP12.2m) of sales
orders placed that will be recognised in the Consolidated Income
Statement when the goods are despatched in the following financial
year.
2. Operating costs
2023 2022
52 weeks 53 weeks
GBP'm GBP'm
Selling and distribution costs 489.7 469.4
Administrative expenses 132.4 122.3
-----------
622.1 591.7
-------------------------------------------- ----------- -----------
3. Operating profit
Operating profit is stated after charging / (crediting) the
following items:
2023 2022
52 weeks 53 weeks
GBP'm GBP'm
Cost of inventories included in cost of sales 803.4 765.3
Amortisation of intangible assets 4.6 6.2
Depreciation of owned property, plant and equipment 25.2 24.3
Depreciation of right-of-use assets 49.3 48.6
Loss on disposal and impairment of property, plant and
equipment and intangible assets 0.3 0.3
Gain on disposal and impairment of right-of-use assets - (0.1)
Expense related to short-term leases 1.6 0.6
---------------------------------------------------------------- ------------------------- -------------------------
The cost of inventories included in cost of sales includes the
impact of a net decrease in the provision for obsolete inventory of
GBP0.8m (2022: GBP4.2m increase) of which GBP0.7m decrease relates
to Sunflex which was acquired in May 2022 (2022: GBP2.6m
increase).
The analysis of the auditor's remuneration is as follows:
2023 2022
52 weeks 53 weeks
GBP'000 GBP'000
Fees payable to the Group's auditor for the audit of the Parent and consolidated
annual financial
statements 34 46
Fees payable to the Group's auditor and its associates for other services to
the Group
- Audit of the Company's subsidiaries pursuant to legislation 293 256
- Other assurance services 46 42
---------------------------------------------------------------------------------- ------- ----------- -----------
4. Employee numbers and costs
The average monthly number of people employed by the Group
(including Directors) was:
2023 2023 2022 2022
52 weeks 52 weeks 53 weeks 53 weeks
Number Full time Number Full time
of heads equivalents of heads equivalents
---------------- --- ----------- ------------- ----------- -------------
Selling 9,446 5,252 9,544 5,437
Distribution 1,057 1,026 963 930
Administration 1,099 1,082 925 906
11,602 7,360 11,432 7,273
-------------------- ----------- ------------- ----------- -------------
The aggregate remuneration of all employees (including
Directors) comprises:
2023 2022
52 weeks 53 weeks
GBP'm GBP'm
----------------------------------------------------- --- --- --- ----------- -----------
Wages and salaries (including termination benefits) 224.8 211.1
Social security costs 16.1 14.4
Share-based payment expense 4.8 4.8
Pension costs - defined contribution plans 6.2 5.2
251.9 235.5
----------------------------------------------------------------- ----------- -----------
5. Financial income and expenses
2023 2022
52 weeks 53 weeks
GBP'm GBP'm
------------------------------------------- --- --- --- ----------- -----------
Financial income
Interest on bank deposits 1.1 0.1
Net foreign exchange gains 0.6 1.1
1.7 1.2
------------------------------------------------------- ----------- -----------
Financial expenses
Interest on bank borrowings (2.2) (0.9)
Amortisation of issue costs of bank loans (0.3) (0.4)
Interest on lease liabilities (5.3) (4.8)
(7.8) (6.1)
------------------------------------------------------- ----------- -----------
Net financial expense (6.1) (4.9)
---------------------------------------------------------- ----------- -----------
6. Taxation
2023 2022
52 weeks 53 weeks
GBP'm GBP'm
------------------------------------------ --- --- --- ----------- -----------
Current taxation
UK corporation tax charge for the period 40.0 39.0
Adjustments in respect of prior periods 0.1 (0.2)
40.1 38.8
------------------------------------------------------ ----------- -----------
Deferred taxation
Origination of temporary differences 0.7 3.0
Adjustments in respect of prior periods 0.1 (0.2)
Impact of change in tax rate (0.1) -
0.7 2.8
------------------------------------------------------ ----------- -----------
Total tax expense 40.8 41.6
--------------------------------------------------------- ----------- -----------
The tax expense is reconciled with the standard rate of UK
corporation tax as follows:
2023 2022
52 weeks 53 weeks
GBP'm GBP'm
------------------------------------------------------------ --- --- --- ----------- -----------
Profit before taxation 192.7 212.8
UK corporation tax at standard rate of 20.5% (2022: 19.0%) 39.5 40.4
Factors affecting the charge in the period:
Non-deductible expenses 1.2 1.6
Adjustments in respect of prior periods 0.2 (0.4)
Impact of change in tax rate (0.1) -
Tax expense 40.8 41.6
--------------------------------------------------------------------------- ----------- -----------
The taxation expense for the period as a percentage of profit
before tax is 21.2% (2022: 19.5%).
The UK Government substantively enacted an increase in the
corporation tax rate to 25.0% effective from 1 April 2023. The
deferred tax asset as at 1 July 2023 has been calculated based on
the rate of 25.0%.
7. Dividends
The dividends set out in the table below relate to the 1 pence
Ordinary Shares:
2023 2022
52 weeks 53 weeks
GBP'm GBP'm
---------------------------------------------------- ------------------- --- --- ----------- -----------
Special dividend for the period ended 26 June 2021 - paid 65.0 pence - 131.9
Final dividend for the period ended 26 June 2021 - paid 23.0 pence - 46.8
Interim dividend for the period ended 2 July 2022 - paid 14.0 pence - 28.3
Special dividend for the period ended 2 July 2022 - paid 37.0 pence - 75.1
Final dividend for the period ended 2 July 2022 - paid 26.0 pence 52.4 -
Interim dividend for the period ended 1 July 2023 - paid 15.0 pence 30.2 -
Special dividend for the period ended 1 July 2023 - paid 40.0 pence 80.7 -
163.3 282.1
-------------------------------------------------------------------------------- ----------- -----------
The Board is proposing a final dividend of 27 pence per Ordinary
Share for the period ended 1 July 2023 which equates to GBP54.5m.
Subject to shareholder approval at the AGM this will be paid on 20
November 2023 to shareholders on the register at the close of
business on 27 October 2023.
8. Earnings per Ordinary Share
Basic earnings per share is calculated by dividing the profit
for the period attributable to equity holders of the Company by the
weighted average number of Ordinary Shares in issue during the
period, excluding Ordinary 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. These represent share options
granted to employees where the exercise price is less than the
average market price of the Group's Ordinary Shares during the
period.
Weighted average numbers of shares:
2023 2022
52 weeks 53 weeks
'000 '000
-------------------------------------------------------------- --- --- --- ----------- -----------
Weighted average number of shares in issue during the period 201,917 202,722
Impact of share options 746 2,135
Number of shares for diluted earnings per share 202,663 204,857
----------------------------------------------------------------------------- ----------- -----------
2023 2022
52 weeks 53 weeks
GBP'm GBP'm
Profit for the period 151.9 171.2
----------------------------------------------------------------------------- ----------- -----------
Earnings per Ordinary Share - basic 75.2p 84.5p
Earnings per Ordinary Share - diluted 75.0p 83.6p
----------------------------------------------------------------------------- ----------- -----------
9. Intangible assets
Software Rights Total
development to brands
and licences and customer
lists
GBP'm GBP'm GBP'm
--------------------------------- -------------- -------------- ------
Cost
At 27 June 2021 52.0 11.0 63.0
Additions 0.9 - 0.9
Acquisition through business
combination - 0.5 0.5
Disposals (0.3) - (0.3)
At 2 July 2022 52.6 11.5 64.1
Additions 0.1 - 0.1
Disposals (0.7) - (0.7)
At 1 July 2023 52.0 11.5 63.5
----------------------------------- -------------- -------------- ------
Accumulated amortisation
At 27 June 2021 37.2 11.0 48.2
Charge for the financial period 6.2 - 6.2
Disposals (0.2) - (0.2)
At 2 July 2022 43.2 11.0 54.2
Charge for the financial period 4.5 0.1 4.6
Disposals (0.6) - (0.6)
At 1 July 2023 47.1 11.1 58.2
----------------------------------- -------------- -------------- ------
Net book value
At 27 June 2021 14.8 - 14.8
At 2 July 2022 9.4 0.5 9.9
At 1 July 2023 4.9 0.4 5.3
----------------------------------- -------------- -------------- ------
All amortisation is included within operating costs in the
Consolidated Income Statement.
There was no trigger for impairment in the period.
Within software development and licences there were no additions
(2022: nil) related to internally generated assets.
10. Property, plant and equipment
Freehold land and Leasehold improvements Fixtures, fittings and Total
buildings equipment
GBP'm GBP'm GBP'm GBP'm
--------------------------- --------------------------- ----------------------- -------------------------- -------
Cost
At 27 June 2021 97.7 157.7 124.2 379.6
Transfer - 1.2 (1.2) -
Additions 0.1 13.3 12.6 26.0
Acquisition through
business combination 9.2 0.1 0.3 9.6
Disposals - (8.3) (3.7) (12.0)
At 2 July 2022 107.0 164.0 132.2 403.2
Transfer - 0.2 (0.2) -
Additions - 10.2 11.4 21.6
Disposals - (7.2) (3.1) (10.3)
At 1 July 2023 107.0 167.2 140.3 414.5
--------------------------- --------------------------- ----------------------- -------------------------- -------
Accumulated depreciation
At 27 June 2021 18.1 91.9 107.0 217.0
Transfer - (0.5) 0.5 -
Charge for the financial
period 1.8 14.4 8.1 24.3
Disposals - (8.1) (3.7) (11.8)
At 2 July 2022 19.9 97.7 111.9 229.5
Transfer 0.1 0.1 (0.2) -
Charge for the financial
period 1.8 14.3 9.1 25.2
Disposals - (7.0) (3.1) (10.1)
At 1 July 2023 21.8 105.1 117.7 244.6
--------------------------- --------------------------- ----------------------- -------------------------- -------
Net book value
At 27 June 2021 79.6 65.8 17.2 162.6
At 2 July 2022 87.1 66.3 20.3 173.7
At 1 July 2023 85.2 62.1 22.6 169.9
--------------------------- --------------------------- ----------------------- -------------------------- -------
All depreciation charges have been included within operating
costs in the Consolidated Income Statement.
There was no trigger for impairment in the period.
11. Leases
Right-of-use assets included in the Consolidated Statement of
Financial Position at 1 July 2023 were as follows:
2023 2023 2023 2022
Land and buildings Motor vehicles, plant and equipment Total Total
GBP'm GBP'm GBP'm GBP'm
-------------------------------- ------------------- ------------------------------------ ------- -------
At the beginning of the period 240.4 8.1 248.5 262.0
Additions 20.3 12.0 32.3 35.3
Disposals (0.1) (0.1) (0.2) (0.2)
Depreciation (45.1) (4.2) (49.3) (48.6)
At the end of the period 215.5 15.8 231.3 248.5
--------------------------------- ------------------- ------------------------------------ ------- -------
Right-of-use additions did not include any lease modifications
in the period (2022: GBP3.1m).
Lease liabilities included in the Consolidated Statement of
Financial Position at 1 July 2023 were as follows:
2023 2023 2023 2022
Land and buildings Motor vehicles, plant and equipment Total Total
GBP'm GBP'm GBP'm GBP'm
-------------------------------- ------------------- ------------------------------------ -------- --------
At the beginning of the period (270.1) (8.0) (278.1) (293.3)
Additions (21.2) (12.0) (33.2) (35.9)
Disposals 0.1 0.1 0.2 0.1
Interest (4.9) (0.4) (5.3) (4.8)
Repayment of lease liabilities 53.6 4.6 58.2 55.8
At the end of the period (242.5) (15.7) (258.2) (278.1)
--------------------------------- ------------------- ------------------------------------ -------- --------
The discount rate applied across all lease liabilities ranged
between 0.9% and 5.85% (2022: 0.9% and 2.8%). The discount rate
reflects our incremental borrowing rate which we assess by
considering the marginal rate on the Group's Revolving Credit
Facility ('RCF'), the Bank of England base rate, the yield on
Government bonds and the term of the lease.
The maturity analysis of the lease liabilities is as
follows:
2023 2022
GBP'm GBP'm
------------- -------- --------
Current (53.4) (52.8)
Non-current (204.8) (225.3)
(258.2) (278.1)
------------- -------- --------
The remaining contractual maturities of the lease liabilities,
which are gross and undiscounted, are as follows:
2023 2022
GBP'm GBP'm
Less than one year (65.8) (57.1)
One to two years (61.4) (53.2)
Two to five years (123.0) (111.9)
Five to ten years (78.9) (68.3)
More than ten years (3.7) (5.0)
Total undiscounted lease liability (332.8) (295.5)
--------------------------------------- -------- --------
The average remaining lease term of our leasehold land and
buildings is 5.0 years (2022: 5.2 years).
The following amounts have been recognised in the Consolidated
Income Statement:
2023 2023 2023 2022
52 weeks 52 weeks 52 weeks 53 weeks
Motor vehicles, plant and
Land and buildings equipment Total Total
GBP'm GBP'm GBP'm GBP'm
Depreciation of right-of-use assets 45.1 4.2 49.3 48.6
Gain on disposal of right-of-use
assets - - - (0.1)
Interest expenses (included in
financial expenses) 4.9 0.4 5.3 4.8
Expense relating to short-term
leases 0.4 1.2 1.6 0.6
------------------------------------- ------------------- -------------------------------- ----------- -----------
There was no trigger for impairment in the current year.
The total cash outflow for leases during the financial period
was GBP57.3m (2022: GBP55.0m).
12. Bank loans
2023 2022
GBP'm GBP'm
------------------------------------ ------ ------
Total borrowings 77.0 54.0
Less: unamortised debt issue costs (1.1) (1.2)
Net borrowings 75.9 52.8
--------------------------------------- ------ ------
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END
FR BCGDCIDBDGXC
(END) Dow Jones Newswires
September 20, 2023 02:00 ET (06:00 GMT)
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