25 October 2012
DEBENHAMS PLC: FULL YEAR RESULTS 2012
Debenhams announces strong results and future growth
plans
Debenhams, the leading international, multi-channel
brand, today announced full year results for the 52 weeks
ended 1 September 2012.
FINANCIAL HIGHLIGHTS
· Total sales up
2.6%1
o UK segment sales up 2.6%1
o International segment sales up 2.7%1
including franchise stores up 17.2%1
· Group like-for-like
sales up 2.3% including VAT, up 1.6% excluding VAT1
· Group statutory
revenue up 2.5%1
· Group online sales
up 39.8%1
· Gross margin
percentage down 30 basis points in line with
guidance1
· Group operating
profit unchanged at £175.0m1
· Group profit before
tax up 4.2% to £158.3m1
· Basic earnings per
share up 14.0% to 9.8p1
· Net debt improved by
£15.0m to £368.7m after £20.1m share buyback2
· Final dividend up
15.0% to 2.3p; full year dividend up 10.0% to 3.3p
· Share buyback to
continue with up to £40m over next 12 months
152 weeks to 1 September 2012 vs. 52
weeks to 27 August 2011
21 September 2012 vs. 3 September
2011
OPERATIONAL HIGHLIGHTS
· Continued progress
against the four pillars of our strategy
o 18 UK stores modernised, on track to
modernise all outstanding stores
o Expansion of UK regional footprint, 2
new stores adding 170 new jobs
o Investment in brand and product ranges
to enhance customer offer
o Further international expansion,
entering 2 new territories and 7 new stores
· Market share gains
achieved across key product categories, especially
non-clothing
· Continued innovation
in multi-channel: launch of Endless Aisle, free wi-fi in
all stores
· Confidence in
strategic delivery leads us to raise targets for online and
international operations
o Medium-term target for online sales
raised from £500m to £600m
o Five year target for total franchise
stores increased from 130 to 150
Michael Sharp, Chief Executive of Debenhams,
said:
"We have made good progress in 2012, achieving
higher sales and earnings growth despite a very difficult
market. I believe the strong sales momentum we
achieved in the second half of 2012 is clear evidence that
our strategy to build a leading international,
multi-channel brand is working and this has prompted us to
be more ambitious with our medium-term targets for the
growth of our online and international operations.
"Looking forward, we believe that customers are
acclimatised to the new economic reality. Whilst we
don't anticipate a significant change in the economic
environment in 2013, we expect to make further progress
during the year. We will always manage cash, costs,
stocks and margins closely but we are committed to continue
prudent investment in key areas to deliver long-term
sustainable growth as well as further returns of capital to
drive shareholder value."
REVIEW OF THE YEAR
By the end of the year the Debenhams brand was
trading from 239 stores across 28 countries and online in
67 countries.
UK MARKET CONDITIONS
The UK experienced challenging trading conditions
during 2012. Unseasonal weather in the form of a
warm, dry autumn in the first half of the financial year
and a cold, wet spring and summer in the second half
undoubtedly impacted demand for seasonal products,
particularly clothing. In addition, consumer
confidence remained depressed throughout the year (source:
GfK Consumer Confidence Index Score) as macroeconomic
concerns about both the UK economy and the widely reported
issues affecting the eurozone weighed on consumers'
minds and budgets. Against this background, Debenhams
delivered a good performance with higher sales and market
share gains.
PROGRESS AGAINST THE FOUR PILLARS OF THE
STRATEGY
In October 2011 Chief Executive Michael Sharp set out
a four pillar strategy to build the business into a leading
international, multi-channel brand. In 2012 we made
good progress towards this goal, driven by our delivery
against the key components of the strategy, which will
continue to be future drivers of growth.
1. Focusing on UK
retail
· 18 UK core stores
were modernised in 2012.
· Modernised stores
are now delivering a further sales uplift in the second
year following modernisation for the first time.
· On track to
modernise the remaining 30 uninvested core stores by
Christmas 2014, including Oxford Street which will be
transformed outside and inside to create a true company
flagship for the brand.
· The UK store
portfolio stood at 154 stores at year end including two new
openings during the year which added 78,000 sq ft of
trading space; one further store has opened since the year
end.
· The new store
pipeline now stands at 17 stores over the next 5 years
which could add over £150 million of sales.
Note: the results for UK retail are contained within
the UK operating segment.
2. Delivering a compelling customer
proposition
· Market share gains
were achieved in key clothing and non-clothing categories
in the UK. In the most recent data, total clothing
market share increased by 20 basis points, including growth
in womenswear (source: Kantar Worldpanel Fashion 12 weeks
market share data to 2 September 2012 vs. 2011). We
continue to gain share of the premium beauty market with
growth of 11%, ahead of the market which is growing at 8%
(source: NPD 52 weeks to August 2012).
· New brands
introduced over the past year include new Designers at
Debenhams brand No. 1 by Jenny Packham, Nautica, Edition
Home and Call It Spring footwear.
· We made additional
investment in marketing under the "Life Made
Fabulous" campaign which generated good returns both
in terms of higher sales and improved perceptions about the
Debenhams brand.
· We are investing in
additional buying and merchandising resources in several
key own bought brands including Red Herring and Principles
by Ben de Lisi with the aim of increasing sales densities
whilst maintaining own bought gross margins. We will
closely monitor the returns from this investment but expect
the real impact will become evident towards the end of
2013. If successful, it will be expanded to other own
brands.
· Building on the
successful impact of our 2012 marketing campaigns, we
intend to increase marketing spend further in 2013
including a Christmas brand campaign for the first time in
six years.
3. Increasing availability and
choice through multi-channel
· Online sales for the
Group as a whole grew by 39.8% to £250.6 million in 2012,
well ahead of market growth in the UK of c.13% (source:
Kantar 52 weeks to 5 August 2012 vs. 2011).
· Our confidence in
our ability to realise our multi-channel ambitions has led
us to increase our medium-term target for online sales from
£500 million to £600 million.
· Debenhams is now the
eleventh biggest UK online retailer by traffic volume, up
from thirteenth last year (source: IMRG Experian Hitwise
Hot Shops List May 2012).
· We reinforced the
role that stores play in the multi-channel model through
the introduction of the store-based fulfilment system
Endless Aisle in October 2011 which captured c.£16 million
of potentially lost sales during the year.
· Non-clothing product
categories continued to grow strongly online including
health and beauty, home, footwear and accessories.
· Free wi-fi became
available in all UK stores in May, contributing to
extremely strong growth in mobile (visits up 200%, iPad app
visits up over 500%).
· The customer contact
centre was outsourced to Capita to improve customer
service.
Note: the results for the multi-channel business are
split between the UK and international operating segments
based on customer location.
4. Expanding the brand
internationally
· The total number of
international stores (comprising Denmark, Republic of
Ireland and the franchise stores) at the end of the year
was 85.
· Seven new franchise
stores opened including market entry into Pakistan and
Russia whilst three stores closed. Three further
stores have opened since the end of the year in Georgia,
Indonesia and the UAE, bringing the current total to 71
stores in 26 countries.
· The contracted
franchise store pipeline stands at 18 stores over the next
four years, of which a further four will open in 2013.
Another 50 stores are in discussion.
· Our target for the
total number of franchise stores in five years has been
increased from 130 to 150.
· Magasin du Nord
delivered a strong performance with like-for-like sales
growth of 4.6% in local currency during the year.
· Trading conditions
in the Republic of Ireland remain challenging due to the
economic environment but we believe we are gaining market
share.
· The number of
countries we deliver online orders to outside the UK
increased from seven to 66 countries. Another 30 countries
will follow.
· Following the launch
of the euro-denominated Republic of Ireland website in
Autumn 2010, the first local language, local currency
website was launched in Germany during 2012. Further
country specific sites will follow in due course.
Note: the results of the international business are
contained within the international operating
segment.
FINANCIAL REVIEW
Notes
Prior year comparison: the 2011
financial year comprised 53 weeks to 3 September
2011. Management believes that in order to have a
proper understanding of the performance of the business it
is more appropriate to compare the 52 weeks of the 2012
financial year with the first 52 weeks of the 2011
financial year (the 52 weeks to 27 August 2011). All
comparisons in pages 5 to 9 of this report are made on this
basis unless otherwise stated.
Segmental reporting: In order to align
our reporting with the way we run the business and to
assist shareholders in assessing the opportunities that
both the UK and international markets offer to Debenhams,
we are changing our segmental analysis. The UK
operating segment comprises all stores in the UK as well as
online sales to UK customers. The international
operating segment comprises the international franchise
stores, the owned stores in Denmark (Magasin du Nord) and
the Republic of Ireland and online sales to customers
outside the UK.
|
2012
52 weeks to 1 Sept 2012
|
2011
52 weeks to 27 Aug 2011
|
Change
|
2011
53 weeks to 3 Sept 2011
|
Gross transaction value (GTV)
· Group
· UK
· International
|
£2,708.0m
£2,204.6m
£503.4m
|
£2,639.5m
£2,149.5m
£490.0m
|
+2.6%
+2.6%
+2.7%
|
£2,679.3m
£2,181.1m
£498.2m
|
Statutory revenue
· Group
· UK
· International
|
£2,229.8m
£1,860.3m
£369.5m
|
£2,176.4m
£1,823.1m
£353.3m
|
+2.5%
+2.0%
+4.6%
|
£2,209.8m
£1,850.6m
£359.2m
|
Group like-for-like sales
· Including VAT
· Excluding VAT
|
|
|
+2.3%
+1.6%
|
|
Group gross margin
|
|
|
-30bps
|
|
Operating profit
· Group
· UK
· International
|
£175.0m
£144.3m
£30.7m
|
£175.0m
£149.1m
£25.9m
|
-
-3.2%
+18.5%
|
£183.7m
£156.2m
£27.5m
|
Group profit before tax
|
£158.3m
|
£151.9m
|
+4.2%
|
£160.3m
|
Basic earnings per share
|
9.8p
|
8.6p
|
+14.0%
|
9.1p
|
Dividend per share
|
3.3p
|
3.0p
|
+10.0%
|
3.0p
|
Sales
Group gross transaction value (GTV), which is a
measure of total sales across the Group including
concessions, increased by 2.6% to £2,708.0 million.
UK GTV increased by 2.6% to £2,204.6 million whilst
international GTV increased by 2.7% to £503.4
million.
Group like-for-like sales grew by 2.3% including VAT
and by 1.6% excluding VAT. New space accounted for
sales growth of 1.0% which included two new UK stores and
seven new franchise stores as well as the annualising of
stores opened in the prior year.
Own bought product ranges continued to perform well,
despite a small decline in the own bought sales mix during
2012, largely due to the addition of new concession brands
both as part of the store modernisation programme and
online as well as an improvement in the performance of
existing concessions. In the UK, the own bought sales
mix of 80.0% compared with 80.5% in the prior year.
In contrast the international own bought mix increased from
62.2% to 62.6% as additional own brand products were
introduced in Denmark and the online business grew in the
Republic of Ireland as well as new franchise store
openings. Group own bought mix was 76.7% (2011:
77.1%).
Group sales from concession brands increased by 4.1%
during the year. As noted above, additional
concessions were added as part of the modernisation
programme and to replace failed concessions. Certain
other concession brands also saw an improved
performance.
Online sales for the Group (which comprises online
sales in all regions including the UK) increased by 39.8%
to £250.6 million (2011: £179.2 million). As such,
online now represents 9.3% of GTV, up from 6.8% last
year.
Gross margin
Group gross margin percentage fell by 30 basis points
during the year, in line with guidance. This was due
to a largely weather-related sales mix change towards
health and beauty, which has a lower gross margin than own
bought clothing, which accounted for 10 basis points of the
decrease, and by higher concession sales referred to above,
which accounted for 20 basis points. There were early
signs of improvements in intake margin in the final months
of the year which will benefit gross margin in 2013.
Costs
Total operating costs increased by 2.7% compared with
the previous year. Higher distribution costs reflect
both the dual running costs associated with the Sherburn
distribution centre and delivery costs associated with
online sales. Elsewhere, we are investing in a number
of key areas of the business including buying and
merchandising, marketing, customer analytics and activities
to support the rapidly growing multi-channel business which
will help to deliver long-term sales growth.
Profitability
Group EBITDA increased by 1.4% to £266.8 million
(2011: £263.2 million). Group operating profit of
£175.0 million was unchanged on the prior
year.
The UK segment delivered EBITDA of £224.8 million
which was slightly lower than last year (2011: £225.3
million) and operating profit fell by 3.2% to £144.3
million (2011: £149.1 million). This was largely a
result of the shift in sales mix, investment in key areas
of the business such as marketing and the increase in sales
in the multi-channel business.
International EBITDA increased by 10.8% to £42.0
million (2011: £37.9 million) and operating profit
increased by 18.5% to £30.7 million (2011: £25.9 million)
largely due to the franchise stores and Magasin du
Nord.
Group profit before tax for the year increased by
4.2% to £158.3 million (2011: £151.9 million). Last
year the fifty-third week of the year accounted for £8.4
million of profit before tax.
Group profit after tax increased by 12.8% to £125.3
million.
Basic earnings per share for 2012 were 9.8 pence
(2011: 8.6 pence) and diluted earnings per share were 9.8
pence (2011: 8.6 pence).
Interest
Interest fell from £23.1 million in 2011 to £16.7
million in 2012, a decrease of 27.7%. This was
largely due to the reduction in net debt and the lower
interest rates following the refinancing of the Group's
senior credit facility in July 2011.
Taxation
Taxation decreased from £40.8 million in 2011 to
£33.0 million in 2012, a decline of 19.1%. The
effective tax rate was 20.8% compared with 26.9% last
year. The lower effective tax rate is in part due to
reductions in the headline rate of corporate tax
(accounting for 2.0% of the 6.1% nominal decrease) with the
balance largely related to the resolution of historical
issues net of current year contingencies. We expect
the effective tax rate for 2013 to be broadly similar to
2012.
Stocks
In light of the difficult trading conditions, stock
levels were managed very tightly. Overall stock value
increased by 3.4% due to new stores, the growth of the
online business and space optimisation in UK stores (52
weeks to 1 September 2012 vs. 53 weeks to 3 September
2011). Terminal stock as at 1 September 2012 was
2.6%, in line with historical levels.
Cash generation and uses of cash
Debenhams remains highly cash generative, generating
£259.7 million from operating activities in 2012.
The board has set clear priorities for the uses of
cash. They are:
· To invest in the
business to support the four pillars of the strategy
· To grow the dividend
in line with maintaining cover at 3 times earnings
· To move towards 1
times net debt to EBITDA over the medium-term
· To return surplus
cash to shareholders through a long-term share buyback
programme
The principal uses of cash in the 52 weeks to 1
September 2012 were as follows (note: comparisons for 2011
are for the 53 weeks to 3 September 2011).
· Capital
investment: The first priority for cash is to
invest behind the four pillars of the Group's
strategy. Capital investment in 2012 was in line with
prior guidance at £118.6 million, an increase of 4.0%
versus the prior year (2011: £114.0 million). The
largest areas of investment were UK store modernisations
(which accounted for 27% of capital investment),
maintenance (23%) and systems to support the Group's
activities (21%). In 2013, capital investment across
the Group is expected to amount to some £135 million as
investment increases in the store modernisation programme,
particularly related to the upgrade of the Oxford Street
flagship store, as well as the relocation of the head
office which has been brought about by the expiry of the
leases on existing head office buildings.
·
Dividends:Total cash paid for dividends
amounted to £38.5 million in 2012 compared with £12.9
million in 2011. This comprised payment of the 2011
final dividend of 2.0 pence per share in January 2012
(£25.6 million) and the 2012 interim dividend of 1.0 pence
per share in July 2012 (£12.9 million).
· Share
buyback: In April 2012 the board
announced that it would commence a long-term share buyback
programme with an initial tranche of shares up to the value
of £20 million during the following six month period.
This tranche was completed in August 2012. 23.6
million shares were bought in the market at an average
price of 84.9 pence per share. Over the next 12
months, we expect to buy shares up to the value of £40
million.
Net debt
Further progress has been made in reducing net
debt. After taking into account £20.1 million of
share buybacks, net debt fell by £15.0 million from £383.7
million as at 3 September 2011 to £368.7 million as at 1
September 2012. Net debt to EBITDA stood at 1.38
times at year end compared to 1.40 times at the end of the
previous year. The board remains committed to moving
net debt towards 1.0 times EBITDA over the
medium-term.
Dividends
The board has proposed a final dividend of 2.3 pence
per share (2011: 2.0 pence). This will result in a
total dividend for the year of 3.3 pence and reflects the
board's target dividend cover of three times
earnings. The ex-dividend date is 5 December 2012.
The dividend will be paid to shareholders on the register
as at 7 December 2012 on 11 January 2013.
Pensions
The Group provides a number of pension arrangements
for its employees. These include the Debenhams
Retirement Scheme and the Debenhams Executive Pension Plan
which closed for future accrual from 31 October
2006.
Under IAS 19 the pension fund showed a deficit of
£57.3 million on 1 September 2012 moving from a surplus of
£3.9 million on 3 September 2011. This move has
resulted from an increase in the value of assets held which
was more than offset by an increase in the carrying value
of liabilities, primarily resulting from a decrease in the
discount rate applied of more than 1%, driven by the drop
in the yield on high quality corporate bonds.
During March 2012 the triennial actuarial valuation
was completed and discussions with the pension fund
trustees were concluded. The contributions from the
Company and the investment strategies devised by the
trustees are intended to restore the schemes to a fully
funded position on an ongoing basis by the end of March
2022 (Debenhams Retirement Scheme) and August 2021
(Debenhams Executive Pension Plan). As a consequence
of this agreed plan, annual contributions to the two funds
were set at £8.9 million, rising each year in line with the
RPI. The Company also pays the non-investment
expenses and levies to the Pension Protection Fund.
OUTLOOK
We believe that customers are to a large extent
acclimatised to the new economic reality. We do not
therefore anticipate a significant change in the economic
environment over the course of 2013 but we expect to make
further progress during the year as our strategy delivers
further benefits. We will always manage cash, costs,
stocks and margins closely but we are committed to continue
prudent investment in key areas of the business to deliver
long-term sustainable growth as well as further returns of
capital to drive shareholder value.
BOARD OF DIRECTORS
Simon Herrick joined the board on 1 November 2011 and
was appointed Chief Financial Officer on 10 January
2012. Chris Woodhouse resigned from his role as
Finance Director on 10 January 2012. Adam Crozier
retired from the board on 1 September 2012. Following Mr.
Crozier's retirement, Dennis Millard was appointed
chairman of the Remuneration Committee and Mark Rolfe
succeeded Mr. Millard as chairman of the Audit
Committee.
Subsequent to the end of the financial year, Peter
Fitzgerald was appointed as a non-executive director on 4
October 2012 and is a member of the Audit Committee.
The board of directors as at 25 October 2012 is as
follows: Nigel Northridge (Chairman), Michael Sharp (Chief
Executive), Simon Herrick (Chief Financial Officer), Peter
Fitzgerald (non-executive director), Martina King
(non-executive director), Dennis Millard (senior
independent director), Mark Rolfe (non-executive director)
and Sophie Turner Laing (non-executive director).
Presentation
A presentation for analysts and investors will be
held today (Thursday 25 October 2012) at 8:45am UK time at
the Citigroup Centre, 33 Canada Square, Canary Wharf,
London E14 5LB. The presentation will be webcast live
at www.debenhamsplc.com
.
Enquiries
|
|
Analysts and Investors
|
|
Lisa Williams, Debenhams plc
|
020 7408 3304, 07908 483841
|
|
|
Media
|
|
Simon Sporborg, Brunswick Group
|
020 7404 5959
|
Tim Danaher, Brunswick Group
|
020 7404 5959
|
High resolution images are available for media to
view and download free of charge from
www.prshots.com/Debenhams.
Notes to Editors
Debenhams is a leading international, multi-channel
brand with a proud British heritage which trades out of 243
stores across 29 countries. Debenhams gives its
customers around the world a unique, differentiated and
exclusive mix of own brands, international brands and
concessions.
In the UK, Debenhams has a top four market share in
womenswear and menswear and a top ten share in
childrenswear. It leads the market in premium health
and beauty.
Debenhams is available online in 67 countries and is
the eleventh biggest UK online retailer by traffic
volume. In March 2012 Debenhams was awarded
"Multi-channel Retailer of the Year" at the
Oracle Retail Week Awards.
Debenhams has been investing in British design for 20
years through its exclusive Designers at Debenhams
portfolio of brands. Current designers include
Ted Baker, Jeff Banks, Jasper Conran, Erickson
Beamon, FrostFrench, Henry Holland, Roksanda Ilincic, Betty
Jackson, Jonathan Kelsey, Carol Lake, Ben de Lisi, Julien
Macdonald, Melissa Odabash, Jane Packer, Jenny Packham,
Pearce Fionda, Preen, Janet Reger, John Rocha, Jonathan
Saunders, Marios Schwab, Lisa Stickley, Yukari Sweeney,
Ashley Thomas, Eric Van Peterson and Matthew
Williamson.
Statements made in this announcement that look
forward in time or that express management's beliefs,
expectations or estimates regarding future occurrences and
prospects are "forward-looking statements" within
the meaning of the United States federal securities
laws. These forward-looking statements reflect
Debenhams' current expectations concerning future
events and actual results may differ materially from
current expectations or historical results. Neither the
content of the Company's website nor the content of any
website accessible from hyperlinks on the Company's
website (or any other website) is (or is deemed to be)
incorporated into or forms (or is deemed to form) part of
this announcement.
The consolidated financial statements have been
prepared on the going concern basis and in accordance with
International Financial Reporting Standards (IFRS) as
adopted in the European Union and those parts of the
Companies Act 2006 applicable to those companies reporting
under IFRS.
The consolidated financial statements have been
prepared on the basis of the accounting policies set out in
the financial statements of Debenhams plc for the financial
year ended 1 September 2012. Accounting policies have been
consistently applied.
The financial information set out in this document
does not constitute the statutory accounts of the Group for
the years ended 1 September 2012 and 3 September 2011 but
is derived from the 2012 annual report and financial
statements. The annual report and financial statements for
2011, which were prepared under IFRS, have been delivered
to the Registrar of Companies and the Group's annual
report and financial statements for 2012, prepared under
IFRS, will be delivered to the Registrar of Companies in
due course. The auditors have reported on those accounts
and have given an unqualified report which does not contain
a statement under section 498 (2) or (3) of the Companies
Act 2006.
2 Gross transaction
value
Revenue from concession and consignment sales is
required to be shown on a net basis, being the commission
received rather than the gross value achieved on the sale.
Management believes that gross transaction value, which
presents revenue on a gross basis before adjusting for
concessions, consignments, staff discounts and the cost of
loyalty scheme points, represents a good guide to the
overall activity of the Group.
|
|
|
|
1 September 2012
|
3 September
2011
|
|
|
|
|
£m
|
£m
|
|
|
|
|
|
|
Gross transaction value
|
|
|
|
2,708.0
|
2,679.3
|
|
|
|
|
|
|
A reconciliation of gross transaction value to
external revenue is included in note 3 below.
3 Segmental
information
IFRS 8 "Operating Segments" requires
disclosure of the operating segments which are reported to
the Chief Operating Decision Maker ("CODM"). The
CODM has been identified as the executive committee, which
includes the executive directors and other key management.
It is the executive committee that has responsibility for
planning and controlling the activities of the
Group.
The Group's reportable segments have been
identified as the UK and International. These
have been re-stated from the previous financial year to
better reflect the way in which financial performance is
managed.The segments are reported to the CODM to
operating profit level, using the same accounting policies
as applied to the Group accounts. The Group does not review
the assets and the liabilities by operating segment as
these are reviewed on a group-wide basis given their
transposable nature. As a result, no such analysis has been
provided.
Segmental analysis of results
|
|
UK
£m
|
International
£m
|
Total
£m
|
|
|
|
|
|
|
Financial year ended 1 September 2012
|
|
|
|
|
Gross transaction value
|
|
2,204.6
|
503.4
|
2,708.0
|
Concessions, consignments, staff discounts and
loyalty schemes
|
|
(344.3)
|
(133.9)
|
(478.2)
|
External revenue
|
|
1,860.3
|
369.5
|
2,229.8
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
144.3
|
30.7
|
175.0
|
|
|
|
|
|
Other segment items
|
|
|
|
|
-Depreciation
|
|
72.6
|
9.8
|
82.4
|
-Amortisation of intangible assets
|
|
7.7
|
1.5
|
9.2
|
|
|
|
|
|
|
|
|
|
|
Financial year ended 3 September 2011
(re-stated)
|
|
|
|
|
Gross transaction value
|
|
2,181.1
|
498.2
|
2,679.3
|
Concessions, consignments, staff discounts and
loyalty schemes
|
|
(330.5)
|
(139.0)
|
(469.5)
|
External revenue
|
|
1,850.6
|
359.2
|
2,209.8
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
156.2
|
27.5
|
183.7
|
|
|
|
|
|
Other segment items
|
|
|
|
|
-Depreciation
|
|
72.8
|
10.7
|
83.5
|
-Amortisation of intangible assets
|
|
7.0
|
1.5
|
8.5
|
|
|
|
|
|
Revenues analysed by country, based on the
customer's location, are set out below:
|
|
|
1 September
2012
|
3 September
2011
|
|
|
|
£m
|
£m
|
|
|
|
|
|
United Kingdom
|
|
|
1,860.3
|
1,850.6
|
Republic of Ireland
|
|
|
136.5
|
144.1
|
Denmark
|
|
|
142.7
|
136.9
|
Rest of the world
|
|
|
90.3
|
78.2
|
|
|
|
|
|
Total
|
|
|
2,229.8
|
2,209.8
|
|
|
|
|
|
|
|
|
|
|
Non-current assets, which comprise intangible assets,
property, plant and equipment and other receivables
analysed by country, are set out below:
|
|
|
1 September
2012
|
3 September
2011
|
|
|
|
£m
|
£m
|
|
|
|
|
|
United Kingdom
|
|
|
1,476.1
|
1,436.0
|
Republic of Ireland
|
|
|
32.1
|
39.2
|
Denmark
|
|
|
33.3
|
35.2
|
Rest of the world
|
|
|
4.3
|
0.6
|
|
|
|
|
|
Total
|
|
|
1,545.8
|
1,511.0
|
|
|
|
|
|
|
|
|
|
|
4 Operating profit
The following items have been included
in arriving at operating profit:
|
|
|
1 September
2012
|
3 September
2011
|
|
|
|
£m
|
£m
|
|
|
|
|
|
The amounts of inventory written down during
the financial year
|
|
|
13.0
|
12.9
|
Cost of inventories recognised as an
expense
|
|
|
1,131.2
|
1,117.5
|
Employment costs (note 5)
|
|
|
360.0
|
372.8
|
Depreciation of property, plant and
equipment
|
|
|
82.4
|
83.5
|
Amortisation of intangible assets
|
|
|
9.2
|
8.5
|
Loss on disposal of property, plant and
equipment
|
|
|
0.2
|
0.1
|
Operating lease rentals
|
|
|
203.6
|
207.3
|
Foreign exchange gains
|
|
|
(14.8)
|
(12.7)
|
Auditors' remuneration
|
|
|
0.4
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
5 Employment costs
|
|
|
1 September
2012
|
3 September
2011
|
|
|
|
£m
|
£m
|
|
|
|
|
|
Wages and salaries
|
|
|
336.1
|
337.6
|
Social security costs
|
|
|
21.9
|
22.6
|
Pension cost
|
|
|
0.4
|
11.2
|
Share-based payments
|
|
|
1.6
|
1.4
|
|
|
|
|
|
Total employment costs
|
|
|
360.0
|
372.8
|
|
|
|
|
|
6 Finance income
|
|
|
1 September
2012
|
3 September
2011
|
|
|
|
£m
|
£m
|
|
|
|
|
|
Interest on bank deposits
|
|
|
0.1
|
0.6
|
Other financing income
|
|
|
1.1
|
3.3
|
|
|
|
|
|
|
|
|
1.2
|
3.9
|
|
|
|
|
|
|
|
|
|
|
7 Finance costs
|
|
|
1 September
2012
£m
|
3 September
2011
£m
|
|
|
|
|
|
|
|
|
|
Bank loans and overdrafts
|
|
|
11.7
|
16.2
|
Cash flow hedges reclassified and reported in
net profit
|
|
|
2.0
|
4.7
|
Amortisation of issue costs on loans
|
|
|
2.9
|
5.8
|
Interest payable on finance leases
|
|
|
0.1
|
-
|
Other financing charges
|
|
|
1.2
|
0.6
|
|
|
|
|
|
|
|
|
17.9
|
27.3
|
|
|
|
|
|
8 Taxation
Analysis of tax charge in the financial
year
|
|
|
1 September 2012
|
3 September
2011
|
|
|
|
£m
|
£m
|
|
|
|
|
|
Current tax:
|
|
|
|
|
UK corporation tax charge on profit for the
financial year
|
|
|
43.4
|
58.4
|
Adjustments in respect of prior periods
|
|
|
(8.9)
|
(1.6)
|
|
|
|
|
|
Current tax expense
|
|
|
34.5
|
56.8
|
|
|
|
|
|
Deferred taxation:
|
|
|
|
|
Origination and reversal of temporary
differences
|
|
|
(3.8)
|
(13.0)
|
Pension cost relief in excess of pension
charge
|
|
|
2.9
|
0.2
|
Adjustments in respect of prior periods
|
|
|
(0.6)
|
(0.9)
|
|
|
|
|
|
Deferred tax credit
|
|
|
(1.5)
|
(13.7)
|
|
|
|
|
|
Tax charge for the financial year
|
|
|
33.0
|
43.1
|
|
|
|
|
|
|
|
|
|
|
|
9 Dividends
A final dividend of 2.0 pence per share (2011: nil
pence per share) was paid during the year in respect of the
financial year ended 3 September 2011, together with
aninterim dividend of 1.0 pence per share
(2011: 1.0 pence per share) in respect of the financial
year ended 1 September 2012. The directors are proposing a
final dividend in respect of the financial year ended 1
September 2012 of 2.3 pence per share (2011: 2.0 pence per
share), which will absorb an estimated £29.0 million (2011:
£25.6 million) of shareholders' funds. It will be paid
on 11 January 2013 to shareholders who are on the register
of members at close of business on 7 December 2012. No
liability is recorded in the financial statements in
respect of the final dividend as it was not approved as at
the balance sheet date.
|
|
|
|
|
1 September
2012
|
3 September
2011
|
|
|
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
Final paid 2.0 pence (2011: nil pence) per
£0.0001 share
|
|
|
|
|
Settled in cash
|
|
|
|
25.6
|
|
-
|
Interim paid 1.0 pence (2011: 1.0 pence) per
£0.0001 share
|
|
|
|
|
Settled in cash
|
|
|
|
12.9
|
|
12.9
|
|
|
|
|
38.5
|
|
12.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10 Earnings per share
Basic earnings per share is calculated by dividing
the earnings attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding
during the financial year, excluding any shares purchased
by the Company and held as treasury shares.
For diluted earnings per share, the weighted average
number of ordinary shares in issue is adjusted to assume
conversion of all dilutive potential ordinary shares. The
Group has one class of dilutive potential ordinary shares,
those share options granted to employees where the exercise
price is less than the market price of the Company's
ordinary shares during the financial year.
Basic and diluted earnings per share
|
|
1 September
2012
|
3 September
2011
|
|
|
|
|
Basic
|
Diluted
|
Basic
|
Diluted
|
|
|
|
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
Profit for the financial year after
taxation
|
|
|
125.3
|
125.3
|
117.2
|
117.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
m
|
Number
m
|
Number
m
|
Number
m
|
|
|
|
|
|
|
|
Weighted average number of shares
|
|
|
1,282.0
|
1,282.0
|
1,286.8
|
1,286.8
|
Shares held by ESOP (weighted)
|
|
|
|
(0.7)
|
(0.7)
|
(0.3)
|
(0.3)
|
Shares issuable (weighted)
|
|
|
|
-
|
1.4
|
-
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted weighted average number of
shares
|
|
1,281.3
|
1,282.7
|
1,286.5
|
1,287.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pence
per share
|
Pence
per
share
|
Pence per share
|
Pence per share
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
9.8
|
9.8
|
9.1
|
9.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11 Cash generated from operations
|
|
1 September
2012
£m
|
3 September
2011
£m
|
|
|
|
|
|
Profit for the financial year
|
|
|
125.3
|
117.2
|
Taxation
|
|
33.0
|
43.1
|
Depreciation and amortisation
|
|
91.6
|
92.0
|
Loss on disposal of property, plant and
equipment
|
|
0.2
|
0.1
|
Profit on disposal of available-for-sale
investment
|
|
-
|
(2.0)
|
Employee options granted during the financial
year
|
|
1.6
|
1.4
|
Fair value (gains)/losses on derivative
instruments
|
|
(3.1)
|
2.7
|
Net movements in provisions
|
|
(1.0)
|
1.0
|
Finance income (note 6)
|
|
(1.2)
|
(3.9)
|
Finance costs (note 7)
|
|
17.9
|
27.3
|
Difference between pension charge and
contributions paid
|
|
(21.1)
|
(8.8)
|
Net movement in other long-term
receivables
|
|
(2.6)
|
0.1
|
Net movement in other non-current
liabilities
|
|
2.9
|
33.2
|
|
|
|
|
Changes in working capital
|
|
|
|
Increase in inventories
|
|
(11.5)
|
(25.4)
|
Increase in trade and other receivables
|
|
(4.7)
|
(4.6)
|
Increase/(decrease) in trade and other
payables
|
|
32.4
|
(5.8)
|
|
|
|
|
|
|
|
|
Cash generated from operations
|
|
259.7
|
267.6
|
|
|
|
|
|
|
|
12 Analysis of changes in net
debt
|
|
3 September
2011
|
Cash flow
|
Non-cash movements
|
1 September 2012
|
|
|
£m
|
£m
|
£m
|
£m
|
Analysis of net debt
Cash and cash equivalents
|
|
29.0
|
15.3
|
(0.3)
|
44.0
|
Bank overdrafts
|
|
(6.2)
|
(3.2)
|
-
|
(9.4)
|
|
|
|
|
|
|
Net cash and cash equivalents
|
|
22.8
|
12.1
|
(0.3)
|
34.6
|
Debt due within one year
|
|
(160.6)
|
10.0
|
(1.2)
|
(151.8)
|
Debt due after one year
|
|
(243.2)
|
-
|
(1.6)
|
(244.8)
|
Finance lease obligations due within one
year
|
|
(1.3)
|
2.2
|
(3.1)
|
(2.2)
|
Finance lease obligations due after one
year
|
|
(1.4)
|
-
|
(3.1)
|
(4.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(383.7)
|
24.3
|
(9.3)
|
(368.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group has a £650.0 million credit facility
comprising a term loan of £250.0 million and a Revolving
Credit Facility ("RCF") of £400.0 million.
These facilities expire in October 2015, with an option to
extend further to October 2016. At 1 September 2012 the
Group's facilities outstanding comprised the term loan
of £250.0 million (2011: £250.0 million) and RCF drawings
of £155.0 million (2011: £165.0 million).
In November 2010 the Group cancelled its existing
term loan and RCF and drew down on its new £650.0 million
credit facility.
During the current and prior financial years the
Group complied with its covenants relating to its credit
facilities.
Issue costs, which mainly relate to facility costs,
are being amortised over the term of the facilities to
October 2015 at the effective interest rate based on the
committed amount of the term loan. The total amortisation
charge relating to the issue costs of the Group's
credit facilities cancelled and current for the financial
year ended 1 September 2012 was
£2.9 million (2011: £5.8 million).
13 Related parties
There have been no significant related party
transactions during the year (2011: none).
14 Financial information
Copies of the statutory accounts are available from
the Company's registrars, Equiniti Limited, Aspect
House, Spencer Road, Lancing, West Sussex, BN99 6DA (Tel:
0871 384 2766) and at the Company's registered office,
1 Welbeck Street, London, W1G 0AA.
PRINCIPAL RISKS AND UNCERTAINTIES
The risks below are the principal risks and
uncertainties that may impact Debenhams' ability to
achieve its strategic and operational goals. Further
information on Debenhams' approach to risk management
will be available in the 2012 Annual Report and
Accounts.
1. External
Risk
Risk & Impact
|
Examples of mitigation
|
Consistent fall in customer spending as a
result of economic downturn, inflation or
deflation
Reduction in gross transaction value and a
decline in sales on discretionary purchases
|
The board conducts strategic business reviews
which ensure that management is focused on key
priorities and cost control. These reviews also
focus on the four pillars of the Group's strategy
to build a leading international, multi-channel
brand.
|
Competitive pressures in existing markets
influence customer behaviour
Place pressure on our pricing strategy, margins
and profitability
|
Debenhams' brand and product strategy gives
customers a unique, differentiated and exclusive
choice of brand, products and categories within a
good/better/best pricing architecture. An
understanding of customers and their needs is
developed by listening to their views, market
intelligence and reviewing key performance indicators
which ensures that pricing is competitive.
Debenhams is investing additional resources in
customer analytics and insight.
|
Factors influencing the sustainability of the
supply chain
Place pressure on margin and will also divert
financial and management resources from more
beneficial uses
|
Debenhams fosters excellent relationships with
its suppliers that are mutually beneficial.
Both parties work towards the objective of optimising
sustainable fulfilment and costs, which is measured
regularly by management through key performance
indicators. Alongside this, Debenhams develops
multiple sourcing routes to ensure pricing remains
competitive and that demand can be supplied.
Debenhams and its suppliers will continue to
work hard to deliver the best performance possible in
a very challenging market.
|
Loss of profit or additional expenditure caused
by increased energy or fuel costs
Place pressure on margin and will also divert
financial and management resources from more
beneficial uses
|
A key objective of the energy committee is to
control energy usage, including the impact of the
Carbon Reduction Commitment scheme. An energy
hedging policy is in place to provide a high degree
of cost certainty.
|
2. Financial
Risk
Risk & Impact
|
Examples of mitigation
|
Risks associated with currency, hedging,
interest rates, credit, counterparties and financial
covenant under the credit facilities
Hinder ability to adjust rapidly to changing
market conditions and impact earnings and cash
flow
Hedging strategy may not adequately protect
operating results from the impact of exchange rate
fluctuations or may limit any benefit caused by
favourable movements in exchange rates
Affect available cash and liquidity and could
have material effect on the business, results of
operations and financial condition
|
Debenhams has a treasury policy in place which
covers counterparty limits and hedging for interest
rates, foreign exchange and energy. There is
also an internal treasury function which is mandated
by the board and audited annually.
Debenhams closely monitors all aspects of cash
management to optimise balance sheet metrics.
Effectiveness is measured regularly by management
through a series of key performance
indicators.
Business critical spreadsheets and databases
used by the finance department have been identified
and appropriate control measures are used in line
with Debenhams' policy to ensure data
integrity.
|
Shortfall in the pension fund
Increases in pension related liabilities could
impact profits and cash flow
|
The trustees of the Group's pension schemes
carefully monitor the pension fund and alter the
investment strategy as appropriate. Any
shortfall in funding is brought to the attention of
the board.
|
3. Strategic
Risk
Risk & Impact
|
Examples of mitigation
|
Inability to predict or fulfil customer demands
or preferences
Sales will be lower, market share reduced and
will be forced to rely on markdown and promotions to
dispose of excess or slow moving inventory. May
be inventory shortfalls on popular merchandise
|
Debenhams utilises market, trend and customer
awareness research to understand current demands and
preferences. It delivers these requirements
through multiple channels, including its store and
non-store sales channels. To achieve this these
channels are constantly developed and high
operational standards maintained to differentiate
from competitors. Stock levels and the supply
chain are monitored closely in order to ensure
product newness is maximised.
This is a decreasing risk as a number of
strategic projects have been undertaken to improve
our understanding of the customer
|
Departure of key personnel and failure to
attract or retain talent
Significantly delay or prevent achievement of
strategy
|
In order to attract and retain talent, both
succession and personal development plans are in
place throughout the Group. In addition,
target-led, performance-related incentive schemes
exist.
|
Failure to achieve the new store roll out or
acquisition targets
Reduced growth or a decline in gross
transaction value and may be required to write down
the value of any stock acquired for sale in an
uncompleted store
|
Debenhams undertakes research of key markets
and demographics to identify potential locations to
drive growth through new space. A full
investment appraisal is conducted as part of the
decision making process and a specialist team has
responsibility for end-to-end management of each
project once the decision is made.
|
Failure of ethical trading policy, poor
perception in the market on corporate responsibility
matters or negative impact to brand due to product
quality, supply chain practices, health and safety
etc.
Negative effect on reputation leading to loss
of stakeholder trust and confidence, material adverse
effect on the ability to attract and retain third
party brands, suppliers, designers, concessionaires
and franchisees with subsequent impact on performance
and results
|
Ethical sourcing, legislative change and
corporate responsibility matters are key areas of
focus for the sustainability committee.
To ensure that Debenhams has the most current
information available, it is a member of relevant
industry bodies that provide awareness of changes to
standards and legislation.
Debenhams is an active member of Ethical
Trading Initiative (ETI) and expects all suppliers to
follow the ETI base code and adhere to Debenhams'
own supplier code of conduct.
A reliance on third party suppliers, the
challenges of the current economic environment and
the complexity of the new and existing legislation
makes this an ongoing risk which Debenhams and its
suppliers have to manage.
|
4. Hazard
Risk & Impact
|
Examples of mitigation
|
Loss of business or additional expenditure
caused by terrorism, strikes, riots, natural
disaster, or pandemics
Adverse effect on inventory and gross
transaction value and will divert financial and
management resources from more beneficial uses.
In the case of terrorism, customer confidence may be
impacted
|
The business continuity committee is comprised
of senior executives and works to a framework based
on the most recent international standard.
The key objectives of this committee are
to ensure that potential threats to the organisation
and the impacts that those threats might cause have
been identified, that a framework that builds
organisational resilience to known threats is in
place and that the framework has the capability to
deliver an effective response to safeguard the
Group.
Insurance policies have been placed as
appropriate to minimise the impact of specific
risks.
|
Additional expenditure or reputational damage
caused by changes in legislation or a breach of
regulations
Adverse effect on inventory and gross
transaction value and will divert financial and
management resources from more beneficial uses
|
Debenhams has specialist accounting, taxation
and legal and secretariat teams and is also a member
of key industry bodies which provide awareness of
changes to standards and legislation.
Forums exist to focus on specific areas of
legislation and specific business policies and
procedures are in place to ensure roles and
responsibilities are understood across the
Group.
|
Theft of customer data or breach of payment
card industry data security standards
Negative effect on reputation leading to loss
of stakeholder trust and confidence, with subsequent
impact on performance and results and will divert
financial and management resources from more
beneficial uses
|
The information security forum reviews projects
and key activities for compliance to the relevant
standards. Debenhams compliance to the PCI
standard is monitored by management and reported to
the Audit Committee. A number of security tools
are employed to protect data, including encryption,
intruder detection and data loss prevention.
|
Personal injury or property damage relating to
a major Debenhams or supplier location
Injury or loss of life to staff or
customers. Negative effect on reputation and
will divert financial and management resources from
more beneficial uses
|
The executive health and safety committee
reviews compliance in this area and a number of
participants are members of various relevant industry
bodies. The committee receives input from
specialist teams which focus on discrete aspects.
These include health & safety, building services,
insurance and buying and merchandising. To
support compliance and to maintain high operational
standards, health and safety awareness programmes are
in place and each site has its own health and safety
committee.
|
Disruptions or other adverse events affecting
relationships with or the performance of major
suppliers, franchise partners, store card providers,
designers or concessionaires
Costs associated with the transfer of the
operations or the potential of extra operational cost
from a new provider
Changes in exclusivity arrangements with
designers or any decline in their popularity could
have a material adverse impact
Loss of a number of important concession or
franchise partners may adversely affect GTV
Adverse events within the supply chain could
restrict the availability or significantly increase
the cost of goods
Credit insurance difficulties for a significant
number of suppliers could lead to a detrimental
variation of terms or alternative suppliers used to
source some goods
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In order to minimise the impact of any third
party relationship or performance issues,
Debenhams' objectives are to: maintain excellent
third party relationships by ensuring strategies are
aligned; have appropriate, unambiguous contracts in
place; ensure third parties are financially robust;
and have contingency plans in place in the event of a
failure (e.g. conversion of space to own bought for
concessionaire failure, multiple sourcing routes for
supplier failure).
This is an increasing risk due to the ongoing
global economic situation and the impact this could
have on a significant supplier or partner.
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Fraud, theft or industrial espionage
Negative effect on reputation and will divert
financial and management resources from more
beneficial uses
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In order to mitigate fraud across all channels
in which Debenhams operates, a number of preventative
measures are in place. These include accounting
policies and procedures, systems access restrictions,
expenditure authorisation levels, whistleblowing and
anti-bribery and corruption policies and a code of
business conduct, all of which provide employees with
guidelines on how to escalate an issue
confidentially. A variety of monitoring
mechanisms are used to identify fraudulent activity,
including data mining across point of sale and head
office functions. As part of the organisation
wide risk assessment, individual managers sign an
anti-fraud, bribery and corruption declaration.
Issues identified are investigated and reported to
the Audit Committee.
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5. Operational
Risk
Risk & Impact
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Examples of mitigation
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Failure to deliver a business critical
project
Divert financial and management resources from
more beneficial uses and significantly damage ability
to manage information technology systems
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A full investment appraisal is conducted as
part of the decision making process and must be
signed off by a board member before any project is
undertaken.
As part of project governance, a steering
committee monitors all key areas involved in the
delivery of the project, a project framework is used,
selected projects will be reviewed by internal audit
and post investment appraisals are undertaken.
Debenhams is undertaking a head office move
during 2013 which increases the risk rating compared
to last year.
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Ineffective brand awareness and marketing
programmes
Loss of market share, customer loyalty,
reduction in gross transaction value and a decline in
sales on discretionary purchases
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Debenhams utilises market, trend and customer
awareness research to understand current demands and
preferences. This information is used to
identify specific segments of the market to target
and to form a proposal as a marketing campaign.
A full investment appraisal is conducted and must be
signed off by a board member before any campaign is
undertaken. Campaign effectiveness is
monitored through external feedback and internal
analysis.
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Risks associated with leasehold
properties
Significant alterations in rental terms could
have a material adverse effect on the business, as
would failure to secure desirable locations.
Disputes over store modernisations may lead to
reinstatement costs and termination of leases may
lead to dilapidation costs being incurred
Failure to manage asbestos in specific
properties may lead to fines or other liabilities
affecting Debenhams' reputation and the full or
partial closure of properties
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Debenhams has a specialist property team which
manages all aspects of leasehold property, including
cost renegotiations, communication of the store
modernisation programme, lease renewals and adherence
to all legal obligations under the lease.
Debenhams is also a member of key industry
bodies which provide awareness of changes to
standards and legislation.
Debenhams consults with industry experts to
ensure that the asbestos policy and asbestos register
are fully up to date. All locations where
asbestos has been identified are clearly marked with
signage and the condition is checked on a regular
basis with action taken in the event of any
deterioration. Any works undertaken in these
areas are approved by both the health & safety and
building services teams prior to any work permits
being issued with specialist companies used as
required.
Debenhams is undertaking a head office move
during 2013 which increases the risk rating compared
to last year.
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Risks associated with systems failure, external
attack of systems, or data inaccuracy
Divert financial and management resources from
more beneficial uses and significantly damage ability
to manage information technology systems
Inappropriate decisions could be made using
wrong or ambiguous information
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Project governance, change control and
implementation frameworks form part of all project
lifecycles and the IS management team is responsible
for ensuring that they are adhered to.
Monitoring processes are in place across a
number of key business systems, alongside
appropriately trained specialist teams and an
internal knowledge database.
Disaster recovery site is in place and
associated systems are regularly tested to ensure
that invocation would work effectively if
required.
This risk was previously included within other
risks in this section, but has now been displayed
separately given the significance of the risk should
it occur.
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Inability to effectively invoke the Business
Continuity Plan
Unable to continue operations smoothly in the
event of a major incident
Divert financial and management resources from
more beneficial uses
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The business continuity committee is comprised
of senior executives and works to a framework based
on the most recent international standard.
The key objectives of this committee are
to ensure that potential threats to the organisation
and the impacts that those threats might cause have
been identified, that a framework that builds
organisational resilience to known threats is in
place and that the framework has the capability to
deliver an effective response to safeguard the
Group.
Debenhams is undertaking a Head Office move
during 2013 which increases the risk rating compared
to last year.
This risk was previously included within other
risks in this section, but has now been displayed
separately given the significance of the risk should
it occur.
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