20495_Debenhams_AR_151104

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NOTES TO THE FINANCIAL STATEMENTS CONTINUED For the financial year year ended ended 29 29 August August 2015 2015 21 Financial risk management continued Borrowings and cash and cash equivalents The interest rate profiles of borrowings after taking account of interest rate swaps, swapped from floating to fixed rates, used to manage interest were as follows: Fixed £m Floating £m 1 Unamortised debt issue costs of £5.3 million (2014: £7.5 million) are excluded from the borrowings above. Fixed sterling borrowings comprise the hedged portion of the debt facility of £125.0 million (2014: £200.0 million), senior notes of £200.0 million (2014: £225.0 million) and finance lease liabilities of £3.2 million (2014: £6.5 million) at 29 August 2015. The weighted average interest rate on the fixed rate borrowings as at 29 August 2015 was 4.5% (2014: 4.4%), with the weighted average time for which rates are fixed being 4.0 years (2014: 4.3 years). Floating rate borrowings are interest bearing at interest rates based on LIBOR. Cash deposits are interest bearing at rates based on LIBID or relevant base rates. Non-interest bearing cash refers to cash in stores or in transit. Floating rate borrowings have been classified as fixed if there were derivative financial instruments hedging the floating rate interest. The interest rate profiles of cash and cash equivalents were as follows: v) Other price risk The Group is exposed to price risk arising from equity investments. 29 August 2015 30 August 2014 The sensitivity analysis below has been determined based on the exposure to equity price risk at the reporting date. At the year end, if the market value of equity investments had been 10% higher/lower, when all other variables were held constant then: • Net profit would have been unaffected as the equity investments were classified as available-for-sale investments • Other reserves would decrease/increase by £0.2 million (2014: £0.4 million) for the Group as a result of the changes in the fair value of available-for-sale investments The above movement in rates is considered to represent reasonable possible changes. Other larger or smaller changes are also possible. b) Capital management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, provide returns for shareholders and benefits to other stakeholders and maintain a structure to optimise the cost of capital. The Group defines capital as debt and equity. In order to maintain or adjust the capital structure, the Group may consider the amount of dividend paid to shareholders, the return of capital to shareholders, the issue or sale of shares or the sale of assets to reduce debt. Total £m Fixed £m Floating £m Borrowings Sterling 1 (328.2) (28.3) (356.5) (431.5) – (431.5) Floating £m Non-interest bearing £m Total £m 29 August 2015 30 August 2014 Total £m Floating £m Non-interest bearing £m Financial assets Sterling – 25.3 25.3 28.5 29.4 57.9 Euro 0.1 3.3 3.4 0.1 2.7 2.8 US dollar – 0.9 0.9 0.6 0.7 1.3 Danish krone – – – 1.2 – 1.2 Chinese yuan – – – 0.1 – 0.1 Other 1.6 1.5 3.1 0.1 1.0 1.1 Total financial assets 1.7 31.0 32.7 30.6 33.8 64.4 Total £m 122 Debenhams plc Annual Report & Accounts & Accounts 2015 2015
The Group routinely monitors its capital and liquidity requirements through leverage ratios consistent with industry-wide borrowing standards, maintaining suitable headroom to the bank facility fixed charge, senior notes and leverage covenants together with credit market requirements to ensure that financing requirements continue to be serviceable. c) Fair value estimates The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. The fair value of forward currency contracts has been determined based on discounted market forward currency exchange rates at the balance sheet date. The fair values of short-term deposits, loans and overdrafts with a maturity of less than one year are assumed to approximate to their book values. In the case of the Group’s loans due in more than one year, the fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rates available to the Group. Note 22 shows the carrying value and fair value of financial assets and liabilities. d) Sensitivity analysis The Group monitors interest rate risk and foreign exchange risk by determining the effect on profit and equity of a range of possible changes in interest rates and foreign exchange rates. The range of sensitivities chosen, being 1% movement in the interest rate or 5% movement in sterling when compared to the US dollar, Euro, Chinese yuan and Danish krone, reflects the Group’s view of reasonably possible changes to these risk variables which existed at the year end. The table below illustrates the estimated impact on the Group as a result of market movements in interest rates in relation to all the Group’s financial instruments. The analysis has been produced assuming no changes in the borrowings and existing interest rate swaps portfolio when considering the interest rate movement. Income statement loss £m 29 August 2015 30 August 2014 Equity gain £m Income statement gain £m 1% increase in interest rate (0.3) 2.9 0.3 2.3 A 1% decrease in interest rate would result in an equal and opposite change in the income statement and equity respectively. The table below illustrates the estimated impact on the Group as a result of market movements in foreign exchange rates in relation to all the Group’s financial instruments. Income statement gain/(loss) £m A 5% strengthening in sterling compared to the US dollar, Euro, Chinese yuan or Danish krone would result in an equal and opposite change in the income statement and equity respectively. Equity gain £m 29 August 2015 30 August 2014 Equity gain/(loss) £m Income statement gain/(loss) £m Equity gain/(loss) £m 5% weakening in sterling compared to US dollar (0.5) 18.2 (0.4) 20.7 5% weakening in sterling compared to Euro 0.1 (3.1) 0.5 (1.0) 5% weakening in sterling compared to Chinese yuan (0.1) 2.0 – 2.2 5% weakening in sterling compared to Danish krone 0.9 – 0.5 – Strategic Report 1-37 Governance 38-58 Financial Statements XX-XX 86-153 123 Debenhams Debenhams plc Annual plc Annual Report Report & Accounts & 2015 123
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ANNUAL REPORT & ACCOUNTS 2015
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OUR BUSINESS MODEL We aim to create
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FINANCIAL HIGHLIGHTS Gross transact
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oard has reviewed its dividend poli
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“WE HAVE BUILT A STRONG PLATFORM
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MARKET CONTEXT An independent view
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Increasing availability and choice
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In 2014/15 we set out a strategic p
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Our ambition is to grow our multi-c
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Our stores remain central to our cu
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Debenhams operates both its own and
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IT investment in FY2015 £60m Produ
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In addition to this, an extensive r
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Risk Impact Examples of mitigation
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Strategic KPIs Delivering a compell
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Figure 1: Financial summary Gross t
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Figure 3: Cash flow, uses of cash a
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Business share by country (%) China
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Engagement survey The results of th
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We will continue to capture more em
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DEAR SHAREHOLDER On behalf of the b
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NIGEL NORTHRIDGE Role: Chairman of
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Executive Committee Michael Sharp C
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All employees gender diversity Male
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directors, the board and its commit
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effective from 31 July 2015. Having
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MEMBERSHIP OF THE AUDIT COMMITTEE T
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Financial Officer or the Company Se
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DEAR SHAREHOLDER On behalf of the R
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LINK BETWEEN REMUNERATION AND STRAT
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What is the maximum potential value
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What is the maximum potential value
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REMUNERATION OUTCOMES IN DIFFERENT
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The remuneration package for a newl
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REMUNERATION POLICY TABLE FOR NON-E
Page 75 and 76: THE ANNUAL REPORT ON REMUNERATION T
Page 77 and 78: DIRECTORS’ SHAREHOLDINGS AND SHAR
Page 79 and 80: HISTORICAL CHIEF EXECUTIVE PAY The
Page 81 and 82: In line with FY2015, awards will be
Page 83 and 84: The total interests of the Chairman
Page 85 and 86: During the year, the Committee unde
Page 87 and 88: een made under them. The Company al
Page 89 and 90: STATEMENT OF DIRECTORS’ RESPONSIB
Page 91 and 92: The scope of our audit and our area
Page 93 and 94: Area of focus How our audit address
Page 95 and 96: Other required reporting Consistenc
Page 97 and 98: CONSOLIDATED INCOME STATEMENT For t
Page 99 and 100: CONSOLIDATED BALANCE SHEET As at 29
Page 101 and 102: CONSOLIDATED CASH FLOW STATEMENT Fo
Page 103 and 104: Supplier income recognition The Gro
Page 105 and 106: Deferred tax is provided on tempora
Page 107 and 108: The fair values of quoted investmen
Page 109 and 110: 3 Segmental reporting IFRS 8 “Ope
Page 111 and 112: Retirement benefits The Group’s d
Page 113 and 114: 9 Finance costs 10 Taxation Analysi
Page 115 and 116: Changes to the UK corporation tax r
Page 117 and 118: Intangible assets includes within p
Page 119 and 120: Capitalised finance costs Finance c
Page 121 and 122: 20 Bank overdraft and borrowings 29
Page 123 and 124: Borrowing facilities The Group has
Page 125: iii) Foreign exchange risk The Grou
Page 129 and 130: The following table shows the Group
Page 131 and 132: The inflation assumption is based o
Page 133 and 134: The table below illustrates the est
Page 135 and 136: 25 Other non-current liabilities Pr
Page 137 and 138: 28 Share-based payments The total c
Page 139 and 140: ) Executive Share Option Plan The E
Page 141 and 142: 31 Analysis of changes in net debt
Page 143 and 144: FIVE YEAR RECORD BALANCE SHEETS Ass
Page 145 and 146: Responsibilities for the financial
Page 147 and 148: NOTES TO THE COMPANY FINANCIAL STAT
Page 149 and 150: Share capital Ordinary shares are c
Page 151 and 152: 6 Debtors Amounts owed by Group und
Page 153 and 154: 12 Called up share capital 29 Augus
Page 155 and 156: STORE LIST UK Aberdeen Altrincham A
Page 157 and 158: ADDITIONAL INFORMATION Registered o
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20495_Debenhams_AR_151104

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