Last checked at 15 Sep 2009 07:00
15 September 2009
Dunelm Group plc
Preliminary Results for the 53 weeks to 4 July 2009
Dunelm Group plc, the leading specialist out-of-town homewares retailer, today announces its preliminary results for the 53 weeks to 4 July 2009.
Financial summary
| FY09 - 53 weeks | FY09 - 52 weeks | FY08 - 52 weeks | |
| Total sales | £423.8m | £417.1m | £391.8m |
| Like-for-like sales growth | -0.5% | -0.5% | +2.5% |
| Operating profit | £52.6m | £51.6m | £49.4m |
| Profit before tax | £53.5m | £52.5m | £49.1m |
| EPS (fully diluted) | 18.6p | 18.3p | 16.6p |
Financial highlights
On a comparable 52-week basis, highlights are:
Business highlights
Will Adderley, Chief Executive, said:
"The last financial year was again a positive one for sales and profit growth. In a tough market we continued to deliver strong performance and we have continued to grow our market share.
"The strong like for like sales performance in the latter weeks of the financial year has continued through the rest of the summer and we are very pleased with the start to our new financial year.
"We are confident that our "Simply Value For Money" proposition will continue to appeal to customers in the current economic climate. Our product ranges are suitable for all budgets and tastes. Our business is not significantly reliant on big-ticket purchases - our average basket remains below £30.
"In addition, the relatively weak state of the commercial property market gives us good opportunities to roll out our offer to more locations.
"Having said all this, we recognise that it will be very challenging to maintain our recent trading performance as like for like sales comparatives start to strengthen, and economic factors potentially subdue consumer spending. Nonetheless, the business is in excellent health, we are confident of continuing to grow our market share and we remain excited about our growth prospects in the medium term."
For further information please contact:
| Dunelm Group plc | 0116 2644 356 |
| Will Adderley, Chief Executive | |
| David Stead, Finance Director | |
| Hogarth Partnership | 020 7357 9477 |
| John Olsen / Fiona Noblet / Simon Hockridge |
Notes to Editors
Dunelm is the UK's leading specialist out of town homewares retailer, operating in the £12bn homewares market. The Group currently operates 97 stores, branded Dunelm Mill, of which 85 are out-of-town superstores and 12 are high street shops. The majority of the stores are located in the Midlands or north-west of England. Dunelm employs over 5,000 full and part time staff, the vast majority of whom work in the stores.
Dunelm was founded in 1979 as a market stall business, selling ready-made curtains. The first shop was opened in Leicester in 1984 and over the following years the business developed into a successful chain of high street shops in the Midlands specialising in soft furnishings. The first Dunelm superstore was opened in 1991, leading to the Group's expansion into the broader homewares market.
The superstores provide an average of 28,000 sq ft of selling space and offer an extensive range of around 20,000 products across a broad spectrum of categories, including bedding, curtains, gifts and seasonal items, cushions, bathroom products, kitchenware, quilts, pillows and rugs. Dunelm also specialises in offering a wide range of fabrics, made to measure curtains and a frequently changing series of special buys. The directors are passionate about ensuring that all ranges live up to Dunelm's philosophy of offering customers "Simply Value for Money".
Dunelm also operates an on-line store, to be found at www.dunelm-mill.com.
Dunelm listed on the London Stock Exchange in October 2006 (DNLM.L) and has a current market capitalisation of approximately £550 million.
CHAIRMAN'S STATEMENT
The last twelve months have been challenging for all retailers. The number of business failures has increased significantly, and has included some well known names with involvement in the homewares market. Against this difficult background, Dunelm has demonstrated great resilience as customers have continued to buy into our "Simply Value for Money" proposition.
We expect that the retail environment will remain challenging for some time, reflecting the depth of the background difficulties in the UK economy. In this scenario, consumers' continual search for better value, together with a trend towards switching of expenditure into home improvements, leaves us well positioned to make further progress.
After the end of the financial year we welcomed a new non-executive director to the Board, appointing Nick Wharton, Finance Director of Halfords Group plc. His wealth of experience and knowledge of the retail sector will be a great asset to the board as we continue to pursue our growth strategy.
The business celebrates its thirtieth year of operations with another year of increase in sales and profits. In addition, there was strong positive cash generation and we ended the year with significant cash surplus. This strong performance has enabled the board to recommend a 9.1% increase in the dividend, broadly in line with the growth in earnings per share. The Group remains in a very strong position to continue our strategy of investing in organic growth in the coming years.
Geoff Cooper
Chairman
CHIEF EXECUTIVE'S REVIEW
Trading
I am delighted to report continued successful growth of the Group during the last financial year. Our overall sales increased by 8.2% over the financial year, or 6.3% on a comparable 52 week basis. Like-for-like sales (calculated by comparing stores which have traded throughout the last two financial years) recovered from a decline of 5.6% in the first half to end the year just 0.5% down - significantly beating the overall homewares market.
I firmly believe that Dunelm remains the leading multiple homewares specialist in the UK. We intend to maintain our success by pursuing the four priorities which have constituted our strategy since flotation.
Priority 1 - growing the store portfolio
We opened six new superstores in the year, at Huddersfield, Newtownabbey, Plymouth, Worcester, Workington and Llanelli. We continue to receive very favourable customer reaction to all of our new openings and are pleased with trading in all of these locations. Altogether the chain of 82 superstores as at the year-end provided 2.4m square feet of selling space.
We see an increasing number of opportunities to grow the superstore portfolio without compromising our long-term financial returns. We have opened three further stores since the year-end in Norwich, Londonderry and Broadstairs and we are contractually committed to nine more units which are due to open over the next twelve months. We also have numerous further opportunities under negotiation. With little occupier demand for 'big box' retail warehousing space, we believe that we are well positioned to continue our store roll-out programme over the next few years whilst maintaining our disciplined and demanding approach to return on investment.
Whilst expanding our superstore chain towards our medium term target of at least 150 superstores, we continue to look for opportunities to relocate our older high street shops. The superstore opening in Worcester replaced our high street store there, leaving us with 12 high street stores.
Priority 2 - developing the customer offer
We know that it is essential for us to continue improving our retail proposition. We are as passionate as ever about giving "Simply Value For Money" to all our customers - a combination of price, choice, quality, product availability and friendly service.
We have introduced a number of developments in our offer over the past year. For example, we have launched an arts & crafts section in a number of stores, and have grouped together various existing ranges to create a new laundry & cleaning section. We now also offer add-on services in many stores - for example, we deliver products to customers' homes and fit them when required.
We have responded to the difficult economic environment by increasing the proportion of special buys available for customers, and have introduced some additional short-term product promotions under the banner of "Miss It Miss Out".
In our new and refitted stores, we now include a dedicated Dorma area, following our acquisition of rights to the Dorma brand in July 2008 (Dorma is a high-end home textiles brand with strong heritage in bed linen particularly). We have successfully retained Dorma's royal warrants following the acquisition, have refined the branding and have developed an exciting new range of Dorma bed linen designs exclusive to Dunelm. We have also begun to apply the Dorma name to other product categories such as bathroom and table linen.
We have continued investing to improve the shopping environment in our older stores. We completed six refits in the last financial year and intend to continue our refit programme at the rate of 5-10 stores per year. To date the cost has been approximately £0.5m per store, with payback anticipated in approximately 3 - 5 years. We have received a good response to these refitted stores both from customers and from our store teams.
Priority 3 - growing Dunelm Direct
Dunelm Direct is the name we give to our multi-channel strategy. Sales from our website (www.dunelm-mill.com) have grown well over the last financial year. We expect this to continue in the coming year as we are about to relaunch the site on a new technology platform which will improve the shopping experience and give us a much stronger technological base to build upon.
Also on this new technology platform will be a new website for Dorma (www.dorma.co.uk) which will act as a showcase for the Dorma brand, stocking all Dorma products, whether Dunelm exclusive designs or products distributed under licence by our third party partner.
Whilst it is still early days for our Dunelm Direct growth strategy we think the investment we have made over the last financial year will give us a strong and scalable platform on which to build.
Priority 4 - exploiting our infrastructure
We continue to extract further benefits from our past investment in IT systems, enabling us to improve stock control and make in-store processes more efficient. We are also seeing improvements to our customer offer directly supported by IT, for example the forthcoming launch of a gift card.
We are taking steps to underpin our medium term expansion plans by securing additional leasehold space at our central warehouse in Stoke, where we have an option over 100,000 sq ft of warehousing to supplement the 250,000sq ft we currently occupy. We anticipate moving operations into this additional space during 2010. Our capital expenditure to fit out new warehousing space is not expected to exceed £2m.
As our business grows, we will also need to expand our head office facility. We are investigating the possible purchase of freehold land in the neighbourhood of our existing base in Syston, Leicester. This is a long-term project and any new building is unlikely to be ready for occupation until 2011.
Outlook
For the first 10 weeks of our financial year, to 12 September, total sales growth has been 26.5% and like-for-like sales have grown by 16.1%. Gross margin has remained strong, with an increase of 180bps year on year.
We are very pleased with the start to our new financial year. We are confident that our "Simply Value for Money" proposition will continue to appeal to customers in the current economic climate. Our product ranges are suitable for all budgets and tastes. Our business is not significantly reliant on big-ticket purchases - our average basket remains below £30. In addition, the relatively weak state of the commercial property market gives us good opportunities to roll out our offer to more locations. Having said all this, we recognise that it will be very challenging to maintain our recent trading performance as like for like sales comparatives start to strengthen, and economic factors (including the planned increase in VAT and anticipations of public spending reductions and rising unemployment) potentially subdue consumer spending. Nonetheless, the business is in excellent health, we are confident of continuing to grow our market share and we remain excited about our growth prospects in the medium term.
Will Adderley
Chief Executive
FINANCE DIRECTOR'S REVIEW
53 Weeks
Dunelm's financial years are determined by reference to 'Mean Accounting Dates' and therefore every few years the Group reports a 53 week financial period. The year ended 4 July 2009 was a 53 week year. Unless otherwise stated, throughout the Finance Director's Review references to 'the financial year' or to 2009 relate to the 53 weeks ended 4 July 2009 and for 2008, to the 52 weeks ended 28 June 2008. The 53rd week represented £6.7m of revenue and £1.0m of operating profit.
Operating result
Group revenues in the financial year were £423.8m (2008: £391.8m), an increase of 8.2% (6.3% on a 52 week basis). Like-for-like sales (calculated by comparing stores which have traded throughout the last two financial years) witnessed a decline of 0.5% on a 52 week basis, although H2 like-for-like sales at + 5.0% showed a strong recovery from a H1 decline of 5.6%.
Our scale, buying power and mix of special buys have continued to deliver gross margin growth, achieving a 120 basis point improvement to 45.8% in 2009 (2008: 44.6%). Taking into account all charges for inventory write-downs, gross margin was 44.9% (2008: 43.1%) and we will report gross margin on this basis in the future.
Operating costs remained tightly controlled, with an overall 4.7% increase in operating costs in like-for-like stores. Property rents increased by 5.6% reflecting an unusually high number of rent reviews falling due in the period. Utility costs increased by 29.9%, reflecting higher tariffs in the first part of the year. Non-store costs grew by £3.7m, including additional logistics costs to support the increase in special buy merchandise as well as further investment in advertising and Head Office support infrastructure.
Operating profit for the 53 weeks to 4 July 2009 was £52.6m. On a 52 week basis operating profit was £51.6m, an increase of £2.2m (4.5%) on the previous year's £49.4m.
EBITDA
Earnings before interest, tax, depreciation and amortisation were £63.2m. This has been calculated as operating profit (£52.6m) plus depreciation and amortisation (£10.6m) and represented a 7.3% increase on the previous year. The EBITDA margin achieved was 14.9% of sales (2008: 15.0%).
Financial items and PBT
The net interest charge for the year ended 4 July 2009 was £0.1m (2008: £0.3m). This reduction is a direct result of the Group's strong cash generation enabling elimination of the prior year net debt.
A foreign exchange gain of £1.0m arose in the year in respect of US dollar holdings within the Group. At the year end, the Group held no forward contracts for the purchase of foreign currency but did hold $2.2m in cash.
After accounting for interest and foreign exchange impacts, profit before tax for the year amounted to £53.5m (2008: £49.1m), an increase of 8.9%.
Tax, PAT and EPS
The tax charge for the year was 29.7% of PBT (2008: 31.5%), benefiting year-on-year from the reduction in the headline rate of corporation tax to 28.0%.
Basic EPS for the year ended 4 July 2009 was 18.8p (2008: 16.8p), an increase of 11.9%. Fully diluted EPS increased by 12.0% to 18.6p (2008: 16.6p); this would have been approximately 18.3p (10.2% increase) on a 52 week basis.
Capital expenditure
Gross capital expenditure in the financial year was £25.9m, up from £18.0m last year. The Group took advantage of market conditions to acquire two freehold stores at attractive yields as well as funding fit-out costs for six new stores opened in the year and six store refits. Rights to the Dorma brand name were acquired during the period at a cost of £5.0m.
Working capital
The Group reduced working capital in the year by £14.8m. Investment in inventories was £57.9m at the year end, a reduction of £2.8m compared with last year despite the addition of six new stores - reflecting specific management focus on this area. Trade and other payables generated a positive cash movement of £11.1m, although some of this benefit is attributable to the 53 week accounting period and is expected to reverse.
Cash position
The Group continues to generate extremely strong cash flows. Net cash from operations, after interest and tax, amounted to £67.4m (2008: £45.0m) in the last financial year. As at 4 July 2009 the Group had net cash resources of £24.0m (2008: net debt of £7.2m). Together with committed undrawn revolving loan facilities of £40.0m this puts us in an excellent position to fund future growth.
Dividend
An interim dividend of 2.0p was paid in April 2009 (2008: 2.0p). It is proposed to pay a final dividend of 4.0p per share (2008: 3.5p). The total dividend of 6.0p represents a 9.1% increase over last year.
Key performance indicators
In addition to the traditional accounting measures of sales and profits, the Directors review business performance each month using a range of other KPIs. These include:
| FY09 | FY08 | |
| Like-for-like sales growth | -0.5% | +2.5% |
| Change in gross margin | +120bp | +60bp |
| Number of new store openings | 6 | 8 |
Key risks
The Directors also consider key risks to the business in the areas of strategic, operational and financial risks.
Strategic risks
New entrants to and/or formats within the homewares market could materially alter the competitive environment. We will continue to monitor competitor activity and to modify our proposition if necessary.
The outlook for consumer expenditure growth is uncertain and a prolonged downturn could have a significant effect on our business, as well as on many other retailers. We mitigate this risk by retaining the ability to react quickly to changes in customer demand and to adjust our offer accordingly. We have the ability to flex our offer in response to customer demand as evidenced by the increased proportion of 'special buy' merchandise in the business. Our focus on a low cost base also enables us to maintain our "Simply Value for Money" proposition.
Like all businesses, we face the risk of increased costs from compliance with new laws and regulations. In addition, any changes to property regulation could have a particular impact on our opportunities for opening new stores. At present we are not aware of any significant forthcoming changes in the regulatory environment.
Our growth plans rely heavily on our being able to gain access to additional trading locations. If for any reason the supply of vacant retail warehouse space declines significantly, we will be forced to accept a lower pace of expansion. However, in view of the economic pressures on both retailers and landlords we anticipate good availability of space over the next few years.
Operational risks
As with most major retailers, the business is heavily reliant on information systems and technology.
A major IT incident could constitute a significant threat to the business, at least in the short-term. Dunelm maintains a disaster recovery plan to provide business continuity in the event of such an occurrence.
Similarly, the business could suffer disruption in the event of a major incident within the supply chain, e.g. loss of our central warehouse or a major supplier. However, our use of a wide supply base, active management of key supplier relationships, high stock service levels and a high proportion of direct-to-store deliveries mitigate this risk.
Dunelm has a number of staff members in specialist positions whose expertise is important to operations and who could not easily be replaced. Additional strengthening of the operating management team over the past 12 months has given greater depth and coverage in a number of areas.
Financial risks
The Group has a committed bank facility under a revolving loan agreement with Lloyds Banking Group plc of £40m expiring in September 2011. This facility, together with existing cash resources, is considered to provide sufficient funding for the Group's operations.
We do not consider our direct exposure to interest rate fluctuations to generate any significant downside risk and we will be well placed to take advantage of upside potential.
Surplus funds are placed on deposit in a range of overnight and fixed term facilities with counter parties approved by the Board. The Group actively manages counter party risk. A credit rating of at least an 'A' is required.
David Stead
Finance Director
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
(a) The financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group: and
(b) The management report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties it faces
| Will Adderley | David Stead |
| Chief Executive | Finance Director |
Consolidated income statement
For the 53 weeks ended 4 July 2009
| 53 weeks | 52 weeks | ||
| 2009 | 2008 | ||
| Note | £'000 | £'000 | |
| Revenue | 1 | 423,783 | 391,795 |
| Cost of sales | (229,701) | (217,018) | |
| Gross profit | 194,082 | 174,777 | |
| Operating costs | 3 | (141,487) | (125,346) |
| Operating profit | 2 | 52,595 | 49,431 |
| Financial income | 5 | 1,563 | 1,075 |
| Financial expenses | 5 | (667) | (1,365) |
| Profit before taxation | 53,491 | 49,141 | |
| Taxation | 6 | (15,870) | (15,470) |
| Profit for the period | 37,621 | 33,671 | |
| Earnings per ordinary share - basic | 8 | 18.8p | 16.8p |
| Earnings per ordinary share - diluted | 8 | 18.6p | 16.6p |
| Dividend proposed per ordinary share | 7 | 4.0p | 3.5p |
| Dividend paid per ordinary share | 7 | 2.0p | 2.0p |
All activities relate to continuing operations. All profit is attributable to equity shareholders of parent.
There were no gains or losses for the current or comparative periods other than those reported above.
Consolidated balance sheet
As at 4 July 2009
| 4 July | 28 June | |
| 2009 | 2008 | |
| £'000 | £'000 | |
| Non-current assets | ||
| Intangible assets | 5,843 | 2,097 |
| Property, plant and equipment | 88,771 | 77,157 |
| Total non-current assets | 94,614 | 79,254 |
| Current assets | ||
| Inventories | 57,895 | 60,710 |
| Trade and other receivables | 10,739 | 11,636 |
| Cash and cash equivalents | 24,016 | 2,853 |
| Total current assets | 92,650 | 75,199 |
| Total assets | 187,264 | 154,453 |
| Current liabilities | ||
| Trade and other payables | (65,550) | (54,570) |
| Liability for current tax | (8,797) | (3,840) |
| Interest-bearing loans and borrowings | (18) | (20) |
| Total current liabilities | (74,365) | (58,430) |
| Non-current liabilities | ||
| Deferred tax liability | (127) | (634) |
| Interest-bearing loans and borrowings | - | (10,000) |
| Total non-current liabilities | (127) | (10,634) |
| Total liabilities | (74,492) | (69,064) |
| Net assets | 112,772 | 85,389 |
| Equity | ||
| Issued capital | 2,008 | 2,008 |
| Share premium | 345 | 345 |
| Retained earnings | 110,419 | 83,036 |
| Total equity attributable to equity holders of the Parent | 112,772 | 85,389 |
The financial statements were approved by the Board of Directors on 15 September 2009 and were signed on its behalf by:
Will Adderley
Chief Executive
Consolidated cash flow statement
For the 53 weeks ended 4 July 2009
| 53 weeks | 52 weeks | |
| 2009 | 2008 | |
| £'000 | £'000 | |
| Profit before taxation | 53,491 | 49,141 |
| Adjustment for net financing costs | (896) | 290 |
| Operating profit | 52,595 | 49,431 |
| Depreciation and amortisation | 10,555 | 9,457 |
| Loss/(Profit) on disposal of property, plant and equipment | 26 | (278) |
| Operating cash flows before movements in working capital | 63,176 | 58,610 |
| Decrease/(Increase) in inventories | 2,815 | (53) |
| Decrease/(Increase)in debtors | 897 | (2,640) |
| Increase in creditors | 11,132 | 3,460 |
| Net movement in working capital | 14,844 | 767 |
| Share based payments expense | 599 | 286 |
| Foreign exchange gains / (losses) | 323 | (49) |
| Cash flows from operating activities | 78,942 | 59,614 |
| Interest paid | (821) | (1,642) |
| Interest received | 523 | 1,075 |
| Tax paid | (11,200) | (14,093) |
| Net cash generated from operating activities | 67,444 | 44,954 |
| Cash flows from investing activities | ||
| Proceeds on disposal of property, plant and equipment | 1 | 303 |
| Acquisition of property, plant and equipment | (19,647) | (17,466) |
| Acquisition of intangible assets | (6,295) | (538) |
| Net cash utilised in investing activities | (25,941) | (17,701) |
| Cash flows from financing activities | ||
| Proceeds from issue of share capital | - | 80 |
| Purchase of treasury shares | (186) | (1,900) |
| Proceeds from issue of treasury shares | 124 | 112 |
| Repayment of bank loan | (10,000) | (30,000) |
| Dividends paid | (10,993) | (10,020) |
| Net cash flows utilised in financing activities | (21,055) | (41,728) |
| Net increase/(decrease) in cash and cash equivalents | 20,448 | (14,475) |
| Foreign exchange revaluations | 717 | (39) |
| Cash and cash equivalents at the beginning of the period | 2,833 | 17,347 |
| Cash and cash equivalents at the end of the period | 23,998 | 2,833 |
Consolidated statement of changes in equity
For the 53 weeks ended 4 July 2009
|
| ||||
| Issued | ||||
| share | Share | Retained | Total | |
| capital | premium | earnings | equity | |
| £'000 | £'000 | £'000 | £'000 | |
| As at 1 July 2007 | 2,006 | 267 | 60,961 | 63,234 |
| Profit for the financial year | - | - | 33,671 | 33,671 |
| Issue of share capital | 2 | 78 | - | 80 |
| Purchase of treasury shares | - | - | (1,900) | (1,900) |
| Treasury shares reissued in respect of share option schemes | - | - | 112 | 112 |
| Share based payments | - | - | 286 | 286 |
| Deferred tax on share based payments | - | - | (230) | (230) |
| Current corporation tax on share options exercised | - | - | 156 | 156 |
| Dividends | - | - | (10,020) | (10,020) |
| As at 28 June 2008 | 2,008 | 345 | 83,036 | 85,389 |
| Profit for the financial year | - | - | 37,621 | 37,621 |
| Purchase of treasury shares | - | - | (186) | (186) |
| Treasury shares reissued in respect of share option schemes | - | - | 123 | 123 |
| Share based payments | - | - | 599 | 599 |
| Deferred tax on share based payments | - | - | 139 | 139 |
| Current corporation tax on share options exercised | - | - | 80 | 80 |
| Dividends | - | - | (10,993) | (10,993) |
| As at 4 July 2009 | 2,008 | 345 | 110,419 | 112,772 |
Notes to the annual financial statements
1 Segmental reporting
The Group has only one class of business, retail of homewares, and operates entirely in the UK market.
2 Operating profit
| 2009 | 2008 | |
| £'000 | £'000 | |
| Operating profit is stated after charging/(crediting) the following items: | ||
| Inventories | ||
| Cost of inventories included in cost of sales | 229,701 | 217,018 |
| Write down of inventories | 2,758 | 5,867 |
| Amortisation of intangible assets | 2,550 | 2,134 |
| Depreciation of property, plant and equipment | ||
| Owned | 8,005 | 7,323 |
| Operating lease rentals | ||
| Land and buildings | 21,683 | 19,140 |
| Plant and machinery | 1,151 | 937 |
| Loss / (Profit) on disposal of property, plant and equipment and intangible assets | 26 | (278) |
The analysis of auditors' remuneration is as follows:
| 2009 | 2008 | |
| £'000 | £'000 | |
| Fees payable to the Company's auditors for the audit of the Parent and consolidated annual accounts | 15 | 15 |
| Fees payable to the Company's auditors and their associates for other services to the Group | ||
| - the audit of the Company's subsidiaries pursuant to legislation | 52 | 67 |
| - tax compliance | 29 | 29 |
| - other tax services | 8 | 9 |
| - all other services | - | 34 |
3 Operating costs
| 2009 | 2008 | |
| £'000 | £'000 | |
| Selling and Distribution | 121,860 | 108,051 |
| Administrative | 19,601 | 17,573 |
| Loss / (Profit) on disposal of property, plant and equipment and intangible assets | 26 | (278) |
| 141,487 | 125,346 |
4 Employee numbers and costs
| The average number of people employed by the Group (including Directors) was: | 2009 | 2009 | 2008 | 2008 |
| Number | Full time | Number | Full time | |
| of heads | equivalents | of heads | equivalents | |
| Selling | 5,003 | 3,302 | 4,875 | 3,254 |
| Distribution | 250 | 240 | 217 | 210 |
| Administration | 161 | 158 | 144 | 142 |
| 5,414 | 3,700 | 5,236 | 3,606 |
Notes to the annual financial statements
Continued
4 Employee numbers and costs continued
The aggregate remuneration of all employees including Directors comprises:
| 2009 | 2008 | |
| £'000 | £'000 | |
| Wages and salaries including bonuses and termination benefits | 52,696 | 47,775 |
| Social security costs | 3,429 | 3,187 |
| Share-based payment expense | 599 | 286 |
| Defined contribution pension costs | 206 | 172 |
| 56,930 | 51,420 |
5 Financial income and expense
| 2009 | 2008 | |
| £'000 | £'000 | |
| Finance income | ||
| Interest on bank deposits | 523 | 1,075 |
| Foreign exchange gains | 1,040 | - |
| 1,563 | 1,075 | |
| Finance expenses | ||
| Interest on bank borrowings and overdraft | (667) | (1,278) |
| Foreign exchange losses | - | (87) |
| (667) | (1,365) | |
| Net finance income/(expense) | 896 | (290) |
6 Taxation
| 2009 | 2008 | |
| £'000 | £'000 | |
| Current taxation | ||
| UK corporation tax charge for the period | 16,143 | 12,045 |
| Adjustments in respect of prior periods | 94 | (255) |
| 16,237 | 11,790 | |
| Deferred taxation | ||
| Origination of temporary differences | (332) | 3,293 |
| Adjustment in respect of prior periods | (35) | 554 |
| Tax rate differential | - | (167) |
| (367) | 3,680 | |
| Total taxation expense in the income statement | 15,870 | 15,470 |
The tax charge is reconciled with the standard rate of UK corporation tax as follows:
| 2009 | 2008 | |
| £'000 | £'000 | |
| Profit before tax | 53,491 | 49,141 |
| UK corporation tax at standard rate of 28.0% (2008: 29.5%) | 14,977 | 14,496 |
| Factors affecting the charge in the period: | ||
| Non-deductible expenses | 7 | 128 |
| Ineligible depreciation | 947 | 918 |
| Lease incentive deductions | (125) | (128) |
| Adjustments to tax charge in respect of prior years | 59 | 299 |
| Profit on disposal in excess of capital gain | 5 | (76) |
| Tax rate differential | - | (167) |
| 15,870 | 15,470 |
The taxation charge for the period as a percentage of profit before tax is 29.7% (2008:31.5%).
Notes to the annual financial statements
Continued
7 Dividends
All dividends relate to the 1p ordinary shares.
| 2009 | 2008 | |
| £'000 | £'000 | |
| Final for the period ended 30 June 2007 - paid 3.0p | - | (6,024) |
| Interim for the period ended 28 June 2008 - paid 2.0p | - | (3,996) |
| Final for the period ended 28 June 2008 - paid 3.5p | (6,994) | - |
| Interim for the period ended 4 July 2009 - paid 2.0p | (3,999) | - |
| (10,993) | (10,020) |
The Directors are proposing a final dividend of 4.0p per ordinary share for the period ended 4 July 2009 which equates to £8.0m. The dividend will be paid on 5 December 2009 to shareholders on the register at the close of business on 21 November 2009.
8 Earnings per share
Basic earnings per share is calculated by dividing the profit for the period attributable to equity shareholders by the weighted average number of ordinary shares in issue during the period.
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. These represent share options granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the period.
Weighted average numbers of shares:
| 53 weeks | 52 weeks | |
| ended | ended | |
| 4 July | 28 June | |
| 2009 | 2008 | |
| '000 | '000 | |
| Weighted average number of shares in issue during the period | 199,874 | 200,446 |
| Impact of share options | 2,559 | 2,180 |
| Number of shares for diluted earnings per share | 202,433 | 202,626 |