FIN A NCIA L REV IEW
FI NA N C IAL RE V I E W CONTINUED
This amount includes £3m of annualisation of the move to expense digital development costs. In FY21, the benefit from three quarters of the business rates holiday of £21m is equal to the level of government support received in Q4 FY20 that will not be received again in FY21 (rates £7m; JRS £14.5m). However, we note that the timing of these amounts will have a benefit in the first half and an adverse impact in the second half of the year. With our stores now fully re-opened, we have not made any further claims under the JRS in FY21 and will not claim the ‘JRS Bonus’. PROFI T A ND EA RNIN G S P E R S H A RE Operating profit for the period was £116.0m (FY19: £126.9m), a reduction of £10.9m, reflecting the impact of the store closure period, partially offset by the strong sales performance in the first three quarters, improved gross margin and the £3.2m benefit from the adoption of IFRS 16.
CAS H G E NE RATI O N AN D N E T CAS H In the period, the Group generated £174.7m of Free Cash Flow (FY19: £152.8m). There was a net cost of £6.9m (FY19: £1.0m) in respect of financial items in the period. This included interest on IFRS 16 lease liabilities of £5.5m, interest payable and amortisation of arrangement fees relating to the Group’s Revolving Credit Facility amounting to £1.8m (FY19: £1.9m), partially offset by a gain of £0.3m (FY19: £0.6m gain) resulting from foreign exchange differences on the translation of dollar denominated assets and liabilities. Interest received on cash deposits was £0.1m (FY19: £0.3m). PBT in the period was £109.1m (FY19: £125.9m), a reduction of £16.8m year-on-year. The impact of IFRS 16 in the period was to reduce profit before tax by £2.3m. Profit after tax of £87.7m (FY19: £101.3m) reflects an effective tax rate of 19.6% (FY19: 19.5%).
Basic earnings per share (EPS) for the period were 43.4 pence (FY19: 50.2p). Diluted earnings per share were 42.9 pence (FY19: 49.9p). Total capital investment was £24.9m for the year (FY19: £25.0m capex less £5.4m disposal proceeds). FY20 included investment in one freehold store (£5.6m), five new store openings including two relocations (£7.6m), technology and digital infrastructure (£4.9m), and store refit expenditure in existing stores (£6.2m). We expect capital expenditure in FY21 to be broadly consistent with FY20. Tax paid of £34.3m (FY19: £20.5m) reflected the one-off impact of the new rules on the timing of corporation tax payments, which resulted in two additional payments on account being made within the period. This will normalise to four payments per year from FY21. After total dividend payments in the period of £106.0m (FY19: £54.6m), including a special dividend of 32.0 pence per share paid in October 2019, the Group ended the year with a net cash position of £45.4m (FY19: net debt £25.3m). This FY20 IFRS 16 £m
FY19 IAS 17 £m
116.0
126.9
Depreciation and amortisation
80.2
39.4
Working capital inflow
80.1
26.5
Share-based payments
2.1
1.4
Operating profit 1
Tax paid
(34.3)
Interest received (FY19 only) Net cash generated from operating activities Capex (net of disposals) Net interest
2
Interest on lease liabilities Repayment of lease liabilities Free cash flow
(20.5)
–
0.3
244.1
174.0
(24.9)
(19.6)
(1.3)
(1.6)
(5.5)
–
(37.7)
–
174.7
152.8
Working capital inflow of £80.1m (FY19: £26.5m inflow) reflected exceptional creditors of c.£40m, including a deferral of £19m VAT, £10m of rental payments (paid in full but on a monthly rather than quarterly basis), and £10m of other accruals and deferred income, as well as c.£40m of lower stock levels and delayed purchases. These benefits are largely expected to reverse in FY21, mainly in the second half. 1.
Including impairment and loss on disposal.
2.
Excluding interest on lease liabilities. FY19 represents interest paid only, with interest received included within net cash generated from operating activities.
30
Dunelm Annual Report & Accounts 2020
