SHEL Holdings Europe Limited
ANNUAL REPORT AND FINANCIAL STATEMENTS For the period ended 28 January 2017
Pag© CONTENDS
Strategic report
Directors' report
5 Statement of directors' responsibilities
6 Independent auditors' report to the members of SHEL Holdings Europe Limited
g Consolidated income statement and other comprehensive income
10 Consolidated balance sheet
12 Consolidated statement of changes In equity
13 Consolidated cash flow statement
14 Notes to the financial statements
51 Company balance sheet
52 Company statement of changes in equity
53 Company cash flow statement
54 Notes to the company financial statements
COMPANY SECRETARY AND REGISTERED OFFICE
S Hemsley, 400 Oxford Street, London \A/1 A1AB
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP, Chartered Accountants and Statutory Auditors, The Atrium, 1 Harefield Road, Oxbridge, UBB1EX
COMPANY'S REGISTERED NUMBER
The Company's registered number is 07826605. SHEL Holdings Europe Limited
Strategic report for the period ended 28 January 2017
The directors present their strategic report and the audited financial statements of the Company and the Group for the period ended 28 January 2017.
Review of the business
Principal activities
The principal activity of the Company is as a holding Company for Group activities which are department store arid online retailing.
Results
The financial statements reflect the results of SHEL Holdings Europe Limited and Its subsidiary undertakings.
Turnover for the 52 weeks to 28 January 2017 was £1,205.7 million (52 weeks ended 30 January 2016; £1,032.8 million).
Group profit on ordinary activities before taxation was £105.2 million (2016: £81.1 million). The profit after taxation for the financial period of £78.5 million (2016: £64.3 million) has been transferred to reserves.
At 28 January 2017, the Group hgd net assets of £1,313.8 million (30 January 2016; £1,226.6m), which Is satisfactory for the directors.
Despite the challenging economic climate, the Group continues to grow turnover and be profitable, which is in line with directors' expectations. This has been achieved by good performance in the underlying business, plus a continued capital investment in all stores.
The full results for the period are set out in the consolidated income statement and other comprehensive income on page 9.
Principal risks and uncertainties
The Company Identifies and manages its key risks and uncertainties across its European businesses. These are monitored on an ongoing basis by directors and strategies are developed as appropriate to mitigate against such risks and minimise their Impact, The principal risks affecting the management of the business and the execution of the Company's strategy relate to: • The challenging economic environment in Europe Including the uncertainty created following the UK's decision to leave the European Union; the Group monitors this activity closely. • Operating In a highly competitive retail market; the Group delivers a strong commercial proposition for our customers and continues to invest In our business. • Employee retention and the ability to attract and recruit talent; employee engagement through our vision and values strengthens commitment to the business. • The impact of Interest rates on consumer demand and other financial risks; the Group's policies for dealing with these risks are discussed In note 24 Financial Risk Management.
Key performance Indicators ("KPIs")
The directors believe that other than the statutory KPIs of turnover, gross profit and operating profit set out in the profit and loss account there are no non-financial KPIs required to be reported to give a full understanding of the business.
Approved by the Board of Directors on 28 March 2017 and signed on Its behalf by:
S Hemsley Company secretary
2 SHEL Holdings Europe Limited
Directors' report for the period ended 28 January 2017
The directors present their report and the audited financial statements for the Company and the Group for the 52 week period ended 28 January 2017 (2016: 52 weeks ended 30 January 2016).
General Information
The Company is a private company limited by shares, domiciled and incorporated in the United Kingdom. The Company's registered address is 400 Oxford Street London WiA iAB.
The immediate parent undertaking is. RoUndwood Holdings Limited. The directors consider the ultimate parent company and controlling party to be Wittington Investments, Limited, which Is incorporated in Canada.
Future developments
The retail market Is expected to remain competitive in 2017; however the directors remain confident that the Company and Group will maintain its current level of performance in the future.
Financial risk management and financial instruments
The directors consider the Group's financial risk profile to be low, Liquidity and cash flow continue to be strong and credit risks are low due to the cash-based nature of the business and the strong cash flows generated.
However, the Group is exposed to counterparty risk due to Its deposits held within financial Institutions, and the Group's operations do expose it to fluctuations in foreign currency exchange rates. The Group manages foreign exchange risk through the use of foreign exchange forward contracts.
Further information on these risks and the methods employed to mitigate them cah be found In note 24 of the notes to the financial statements.
Dividends
An interim dividend of £0.27 (2016: £2,819) per ordinary share, amounting to £13.2 million (2016: £14.1 million) was paid In April 2016, The directors do not recommend the payment of a final dividend.
Political donations
No political contributions were paid in the period (2016: £25,000).
Post balance sheet events
After the reporting date, an Interim dividend of £38.5m was proposed by the board of directors and Is due to be paid in April 2017.
Subsequent to the balance sheet date, there have been no other events requiring disclosure.
Directors
The directors who held office during the period and up to the date the financial statements were signed are:
P G Kelly A R Graham J A Skelton A Batty L Weedall (appointed 17 October 2016)
3 SHEL Holdings Europe Limited
Directors' report for the period ended 28 January 2017 (continued)
No director had any interest in the Company during the period and up to the date the financial statements were signed.
Directors' third-party and pension scheme indemnity provisions
As permitted by the Articles of Association, the directors have the benefit of an indemnity which is a qualifying third party indemnity provision as defined by Section 234 of the Companies Act 2006. The Indemnity was in force throughout the last financial year and is currently in force. The Company also purchased and maintained throughout the financial year Directors' and Officers' liability insurance in respect of itself and its Directors,
Employees
The Group systematically provides employees with information on matters of concern to them, consulting them or their representatives regularly, so that their views can be taken into account when making decisions that are likely to affect their interests. Employee involvement in the Group is encouraged, as achieving a common awareness on the part of all employees of the financial and economic factors affecting the Group plays a major role in achieving the Group's business goals.
The Group is committed to employment policies, which follow best practice, based on equal opportunities for all employees, irrespective of sex, race, colour, disability or marital status. The Group gives full and fair consideration to applications for employment from disabled persons, having regard to their particular aptitudes and abilities. Appropriate arrangements are made for the continued employment and training, career development and promotion of disabled persons employed by the Group. If members of staff become disabled the Group continues employment, either in the same or an alternative position, with appropriate retraining being given if necessary.
Disclosure of information to auditors
Each of the Company's current directors has taken appropriate steps to make himself/herself aware of relevant audit information and so far as each director Is concerned there is no relevant audit information of Which the Company auditors are unaware.
The auditors, PricewaterhouseCoopers LLP, have indicated their willingness to continue in office, and a resolution that they be re-appointed will be proposed at the annual general meeting.
Approved by the Board of Directors on 28 March 2017 and signed on its behalf by: J J A Skelton Director
4 SHEL Holdings Europe Limited
Statement of directors1 responsibilities for the period ended 28 January 2017
The directors are responsible-for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.
Company law requires the directors to prepare financial statements for each financial 52 week period. Under that law the directors have prepared the group financial statements in accordance with International Financial Reporting Standards (IFRSS) as adopted by the European Union ahd company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company and of the profit or loss of the group and company for that period, in preparing the financial statements, the directors are required to:
• select suitable accounting policies and then apply them consistently; • State whether applicable IFRSs as adopted by the European Union have been followed for the group financial statements and IFRSs as adopted by the European Union have been followed for the company financial statements, subject to any material departures disclosed and explained in the financial statements; • make judgements and accounting estimates that are reasonable and prudent; and • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and company will continue In business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group and company's transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements comply with the Companies Act 2006 and, as regards the group financial statements, Article 4 of the IAS Regulation.
The directors are also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other Irregularities.
Directors' statement pursuant to the Disclosure and Transparency Rules
Each of the directors, whose names are listed in the Directors' report confirm that, to the best of each person's knowledge and belief:
• the financial statements, prepared in accordance with iFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the group and company; and • the directors' report contained in the annual report Includes a fair review of the development and performance of the business and the position of the company and group, together with a description of the principal risks and uncertainties that they face.
The directors are responsible for the maintenance and integrity of the group web site, www.selfridgesgroup.com. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Approved by the Board of Directors on 28 March 2017 and signed on its behalf by;
S Hems ley Company Secretary
5 SHEL Holdings Europe Limited
Independent auditors' report to the members of SHEL Holdings Europe Limited
Report on the financial statements
Our opinion fn our opinion: • SHEL Holdings Europe Llmited's group financial statements and company financial statements (the "financial statements") give a true and fair view of the state of the group's and of the company's affairs as at 28 January 2017 and of the group's profit and the group's and the company's cash flows for the 52 week period (the "period") then ended; • the group financial statements have been properly prepared In accordance with international Financial Reporting Standards ("IFRSs") as adopted by the European Union; • the company financial statements have been properly prepared in accordance with iFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
What we have audited The financial statements, Included within the Annual Report and Financial Statements (the "Annual Report"), comprise: • the consolidated income statement and other comprehensive Income for the period then ended; • the consolidated and company balance sheets as at 28 January 2017; • the consolidated and Gompany cash flow statements for the period then ended; • the consolidated and company statements of changes in equity for the period then ended; and • the notes to the financial statements, which include a summary of significant accounting policies and other explanatory information. The financial reporting framework that has been applied In the preparation of the financial statements Is iFRSs as adopted by the European Union and, as regards the company financial statements, as applied in accordance with the provisions of the Companies Act 2006, and applicable law.
In applying the financial reporting framework, the directors have made a number of subjective judgements, for example in respect of significant accounting estimates. In making such estimates, they have made assumptions and considered future events,
In our opinion, based on the work undertaken in the course of the audit: • the information given in the Strategic Report and the Directors' Report for the financial period for which the financial statements are prepared is consistent with the financial statements; and
• the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
6 SHEL Holdings Europe Limited
Independent auditors' report to the members of SHEL Holdings Europe Limited (continued)
In addition, in light of the knowledge and understanding of the group, the company and their environment obtained in the course of the audit, we are required to report if we have Identified any material misstatements in the Strategic Report and the Directors' Report. We have nothing to report In this respect.
Adequacy of accounting records and information and explanations received Under the Companies Act 2006 we are required to report to you if, in our opinion; • we have not received all the Information and explanations we require for our audit; or • adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or • the company financial statements are not In agreement with the accounting records and returns. We have no exceptions to report arising from this responsibility.
Directors' remuneration Under the Companies Act 2006 we are required to report to you if, in our opinion, certain disclosures of directors' remuneration specified by law are not made. We have no exceptions to report arising from this responsibility.
Our responsibilities and those of the directors As explained more fully In the Statement of Directors' Responsibilities, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland) flSAs (UK & Ireland)"). Those standards require us to Comply with the Auditing Practices Board's Ethical Standards for Auditors,
This report, including the opinions, has been prepared for and only for the company's members as a body In accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
What an audit of financial statements Involves We conducted our audit in accordance with ISAs (UK & Ireland). An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: • whether the accounting policies are appropriate to the group's and the company's circumstances and have been consistently applied and adequately disclosed; • the reasonableness of significant accounting estimates made by the directors; and • the overall presentation of the financial statements.
7 SHEL Holdings Europe Limited
Independent auditors' report to the members Of SHEL Holdings Europe Limited (continued)
We primarily focus our work In these areas by assessing the directors' judgements against available evidence, forming our own judgements, and evaluating the disclosures In the financial statements.
We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide a reasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive procedures or a combination of both.
In addition, we read all the financial and non-financial Information in the Annual Report to Identity material inconsistencies with the audited financial statements and to identify ahy information that Is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit, if we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. With respect to the Strategic Report and Directors' Report, we consider whether thoSeTsports include the disclosures required by applicable legal requirements.
Owen Mackney (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors Uxbrldge 28 March 2017
Q SHEL Holdings Europe Limited
Consolidated Income statement and other comprehensive income for the period ended 28 January 2017
52 weeks ended 52 weeks ended 28 January 2017 30 January 2016 Note £m £m
Revenue 3 1,205.7 1,032.8 Cost of sales 4 (537.3) (459.3) Gross profit 668.4 573.5
Distribution costs 4 (369.9) (327.6) Administrative expenses 4 (177.6) (144.0) Operating profit 120,9 101.9
Interest payable (19.9) (22.6) Interest receivable 10 5.0 2.0 Other finance costs 11 (0.2) Net finance costs (15.7) (20.8)
Profit before income tax 105.2 81.1 ihcome tax expanse 12 (26.7) (1.6,8) Profit for the financial period 78.5 64.3
Other comprehensive Income/(expenses) Items that will not be reclassified to profit or loss Rerneasurements of post-employment benefit obligations 26 (30.7) 22.1 Related tax 16 5.0 (4.3)
Items that may be subsequently reclassified to profit or loss Foreign currency translation differences 19.9 5.0 Impact of change in UK tax rate on deferred tax 16 (0.7) (1.5)
Other comprehensive income/(expenses) (6.5) 21.3
Total comprehensive income for the period 72.0 85,6
The results for the period reflect trading from continuing operations.
Total comprehensive income is allocated In full to the owners of the company.
9 SHEL Holdings Europe Limited
Consolidated balance sheet as at 28 January 2017
Note As at As at 28 January 20*17 30 January 2016 £m Em Assets
Non-current assets Property, plant and equipment 14 473.0 423,0 Intangible assets 15 1,213.3 1,195.2 Deferred Income tax assets 16 34.7 28.4 Trade and other receivables 18 1.6 31.8 Total non-current assets 1,722.6 1,678.4
Current assets Inventories 17 132.8 119.6 Trade and other receivables 18 186.8 203.0 Derivative financial instruments 23 0.5 0.8 Cash and cash equivalents 197,4 159.5 Total current assets 517.5 482.9
Total assets 2,240.1 2,161.3
10 SHEL Holdings Europe Limited
Consolidated balance sheet as at 28 January 2017 (continued)
Note As at As at 28 January 2017 30 January 2016 £m Em Equity Share capital 27 1,1 49,6 Merger reserve 1,218.7 1,218.7 Retained earnings 94.0 (41.7) Total equity 1,313*8 1,226.6
Liabilities
Non-current liabilities Borrowings and other financial liabilities 20 452.0 498.3 Deferred income tax liabilities 16 45.6 43.2 Post-employment benefits 26 52.4 23.1 Trade and other payables 19 8.4 6.1 Provisions 26 1.1 Total non-current liabilities 558,4 571.8
Current liabilities Trade and other payables 19 350.8 299.3 Current income tax liabilities 17.1 5.4 Borrowings and Other financial liabilities 20 54.1 Derivative financial instruments 23 0.1 Provisions 25 4.0 Total current liabilities 367.9 362.9
Total liabilities 926.3 934.7
Total liabilities and equity 2,240.1 2,161.3
TTie financial statements on pages 9 to 63 were authorised for issue by the board of directors on 28 March 2017 and were signed on its behalf by:
J A Skelton Director
11 SHEL Holdings Europe Limited
Consolidated statement of changes in equity for the period ended 28 January 2017
Share Merger Retained Note capital reserves earnings Total equity £m £m £m £m.
Balance as at 1 February 2015 1,218.7 (113.2) 1,105.5
Profit for the financial period 64.3 64.3 Other comprehensive Income 21.3 21.3 Total comprehensive income for the 85.6 85.6 financial period
Dividends 13 (14.1) (14.1) Proceeds from shares issued 49.6 49.6 Total transactions with owners 49.6 (14.1) 35.5 recognised directly in equity
Balance as at 30 January 2016 49,6 1,218.7 (41.7) 1,226.6
Balance as at 30 January 2016 49.6 1,218.7 (41.7) 1,226.6
Profit for the financial period 78.5 78,5 Other comprehensive expense (6.5) (6.5) Total comprehensive Income for the 72.0 72.0 financial period
Dividends 13 (13.2) (13.2) Proceeds from shares issued 27 28.4 28.4 Bonus share issue 27 30.0 (30.0) Share capital reduction 27 (106.9) 106.9 Total transactions with owners (48.5) 63.7 15.2 recognised directly in equity
Balance as at 28 January 2017 1.1 1,218.7 94.0 1,313.8
All changes in equity are attributable to the owners of the company.
12 SHEL Holdings Europe Limited
Consolidated cash flow statement for the period ended 28 January 2017
52 weeks ended 52 weeks ended 28 January 2017 30 January 2016 Note £m £m Cash flows from operating activities Operating profit 120.9 101.9 Adjustments for: • Depreciation of property, plant and equipment 14 56.3 48.4 • Impairment of tangible and intangible assets 0.7 3.4 • Loss on disposal of property, plant and equipment 14 5.2 2.4 • Loss on disposal of intangible assets 15 0.7 • Amortisation of intangible fixed assets 15 11.1 8.9 • Difference between pension charge and cash contributions (4.0) (3.6) « Unwind of acquisition fair value adjustment 1.7 4.7 • Foreign, exchange movements on loans 0.8
Changes In; • increase in Inventory (7.7) (2.7) • Decrease/(!ncrease) in trade and other receivables (7.6) (20.8) • Increase In trade and other payables 32.2 28.0 • (Decreasej/lncrease in provisions (5.5) 1,9 Cash generated from operating activities 204.0 173.3
Interest paid (18.4) (18.2) Income tax paid (18.2) (15.5) Net cash generated from operating activities 167.4 139.6
Cash flows from investing activities Acquisition of subsidiary, net of cash acquired (39.2) Purchases of property, plant and equipment 14 (102.0) (66.0) Purchases of Intangible assets 15 (29.5) (16-D Proceeds from sale of property, plant and equipment 14 10>2 Loans granted to unrelated parties (50.3) Interest received 1.4 1.6 Net cash used in investing activities (119.9) (170.0)
Cash flows from financing activities Proceeds from issue of share capital 27 28.4 49.6 Proceeds from borrowings 66.5 42.9 Repayment of borrowings (100.4) Dividends paid to owners of the Company 13 (13.2) (14.1) Net cash (used in)/generated from financing activities (18.7) 78.4
Net increase in cash and cash equivalents 28.8 48.0 Cash and cash equivalents at beginning of financial period 159.5 109.6 Exchange gains on cash and cash equivalents 9.1 1.9 Cash and cash equivalents at end of financial period 197.4 159.5
13 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017
1 General information
SHEL Holdings Europe Limited (the "Company") Is a private limited company limited by shares, registered and domiciled in the United Kingdom. The address of the Company's registered office is 400 Oxford Street, London, W1A1AB.
The Group operates in the department store and online retailing sector. Operating banners include Selfridges in the United Kingdom, de Bijenkorf in the Netherlands and Brown Thomas and Arnotts in Ireland.
2 Summary of significant accounting policies a) Basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) interpretations as adopted by the European Union and the Companies Act 2006 applicable to companies reporting under fFRS.
The consolidated financial statements of the Group as at and for the year ended 28 January 2017 comprise the Company and its subsidiaries (together referred to as the "Group" and Individually as "Group companies").
The consolidated financial statements were authorised for issue by the Board of Directors on 28 March 2017. b) Adoption of new and revised International Financial Reporting Standards
A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 31 January 2016, and have not been applied in preparing these consolidated financial statements. None of these is expected to have a significant effect on the consolidated financial statements of the Group, except the following set out below:
IFRS 9, 'Financial instruments', addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of IFRS 9 was issued In July 2014. It replaces the guidance In IAS 39 that relates to the classification and measurement of financial instruments, including impairment of financial assets and hedge accounting. IFRS 9 retains but simplifies the mixed measurement model and establishes . three primary measurement categories for financial assets: amortised cost, fair value through other comprehensive income (OGI) and fair value through profit and loss (P&L). The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial asset. Investments in equity Instruments are required to be measured at fair value through profit or loss with the irrevocable option at Inception to present changes In fair value In OGI with no subsequent reclassification of cumulative gains and losses to profit or loss. There is now a new expected credit losses model that replaces the incurred loss impairment model used In IAS .39. For financial liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. IFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged Item and hedging instrument and for the 'hedged ratio' to be the same as the one management actually use for risk management purposes. Contemporaneous documentation Is still required but Is different to that currently prepared under IAS 39, The standard Is effective for accounting periods beginning on or after 1 January 2018. Early adoption Is permitted subject to EU endorsement. The Group is assessing the impact of IFRS 9.
IFRS 15, 'Revenue from contracts with customers' deals with revenue recognition and establishes principles for reporting useful Information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. Revenue Is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18 'Revenue' and IAS 11 'Construction contracts' and related interpretations. The standard Is effective for annual periods beginning on or after 1 January 2018 and earlier application Is permitted subject to EU endorsement. The Group is assessing the Impact of IFRS 15.
14 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017
IFRS 16, 'Leases' sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, ie the customer ('lessee') and the supplier ('lessor'). IFRS 16 requires lessees to recognise a lease liability reflecting future lease payments and a 'right of use asset' for virtually all lease contracts. IFRS 16 Is effective from 1 January 2019. A company can choose to apply IFRS 16 before that date but only if it also applies IFRS 15 Revenue from Contracts with Customers. The Group is assessing the impact of IFRS 16 due to the significant leasing commitments as disclosed in note 29.
There are no other IFRSs, Annual improvements or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group. c) Accounting convention
The consolidated financial statements have been prepared under the historical cost convention, as modified by financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss. d) Accounting periods
The financial statements are drawn up to either a 52 or 53 week period, to the nearest Saturday ending within one week of 31 January In each year, being 28 January In 2017 and 30 January In 2016, e) Going concern
In adopting the going concern basis for preparing the financial statements, the directors have considered the business activities as set out on page 2 as well as the Group's principal risks and uncertainties as set out on page 2. Based on the Group's cash flow forecasts and projections, the Board Is satisfied that the Group will be able to operate within the ievel of its facilities for the foreseeable future. For this reason the Group continues to adopt the going concern basis in preparing its financial statements. f) Functional and presentation currency
These consolidated financial statements are presented in Great British Pounds ("GBP"), Which Is the Company's functional currency. All financial information presented in GBP has been rounded to the nearest million. g) Foreign currencies
The results of overseas subsidiaries are translated at the weighted average of monthly exchange rates for revenue and profits, "me statements of financial position of overseas subsidiaries are translated at year end exchange rates. The resulting exchange differences are dealt with through reserves and reported In the consolidated statement of comprehensive Income.
Transactions denominated In foreign currencies are translated at the exchange rate at the date of the transaction. Foreign currency monetary assets, and liabilities held at the end of the reporting period are translated at the closing balance sheet rate. The resulting exchange gain or loss is recognised within the income statement.
Non-monetary items that are measured in terms of historical cost In a foreign currency are translated using the exchange rate at the date of the transaction.
Loans that are quasi equity in nature are translated at the rate prevailing at the date the loan was made where they are denominated In foreign currency.
15 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
h) Consolidation
The group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is. the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the group at the date of acquisition. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The results of subsidiaries acquired during the year are included from the date of acquisition.
Subsidiary undertakings are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. Subsidiary undertakings acquired during the year are recorded using the acquisition method of accounting and their results are included from the date of acquisition.
The separable net assets, including property, plant and equipment and intangible assets, of the newly acquired subsidiary undertakings are Incorporated into the consolidated financial statements on the basis of the fair value as at the effective date of control.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated.
I) Business combinations
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration transferred is measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred and assumed, and equity instruments issued by the Company in exchange for control in the acquiree. Acquisition related costs are recognised In the statement of comprehensive Income as incurred.
Goodwill arising on acquisition or In a business combination is recognised as an asset at the date that control is acquired. Goodwill is measured at cost being the excess of the sum of the consideration transferred, the amount of any non-controlling Interest In the acquiree and the fair value of the acquirer's previously held equity interest (if any) in the entity over the Company's interest in the net fair value at the acquisition date of the identifiable assets acquired and the liabilities assumed.
In the Company's interest in the net fair value of the acquiree's identifiable assets and liabilities exceeds the cost of the business combination, the excess Is recognised Immediately in profit or loss. j) Dividends
Final dividends are recorded in the financial statements in the period in which they are approved by the Company's shareholders. Interim dividends are recorded in the period in which they are approved and paid. k) Revenue
Revenue, which excludes value added tax and appropriate deduction for loyalty scheme vouchers, comprises of:
(I) the fair value of sales to external customers of products and services, and (II) the fair value of concession income earned in respect of sales made through concession outlets.
Revenue from sales to external customers Is recognised upon the delivery of the goods and services to the customers. Where payment is received in advance of the delivery of the goods or services, It is deferred and
16 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
Included In accruals and deferred income until delivery occurs. Concession Income is recognised when sales are made through the concession outlets upon the delivery of goods and services to customers. Discounts provided to staff have been classified as deductions against turnover.
Credit card points for future discounts earned by customers participating In the Group's customer loyalty programs are deferred on the balance sheet at the time of the sale when these points are granted and subsequently recognised In the profit or loss When redeemed.
I) Exceptional items
Exceptional items are disclosed separately In the financial statements where It is necessary to do so to provide further understanding of the financial performance of the Group. TTiey are material items of income or expense that have been shown separately due to the significance of their nature or amount. m) Property, plant and equipment
Land and buildings are stated at historical cost less accumulated depreciation. Cost Includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for Its Intended use.
Subsequent costs'are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the Item will flow to the group and the cost of the Item can be measured reliably. The carrying amounts of replaced parts are derecognlsed. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.
Depreciation on assets is calculated using the straight-line method to allocate their cost or revalued amounts to their residual values over their estimated useful lives, as follows:
% Freehold and long leasehold properties 1.00 Structural assets 3.33 to 33.33 Plant and machinery 10.00 to 33.33 Fixtures and fittings 6.66 to 33.33
Freehold land Is not depreciated.
The assets" residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset's carrying amount Is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within 'Other (lossesygains - net' in the income statement.
17 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
n) Intangible assets
Goodwill Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over and above the fair value of the identifiable net assets acquired. If the total consideration transferred Is less than the fair value of the net assets of the subsidiary acquired the difference is recognised directly in the income statement.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the CGUs that is expected to benefit from the synergies of the combination. Each unit or group of units tp which the goodwill is allocated represents the lowest ievel within the entity at which the goodwill is monitored for Internal management purposes. Goodwill Is monitored at the operating segment level.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of the CGU containing the goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any Impairment is recognised immediately as an expense.
Computer licences Acquired computer software licences are capitalised on the basis of the costs Incurred to acquire and bring to use the specific software. These costs are amortised on a straight line basis over the life of the associated support contract
Computer software Costs associated with maintaining computer software programmes are recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of Identifiable and unique software products controlled by the Group are recognised as intangible assets when the following criteria are met:
• it is technically feasible to complete the software product so that it will be available for use: • management Intends to complete the software product and use it; • there Is an ability to use the software product; • it can be demonstrated how the software product will generate probable future economic benefits; • adequate technical, financial and other resources to complete the development and to use the software product are available; and • the expenditure attributable to the software product during Its development can be reliably measured.
Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads.
Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
Computer software development costs recognised as assets are amortised on a straight line basis over their estimated useful lives, which does not exceed eight years. o) Financial assets and liabilities
Financial assets and liabilities are recognised In the Group's statement of financial position when the Group becomes a party to the contractual provisions of the Instrument.
18 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
Other financial assets Other financial assets consist of long-term loans and receivables. Other finanolal assets are Initially measured at fair value and are subsequently held at amortised cost. As such, this results in their recognition at nominal value less any allowance for any doubtful debts.
Borrowings and other financial liabilities Interest-bearing bank loans, loan notes, promissory notes and overdrafts are initially recorded at fair value, which equals the proceeds received, net of direct Issue costs. They are subsequently held at amortised cost. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for using an effective Interest rate method and are added to the carrying amount of the Instrument to the extent that they are hot settled In the period in which they arise.
Derivative financial instruments and hedging activities The Group primarily uses forward foreign currency contracts to manage its exposures to fluctuations in foreign exchange rates. These instruments are initially recognised at fair value on the trade date and are subsequently remeasured at their fair value at the end of the reporting period. Changes in the fair value of such derivative financial Instruments (which do not qualify for hedge accounting) are recognised in the income statement as they arise.
p) Investments in subsidiaries
The carrying value of Investments in subsidiary undertakings is stated after deducting any provision for impairment in value. An investment is deemed to be impaired when its carrying amount Is greater than Its estimated recoverable amount, which Is the higher Of net realisable value and value In use. Future cash flows arising from Investments, discounted at an appropriate rate, are used to determine value in use. Any impairment arising is charged to the profit and loss account. q) Current and deferred taxation
The tax expense for the period comprises current and deferred tax. Tax is recognised In the Income statement, except to the extent that it relates to Items reoognised in other comprehensive income or directly in equity. In this case, the tax is also recognised In other comprehensive Income or directly in equity, respectively.
The current Income tax charge Is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to Interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred Income tax Is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts In the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if It arises from Initial recognition of an asset or liability In a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred Income tax is determined Using tax rates laws that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred Income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
19 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
Deferred income tax liabilities are provided on taxable temporary differences arising from Investments In subsidiaries except for where the timing of the reversal of the temporary difference is controlled by the group and It is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets are recognised on deductible temporary differences arising from investments In subsidiaries only to the extent that it js probable the temporary difference will reverse In the future and there is sufficient taxable profit available against which the temporary difference can be utilised,
Deferred income tax assets and liabilities are offset when there Is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred Income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entitles where there is an intention to settle the balances on a net basis, r) Trade and other receivables
Supplier income that has been earned but not invoiced at the balance sheet date is recognised in Trade and other receivables.
Trade and other receivables also include amounts receivable in the ordinary course of business for customer transactions paid on credit and charge cards.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for Impairment. s) Inventories
Inventories are stated at the lower of cost and net realisable value. Cost Is calculated as a weighted average. All Inventories are finished goods. Net realisable value is the estimated selling price In the ordinary course of business, less applicable variable selling expenses. t) Cash and cash equivalents
Cash and cash equivalents Includes short-term deposits with banks and other financial Institutions, with an Initial maturity of three months or less. u) Employee benefits
Defined benefit pension schemes The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets.
Each of the groups of companies separately operates its own defined benefit pension scheme, or schemes:
Selfridges Selfridges operates the Seffrldges Pension Scheme for the benefit of all employees who were members at 31 October 2001, the date at which the scheme was closed to new members.
The Scheme is a funded defined benefit scheme which is periodically valued and has contributions assessed by a qualified actuary. The assets of the Scheme are held by Trustees in independent funds which are separate from the assets of the group.
Brown Thomas Brown Thomas operates two multi-employer defined benefit schemes.
20 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
The Schemes are funded defined benefit schemes which are periodically valued and have contributions assessed by a qualified actuary. The assets of the Scheme are held by Trustees in independent funds which are separate from the assets of the group.
Defined contribution pension schemes Each of the groups of companies also operates a separate defined contribution pension scheme. A defined contribution plan is a pension plan-under which the group pays fixed contributions into a separate entity. The group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service In the current and prior periods. Defined contributions payable in respect of defined contribution plans are charged to operating profit as incurred.
Employee incentive schemes The Group operates a long term incentive pian (LTIP) for certain employees, including directors. New schemes are set up each year.
For schemes up to and including the 2014 scheme, redemption payments are calculated according to appreciation in enterprise value over the scheme performance period, as determined by an EBIT multiple, and incentive units are redeemable after four years' service.
For schemes on and after 2015, redemption payments are calculated based on the financial and non-financial performance of the business. Incentive units are redeemable after three years' service.
v) Trade and other payables
Trade and other payables are recorded Initially at fair value and subsequently measured at amortised cost. Generally this results in their recognition at their nominal value.
Refunds Management monitors the extent of returns and refunds on an ongoing basis. Accruals for such returns and refunds are estimated and recorded on the basis of such historical evidence. However, actual refunds and returns could vary from those estimates.
Gift cards Unredeemed gift Cards are carried on the balance sheet unless the likelihood of redemption Is remote In which case they are recognised as revenue. This is based on historical non-redemption rates. These balances are reviewed regularly and updated to reflect management's latest best estimates. However, actual redemptions could vary from those estimates.
Loyalty schemes Accruals for loyalty scheme redemptions are estimated on the basis of actual loyalty scheme points awarded adjusted for average redemption rates as determined on the basis of historic evidence. However, actual redemptions could vary from those estimates. w) Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event, it is probable that a transfer of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are valued at discounted amounts where discounting Is material. x) Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any Incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.
21 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017
y) Commercial income and capital contributions
Commercial Income has been an area of heightened focus for many businesses, as the amount recognised in the profit and loss account for elements of commercial income may require the application of Judgment based on the contractual terms in place with suppliers and estimates of amounts a company is entitled to where transactions span the financial period-end. For the retail stores and online business, such arrangements including volume rebates, promotional support and media Income agreements do not have a material impact on our turnover, gross margins or reported profit. Contributions received in respect of property fit-out costs are amortised over the shorter of the lease term or the period to the first rent review, or useful economic life of the associated store fit. z) Significant accounting assumptions and judgments
In preparing the consolidated financial statements, judgments, estimates and assumptions are made by management, which affect the reported amounts in the financial statements. Actual results may differfrom these estimates. Changes in the assumptions can affect the financial statements, particularly as regards the following assumptions:
• Calculations made to determine the recoverable amount of a cash-generating unit to which goodwill is allocated. The calculation of the recoverable amount is based on the estimated future cash flows and an appropriate discount rate has to be applied to calculate the present value.
• Reviewing the level of obsolescence of inventories and Its impact on the expected net realisable value, being the estimated selling price in the ordinary course of business less the estimated costs to be incurred in bringing the Inventories to their selling location and in selling condition, and consequently the measurement of Inventories. An Increase of the provision for obsolete inventory by 10% would result In a decrease of the operating profit of the Group by approximately £0.4m.
• The assumptions and estimates used in calculating the defined benefit pension obligation. The actuarial movements will affect the Statement of Comprehensive Income In the period these adjustments occur and the post-employment benefits liability within the consolidated balance sheet.
• Project costs are capitalised when there is an expectation that the resulting asset will deliver future economic benefits to the group. Capitalised project costs often include a proportion of Internal staff costs, Including an allocation of staff wages and business overhead costs, as well as external costs. Management judgement is exercised In the determination of costs to be capitalised, the estimated useful life of the asset and the estimated recoverable value of the asset.
• In accounting for business combinations, management have needed to assess the fair value of assets and liabilities acquired. Any differences arising on the recognition of such assets would have corresponding Impacts on the value of goodwill acquired. Such judgments can also Impact future income statement results through the unwind of fair value adjustments and higher depreciation charges.
3 Segmental analysis
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Group Managing Director.
The UK segment primarily consists of the UK retail business, Selfrldges, The Netherlands segment consists of the Dutch retail business, de Bijenkorf. The Ireland segment consists of the Irish retail business, Brown Thomas and Arriotts,
22 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
Financial period ended 23 January 2017 United Kingdom Netherlands Ireland Total Em £m £m £m Turnover 673.3 332.7 199.7 1,205.7
Operating EBITDA 147.2 29.8 11.3 188.3 Depreciation (35.8) (12.6) (7-9) (56.3) Amortisation (6.1) (3.9) (1.1) (11.1) Interest income 2.5 2.5 5.0 Interest expense (19.8) (0.1) (19.9) Other (0.6) (0.2) (0.8) Profit on ordinary activities before 87.4 13.2 4.6 105.2 taxation
Capital expenditure 83.8 32.2 15.5 1315
As at 28 January 2017 Segment assets 1,433.4 482.7 323.8 2.239.9 Unallocated assets: Other 0.2 Total assets 2,240.1
Segmental liabilities 687.7 157.2 81.4 926.3
23 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
Financial period ended 30 January 2016 United Kingdom Netherlands Ireland Total £m £m £m £m Turnover 587.2 300.9 144.7 1,032,8
Operating EBITDA 125.2 26.1 7.9 159.2 Depreciation (31.7) (10.7) (6.0) (484) Amortisation (5.3) (3.3) (0.3) (8.9) Interest income 1.5 0.5 2,0 Interest expense (22.6) (22.6) Other 0,2 (0.4) (0.2) Profit on ordinary activities before 67.3 12.1 1.7 81.1 taxation
Capital expenditure 57,4 19.6 5.1 82.1
As at 30 January 2016 Segment assets 1,398.6 453.4 307.8 2,159.8 Unallocated assets: Other 1.5 Total assets 2,161.3
Segmental liabilities 719.2 130.1 85.4 934.7
4 Expenses by nature
Operating profit Is stated after charging/(crediting) the items set out below: 2017 2016 £m £m Cost of sales 536.0 456.1 Cost of sales, write-off obsolete Inventories 1*3 3.2 Employee costs (note 5) 229.1 194.1 Premises rent payable to entity under common control 49.7 48.9 Premises rent payable to third parties under operating leases 36.4 34.1 Depreciation of tangible fixed assets 56.3 48.4 Amortisation of intangible assets 11.1 8.9 Impairment of tangible fixed assets 0.6 Impairment of intangible fixed assets 0.7 2.8 Loss on disposal of tangible fixed assets 5.2 2.2 Loss/(galn) on disposal of intangible assets 0.7 0.2 Unwind of acquisition Inventory fair value adjustment 1.7 4.7 Foreign exchange loss/(gain) (0.8) 0.8 Other costs 157.4 122.7 Total cost of sales, distribution and administrative 1,084.8 930.9 expenses
Amortisation expense In the table above is included in the Administration Expenses line in the Income Statement.
24 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
These costs are included in the functional cost lines (in the consolidated Income statement) as follows:
2017 2016 Cm £m Cost of sales 537.3 459.3 Distribution costs 369.9 327,6 Administrative expenses 177,6 144.0 Total distribution and administrative expenses 1,084.8 930.9
5 Employee costs
Employee costs during the period amounted to: 2017 2016 £m £m Wages and salaries 193.6 157.7 Social security costs 21.4 17.9 Amount payable under long term incentive plan 4.5 10.8 Amounts payable under post-employment defined benefit plans 0.8 0.7 Contributions to defined contribution plans .. 8.8 7.0 Total employee costs 229.1 194.1
6 Employee numbers
The average monthly number of employees during the period was: 2017 2016 Full time 3,886 3,542 Part time 3,156 3,018 Total employees 7,042 6,560
Split between:
2017 2016 Selling 5,140 4,982 Management and administration 1,902 1.578 Total employees 7,042 6,560
Directors9 emoluments
2017 2016 £m £m Aggregate emoluments 2.7 2.5 Aggregate amounts receivable under long-term incentive schemes 1.0 1.0 Total directors1 emoluments 3.7 3.5
Key management personnel comprise Board directors only. "These are persons having responsibility for directing and controlling the activities of the Group.
25 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
The highest paid director received tota] emoluments and amounts under the long-term incentive schemes of £2.3 million (2016: £2.2 million). There are no retirement benefits accruing to directors In the financial period under defined benefit schemes (2016: nil).
8 Auditor remuneration
During the year the group (including its overseas subsidiaries) obtained the following services from the company's auditor and Its associates:
2017 2016 £m £m Auditors' remuneration - for the audit of the Company's and the 0.1 0.1 consolidated financial statements Auditors' remuneration - for the audit of subsidiary financial 0.3 0.2 statements Auditors' remuneration - tax advisory services 0.1 0.1 Auditors' remuneration - other services
9 Interest payable and similar charges
2017 2016 £m £m Bank Interest payable 0.3 0.1 Write off of interest receivable 2.7 Interest payable on loan notes (note 20) 19.6 19.8 Interest payable and similar charges 19.9 22.6
10 Interest receivable and similar income
2017 2016 £m £m Bank interest receivable 0.5 0.5 Interest receivable from company under common control 2.0 1.0 Other Interest receivable 2.5 0.5 Interest receivable and similar income 5.0 2.0
11 Other finance costs
2017 2016 £m £m Net expense on post-employment liabilities (0.6) (1.5) Fair value gains / (losses) on derivative financial instruments (0.2) 1.3 Other finance costs (0.8) (0,2)
26 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
12 Tax on profit on ordinary activities
2017 2016 £m £m Current tax Current tax expense In respect of the current year 26.2 15.3 Adjustments In respect of prlor.years 0.1 (1.9) Total current tax 26.3 13.4
Deferred tax Deferred tax expense recognised in the current year (note 16) (3.5) (1.4) Tax associated with pension liability (note 16) (0.3) 2.2 Adjustments recognised in the current year in relation to the 2.0 1.8 deferred tax of prior years Changes in recognised deductible temporary differences 1.8 1.8 Adjustments to deferred tax attributable to changes In tax rates 0.4 (1.0) and laiws Total deferred tax 0.4 3.4 Tax on profit on ordinary activities 26.7 16.8
Reconciliation of current tax charge
The UK standard rate of corporation tax for the period is 20.0% (2016: 20.16%). The tax charge for the current period differs from the standard rate for the reasons set out In the following reconciliation:
2017 2016 £m £m Profit on ordinary activities before taxation 105.2 81.1 Tax on profit on ordinary activities at standard rate of 20.0% (2016: 20.16%) 21.0 16.3 Tax effects of: - Adjustment In respect of prior years 2.1 (0,1) - Expenses not deductible for tax purposes 1.4 0.1 - Change in recognised deductible temporary differences 1.8 1.7 - Rate change Impact (1-0) (2.4) - Overseas tax differences 0.9 0.8 - Other 0.5 0.4 Total tax charge for the year 26.7 16.8
Changes to the UK corporation tax rates were substantially enacted as part of the Finance Bill 2015 (on 26 October 2015) and the Finance Bill 2016 (on 7 September 2016). These include reductions to the main rate to reduce the rate to 19% from 1 April 2017 and to 17% from 1 April 2020. Deferred taxes at the balance sheet date have been measured using these enacted tax rates and reflected in these financial statements.
27 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
13 Dividends
2017 2016 £m £m Equity - ordinary Interim: paid April 2016 £0.27 (2016: £2,819). per £1 share 13.2 14.1 Total dividends 13.2 14.1
After the reporting date, an Interim dividend of £38.5m was proposed by the board of directors and Is due to be paid irt April 2017.
14 Property, plant and equipment
Freehold and long Fixtures Freehold leasehold Structural Plant and and land properties assets machinery fittings Total £m £m firo Em m Cm Cost or valuation At 01 February 2015 42.8 71.7 244,5 40.6 296.0 695.6 Effect of retranslatlon 2.6 0.3 1.8 0,7 1.8 7.2 Additions 31.6 4.4 30,0 66.0 Acquisition of subsidiary 31.4 7A 2,5 41.3 Disposals (0.9) (2,3) (24.2) (27.4) Reclassification 6.0 (0.6) (Ml At 30 January 2016 45.4 103.4 283.0 50.2 300.7 782.7 Effect of retranslation 7.3 2.4 11.9 2.8 12,2 36.6 Additions 34.6 3.7 63.7 102,0 Disposals (16.0) (3.6) (8.5) (54.1) (82.2) Reclassification (11.7) 13.2 As at 28 January 2017 36.7 105.8 314.2 46.7 335.7 839.1
Accumulated depredation At 01 February 2015 6.3 4.7 106.6 26.8 188.8 333.2 Effect of retranslation 0.1 1.0 0.3 1.3 2.7 Charge for the period 0.1 0.8 13.3 4.9 29.3 48.4 Disposals (0.5) (1.9) (22.8) (25.2) Impairment 0.6 0.6 At 30 January 2016 6.4 5.6 121.0 30.1 196.6 359.7 Effect of retrahslatlon 0.7 6.8 1.7 8.2 17.4 Charge for the period 0,2 1.0 14.1 6.8 34.2 56.3 Disposals (6,0) (0,6) (8,4) (52.3) (67.3) Impairment Reclassification 0.2 (1.9) 1.7 At 28 January 2017 0.6 7.3 141* 28.3 188.4 366.1
Net book value As at 30 January ,2016 39.0 97.8 162.0 20.1 104.1 423.0 As at 28 January 2017 36.1 98.5 172,7 18.4 147.3 473.0
Included within Structural assets is £l4.7m (2016: £32,6m) of assets relating to assets under course of construction that are not beinQ depreciated.
28 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
15 Intangible assets
Computer Software under Computer Development Goodwill Software Total £m £m £m £m Cost or valuation At 01 February 2015 1,165.9 48.8 1.1 1,215.8 Effect of ^translation 0.4 0.4 Additions 13.5 2.6 16.1 Acquisition of subsidiary 3.6 0.5 4.1 Reclassification (3.1) (3.1) At 30 January 2016 1,169.5 60.1 3.7 1,233.3 Effect of retranslation 2.4 2.4 Additions 12,0 17.5 29.5 Disposals (5.8) (0.4) (6.2) Reclassification 1.0 (1.0) As at 28 January 2017 1,169.5 69.7 19.8 1,259,0
Accumulated amortisation and impairment At 01 February 2015 29.0 29.0 Effect of retranslation 0.3 0.3 Charge for the period 8.9 .8.9 Disposals (2.9) (2.9) Impairment 2.8 2.8 At 30 January 2016 38.1 38.1 Effect of retranslation 1.3 1.3 Charge for the period 11.1 11.1 Disposals (5.5) (5.5) Impairment 0.7 0.7 At 28 January 2017 45.7 45.7
Net book value As at 30 January 2016 1,169.5 22.0 3.7 1,195.2 As at 28 January 2017 1,169.5 24.0 19.8 1,213.3
Impairment tests for goodwill
IFRS requires a cash-generating unit {"CGU") to which goodwill has been allocated to be tested for impairment annually by comparing the carrying amount of the CGU, Including goodwill, with its recoverable amount. If the carrying amount of the CGU, Including goodwill, exceeds the recoverable amount of the CGU, then an impairment loss has to be recognised.
Management reviews the business performance and completes the CGU impairment analysis based on operating segments (as defined in note 3). Goodwill is therefore monitored by management at this level, The following is a summary of goodwill allocation for each operating segment:
29 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
United Total Kingdom Netherlands Ireland £m £m £m £m As at 30 January 2016 838,5 284,7 46.3 1,169.5 Additions Impairments As at 28 January 2017 838.5 284,7 46.3 1,1-69.5
The recoverable amount of all CGUs has been determined based on value-in-use calculations. Value in use calculations are underpinned by the Group's budgets and forecasts Covering a five year period, which have regard to historical performance and knowledge of the current market, together with management's view on the future achievable growth and committed initiatives. The cashflows which derive from the budgets are pre-tax and Include ongoing capital expenditure. Gash flows beyond the five-year period are extrapolated using the estimated long term growth rates.
Other than detailed budgets, the key assumptions for the value in use calculations are the long term growth rates and the pre-tax discount rate. The long term growth rates are management's expected long term growth rates. The pre-tax discount rate is based on the Group's weighted cost of capital adjusted for country, industry and market risk.
United Kingdom Netherlands Ireland
Ad at 30 January 2016 Long term growth rate 2.0% 2.0% 2.0% Pre-tax discount rate 11,25% 12.75% 11.25 As at 28 January 2017 Long term growth rate 2.5% 2.5% 2.5% Pre-tax discount rate 10.84% 11.09% 9,84%
Sensitivity analysis Whilst management believes the assumptions are realistic It Is possible that an impairment would be Identified if any of the above key assumptions were changed significantly. A sensitivity analysis has been performed on each of these key assumptions with other variables held constant. Management have concluded that there are no reasonably possible changes in any key assumptions that would cause the carrying amount of goodwill to exceed the value in use.
30 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
16 Deferred tax balances
2017 Net Recognised Recognised Acquisitions Deferred Deferred Net In profit or [n OCI /disposals balance loss {including tax tax balance 2016 rate change asset liability impact) £m £m £m £m £m £m £m Property, plant 41.2 2.8 44.0 44.0 and equipment / Intangible assets Tax losses (1.9) (0.4) (2.3) (2.3) Short term timing differences (21.4) (1.7) (24.7) 1.6 (23.1) Employee benefits (3,1) (0.3) (4.3) (7.7) (7.7) Tax (assets) / liabilities 14.8 0.4 (4.3) (34.7) 45.6 10.9
2016 Recognised Recognised Acquisitions Deferred Deferred Net in profit or In OCI /disposals balance loss (m eluding tax tax balance 2015 rate change asset liability 2016 Impact) £m £m £m £m £m £m £m Property, plant 41.9 d-3) 0.6 (0.3) 41.5 41.2 and equipment / Intangible assets Tax losses (3.1) 3.1 (1.9) (1.9) (1-9) Short term timing differences (22.7) (0.6) 1.9 (23.1) 1.7 (21.4) Employee benefits (11.1) 2.2 5.8 (3.1) (3.1) Tax (assets) / liabilities 5.0 3.4 5.8 0.6 (28.4) 43.2 14.8
Having reviewed the latest business plans and forecasts, the directors are confident that the business will generate sufficient taxable income In the future to justify the recognition of deferred tax assets in respect of tax losses.
Tine provision for deferred tax consists of the following deferred tax (assets)/liabl|ities:
2017 2016 £m £m Deferred tax assets due within 12 months (1.0) (4.0) Deferred tax liabilities due within 12 months 0.5 Total provision - current (1.0) (3.5) Deferred tax assets due after more than 12 months (33.6) (24.4) Deferred tax liabilities due after more than 12 months 45.5 42.7 Total provision •- non current 11.9 18.3
Total provision 10.9 14.8
Deferred tax assets have not been recognised on gross losses of £3.2m (2016: £5.2m).
31 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
17 inventories
2017 2016 £m em Finished goods for resale 136.5 123.7 Provision for obsolescence (3.7) (4.1) Total Inventories 132.8 119.6
The consolidated Income statement and other comprehensive income includes a write-off of £1.3m of inventory during the period (2016: £3.2m) which is included In the 'cost of sales' line.
18 Trade and other receivables
2017 2016 £m £m Current Trade debtors 44.3 36,7 Provisions for past due debts receivable (1-4) (1.1) Amounts owed by entity under common control 76.3 98.5 Other debtors 51.5 49.9 Prepayments and accrued Income 16.1 18.8 Corporation tax 0.2 Total current 186.8 203.0
Non-current Other debtors 1.6 1.8 Amounts owed by entity under common control 30,0 Total non-current 1.6 31,8
Amounts owed by entity undertakings under common control previously Included a loan of £30.0m falling dUe after more then one year owed by Selfridges Properties Limited, an entity undertaking under common control. Interest on the loan was charged at LIBOR plus 3 per cent. The loan and all Interest charges were fully settled on 20 December 2016.
Other amounts owed by Group undertakings and entity undertakings under common control are non-interest bearlhg and repayable upon demand. A partial repayment of £36.5m was made to Selfridges Retail Limited from Selfridges Properties Limited on 20 December 2016.
Other debtors include loans totaling £40.8m (2016: £40.8m) on Which interest Is charged at EURIBOR plus 5 per cent. The loan Is repayable on 31 August 2017 and the loah Is secured on the borrower's assets.
Movements on the provision for impairment of trade and other receivables are as follows:
2017 2016 £m £m At the start of the period (1.1) (2.0) Provision for receivables Irr^alrment (0.2) 0.6 Receivables written off during the year as uncolleGtable 0.1 Impact of change in foreign exchange rate (0.1) 0.2 At the end of the financial period (1,4) (1-1)
32 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
19 Trade and other payables As re-presented 2017 2016 £m £m Current Trade creditors 186.0 152.5 Amounts owed to entities under common control 0.3 1,0 Other creditors 9.6 7.3 Other taxation and social security 29.3 25.2 Accruals and deferred income 125.6 113.3 Total current 350.8 299.3
Non - current Accruals and deferred income 2.2 Other creditors 8.4 3.9 Total non-current 8.4 6,1
Amounts owed to entity undertakings under common control are non-Interest bearing, are unsecured and have no fixed date Of repayment.
Comparative Information In the table above has been re-presented for an item which had been included In 'Other Creditors' in the financial statements in the prior perbd. This is more appropriately classified as "Deferred Income".
20 Borrowings and other financial liabilities
2017 2016 £m £m Current Amounts owed to entitles under common control 54.1 Total current 54.1
Non-current Floating rate senior loan notes 450.0 450.0 Promissory note payable to entity under common control 19.3 Amounts owed to entitles under common control 2.0 29.0 Total non-current 452.0 498.3
During 2013, the Company borrowed £65.0m from Selfridges Properties Limited, an entity undertaking under common control. The loan attracted interest at LIBOR plus 2 per cent. The loan and all interest charges were fully settled on 20 December 2016.
In December 2011, the Company issued £450m senior loan notes to Roundwood Holdings Limited, the parent company. Loan notes attract interest at LIBOR plus 3 per cent and were Issued as part of the consideration for acquisitions. The loan notes are repayable in 2021, are unsecured and are listed on the Channel Islands Stock Exchange.
On 14 February 2014 a promissory note for £19.3m was issued to SGL Properties UK Limited, an entity under common control and classified as falling due after more than one year. The promissory note was non-Interest bearing. The Company settled 27.0m of the outstanding balance on 26 September 2016 and the remaining £12.3m was settled on 20 December 2016.
33 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
An amount of £2.0m (2016: £2.0m) owed to a Group company has been classified by the directors as quasi equity in nature and has therefore been included within creditors due after more than one year.
In the period ended 30 January 2016, an amount of £16.1m was Issued to Seifridges Retail Limited by SRL Scottish Limited Partnership (2016: £16.1m), an entity under common control. The loan was non-Interest bearing and repayable on demand. The loan and all Interest charges were fully settled on 20 December 2016.
21 Financial assets by category
Financial assets at fair Loans and viaiue through receivables Total profit and loss Em £m £m As at 30 January 2016 Cash and cash equivalents • Current 159.5 159.5 Trade and other receivables • Current {excluding prepayments) 185.9 185.9 • Non-current 31.8 31.8 Derivative financial instruments • Current 0.8 0.8 Total 0.8 377.2 378.0
As at 28 January 2017 Cash and cash equivalents • Current 197.4 197.4 Trade and other receivables • Current (excluding prepayments) 172.3 172.3 • Non-current 1.6 1.6 Derivative financial instruments • Current 0,5 0.5 Total 0.5 371.3 371.8
There are no significant differences between the fair and book values of the financial assets.
34 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
22 Financial liabilities by category
Financial liabilities at fair value Other through financial Total profit and liabilities loss £m £m Cm As at 30 January 2016 Borrowings • Current 54.1 54.1 • Non-current 498.3 498.3 Trade and other payables • Current (less deferred income) 247.6 247.6 • Non-current 6.1 6.1 Derivative financial instruments • Current 0.1 0.1 Total 0.1 806,1 806.2
As at 28 January 2017 Borrowings • Current • Non-current 452.0 452.0 Trade and other payables • Current (less deferred Income) 310.4 310.4 • Non -current 8.4 8.4 Derivative financial Instruments • Current Total 770.8 770.8
There are no significant differences between the fair and book values of the financial liabilities.
23 Derivative financial instruments
The Group transacts In derivative financial instruments for the purposes of managing its foreign currency risks arising from the Group's operations. The Group does not transact In derivative financial instruments for trading or speculative purposes.
The Group principally transacts structured foreign exchange forward contracts. These contracts are primarily transacted between GBP/EUR and GBP/USD. The fair value of the Group's financial instruments is summarised below:
35 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
Derivative Derivative Net assets liabilities position £m £m £m Structured forward foreign exchange contracts • Current 0.8 IQJ1 0.7 As at 30 January 2016 0.8 (0.1) 0.7
Structured forward foreign exchange contracts • Current 0;5 0.5 As at 28 Jahuary 2017 0.5 0.5
Derivative assets and derivative liabilities amounts represent the fair value as at the balance sheet date of the structured foreign exchange forward contracts.
IFRS standards require an analysis of financial instruments into the following categories based on their valuation method. The different levels have been defined as follows:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2 - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or Indirectly (that Is, derived from prices) Level 3 - Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)
The fair value of structured forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date, with the resulting value discounted back to present value. All derivative financial Instruments held by the Group at the end of the period were therefore categorised as level 2 (2016: level 2).
The following table presents the timing of cash flows related to the structure forward foreign exchange contracts. Cash flows are exchanged as presented, I.e. the contracts are not net-settled.
Derivative Derivative Net assets liabilities position £m £m £m Timing of cash flows Within one year 19.0 (18.4) 0.6 As at 30 January 2016 19.0 (18.4) 0.6
Timing of cash flows Within one year 15.1 (14.6) 0.5 As at 28 January 2017 15.1 (14.6) 0.5
The carrying amounts of all of the Group's financial instruments equal their fair values as at the balance sheet date.
36 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
24 Financial risk management
The Directors consider the Group's financial risk profile to be low. The principal financial risks faced by the Group are liquidity ancj funding, counterparty, interest rate and foreign exchange risks.
Liquidity and funding Liquidity and funding risk is the risk that the Group will not be able to meet its short term financial demands.
The Group's operating subsidiaries are funded by a combination of retained profits, bank borrowings and loan facilities with companies under common control.
Cashflow forecasting is performed in the operating entities and this analysis is aggregated at a Group level. Group finance monitors rolling forecasts of the Group's liquidity requirements to ensure it has sufficient cash to meet operational needs.
The following are the contractual maturities of financial liabilities owing by the Group:
Owing to entities Floating under Derivative Trade and rate senior common financial other Total loan notes control instruments payables £m £m £m £m £m Timing of cash flows Within one year 18.1 55.7 18,4 260.2 352.4 Between one and two years 17.2 1.0 6.1 24.3 Between two and five years 58.8 28.1 86,9 More than five, years 468.3 19.3 487,6 As at 30 January 2016 562.4 104,1 18.4 266.3 951.2
Timing of cash flows Within one year 17.1 14.6 324.6 356.3 Between one and two years 17.9 8.4 26.3 Between two and five years 505.7 505.7 More than five years As at 28 January 2017 540.7 14.6 333.0 888.3
The maturity analysis of derivative financial instruments In the table above represents the gross settled liability leg of structured forward foreign exchange contracts. A full analysis of derivative assets and liabilities can be found in note 23.
37 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
Credit risks Counterparty risk Is the risk that one of the Group's counterparties will not meet its contractual obligations.
Counterparty risks are minimised due to the cash based nature of transactions with the Group's customers. However, the company does remain exposed to counterparty risks arising from Its holdings of cash and cash equivalents, trade receivables (representing unsettled customer credit card transactions), outstanding loans receivable (from companies under common control and from unrelated parties) and opeh derivative financial instruments.
Cash and cash equivalents and open derivative financial instruments are held In regulated financial Institutions with high credit ratings.
Credit card transactions are typically settled after two to three days, longer term settlements extend to seven days. The short term nature of these settlements with credit card Intermediaries help to mitigate the risks whloh might otherwise arise in dealing with such counterparties.
Loans to unrelated parties are monitored closely. The Group holds covenants on properties owned by the borrower to guard against any counterparty default on the outstanding balance.
The maximum exposure to credit risk is the carrying amount of assets as disclosed within the financial assets table in note 21.
Credit risk arises from cash and cash equivalents, derivative financial Instruments and deposits with banks and financial institutions, as well as credit exposures to retail customers.
As noted above cash and cash equivalents, and derivative financial Instruments are held in regulated financial institutions with high credit ratings. Similarly deposits are held with regulated banks and financial institutions with high credit ratings. Sales to retail customers are settled in cash or using major credit cards.
Interest rate risks Interest rate risk Is the risk that the company will be impacted by adverse movements in interest rates.
Loans attracting interest are primarily held with entities held under common control and, as such, risks of adverse Interest rate movements on these financial liabilities are not mitigated against.
Currency risks The Group has Investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Whilst recognising such risks, the group undertakes no risk mitigation initiatives to protect against adverse foreign currency exchange movements.
Other foreign currency exposures arising from trading activities (particularly the risk arising from adverse currency movements on outstanding purchase orders in non-Sterling denominated currencies) are managed through the use of forward foreign exchange contracts. Such contracts are primarily USD and Euro denominated.
Sensitivity The table below illustrates the estimated impaot on the income statement and equity as a result of market movements in foreign exchange and interest rates in relation to the Group's financial instruments. The directors consider that a 1% +/- (fast year 1%) movement in interest rates and a 20% +/- (last year 20%) weakening in sterling against the relevant currency represents a reasonable possible change. However this analysis is for illustrative purposes only.
38 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
The table excludes financial instruments that expose the Group to interest rate and foreign exchange risk where such risk is fully hedged with another financial instrument. Also exoluded are trade receivables and payables as these are either sterling denominated or the values are not material.
2017 2016 £m £m Impact on Income statement • 20% weakening in sterling against Euro 2,6 0.8 • 20% strengthening In sterling against Euro (2.6) (0.8) • 20% weakening in sterling against USD (0.1) 0,1 • 20% strengthening in sterling against USD 0.1 (0.1) • 1% increase In interest rates (4.1) (4.5) • 1 % decrease in interest rates (4.1) 4.5
Capital risks The Group's objectives when managing capital (i.e, the shareholders' equity in the business) are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and to maintain an efficient capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
25 Provisions
Restructuring Group programme Other total £m £m £m At 30 January 2016 4.0 1.1 5.1 Arising during the period Utilised (4.1) (4.1) Credited to the income statement (1.3) (1-3) Impact of change in foreign exchange rate 0.1 0.2 0.3 At 28 January 2017
Analysis of total provisions:
2017 2016 £m £m Non - current 1.1 Current 4.0 Provisions 5.1
In 2013, De BIJenkorf announced a change in Its strategy. As a consequence the stores in Arnhem and Enschede were closed in January 2014 and the stores in Groningen, Breda and Den Bosch were closed in the first 3 months of 2016. The expected costs associated with these store closures, being termination of employee contracts and costs associated With leaving the buildings according to the rent contracts are provided under the restructuring programme. For the long term part of the provision a discount rate of 2.4% was used. The remaining provision was fully utilised in the period.
39 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
Other provisions are provided In respect of onerous leases. On 29 March 2016, legal documents were executed to initiate the early surrender of this long lease. The unwinding of this liability is reflected in these 2017 financial statements.
28 Post-employment benefits
The Group operates a number of pension schemes for Its employees which are operated at the segment level. These schemes are categorised as either defined benefit or defined contribution schemes.
Defined benefit arrangements entitle employees to retirement benefits based on their final salary and length of service at the time of leaving the scheme, payable on attainment of retirement age (or earlier death).
By funding Its defined benefit pension schemes, the Group is exposed to the risk that the cost of meeting Its obligations is higher than anticipated. This could occur for several reasons, for example:
• Investment returns on the schemes' assets may be lower than anticipated, especially If falls in asset values are not matched by similar falls in the value of the schemes' liabilities.
• The level of price inflation may be higher than that assumed, resulting in higher payments from the schemes.
• Scheme members may live longer than assumed, for example due to unanticipated advances in medical healthcare. Members may also exercise (or not exercise) options In a way that leads to increases in the schemes' liabilities, for example through early retirement or commutation of pension for cash.
• Legislative changes could also lead to an Increase In the schemes' liabilities.
• The scheme liabilities are calculated using a discount rate set with reference to corporate bond yields. If scheme assets underperform this yield will create a deficit. The Group believes that due to the long term nature of the scheme liabilities, a level of continuing equity investment is an appropriate element of the Group's long term strategy to manage the schemes efficiently.
• A decrease In corporate bond yields will increase plan liabilities, although that will be partially offset by an increase in the value of the schemes' bond holdings.
For eligible employees, the company pays contributions to defined contribution pension plans. The defined contribution plan Is a pension plan under which the Group pays contributions to an independently administered fund; such contributions are based upon a fixed percentage of employees' pay. The Group has no legal or constructive obligations to pay further contributions to the fund once the contributions have been paid. Members' benefits are determined by the. amount of contributions paid by the Group and the member, together with Investment returns earned on the contributions arising from the performance of each individual's chosen investments and the type of pension the member chooses to buy at retirement. As a result, actuarial risk (that benefits will be lower than expected) and Investment risk (that assets Invested in will not perform in line with expectations) fall on the employee.
40 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
Defined benefit schemes
Reconciliation of net pension liability
S'elfridges Holdings Limited Carlow Investment Company St. Clair B.V Total 2017 .2016 2017 2016 2017 2016 2017 2016 £m £m £m £m £m £m £m £m Present value :of scheme liabilities (322.9) (268.4) (80.7) (64.5) (2.1) 0..S) (405.7) (334.7) Fair value of scheme assets 291.5 259.5 61,8 52.1 353.3 311.6 Deficit in the scheme (31.4) (8.9) (18.9) (12.4) (2.1) (1.S) (52.4) (23.1) Related deferred tax asset 5.4 1.5 2.3 1.6 7.7 3.1 Net pension liability (26.0) (7.4) (16.6) (10.8) (2.1) (1.8) (44.7) (20.0)
Details of the individual schemes presented above are analysed further below
41 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
Selfridges Retail Limited
Selfridges Retail Limited operates a defined benefit pension plan in the UK, the Selfridges Pension Scheme, providing benefits to Its members. The scheme closed to new entrants on 31 October 2001 and closed to future accrual of benefits from 29 February 2012. Following closure to future accrual, benefits now increase broadly In line with price inflation. The weighted average duration to payment of the soheme's expected cash flows is 18 years.
The scheme is approved by HMRC for tax purposes, and is operated separately from the Company and managed by an Independent Trustee. The Trustee Is responsible for payment of the benefits and management of the scheme's assets. The scheme is subject to UK regulations overseen by the Pensions Regulator, which require the company and Trustee to agree a funding strategy and contribution schedule for the scheme every three years, The most recent triennial review of the scheme was undertaken as at 6 April 2014 and identified a funding deficit. In addition to a special contribution of £16.1m which was paid on 30 June 2015, the Company agreed to pay £14.2m, previously agreed, over the period to 5 April 2018.
The valuations of the defined benefit schemes used for the purpose of IAS 19 disclosures have been based on the most recent actuarial valuations as identified and updated by Independent actuaries to take account of the requirements of IAS 19 In order to assess the liabilities as at 28 January 2017.
The major assumptions used by the actuary were; 2017 2016 Rate of Increase in salaries n/a n/a Rate of increase in pensions In payment 3.3% 2.9% Discount rate 3.0% 3.8% Price Inflation assumption 3.4% 3.0%
In valuing the liabilities of the pension fund at 28 January 2017, mortality assumptions have been made. The assumptions relating to longevity underlying the pension scheme liabilities at the balance sheet date are based on standard actuarial mortality tables and include an allowance for future improvements in longevity. The assumptions are equivalent to expecting a 61 -year old to have the following life expectancy:
Life expectancy at age 61 for current pensioners 2017 2016 - Men 26.5 26.4 - Women 28.8 28.7 Life expectancy at age 61 for members retiring in 20 years' time - Men 28.4 28.3 - Women 30.8 30.7
The assets in the scheme were as follows:
2017 2016 £m £m Equities 65.0 Diversified Growth 34.3 32.7 Property 16.6 16.3 Bonds 65,0 91.0 Partnership interest 53.2 53.1 Equity Linked Bonds 94.7 Liability Driven Investments 20.9 Cash/Other 6.8 1.4 Total market vaiue of assets 291.5 259.5
42 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions holding other assumptions constant would have the affected the defined benefit obligation by the amounts shown below:
2017 2016 Em Cm Effect of following assumptions Discount rate decrease by 0.5% pa +32 +26 Future price Inflation increase by 0.5% pa +19 +17 Assumed life expectancy increase by 1 year +10 +8
Browrt Thomas & Co. Lfmited
Brown Thomas & Co. Limited operates two multi-employer defined benefit schemes - the Brown Thomas Group Senior Executive Pension Scheme and the Brown Thomas Group Staff Pension Scheme. The schemes are set up under trusts and the assets of the schemes are therefore held separately from those of the Company. Both schemes are closed to new entrants. From the 1 May 2014, future accruals are subject to a cap of the lower of CPI or 2.5%.
There is a Section 50 Funding Agreement In place for the Brown Thomas Group Senior Executives Pension Scheme and the Brown Thomas Group Staff Pension Scheme. Under the terms of this Funding Agreement for the Brown Thomas Group Senior Executives Pension scheme the Employer will contribute to the Scheme at a rate of 31.8% of pensionable salaries, plus an additional €150,000 (approximately £115,000) lump sum payment per annum, with the first lump sum paid In April 2015 and the last payable by 30 April 2024. The employee contribution rgte is In addition and equals 5% of pensionable salary.
Regarding the Brown Thomas Group Staff Pension Scheme the Employer will contribute to the Scheme at a rate of 18.9% of total pensionable salaries plus an additional €350,000 (approximately £270,000) lump sum payment per annum, with the first payment made In 2014 for a period of 10 years. The employee contribution rate Is In addition and equals 5% of pensionable salary.
The weighted average duration to payment of the scheme's expected cash flows Is 20 years.
The valuations of the defined benefit schemes used for the purpose of IAS 19 disclosures have been based on the most recent actuarial valuations as identified and updated by independent actuaries to take account of the requirements of (AS 19 In order to assess the liabilities as at 28 January 2017.
"The major assumptions used by the actuary were: 2017 2016 Rate of Increase in salaries 1.85% to 2.85% 1.50% to 2.50% Rate of increase in pensions in payment 1.50% 1,20% Discount rate 2.00% 2.25% Price inflation assumption 1.85% 1.50%
In valuing the liabilities of the pension fund at 28 January 2017, mortality assumptions have bean made. The assumptions relating to longevity underlying the pension scheme liabilities at the balance sheet date are based on standard actuarial mortality tables and include an allowance for future improvements in longevity. The assumptions are equivalent to expecting a 65-year old to live for a number of years as follows:
43 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
Life expectancy at age 65 for current pensioners 2017 2016 - Men 21.2 20,9 - Women 23.7 23.5 Life expectancy at age 65 for members retiring in 20 years9 time - Men 23.7 23.5 - Women 25.8 25.6
The assets in the scheme were as follows: 2017 .2016 £m £m Equities/ Property 27.9 25.0 Bonds 22.7 21.7 Fixed interest 5.6 4.0 Other 5.6 1.4 Total market value of assets 61.8 52,1
Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions holding other assumptions constant would have the affected the defined benefit obligation by the amounts shown below:
2017 2016 Increase Decrease Increase Decrease £m £m £m £m Effect of a 1% movement Rate of Increase In salaries +3.3 -2.9 +2.0 -1.8 Rate of Increase in pensions in payment +13.4 -11.2 +8.5 -7.1 Discount rate -16.8 +22.3 -10.8 +14,3 Price inflation assumption +21.7 -16.6 +13.7 -10.6 Mortality rate +3.2 N/a +2.3 -2.2
St Clair B.V.
Magazijn De BIJenkorf operates a Jubilee plan, under which employees receive a payment when they roach a certain number of years service (12.5,25 and 40 years).
The present value of the Jubilee obligation; and the related current service cost and past service cost, were measured using the projected unit credit method.
The major assumptions used by the actuary were:
2017 2016 Rate of Increase In salaries 2.00% 2.00% Discount rate 0.98% 1.00% Price Inflation assumption 2.00% 2.00%
Tbe Jubilee scheme is unfunded and, accordingly, no plan assets are in place.
44 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
Movement in the net defined benefit liability
Selfridges Holdings Limited Carlow Investment Company St Clair B.V Total 2017 2016 2017 2016 2017 2016 2017 2016 £m £m £m £m £m £m £m £m Balance at start of financial period (8.9) (46.9) (12.4) (14.7) (1.8) (2.0) (23.1) (63.6)
Current service cost (0.6) (0.6) fO.2) (0.1) (0.8) (0.7) Past service costs/income Interest income/ (expense) (0.3) (1.2) (0.3) (0.3) (0.6) (1.5) Gains in income statement 0.2 0.2 (9.2) (48,1) (13.3) (15.6) (2.0) ML (24.5) (65.6) Remeasurement on the net defined benefit surplus Actual return on pension scheme assets excluding amounts included in net interest expense/income 28.4 (6.8) 2.6 (1 -4) 31.0 (8.2) Experience-gains and losses arising.on the scheme liabilities • Changes in demographic assumptions • Changes in financial assumptions (56.4) 25.0 (8.2) 2.6 (64.6) 27.6 • Changes in experience adjustments 2.1 1.6 0.8 1.1 2.9 2.7 (25.9) 19.8 (4.8) 2.3 (30.7) 22.1
Contributions paid by employer 3.7 19.4 0.9 0,9 4.6 20,3 Effect of movements in exchange rates (1.7) (0.2) (0.1) (1-9) (0.1) Benefits paid 0.1 0.2 0.1 0.2 3.7 1S.4 (0.8) 0.9 (0.1) 0.1 2.8 20.4 Balance at end of financial period (31.4) (8,9) (18.9) (12.4) (2.1) (1.8)- (52.4) (23 rt)
45 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
Movement in the present value of scheme liabilities
Selfridges Holdings Limited Carlow Investment Company St Clair B.V Total 2017 2016 2017 2016 2017 2016 2017 2016 £m £m £m £m £m £m £m £m Balance at start of financial period (268.4) (294.1) (64.5) (67.1) (1.8) (2.0) (334.7) (363.2)
Current sen/ice cost (0.6) (0.6) (0.2) (0.1) (0.8) (0.7) Past service costs Interest cost (10.0) (9.3) (1.6) (1-2) (11.6) (10.5) Gains in income statement 0,2 0.2 (278.4) (303.4) (66.7) (68.9) (2.0) (1.9) (347.1) (374,2)
Experience gains and losses arising1 on the scheme liabilities • Changes in demographic • assumptions • Changes in financial • (56.4) 25.0 (8.2) 2.6 (64.6) assumptions 27.6 • Changes in experience adjustments 2.1 1.6 0.8 1.1 2.9 2.7 (54.3) 26.6 (7.4) 3.7 (61.7) •30.3
Contributions from scheme members (0.1) (0.1) (0.1) (0.1) Effect of movements in exchange rates (8.1) (0.8) (0.2) (0.1) (8.3) (0.9) Benefits paid 9.8 8.4 1.6 1.6 0.1 0.2 11.5 10.2 9.8 8.4 (6.6) 0.7 (0.1) 0..1 3*1 9.2
Balance at end of financial period (322.9) (268.4) (80.7) (64.5) (2.1) (1.8) (405.7) (334.7)
46 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
Changes in the fair value of scheme assets
Selfridges Holdings Limited Carlow Investment Company St Clair B.V Total 2017 2016 2017 2016 2017 2016 2017 2016 £m £m £m £m £m £m £m £m Balance at start of financial period 259.5 247.2 52.1 52.4 311.6 299,6 interest income/ (expense) 9.7 8.1 1.3 0.9 11.0 9.0 269.2 255.3 53.4 53.3 322.6 308.6
Actuarial return on pension scheme assets excluding net 28.4 (6.8) 2.6 (1.4) 31.0 (8.2) interest income Effect of movements in exchange rates 6.4 0.8 6.4 0.8 28.4 (6.8) 9.0 m 37.4 ML
Contributions paid by employer 3.7 19.4 0.9 0.9 4,6 20.3 Contributions from scheme members 0.1 0.1 0.1 0.1 Benefits paid (9.8) (8.4) (1.6) (1.6) (11.4) (10.0) (6.1) 11.0 (0.6) (0.6) (6.7) 10,4
Balance at end of financial period 291.5 259.5 61.8 52.1 353.3 311.6
47 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
Defined contribution schemed
SeHridges Retail Limited has a defined contribution pension scheme open to all employees, Contributions paid by the Company to the fund amounted to £2.8m (2016: £2.4m) during the period.
Brown Thomas & Co. Limited presently operates two defined contribution schemes. The charge for the current year was £0.3m (2016: £0.3m).
Magazljn De Bljenkorf operates two defined contribution schemes. The charge for the current year was £5.4m (2016:64.3m).
Arhotts Limited, a wholly owned subsidiary of Arnotts Retail Holdings Limited, operates a defined contribution scheme for its employees. The charge for the current year was £0.3m (2016: £0.1 m).
There are contributions outstanding at the period end of £5.1 m (2016: £0.1 m),
27 Share capital
2017 2016 £m £m Allotted, called up and fully paid 107,994,682 (2016:49,594,682 ordinary shares of £1 each) at £0.01 each 1.1 49.6
On 20 December 2016, the Company issued 28,400,000 ordinary shares of £1.00 each at par value to RoundWOod Holdings Limited, the sole shareholder of the Company, for cash. All shares rank pari passu In all respects with exlstlhg share capital.
On the same day, the Company issued 30,000,000 bonus shares of £1.00 each at par value to Roundwood Holdings Limited. In connection with this bonus share issue, the company capitalised profits of £30.0m and applied the capitalised sum in paying up the shares to be allotted. All shares rank pari passu In all respects with existing share capital.
Finally, on the same day, the Company reduced Its Issued capital by £106,914,735 by reducing the nominal value of Its 107,994,682 existing ordinary shares of £1,00 each (each of which had been fully paid Up) to £0.01, For each Issued ordinary share, £0.99 of the nominal value was cancelled, the number of ordinary shares In Issue remained unchanged. The value of issued capital which had been reduced, £106,914,735, was then transferred to retained earnings.
28 Commitments for capital expenditure
Capital commitments, for which no provision has been made in these financial statements, were as follows:
2017 2016 £m £m Contracted but not provided for 34.1 28.8 Authorised but not contracted for 19.6 14.6 Total 53.7 43.4
Property, plant and equipment 47.4 40.8 Intangible assets 6.3 2,6 Total 53.7 43.4
48 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
29 Commitments for operating leases
The Group leases properties under operating leases. Total future minimum rentals payable under nonj cancellable operating leases are as follows:
As re-presented 2017 2016 £m £m Not later than one year 92.0 87.7 Later than one year and not later than five years 329.1 330.3 Later than five years 1,153.5 1,215-5 Total 1,574.6 1,633.5
In addition to the minimum lease payments above, there are contingent rents payable which are calculated as a percentage of the relevant store income.
2016 has been re-presented to be more consistent with the Underlying lease arrangements.
30 Related party transactions
Key management personnel compensation Key management personnel comprise the Board of Directors (refer to Note 7). Compensation typically includes salaries and other short term employee benefits, post-employment benefits and other long-term benefits; Key management personnel are eligible to receive discounts on goods purchased from the Group's trading companies, Such discounts are in line with discounts offered to all staff employed by Group companies.
In addition to their salaries, the Group also contributes to post-employment defined benefit and defined contribution plans (depending upon with which of the segments the individual is aligned). See note 26 for details of the relevant schemes.
Certain key management personnel participate In incentive schemes aligned to the long term performance of the business. These schemes do not give the relevant individual any equity or similar interest in the company.
Property leases Certain properties utilised by the companies within the Group are owned by companies under common control Which do not form part of this consolidated Group. Rents are payable at a market value on inception of the lease and on a quarterly basis. The total value of rents payable to entities under common control was £49.7m (2016: £48.9m).
Transactions with subsidiary companies and companies under common control Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between the Company and its subsidiaries are disclosed in the Company's financial statements. Refer to Note C13.
The Group Incurs management fees recharged from its Canadian parent company.
The Company charges management fees to its' subsidiaries and companies under common control, £0,3m (2016: £4.0m) was left owing to the Company at year end. Selfridges Retail Limited recharged costs in relation to capital expenditure to a company under common control, £0.1m (2016:£0.1m) was left owing to the Selfridges Retail Limited at year end.
49 SHEL Holdings Europe Limited
Notes to the financial statements for the period ended 28 January 2017 (continued)
Certain loan facilities owed by the Group have been received from companies under common control, and certain loan facilities owed to the Group have been provided to companies under common control. A number of these loans have been repaid during the year, they include:
• A loan from Selfridges Properties Limited in the amount of £65.0m. This facility together with all accrued interest, was repaid in full in 20 December 2016 (2016: £65,Om).
• A promissory note due to SGL Properties UK Limited In the amount of £19.3m. A partial repayment of £7.0mwas made on 26 September 2016 and the remaining portion of the facility, £12.3m was repaid In full on 20 December 2016. (2016: £19.3m).
• A loan Issued to Selfrldges Retail Limited by SRL Scottish Limited Partnership In the amount of £16.1m. This facility was repaid In full on 20 December 2016 (2016: £16.1 m).
• A loan to Selfridges Properties Limited in the amount of £30.0m This facility together with all accrued Interest, was repaid in full in 20 December 2016 (2016: £30.0m).
The remaining loan facility owed by the Group is a Eurobond issued to Roundwood Holdings Limited in the amount of £450,0m (2016: £450.0m). The loan notes attract interest at LIBOR plus 3 per cent, are repayable in 2021 and are unsecured,
The remaining loan facilities owed to the Group include:
• A receivable owed by Selfridges Properties Limited In the amount of £74.9m (2016: £94,2m). This amount has increased due to recharges in relation to capital expenditure, and has reduced due to rental charges and a payment of £36.5m by Selfridges Properties Limited to part settle the balance on 20 December 2016.
• A short term receivable from Holt Renfrew and Co Limited in the amount of £0;03m {2016: £3.8m).
31 Contingent liabilities
The Group, along with other third parties, are involved in an action from the landlord of a retail location leased by the Group. The Group has taken external legal advice which indicates that it Is not probable that a material liability will arise. Therefore no provision in relation to this matter has been recognised in these consolidated financial statements.
32 Ultimate holding company
The immediate parent undertaking is Roundwood Holdings Limited.
The directors consider the ultimate parent company and controlling party to be Wittington Investments, Limited, which is Incorporated in Canada.
The Company Is the parent undertaking of the smallest and largest group of undertakings to consolidate these financial statements at 28 January 2017.
50 SHEL Holdings Europe Limited
Company balance sheet as at 28 January 2017
Note As at As at 28 January 2017 30 January 2016 Cm £m Assets
Non-current assets Property, plant and equipment C6 2.4 2.8 Intangible assets C7 0.1 0.9 Investments in subsidiaries G8 559.5 559.5 Deferred Tax Asset 017 0.2 Total hon-curreiit assets 562.2 563,2
Current assets Trade and other receivables C9 1.8 13.0 Cash and cash equivalents C14 16*9 5.1 Total current assets 18.7 18.1
Total assets 580.9 581.3
Eqwfty Share capital C12 1.1 49.6 Retained earnings 121.3 (0.3) Total equity 122.4 49.3
Liabilities
Non-current liabilities Trade and other payables C10 2.2 Borrowings and other financial liabilities C11 450.0 477.0 Total non-current liabilities 450.0 479.2
Current liabilities Trade and other payables C10 8.5 14.8 Borrowings and other financial liabilities C11 38.0 Total current liabilities 8.5 52.8
Total liabilities 458.5 532.0
Totai liabilities and equity 580.9 581.3
The Company's profit before tax was £57.9m which included £75.0m of dividends received and was after deduction of £19,6m of Interest charges payable to a company under common control.
51 SHEL Holdings Europe Limited
Company statement of changes in equity for the period ended 28 January 2017
Share Retained Note capital earnings Total equity £m £m £m
Balance as at 1 February 2015 0.9 0.9
Profit for the financial period 12.9 12.9 Total comprehensive income for 12.9 12.9 the financial period
Dividends 49,6 (14.1) (14.1) Total transactions with owners 49.6 (14.1) 35.5 recognised directly in equity
Balance as at 30 January 2016 49.6 (0.3) 49.3
Balance as at 30 January 2016 49.6 (0.3) 49.3
Profit for the financial period 57.9 57.9 Total comprehensive Income for 57.9 57.9 the financial period
Dividends C5 (13.2) (13.2) Proceeds from shares issued G12 28.4 28.4 Bonus share issue G12 30.0 (30.0) Share capital reduction C12 (106.9) 106.9 Total transactions with owners (48.5) 63.7 15.2 recognised directly in equity
Balance as at 28 January 2017 1.1 121.3 122.4
All changes in equity are attributable to the owners of the company.
52 SHEL Holdings Europe Limited
Company cash flow statement for the period ended 28 January 2017
52 weeks ended 52 weeks ended 28 January 2017 30 January 2016 Note £m £m Cash flows from operating activities Operating profit (2.1) (5.8) Adjustments for: • Depreciation of property, plant and equipment C6 0.4 0.4 • Amortisation of Intangible assets C7 0.1 0.1 • Impairment of Intangible assets C7 0.7 2.8 • Foreign exchange movements on loans 0.8
Changes in: • Decrease in trade and other receivables C9 4.8 9.6 • (Decrease) In trade and other payables C10 (3,6) (12.4) Cash generated from operating activities 0.3 (4,5)
Interest paid (18.4) (18.1) Income tax paid 4.7 Net cash used in operating activities (13.4) (22.6)
Cash flows from Investing activities Acquisition of subsidiary, net of cash acquired (49.6) Purchases of property, plant and equipment C6 Purchases of intangible assets G7 (0.7) Dividends received from subsidiaries 75.0 35.3 Net cash (used in)/generated from investing 75.0 (15.0) activities
Cash flows from financing activities Proceeds from share capital issued 28.4 49.6 Repayment of loan payable to entity under common control (65.0) Dividends paid to owners of the Company C5 (13.2) (14.1) Net cash (used in)/generated from financing (49.8) 35.5 activities
Net i'ncrease/(decrease) in cash and cash 11.8 (2.1) equivalents Cash and cash equivalents at beginning of financial period 5.1 7.2 Exchange gal.ns on cash and cash equivalents Cash and cash equivalents at end of financial 16.9 5.1 period
53 SHEL Holdings Europe Limited
Notes to the Company financial statements for the period ended 28 January 2017
C1 Accounting policies
The Company's accounting policies are the same as those set out in note 2 of the Group financial statements, except as noted below.
Investments In subsidiaries are stated at cost less, where appropriate, provisions for impairment.
Loans from other Group undertakings and all other payables are initially recorded at fair value, which Is generally the proceeds received net of direct Issue costs. They are then subsequently carried at amortised cost.
The Company's financial risk Is managed as part of the Group's strategy and policies as discussed in note 24 of the Group financial statements.
In accordance with the exemption allowed by Section 408(3) of the Companies Act 2006, the Company has not presented its own Income statement or statement of comprehensive income.
C2 Employees
The Company has no employees other than the directors (2016: none).
C3 Directors9 emoluments
2017 2016 £m £m Aggregate emoluments 2.7 2.5 Aggregate amounts receivable under long-term incentive schemes 1.0 1.0 Total directors1 emoluments 3.7 3.5
The highest paid director received total emoluments and amounts received under long-term Incentive schemes of £2.3 million (2016; £2.2 million). There are no retirement benefits accruing to directors in the financial period (2016: nil).
Key management personnel comprise the Board Of Directors for the Company.
C4 Auditor remuneration
During the year the Company obtained the following services from the company's auditor and its associates:
2017 2016 £m £m Auditors' remuneration - for the audit of the Company's 0.1 0.1 financial statements Total auditor remuneration 0.1 0.1
54 SHEL Holdings Europe Limited
Notes to the Company financial statements for the period ended 28 January 2017 (continued)
C5 Dividends
2017 2016 Em £m Equity - ordinary Interim: paid April 2016 £0.27 (2016: £2,819) per£1 share 13.2 14.1 Total dividends 13.2 14.1
After the reporting date, an interim dividend of £38.5m was proposed by the board of directors and Is due to be paid in April 2017.
C6 Property, plant and equipment
Fixtures and fittings Total Cm Cost or valuation At 01 February 2015 M 3.3 At 30 January 2016 3.3 3.3 As at 28 January 2017 3.3 3.3
Accumulated depreciation At 01 February 2015 0.1 0.1 Charge for the period 0.4 0.4 At 30 January 2016 0.5 0.5 Charge for the period 0.4 M At 28 January 2017 0.9 0.9
Net book value As at 30 January 2016 2.8 2.8 As at 28 January 2017 2.4 2.4
55 SHEL Holdings Europe Limited
Notes to the Company financial statements for the period ended 28 January 2017 (continued)
C7 Intangible assets
Computer software Total £m £m Cost or valuation At 01 February 2015 3.1 3.1 Additions 0.7 0J_ At 30 January 2016 3.8 3.8 As at 28 January 2017 3.8 3.8
Accumulated depreciation At 01 February 2015 Charge for the period 0.1 0.1 Impairment 2.8 2.8 At 30 January 2016 2.9 2.9 Charge for the period 0.1 0.1 impairment 0.7 0.7 At 28 January 2017 3.7 3.7
Net book value As at 30 January 2016 0.9 0.9 As at 28 January 2017 0.1 0.1
C8 Investments In subsidiaries
£m Carrying value of investment In subsidiary undertakings at 31 January 2016 559.5 Carrying value at 28 January 2017 559.5
The undertakings whose results or financial position affected the figures shown in the Group's annual financial statements are as presented be|o\w.
All companies listed are limited by shares.
56 SHEL Holdings Europe Limited
Notes to the Company financial statements for the period ended 28 January 2017 (continued)
Country of Country of Activity registration operation
The following companies are wholly owned and have the registered office address of 400 Oxford Street, London, W1A1AB:
SREL Retail Europe Limited England & Wales United Kingdom Holding Company
Selfridges Holdings Limited England & Wales United Kingdom Holding Company
Selfridges & Co Limited * England & Wales United Kingdom Holding Company
Selfrldges Retail Limited * England & Wales United Kingdom Department store retailing
Selfrldges EU Deliveries England & Wales Europe Delivery Company Limited *
Selfridges Worldwide England & Wales- Worldwide Delivery Company Deliveries Limited *
Eataly Retail UK Limited* England & Wales Dormant Dormant
Selfridges Developments England & Wales Dormant Dormant Limited
Selfridges Trustee Company England & Wales United Kingdom Pension Trustee Limited*
The following companies are wholly owned and have the registered office address of Hoogoorddreef 11, 1101 BA Amsterdam:
St Clair BV* Netherlands Netherlands Holding Company
Magazljn De Bijenkorf BV * Netherlands Netherlands Department store retailing
57 SHEL Holdings Europe Limited
Notes to the Company financial statements for the period ended 28 January 2017 (continued)
Country of Country of Activity registration operation
The following company is wholly owned and has the registered office address of 8-10 Avenue de la Gare, L- 1610, Luxembourg:
Selfridges Investments Sari * Luxembourg Luxembourg Holding Company
The following companies are wholly owned and have the registered office address of 92 Grafton Street, Dublin:
Carlow Investment Company Ireland Ireland Holding Company Limited * Brown Thomas Group Ireland Ireland Holding Company Limited* Brown Thomas & Co Limited * Ireland Ireland Department store retailing
William Todd & Company Ireland Dormant Dormant Umlted*
Cash & Company Limited* Ireland Dormant Dormant
Alexander Moon Limited" Ireland Dormant Dormant
The following companies are wholly owned and have the registered office address of 12 Henry Street, Dublin:
Arnotts Retail Holdings Ireland Ireland Holding company Limited Arnotts Limited* Ireland Ireland Department store retailing
Arnotts DC Trustees Limited* Ireland Ireland Pension Trustee
* Owned indirectly
58 SHEL Holdings Europe Limited
Notes to the Company financial statements for the period ended 28 January 2017 (continued)
C9 Trade and other receivables
2017 2016 £m £m Current Amounts owed by Group undertakings 0.3 7.6 Amounts owed by entities under common control 0.7 4.1 Other debtors 0.8 1.3 Total current 1.8 13.0
Amounts owed by group undertakings and entities under common control are non-Interest bearing, unsecured and have no fixed date of repayment.
CIO Trade and other payables
2017 2016 £m £m Current Trade creditors 0.1 0.1 Amounts owed to Group undertakings 3.9 Accruals and deferred Income 8.4 10.8 Total current 8.5 14.8
Non-current Accruals and deferred Income 2.2 Total non-current 2.2
Amounts owed by group undertakings and entities under common control are non-interest bearing, unsecured and have no fixed date of repayment.
C11 Borrowings and other financial liabilities
2017 2016 £m £m Current Amounts owed to entities under common control 38.0 Total current 38.0
Non-current Floating rate senior loan notes 450.0 45O.0 Amounts owed to entities under common control 27.0 Total non-current 450.0 477.0
During 2013, the Company and the Group borrowed £65.0m from Selfridges Properties Limited, an entity undertaking under common control. The loan attracted Interest at LIBOR plus 2 per cent. The loan and all interest charges were fully settled on 20 December 2016.
59 SHEL Holdings Europe Limited
Notes to the Company financial statements for the period ended 28 January 2017 (continued)
In December 2011, the Company Issued £450m senior loan notes to Roundwood Holdings Limited, the parent company. Loan notes attract interest at LIBOR plus 3 per cent and were Issued as part of the consideration for acquisitions. The loan notes are repayable in 2021 and are unsecured.
C12 Share Capital
Refer to Note 27 of the Group consolidated financial statements.
C13 Related party transactions
Transaction support sen/Ices undertaken by Selfridges Retail Limited on behalf of the Company are recharged to the Company.
Certain loan facilities owed by the Company are as follows: • A loan from Selfrldges Properties Limited in the amount of £65.0m. This facility together With all accrued Interest, was repaid in full In 20 December 2016 (2016: £65.0m).
• The remaining loan facility owed by the Company is a Eurobond issued to Roundwood Holdings Limited in the amount of £450.0m (2016: £450.0m). The loan notes attract interest at LIBOR plus 3 per cent, are repayable In 2021 and are unsecured.
Key management personnel comprise the Board of Directors for the Company, Refer to Note 30 of the Group consolidated financial statements.
C14 Financial assets by category
Loans and receivables Total £m Cm As at 30 January 2016 Cash and cash equivalents • Current 5.1 5,1 Trade and other receivables • Current (excluding prepayments) 13.0 13.0 total 18.1 18.1
As at 28 January 2017 Cash and cash equivalents • Current 16,9 16.9 Trade and other receivables • Current (excluding prepayments) 1.4 1.4 Total 18,3 18.3
60 SHEL Holdings Europe Limited
Notes to the Company financial statements for the period ended 28 January 2017 (continued)
C15 Financial liabilities by category
Other financial Total liabilities Em £m As at 30 January 2016 Borrowings • Current 38.0 38.0 • Non-current 477.0 477.0 Trade and other payables _ • Current (less deferred income) 14.8 14.8 • Non- current 2.2 _Z2 Total 532.0 532.0
As at 28 January 2017 Borrowings • Current
• Non-current 45010 450.0 Trade and other payables • Current (less deferred income) 8.5 8.5 • Non ^current Total 458.5 458.5
C16 Financial risk management
The Directors consider the Company's financial risk profile to be low. The principal financial risks faced by the Company are liquidity and funding, counterparty, interest rate and foreign exchange risks.
Liquidity and funding Liquidity and funding risk is the risk that the Company will not be able to meet its short term financial demands.
The majority of the Company's operational outgoings (le excluding loan repayments) are funded by a subsidiary company and are recharged to the Company on a monthly basis. Management of the subsidiary monitor rolling forecasts of total liquidity requirements to ensure it has sufficient cash to meet operational needs.
61 SHEL Holdings Europe Limited
Notes to the Company financial statements for the period ended 28 January 2017 (continued)
The following are the contractual maturities of financial liabilities owing by the Company:
Owing to entities under Floating rate common Trade and senior loan control other Total notes payables £m Cm Em Em Timing of cash flows Within one year 18.1 39.7 14.8 72.6 Between one and two years 17.2 1.0 2.2 20,4 Between two and five years 58.8 28.1 86.9 More than five years 468.3 468.3 As at 30 January 2016 562.4 68.8 17.0 648.2
Timing of cash flows Within one year 17.1 8.5 25.6 Between one and two years 17.9 17.9 Between two and five years 505.7 505.7 More than five years As at 28 January 2017 540.7 8.5 549.2
Counterparty risks Counterparty risk Is the risk that one of the Company's counterparties will not meet its contractual obligations.
The Company's main counterparty risks rests with receivables from Subsidiary companies and other companies under common control. The Company also holds some cash and cash equivalents. Such funds are held in regulated financial institutions with high credit ratings.
The maximum exposure to credit risk is the carrying amount of assets as disclosed within the financial assets table in note C14.
Credit risks Credit risk arises from cash and cash equivalents, derivative financial Instruments and deposits with banks and financial institutions, as well as credit exposures to retail customers.
As noted above cash and cash equivalents, and derivative financial instruments are held In regulated financial institutions with high credit ratings. Similarly deposits are held with regulated banks and financial institutions With high credit ratings, Sales to retail customers are settled in cash or using major credit cards. interest rate risks Interest rate risk Is the risk that the company will be Impacted by adverse movements in interest rates.
Loans attracting interest are primarily held with entities held under common control and, as such, risks of adverse interest rate movements on these financial liabilities are not mitigated against.
Currency risks The Company has investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Whilst recognising such risks, the Company undertakes no risk mitigation Initiatives to protect against adverse foreign currency exchange movements.
62 SHEL Holdings Europe Limited
Notes to the Company financial statements for the period ended 28 January 2017 (continued)
Capita! risks The Group's objectives when managing capita! (i.e, the shareholders' equity In the business) are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and to maintain an efficient capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the group may adjust the amount of dividends, paid to shareholders, reduce capital to shareholders, Issue new shares or sell assets to reduce debt.
Sensitivity The table below illustrates the estimated Impact on the income statement and equity as a result of market movements In foreign exchange and interest rates in relation to the Company's financial instruments. The directors consider that a 1% +A (last year 1%) movement in Interest rates and a 20% +/- (last year 20%) weakening in sterling against the relevant currency represents a reasonable possible change. However this analysis is for illustrative purposes only.
The table excludes financial instruments that expose the Group to interest rate and foreign exchange risk where such risk Is fully hedged with another financial Instrument. Also excluded are trade receivables and payables as these are either sterling denominated or the foreign exchange risk Is materially hedged.
2017 2016 £m £rn Impact on income statement • 20% weakening in sterling against Euro • 20% strengthening in sterling against Euro • 1 % increase In interest rates (4.5) (5.1) • 1 % decrease in interest rates 4.5 5.1
C17 Deferred tax balances
Net deferred tax asset of £0.2m (2016: nil) comprised of a deferred tax liability of £0.1 m on property, plant and equipment/intangible assets and a deferred tax asset of £0.3m on short term timing differences.
63