Regulatory Story
Go to market news section View chart   Print
RNS
Dixons Carphone PLC  -  DC.   

Dixons Carphone Preliminary Results 2016/17

Released 07:00 28-Jun-2017

RNS Number : 3556J
Dixons Carphone PLC
28 June 2017
 

Dixons Carphone plc

Good results with headline profit before tax up 10%

Preliminary results for the 12 months to 29 April 2017*

 

•  Group like-for-like revenue(3) up 4%. Statutory revenue up 9%

•  Strong profit performance:

-  Headline PBT(1) of £501 million (2015/16: £457 million), up 10%.

-  Headline basic EPS(1) 33.8p (2015/16: 30.2p), statutory basic EPS 25.6p (2015/16: 14.0p)‌‌

-  Total statutory profit before tax of £386 million (2015/16: £263 million) after non-headline(1) charges of £115 million (2015/16: £194 million).

•  Free cash flows(8) of £160 million (2015/16: £202 million) and net debt(9) broadly flat year-on-year at £271 million 

•  Final dividend of 7.75p (2015/16: 6.50p) proposed, taking total dividends for the year to 11.25p (2015/16: 9.75p), up 15% year-on-year

 

Headline results*(1)

 

Headline revenue(1)

Headline profit / (loss)(1)

 

Note

2016/17

£million

2015/16 - restated

£million

Reported rate

% change

Local currency(2)

% change

Like-for-like(3)

% change

2016/17

£million

2015/16 - restated

£million

UK & Ireland

(4)

6,550

6,402

2%

2%

4%

385

371

Nordics

(5)

3,156

2,632

20%

5%

1%

89

79

Southern Europe

(6)

661

550

20%

4%

6%

22

17

Connected World Services

(7)

213

152

41%

37%

N/A

21

11

Group

 

10,580

9,736

9%

3%

4%

517

478

Net finance costs

 

 

 

 

 

 

(16)

(21)

Profit before tax

 

 

 

 

 

 

501

457

Tax

 

 

 

 

 

 

(112)

(110)

Profit after tax

 

 

 

 

 

 

389

347

Headline basic EPS

 

 

 

 

 

 

33.8p

30.2p

Notes:     

-  In the UK & Ireland, like-for-like revenues in the full year improved by approximately 3% as a net result of sales successfully transferred from closed stores and sales disruptions.

* See notes on page 2 for an explanation of the basis of preparation and defined terms.

 

Seb James, Group Chief Executive, said:

"Over the last few years a great deal of work has been done to make the company stronger, lower risk and more resilient. We are seeing the upside of these efforts now as we declare record headline profits before tax of over half a billion pounds - up 10%. More importantly, the improvement in our cost base, the strong leadership position that we have built, the investment that we have made in our digital business and, above all, the enormous shift in customer satisfaction and price competitiveness that we have driven leave us well positioned to flourish in the years ahead.

While the UK consumer environment seems to be holding up for us, there will undoubtedly continue to be changes in the way people buy all of the products that we sell from phones to washing machines. Change always represents opportunity, and our job is to find the propositions that keep us compelling to our customers forever. We are excited about our plans in services and about the myriad of initiatives that will drive long-term relationships with our customers.

In short, it has been a good year for Dixons Carphone and it gives me great pleasure once again to thank my 43,000 colleagues for the work that they have done to deliver so well and so energetically for our customers."

 

 

 

 

 

Investor and analyst webcast

There will be a conference call with presentation for investors and analysts at 9:00 am today. The presentation slides will be available via webcast (listen only) on our corporate website, www.dixonscarphone.com

Next announcement

The Group will publish its Q1 trading statement on 7th September 2017.

For further information

Kate Ferry

IR, PR & Corporate Affairs Director

+44 (0)7748 933 206

Mark Reynolds

Head of Investor Relations

+44 (0)7979 696 498

Hannah Collyer

Head of Media Relations

+44 (0)7834 256 775

Nick Cosgrove, Helen Smith

Brunswick Group

+44 (0)207 404 5959

Information on Dixons Carphone plc is available at www.dixonscarphone.com

Follow us on Twitter: @dixonscarphone and @DCSebJ

About Dixons Carphone

Dixons Carphone plc is Europe's leading specialist electrical and telecommunications retailer and services company, employing over 43,000 people in ten countries.

Focused on helping customers navigate the connected world, Dixons Carphone offers a comprehensive range of electrical and mobile products, connectivity and expert after-sales services from the Geek Squad and Team  Knowhow.

Dixons Carphone's primary brands include Carphone Warehouse and CurrysPCWorld in the UK & Ireland, Elkjøp, Elkjøp Phonehouse, Elgiganten, Elgiganten Phone House, Gigantti and Lefdal in the Nordic countries, Kotsovolos in Greece, Dixons Travel in a number of UK airports as well as Dublin and Oslo, and Phone House in Spain. Our key service brands include Team Knowhow in the UK, Ireland and the Nordics, and Geek Squad in the UK, Ireland and Spain.

Business-to-business (B2B) services are provided through Connected World Services, CurrysPCWorld Business and Carphone Warehouse Business. Connected World Services aims to leverage the Group's existing expertise, operating processes and technology to provide a range of services to businesses.

Dixons Carphone was voted 'Retailer of the Year' at the Retail Week Awards last year.

Certain statements made in this announcement are forward-looking. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from any expected future events or results referred to in these forward-looking statements. Unless otherwise required by applicable laws, regulations or accounting standards, we do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise. Information contained on the Dixons Carphone plc website or the Twitter feed does not form part of this announcement and should not be relied on as such.

 

 

Notes

(1)  Headline results exclude amortisation of acquisition intangibles, Merger integration and transformation costs, businesses to be exited, property rationalisation costs, acquisition-related costs and other one-off, non-recurring items, net interest on defined benefit pension schemes and discontinued operations. Such excluded items are described as 'non-headline'. Comparatives have been restated following the classification of the iD mobile operations in the Republic of Ireland and the Sprint Joint Venture as businesses to be exited, and therefore included in non-headline results. For further details see notes 3,  9 and 11 to the financial information.

(2)‌‌‌‌  Change in local currency revenue reflects total revenues on a constant currency and period basis.

(3)‌‌‌‌  Like-for-like revenue is defined in the Glossary and definitions section.

(4)‌‌‌‌  UK & Ireland comprises operations in the UK and Ireland and the Dixons Travel business.

(5)‌‌‌‌  Nordics comprises operations in Norway, Sweden, Finland, Denmark, and Iceland.

(6)‌‌‌‌  Southern Europe comprises operations in Spain and Greece.

(7)‌‌‌‌  Connected World Services comprises the Group's B2B operation which leverages the specialist skills, operating processes and technology of the Group to provide managed services to third parties looking to develop their own connected world solutions.

(8)‌‌‌‌  Free Cash Flow comprises cash generated from / (utilised by)‌‌‌‌ continuing operations before special pension contributions, less net finance expense, less income tax paid and net capital expenditure.

(9)  Net debt is defined in the Glossary and definition section.

See glossary on pages 24 to 28 for further definitions of terms

 

 

Performance review

 

The performance review below refers, unless otherwise stated, to headline information for continuing businesses. Prior year comparatives have been restated to remove the results of businesses to be exited as disclosed in note 11 to the financial information.

 

Group

Group headline revenue increased 3% on a local currency basis and 9% in Sterling terms to £10,580 million (2015/16: £9,736 million)‌‌. Like-for-like revenue growth was 4%, reflecting growth across all divisions.

Headline EBIT was up 8% to £517 million (2015/16: £478 million)‌‌.

Headline profit before tax was £501 million (2015/16: £457 million)‌‌, with a reduced year-on-year interest charge.

 

UK & Ireland

Revenue in the UK & Ireland increased by 2% to £6,550 million (2015/16: £6,402 million), with like-for-like revenue for the year up 4%, benefiting by approximately 3% as a net result of sales transferred from closed stores and sales disruption. The electricals business delivered a solid result with market share gains across consumer electronics, white goods, computing and multiplay.

The mobile market was more challenging due to product safety and supply issues, limited product innovation, delays in product launches and more competitive SIMO propositions. iD in the UK continues to benefit from its differentiated proposition and innovative tariffs with the number of active customers increasing to more than 600,000 from 325,000 in the prior year.

Headline EBIT has increased 4% to £385 million. Electricals profitability growth has reflected revenue growth with margins remaining relatively flat year on year. There has been an in-year benefit of £28 million from changes in the cost profile of services provided under long-term customer support agreements.

Electricals growth has offset lower mobile margin caused by higher handset costs. In addition we have seen lower out of bundle spend (partly due to new EU roaming legislation) but have experienced higher average customer contract life (net impact positive £21 million; 2015/16: £32 million). Changes in contractual terms for the sale of third party insurance contracts have benefited headline EBIT by £22 million.

We have made the decision to exit our iD mobile operations in the Republic of Ireland. The iD mobile operations in the Republic of Ireland represent a different business model to the UK, as it is a capacity MVNO with options for expanding its spectrum. This brings with it excellent control, but that comes with upfront costs and increased administration, and we believe the business will flourish faster under dedicated ownership.

 

Nordics

The Nordic business delivered 5% revenue growth on a local currency basis with growth across all countries. Reported revenues increased 20% to £3,156 million (2015/16: £2,632 million) benefiting from the weakness of Sterling.

Like-for-like revenue was up 1% with the difference between like-for-like growth and local currency growth predominantly reflecting new store openings, FONA store acquisitions and the contribution of Infocare, which was acquired in the prior year. Like-for-like revenue growth was helped by strong audio and mobile sales more than offsetting a decline in tablet sales.

Headline EBIT in local currency remained broadly flat year on year. Reported headline EBIT growth of 13% to £89 million reflects the translation benefit of weaker Sterling.

Southern Europe

Southern Europe had strong underlying results with like-for-like revenue up 6%, and revenue on a local currency basis up 4%. The increase was driven by the business in Greece which delivered excellent growth. Our Spanish business continues to evolve to offer multi-play, sim-only and handset propositions and move to a more flexible franchise approach in a changing market.

Southern Europe headline EBIT was £22 million (2015/16: £17 million), up 29% benefiting from the increased revenue noted above and the relative strengthening of the Euro against Sterling.

Connected World Services

Connected World Services ('CWS') has continued to grow, delivering revenue of £213 million, up from £152 million in the prior year with headline EBIT growth of £10 million to £21 million. Year on year revenue and profit growth is driven by contracts with EE and TalkTalk for mobile phone insurance and the distribution of mobile, TV and broadband connectivity, as well as the honeybee platform development contract with Sprint.

On 9 June the Group announced that in light of the changing US mobile market landscape and Sprint's review of its own distribution strategy, the companies have reached mutual agreement that CWS will focus on the deployment of the honeybee platform across the entire Sprint estate and that Sprint will acquire the CWS 50% share of the distribution joint venture. The Group's share of joint venture losses (£17 million 2015/16: £4 million): have been classified as non-headline items in accordance with the Group policy for businesses to be exited.

We continue to develop the honeybee pipeline, and have signed an agreement with WebHelp, a large French outsourcer and a pilot call centre agreement with Capita, both of which we anticipate will deliver further agreements with new customers.

Net finance costs

Headline net finance costs were £16 million (2015/16: £21 million). The reduction in net financing costs reflects the full year benefit of lower margin  on the revolving credit facility negotiated in October 2015 coupled with reduced LIBOR rates and finance income received from the loan with the Group's investment in the Unieuro operations.

Tax

The headline effective tax rate for the full year is 22% (2015/16: 24%). The rate is higher than the UK statutory rate of 20% due mainly to higher statutory rates in the Nordics, certain non-deductible items mainly in the UK and a net increase in tax related provisions in the year.

Cash and movement on net debt

 

Free Cash Flow

 

2016/17

£million

2015/16

£million

Headline EBIT

517

478

Depreciation and amortisation

152

137

Working capital

(104)

(80)

Capital expenditure

(242)

(221)

Taxation

(72)

(56)

Interest

(23)

(31)

Other items

2

18

Free cash flow before restructuring items - continuing operations

230

245

Restructuring costs

(70)

(43)

Free Cash Flow

160

202

 

Free Cash Flow before restructuring was an inflow of £230 million (2015/16: £245 million), a decrease of 6%.

The Group experienced a working capital outflow of £104 million (2015/16: £80 million), largely as a result of increased receivables balances relating to network commissions in the UK and changes in contractual terms for the sale of third party insurance contracts coupled with lower deferred income as a result of changes to the cost profile of services provided under long-term customer support agreements as discussed earlier in this report.

Capital expenditure in the period was £242 million (2015/16: £221 million). The year-on-year increase reflected spend on SWAS stores and the refit of the stores as part of the property rationalisation programme announced in the prior year, together with further investment in IT platforms and continued development in both our retail and Connected World Services businesses.

The reduction in interest paid is as a result of facility fees that were paid in H1 2015/16 and the reduction in financing costs explained above.

Restructuring costs primarily comprise the cash costs associated with the Merger, transformation activities and the property rationalisation programme noted below within non-headline items.

A reconciliation of free cash flow to cash flow from operations is presented at note 8c to the financial information.

 

Funding

 

2016/17

£million

2015/16

£million

Free Cash Flow

160

202

Dividends

(115)

(106)

Acquisitions and disposals including discontinued operations

(25)

(82)

Pension contributions

(43)

(35)

Other items

19

14

Movement in net debt

(7)

Opening net debt

(267)

(260)

Closing net debt

(271)

(267)

 

 

At 29 April 2017 the Group had net debt of £271 million, broadly flat year-on-year to net debt of £267 million in the prior year. Free Cash Flow was an inflow of £160 million (2015/16: £202 million) for the reasons described above.

Net cash outflows from acquisitions and disposals in the current year represents cash outflows relating to the Sprint joint venture, the acquisition of Simplifydigital and the FONA stores in Denmark, offset by cash receipts in relation to the Group's previously disposed retail operations in Germany.

The increase in pension contributions reflects the agreed deficit reduction plan following the 2016 triennial valuation. Other items primarily relate to foreign exchange movements on net debt.

Statutory results

 

Income statement - continuing operations 

 

2016/17

£million

 2015/16

     £million

Revenue

10,585

9,738

EBIT

418

304

Net finance costs

(32)

(41)

Profit before tax

386

263

Tax

(95)

(84)

Profit after tax - continuing operations

291

179

Proft / (loss) after tax - discontinued operations

4

(18)

Profit after tax for the period

295

161

Basic EPS

25.3p

15.6p

Diluted EPS

25.2p

15.1p

 

Revenue increased 9% to £10,585 million due to the reasons discussed earlier in this report.

Earnings before interest and tax increased from £304 million to £418 million in the current period, largely due to the reasons discussed earlier in this report and a reduction in non-headline costs incurred in the current year which are explained later in this report.

Net finance costs have decreased by £9 million due to reduced interest on borrowings reflecting the full year benefit of lower interest rates on amounts drawn under the revolving credit facility as described above and prior year non-headline costs relating to the write off of deferred facility fees incurred as disclosed below.

The tax charge increased from £84 million to £95 million reflecting higher statutory profit in the year partially offset by the impact of the lower effective tax rate discussed above. Tax credits on non-headline items reduced as a result of lower non-headline costs incurred in the year.

Basic EPS has increased from 15.6p to 25.3p for the period due to the higher reported profit after tax. Diluted EPS has increased from 15.1p to 25.2p reflecting the increase in the reported profit after tax and the lower number of potentially dilutive shares following the post-Brexit decline in the Group share price.

Non-headline items

Statutory profit before tax of £386 million (2015/16: £263 million) includes non-headline charges of £115 million (2015/16: £194 million). These charges are analysed below. Further details can be found in note 3 to the financial information.

 

2016/17

£million

2015/16

£million

Businesses to be exited

(28)

(10)

Merger and transformation related costs

(31)

(52)

Amortisation of acquisition intangibles

(34)

(40)

Property rationalisation costs

-

(70)

Acquisition related costs

-

(6)

Share plan taxable benefit compensation

(11)

-

Unieuro income

5

-

Total non-headline items before interest and tax

(178)

Net pension interest

(16)

(16)

Total non-headline items before tax

(115)

(194)

Tax

17

26

Profit / (loss) after tax - discontinued operations

4

(18)

Total non-headline items

(94)

(186)

 

Businesses to be exited relates to the trading losses of the iD mobile operations in the Republic of Ireland of £10 million (2015/16: £6 million), and the share of trading losses from joint ventures of £18 million (2015/16: £4 million) (including segmental allocation of central costs of £1 million (2015/16: £nil))  for which an agreement has been reached to sell the Group's 50% interest to Sprint.

Costs incurred in relation to the Merger relate to integration costs of £18 million (2015/16: £48 million) and functional transformation costs of £13 million (2015/16: £nil). Integration costs primarily reflect professional fees, employee severance and incentive costs associated with the initial integration of the two merged businesses. During the current period functional transformation projects have commenced across the finance, procurement and human resources functions to rationalise shared service centre activities and harmonise policies and procedures across key support functions of the business. During 2015/16, Merger-related costs also included the write-off of £4 million deferred facility fees which were incurred as a result of the Merger and the financing required to facilitate the Merger at short notice.

The charge for the amortisation of acquisition intangibles was £34 million (2015/16: £40 million) with the decrease due to some of the acquisition intangibles arising on the CPW Europe Acquisition being fully amortised during the prior period.

In the prior year the Group initiated a reorganisation of its property portfolio. The costs associated with this programme recognised in the prior year of £70 million related to committed property exit costs, asset write-downs and operational costs associated with the 3-in-1 store concept roll out across the UK & Ireland.

Acquisition-related costs in the prior period related to professional fees incurred as a result of the acquisition of Simplifydigital in the UK and Infocare in the Nordics and the revaluation of deferred consideration payable to the former shareholders of the Epoq kitchen business in the Nordics.

In the event of non-vesting, compensation will be paid to participants of the Share Plan for any tax charges arising from taxable benefits from the waiver of any portion of loans granted under the scheme. Based on the current share performance it is considered probable that this liability will crystallise, and therefore a provision of £11 million has been made during 2016/17.

Unieuro income relates to a special dividend to the Group to distribute the proceeds raised through the 31.8% IPO of its investment in Unieuro on the Milan stock exchange.

Net pension interest was £16 million reflecting the charge incurred in relation to the Dixons Retail UK pension scheme.

Discontinued operations

A loss of £18 million was recognised during the prior year in relation to the disposal of the Group's retail operations in Germany, the Netherlands and Portugal. In the current year, £4 million income principally relates to the write back of the previously impaired loan to Unieuro which was repaid during the year. Consistent with the original impairment this income is treated as discontinued operations.

 

Balance Sheet

 

 

2016/17

£million

2015/16

£million

Goodwill

3,111

3,054

Other fixed assets

973

906

Working capital

(203)

(361)

Net debt

(271)

(267)

Tax, pension & other

(555)

(472)

 

3,055

2,860

 

The movement in goodwill is primarily due to the retranslation of currency denominated balances largely in the Nordics. Other fixed assets have increased, with the higher capital expenditure during the year exceeding amortisation and depreciation. Negative working capital has reduced in the year largely as a result of network commission receivables increasing due to favourable assumptions over future contractual receipts, increased consumer insurance commission receivables following changes in contractual terms for the sale of third party insurance contracts, a reduction in provisions due to utilisation of property related provisions in the year and increases in stock offset by increases in trade payables. Net debt has marginally increased as described above. Other net liabilities (tax, pension & other) have increased primarily as a result of the increase in the IAS 19 accounting deficit described below offset by the increase in carrying value of the joint venture and recognition of the investment in the remaining interest in Unieuro.

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow statement

 

2016/17

£million

 2015/16

     £million

EBIT - continuing operations

304

EBIT - discontinued operations

-

(4)

Depreciation and amortisation

186

177

Working capital

(154)

(8)

Other operating cash flows

(86)

(73)

Cash flows from operating activities

396

 

 

 

Acquisitions

(46)

(59)

Capital expenditure

(242)

(221)

Other investing cash flows

41

54

Cash flows from investing activities

(247)

(226)

 

 

 

Dividends paid

(115)

(106)

Other financing cash flows

(41)

(11)

Cash flows from financing activities

(117)

 

 

 

(Decrease) / increase in cash and cash equivalents

(39)

53

 

The statutory EBIT increase and working capital outflow increase in the year are for those reasons outlined above.

Acquisition cash outflows in the current period of £46 million relate to £29 million further capital injected into the US joint venture with Sprint, £10 million deferred consideration payment for the prior year acquisition of Simplifydigital, £2 million in the Nordics in relation to the 'Epoq' kitchen business acquired in 2011/12 and £5 million for the acquisition of ten FONA stores in Denmark. The prior year reflected the final CPW Europe Acquisition deferred payment and the acquisitions of Simplifydigital and InfoCare. The increase in capital expenditure reflects those reasons outlined above.

The increase in other financing outflows is due to interest paid on and reduction in year end amounts drawn under the revolving credit facilities.

Comprehensive income / changes in equity

Total equity of the Group has increased from £2,860 million to £3,055 million primarily reflecting the total statutory profit of £295 million, the gain on retranslation of overseas operations of £76 million offset by the payment of dividends of £115 million and actuarial loss (net of taxation) relating to the defined benefit pension scheme of £123 million.

Other matters

Pensions

The IAS 19 accounting deficit of the defined benefit section of the UK pension scheme of Dixons Retail amounted to £589 million at 29 April 2017 compared to £472 million at 30 April 2016. Contributions during the period under the terms of the deficit reduction plan amounted to £43 million (2015/16: £35 million). The deficit has increased during the year as a result of changes in financial assumptions, primarily the discount and inflation rates, which determine liabilities, partially offset by an increase in underlying asset values.

Dividends

The Board declared an interim dividend of 3.5p per share, up from 3.25p per share last year. The interim dividend was paid on 27 January 2017.

We are proposing a final dividend of 7.75p per share, taking the total dividend for the year to 11.25p per share, a 15% increase on the previous year (2015/16: 9.75p). The final dividend is subject to shareholder approval at the Company's forthcoming Annual General Meeting. The ex-dividend date is 24 August 2017, with a record date of 25 August 2017 and an intended final dividend payment date of 22 September 2017.

 

 

Consolidated income statement

 

 

Year ended 29 April 2017

 

Year ended 30 April 2016

 

Note

Headline*

£million

Non-

headline*

£million

Total
£million

Headline

(restated)*
£million

Non-

headline

(restated)*

£million

Total
£million

Continuing operations

 

 

 

 

 

 

 

Revenue

2

10,580

5

10,585

9,736

2

9,738

 

 

 

 

 

 

 

 

Profit / (loss) from operations before share of
results of joint ventures

 

517

(82)

435

478

(170)

308

Share of results of joint ventures

 

-

(17)

(17)

-

(4)

(4)

Profit / (loss) before interest and tax

2,3

517

(99)

418

478

(174)

304

 

 

 

 

 

 

 

 

Finance income

 

17

-

17

17

-

17

Finance costs

 

(33)

(16)

(49)

(38)

(20)

(58)

Net finance costs

4

(16)

(16)

(32)

(21)

(20)

(41)

 

 

 

 

 

 

 

 

Profit / (loss) before tax

 

501

(115)

386

457

(194)

263

 

 

 

 

 

 

 

 

Income tax (expense) / credit

5

(112)

17

(95)

(110)

26

(84)

Profit / (loss) after tax - continuing operations

 

389

(98)

291

347

(168)

179

 

 

 

 

 

 

 

 

Profit / (loss) after tax - discontinued operations

9

-

4

4

-

(18)

(18)

 

 

 

 

 

 

 

 

Profit / (loss) after tax for the period

 

389

(94)

295

347

(186)

161

 

 

 

 

 

 

 

 

Earnings per share (pence)

6

 

 

 

 

 

 

Basic - continuing operations

 

33.8p

 

25.3p

30.2p

 

15.6p

Diluted - continuing operations

 

33.7p

 

25.2p

29.2p

 

15.1p

Basic - total

 

 

 

25.6p

 

 

14.0p

Diluted - total

 

 

 

25.5p

 

 

13.6p

 

*     Headline results exclude amortisation of acquisition intangibles, Merger integration and transaction costs, property rationalisation costs, acquisition related costs, net interest on defined benefit pension schemes, businesses to be exited and discontinued operations. Such excluded items are described as 'non-headline'. The headline and non-headline results have been restated for the year ended 30 April 2016 to reflect the current year classification of the iD mobile operations in the Republic of Ireland and the Sprint JV operations as businesses to be exited as discussed in note 3 and note 11 to the financial information.

                   Consolidated statement of comprehensive income

 

Year ended

 29 April

 2017
£million

Year

ended
30 April
2016
£million

Profit after tax for the period

295

161

 

 

 

Items that may be reclassified to the income statement in subsequent years:

 

 

Cash flow hedges

 

 

   Fair value movements recognised in other  comprehensive income

20

(23)

Reclassified and reported in income statement

(18)

(35)

Amount recognised in inventories

22

46

Available-for-sale financial assets

 

 

   Gains arising during the period

19

-

Exchange gain arising on translation of foreign operations

76

66

Other foreign exchange differences

-

2

Tax on items that may be subsequently reclassified to profit or loss

(3)

-

 

116

56

 

 

 

Items that will not be reclassified to the income statement in subsequent years:

 

 

Actuarial (losses) / gains on defined benefit pension schemes    - UK

(144)

(5)

                                                                                                        - Overseas

-

2

Deferred tax on actuarial (losses) / gains on defined benefit pension schemes

21

(9)

 

(123)

(12)

 

 

 

Other comprehensive (expense) / income for the period (taken to equity)

(7)

44

 

 

 

Total comprehensive income for the period

288

205

 

 

                   Consolidated balance sheet

 

Note

29 April
 2017
£million

30 April
2016
£million

Non-current assets

 

 

 

Goodwill

 

3,111

3,054

Intangible assets

 

553

540

Property, plant & equipment

 

420

366

Investments

 

19

-

Interests in joint ventures and associates

 

18

5

Trade and other receivables

 

531

408

Deferred tax assets

 

253

234

 

 

4,905

4,607

Current assets

 

 

 

Inventory

 

1,101

958

Trade and other receivables

 

1,136

1,113

Derivative assets

 

17

18

Cash and cash equivalents

 

209

233

 

 

2,463

2,322

Total assets

 

7,368

6,929

 

 

 

 

Current liabilities

 

 

 

Trade and other payables

 

(2,502)

(2,268)

Derivative liabilities

 

(13)

(42)

Deferred and contingent consideration

 

(8)

(12)

Income tax payable

 

(94)

(89)

Loans and other borrowings

 

(10)

-

Finance lease obligations

 

(3)

(2)

Provisions

 

(84)

(78)

 

 

(2,714)

(2,491)

 

 

 

 

Non-current liabilities

 

 

 

Trade and other payables

 

(368)

(423)

Deferred and contingent consideration

 

(14)

(21)

Loans and other borrowings

 

(381)

(409)

Finance lease obligations

 

(86)

(89)

Retirement benefit obligations

 

(591)

(474)

Deferred tax liabilities

 

(138)

(115)

Provisions

 

(21)

(47)

 

 

(1,599)

(1,578)

Total liabilities

 

(4,313)

(4,069)

Net assets

 

3,055

2,860

 

 

 

 

Capital and reserves

 

 

 

Share capital

 

1

1

Share premium reserve

 

2,260

2,256

Accumulated profits

 

1,513

1,398

Translation reserve

 

31

(45)

Demerger reserve

 

(750)

(750)

Equity attributable to equity holders of the parent company

 

3,055

2,860

 

 

                   Consolidated statement of changes in equity

 

Note

Share
capital
£million

Share
premium reserve
£million

Accumulated profits
£million

Translation reserve
£million

Demerger
reserve
£million

Total equity
£million

At 2 May 2015

 

1

2,256

1,369

(113)

(750)

2,763

 

 

 

 

 

 

 

 

Profit for the period

 

-

-

161

-

-

161

Other comprehensive income and expense recognised directly in equity

 

-

-

(24)

68

-

44

Total comprehensive income and expense
for the period

 

-

-

137

68

-

205

 

 

 

 

 

 

 

 

Net purchase of own shares

 

-

-

(5)

-

-

(5)

Equity dividends

7

-

-

(106)

-

-

(106)

Net movement in relation to share schemes

 

-

-

10

-

-

10

Tax on items recognised directly in reserves

 

-

-

(7)

-

-

(7)

At 30 April 2016

 

1

2,256

1,398

(45)

(750)

2,860

 

 

 

 

 

 

 

 

Profit for the period

 

-

-

295

-

-

295

Other comprehensive income and expense recognised directly in equity

 

 

-

 

-

(83)

76

 

-

(7)

Total comprehensive income and expense
for the period

 

 

-

 

-

212

76

 

-

288

 

 

 

 

 

 

 

 

Ordinary shares issued

 

-

4

-

-

-

4

Equity dividends

 

-

-

(115)

-

-

(115)

Net movement in relation to share schemes

 

-

-

17

-

-

17

Tax on items recognised directly in reserves

 

-

-

1

-

-

1

At 29 April 2017

 

1

2,260

1,513

31

(750)

3,055

 

                   Consolidated cash flow statement

 

Note

Year ended

 29 April

 2017

£million

Year
ended
30 April

 2016

£million

Operating activities

 

 

 

Cash generated from operations

8

479

487

Special contributions to defined benefit pension scheme

 

(43)

(35)

Income tax paid

 

(72)

(56)

Net cash flows from operating activities

 

364

396

Investing activities

 

 

 

Interest received

 

2

-

Net cash outflow arising from acquisitions

 

(17)

(50)

Proceeds from disposal of property, plant & equipment

 

9

24

Proceeds on sale of business

 

22

30

Dividends received from available-for-sale investments

 

8

-

Acquisition of property, plant & equipment and other intangibles

 

(242)

(221)

Investment in joint ventures

 

(29)

(9)

Net cash flows from investing activities

 

(247)

(226)

Financing activities

 

 

 

Interest paid

 

(17)

(20)

Repayment of obligations under finance leases

 

(8)

(6)

Net purchase of own shares

 

-

(5)

Issue of ordinary shares

 

4

-

Equity dividends paid

 

(115)

(106)

(Decrease) / increase in borrowings

 

(18)

25

Facility arrangement fees paid

 

(2)

(5)

Net cash flows from financing activities

 

(156)

(117)

 

 

 

 

(Decrease) / increase in cash and cash equivalents

 

(39)

53

 

 

 

 

Cash and cash equivalents at beginning of the period

 

233

163

Currency translation differences

 

15

17

Cash and cash equivalents at end of the period

8

209

233

 

 

 

 

 

                    Notes to the Financial Information

1     Basis of preparation

The financial information, which comprises the consolidated income statement, consolidated statement of comprehensive income, consolidated balance sheet, consolidated statement of changes in equity, consolidated cash flow statement and extracts from the notes to the accounts for the year ended 29 April 2017 and 30 April 2016, has been prepared in accordance with the accounting policies set out in the full financial statements and on a going concern basis.

In their consideration of going concern, the directors have reviewed the Group's future cash forecasts and profit projections, which are based on market data and past experience. The directors are of the opinion that the Group's forecasts and projections, which take into account reasonably possible changes in trading performance, show that the Group is able to operate within its current facilities and comply with its banking covenants for the foreseeable future. In arriving at their conclusion that the Group has adequate financial resources, the directors were mindful of the level of borrowings and facilities available and that the Group has a robust policy towards liquidity and cash flow management.

Accordingly the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operation for the foreseeable future and consequently the directors continue to apply the going concern basis in the preparation of the financial statements.

The financial information set out in this announcement does not constitute statutory accounts within the meaning of Sections 434 to 436 of the Companies Act 2006 and is an abridged version of the Group's financial statements for the year ended 29 April 2017 which were approved by the directors on 27 June 2017.  Statutory accounts for the year ended 30 April 2016 have been delivered to the Registrar of Companies, the auditor has reported on those accounts, their report was unqualified and did not contain statements under Section 498(2) or (3) of the Companies Act 2006.  Statutory accounts for the year ended 29 April 2017 will be delivered in due course.  The auditor has reported on those accounts, their report was unqualified and did not contain statements under Section 498 of the Companies Act 2006.

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, IFRS issued by the International Accounting Standards Board and those parts of the Companies Act 2006 applicable to those companies reporting under IFRS. The consolidated financial statements incorporate the financial statements of the Company and its subsidiary undertakings for the year ended 29 April 2017. 

The Group's income statement and segmental analysis identify separately headline performance and non-headline items. Headline performance measures reflect adjustments to total performance measures. The directors consider 'headline' performance measures to be a more accurate reflection of the ongoing trading performance of the Group and believe that these measures provide additional useful information for shareholders on the Group's performance and are consistent with how business performance is measured internally. The accounting policy for the use of these measures is outlined in the 'Alternative Performance Measures' section of the Glossary and definitions.

Non-headline items in the current and prior periods comprise businesses to be exited, amortisation of acquisition intangibles, Merger integration and transformation costs, property rationalisation costs, acquisition related costs, net interest on defined benefit pension schemes, share plan taxable benefit compensation and discontinued operations. A reconciliation of headline profit and losses to total profits and losses is shown in note 2. Items excluded from headline results can evolve from one financial year to the next depending on the nature of exceptional items or one off type activities described above. Headline performance measures and non-headline performance measures may not be directly comparable with other similarly titled measures or "adjusted" revenue or profit measures used by other companies.

2 Segmental analysis

The Group's operating segments reflect the segments routinely reviewed by the Board and which are used to manage performance and allocate resources. This information is predominantly based on geographical areas which are either managed separately or have similar trading characteristics such that they can be aggregated together into one segment.

The Group's reportable segments have been identified
as follows:

•       UK & Ireland comprises operations in the UK and Ireland.

•       Nordics operates in Norway, Sweden, Finland, Denmark and Iceland.

•       Southern Europe comprises operations in Spain and Greece.

•       Connected World Services is the Group's B2B operation which leverages the specialist skills, operating processes and technology of the Group to provide managed services to third parties looking to develop their own connected world solutions.

UK & Ireland, Nordics and Southern Europe are involved in the sale of consumer electronics and mobile technology products and services, primarily through stores or online channels.

Transactions between segments are on an arm's length basis.

 

2 Segmental analysis continued

 

 

 

 

 

 

 

Year ended 29 April 2017

 

 

UK &

 Ireland £million

Nordics £million

 Southern Europe
£million

Connected World Services £million

Eliminations
£million

Total
 £million

Headline external revenue

 

6,550

3,156

661

213

-

10,580

Inter-segmental revenue

 

81

-

-

-

(81)

-

Total headline revenue

 

6,631

3,156

661

213

(81)

10,580

 

 

 

 

 

 

 

 

Headline EBIT before share of results of
joint ventures

 

385

89

22

21

-

517

Share of headline results of joint ventures

 

-

-

-

-

-

-

Headline EBIT

 

385

89

22

21

-

517

 

 

Reconciliation of headline profit to total profit before tax

 

 

 

 

 

 

Year ended 29 April 2017

 

Headline
profit /
 (loss)
£million

 

 

Businesses to be exited £million

Amortisation of acquisition intangibles £million

Merger integration and transformation costs

£million

Pension scheme interest

£million

Unieuro income

£million

Share plan taxable benefit compensation
£million

Total
profit / (loss) £million

UK & Ireland

385

(11)

(20)

(28)

-

-

(10)

316

Nordics

89

-

(12)

(3)

-

-

(1)

73

Southern Europe

22

-

(1)

-

-

5

-

26

Connected World Services

21

-

(1)

-

-

-

-

20

EBIT before share of results of joint ventures

517

(11)

(34)

(31)

-

5

(11)

435

Share of results of joint ventures

-

(17)

-

-

-

-

-

(17)

EBIT

517

(28)

(34)

(31)

-

5

(11)

418

Finance income

17

-

-

-

-

-

-

17

Finance costs

(33)

-

-

-

(16)

-

-

(49)

Profit / (loss) before tax

501

(28)

(34)

(31)

(16)

5

(11)

386

 

 

2 Segmental analysis continued

 

 

 

 

 

 

 

Year ended 30 April 2016 (restated)

 

 

UK &

 Ireland £million

Nordics £million

 Southern Europe
£million

Connected World Services £million

Eliminations
£million

Total
 £million

Headline external revenue (restated)*

 

6,402

2,632

550

152

-

9,736

Inter-segmental revenue

 

60

-

-

-

(60)

-

Total headline revenue (restated)*

 

6,462

2,632

550

152

(60)

9,736

 

 

 

 

 

 

 

 

Headline EBIT before share of results of
joint ventures (restated)*

 

371

79

17

11

-

478

Share of headline results of joint ventures (restated)*

 

-

-

-

-

-

-

Headline EBIT (restated)*

 

371

79

17

11

-

478

 

 

Reconciliation of headline profit to total profit before tax

 

 

 

 

 

 

Year ended 30 April 2016 (restated)

 

Headline
profit / (loss)
(restated)*
£million

 

 

Businesses to be exited*

£million

Amortisation of acquisition intangibles £million

Dixons
Retail
Merger £million

Property rationalisation costs

£million

Acquisition related

£million

Pension scheme interest
£million

Total
profit / (loss) £million

UK & Ireland

371

(6)

(24)

(37)

(70)

(1)

-

233

Nordics

79

-

(13)

(5)

-

(5)

-

56

Southern Europe

17

-

(2)

-

-

-

-

15

Connected World Services

11

-

(1)

(6)

-

-

-

4

EBIT before share of results of joint ventures

478

(6)

(40)

(48)

(70)

(6)

-

308

Share of results of joint ventures

-

(4)

-

-

-

-

-

(4)

EBIT

478

(10)

(40)

(48)

(70)

(6)

-

304

Finance income

17

-

-

-

-

-

-

17

Finance costs

(38)

-

-

(4)

-

-

(16)

(58)

Profit / (loss) before tax

457

(10)

(40)

(52)

(70)

(6)

(16)

263

 

*      Headline results have been restated to exclude the results of the iD mobile operations in the Republic of Ireland and the Sprint JV operations, which have
been classified as businesses to be exited in the current year and comparatives have been restated accordingly as discussed in note 3 and note 11.

 

3 Non-headline items

 

Note

Year ended

29 April
2017

£million

Year

 ended

30 April
2016

(restated)*

£million

Included in revenue:

 

 

 

Businesses to be exited

(i)

5

2

 

 

5

2

 

 

 

 

Included in profit / (loss) before interest and tax:

 

 

 

Businesses to be exited

(i)

(28)

(10)

Amortisation of acquisition intangibles

(ii)

(34)

(40)

Exceptional items              - Merger and transformation related costs

(iii)

(31)

(48)

                                          - Property rationalisation costs

(iv)

-

(70)

                                          - Acquisition related

(v)

-

(6)

Share plan taxable benefit compensation

(vii)

(11)

-

Unieuro income

(viii)

5

-

 

 

(99)

(174)

 

 

 

 

Included in net finance costs:

 

 

 

Net non-cash finance costs on defined benefit pension schemes

(vi)

(16)

(16)

Exceptional items - Merger and transformation related costs

(iii)

-

(4)

 

 

(16)

(20)

 

 

 

 

Total impact on profit / (loss) before tax

 

(115)

(194)

 

 

 

 

Tax on non-headline items

 

17

26

Total impact on profit / (loss) after tax - continuing operations

 

(98)

(168)

 

 

 

 

Discountinued operations

9

4

(18)

Total impact on profit / (loss) after tax

 

(94)

(186)

 

*      Comparative hon-headline results for the year ended 30 April 2016 have been restated as set out in note 11.

 

 (i)   Businesses to be exited:

        Comprises the trading result of businesses to be exited where they do not meet the criteria under IFRS 5 for separate disclosure as discontinued operations. In the current period, this comprises of the iD mobile operations in the Republic of Ireland and the results of the Sprint Joint Venture. For iD mobile Ireland, a decision was reached to exit the business, most likely through a sale to a third party. The results of the Ireland MVNO have therefore been reclassified as non-headline items in the current year in the income statement and related disclosures. The iD mobile operations in the Republic of Ireland contributed £5 million in revenue and a loss of £10 million in EBIT in 2016/17 (2015/16: Revenue of £2 million and a loss of £6 million) which has been classified as non-headline. Restated amounts are set out in note 11.

        In June 2017 the Group announced the sale of the 50% interest in the Sprint Joint Venture. The share of loss recognised in the year of £17 million, together with central costs directly related to the operation of £1 million, have therefore been classified as a business to be exited. The share of loss for 2015/16 of £4 million has been restated accordingly as set out in note 11.

(ii)   Amortisation of acquisition intangibles:

        A charge of £34 million arose during the year in relation to acquisition intangibles arising on the CPW Europe Acquisition, the Dixons Retail Merger and the Simplifydigital acquisition (2015/16: £40 million).

 

 

3 Non-headline items continued

 (iii) Exceptional items - Merger and transformation related costs:

 

Year ended

29 April
2017

£million

Year

 ended

30 April
2016

£million

Merger integration costs

(18)

(48)

Transformation related costs

(13)

-

Revolving Credit Facility fee write off

-

(4)

 

(31)

(52)

        The Merger has given rise to the following costs which have been treated as exceptional items:

•  Merger integration costs relate to the reorganisation of the Group following the Merger and primarily comprise professional fees, employee severance and incentive costs associated with the integration process.

•  During the current period, functional transformation projects have commenced across the finance, procurement and human resources functions to rationalise shared service centre activities and harmonise policies and procedures across key support functions of the business. The costs primarily relate to consultancy fees.

•  In the year ended 30 April 2016, the Revolving Credit Facility fee write off recognised in finance costs relates to the deferred facility fees written off. The fees incurred were a result of the Merger and the financing required to facilitate the Merger at short notice. No related amounts were recognised in the current year.

 (iv) Property rationalisation costs:

        Following the Merger it was announced that the Group would launch a major roll out of its fully refurbished 3-in1 store concept in the UK & Ireland. This involves merging the remaining PC World and Currys stores and inserting a Carphone Warehouse, reducing the overall store portfolio by 134. The costs associated with this initiative, being early lease termination premiums, onerous lease provisions, dilapidations and fixed asset impairments, have been treated as exceptional items. On a net basis, there have been no additional costs incurred in the year ended 29 April 2017 relating to the property rationalisation, and existing provisions have been utilised.

(v)   Acquisition related:

Acquisition related comprise costs incurred in the year ended 30 April 2016 relating to an increase in the contingent consideration payable on a business acquired by Dixons in the Nordics in 2011/12 (£5 million), and costs incurred in the acquisition of Simplifydigital and Infocare (£1 million).

(vi)  Net non-cash financing costs on defined benefit pension schemes:

        Under IAS 19 'Employee Benefits', the net interest charge on defined benefit pension schemes is calculated by applying the corporate bond yield rates applicable on the last day of the previous financial year to the net defined benefit obligation. Corporate bond yield rates vary over time which in turn creates volatility in the income statement and balance sheet and results in a non-cash remeasurement cost which can be volatile due to corporate bond yield rates prevailing on a particular day and is also unrepresentative of the actual investment gains or losses made or the liabilities paid and payable. Consistent with a number of other companies, the accounting effects of these non-cash revaluations of net defined benefit pension liabilities have been excluded from headline earnings.

(vii) Share plan taxable benefit compensation:

        In the event of non-vesting, compensation will be paid to participants of the Share Plan for any taxable benefit arising on the waiver of any portion of loans granted under the scheme. Based on the current share performance it is considered probable that this liability will crystallise, and therefore provision of £11 million has been made during 2016/17.

(viii)         Unieuro income:

        In November 2013, the Group disposed of its Unieuro operations, and retained an investment of 14.96% in Italian Electronics Holdings s.r.l (IEH), a holding company which in turn owned 100% of the Unieuro operations. The investment was initially recognised at £Nil based on the fair value of the retained interest. In March 2017, Unieuro undertook an IPO for 31.8% of its shareholdings, which reduced the Group's investment to 10.2% of the Unieuro operations. As a result of the IPO, the Group received a dividend from the intermediate holding company of £5 million, which is treated as non-headline as relates to a disposal of a portion of our investment. A repayment was also received of £5 million for a loan previously impaired following the disposal, which has been treated as a discontinued operation income in line with the treatment of the original disposal, as disclosed in note 9.
 

4 Net finance costs

 

Year ended

29 April
2017

£million

Year

 ended

30 April
2016

£million

Unwind of discounts on trade receivables

15

17

Interest receivable

2

-

Finance income

17

17

 

 

 

Interest on bank overdrafts, loans and borrowings

(12)

(16)

Finance lease interest payable

(6)

(6)

Net interest on defined benefit pension obligations(i)

(16)

(16)

Unwind of discounts on liabilities

(8)

(10)

Amortisation of facility fees

(1)

(2)

Revolving credit facility fee write off (i)

-

(4)

Other interest expense

(6)

(4)

Finance costs

(49)

(58)

 

 

 

Total net finance costs

(32)

(41)

 

 

 

Headline total net finance costs

(16)

(21)

 

(i) Headline finance costs exclude net interest on defined benefit pension obligations and the write off of revolving credit facility fees (see note 3).

 

5 Tax

The effective tax rate on headline earnings of 22% (2015/16 (restated): 24%) has decreased due to a reduction in items attracting no tax relief or liability and a reduction in tax paid at higher overseas tax rates, largely as a result of statutory rate changes in the Nordics. The UK corporation tax rate for the year ended 29 April 2017 was 20% for the 11 months to 31 March 2017 and 19% thereafter (2015/16: 20%). The total effective tax rate for continuing operations is 25% (2015/16: 32%).

 

 

 

6 Earnings per share

 

 

Year ended

29 April
2017

£million

Year

 ended

30 April
2016

(restated)

£million

Headline earnings

 

 

 

Continuing operations

 

389

347

 

 

 

 

Total earnings / (loss)

 

 

 

Continuing operations

 

291

179

Discontinued operations

 

4

(18)

Total

 

295

161

 

 

 

 

 

 

Million

Million

Weighted average number of shares

 

 

 

Average shares in issue

 

1,152

1,151

Less average holding by Group ESOT

 

(1)

(1)

For basic earnings per share

 

1,151

1,150

Dilutive effect of share options and other incentive schemes

 

4

38

For diluted earnings per share

 

1,155

1,188

 

 

 

 

 

 

Pence

Pence

Basic earnings per share

 

 

 

Total (continuing and discontinued operations)

 

25.6

14.0

Adjustment in respect of discontinued operations

 

(0.3)

1.6

Continuing operations

 

25.3

15.6

Adjustments for non-headline - continuing operations (net of taxation)

 

8.5

14.6

Headline basic earnings per share

 

33.8

30.2

 

 

 

 

Diluted earnings per share

 

 

 

Total (continuing and discontinued operations)

 

25.5

13.6

Adjustment in respect of discontinued operations

 

(0.3)

1.5

Continuing operations

 

25.2

15.1

Adjustments for hon-headline - continuing operations (net of taxation)

 

8.5

14.1

Headline diluted earnings per share

 

33.7

29.2

 

Basic and diluted earnings per share are based on the profit for the period attributable to equity shareholders. Headline earnings per share is presented in order to show the underlying performance of the Group. Adjustments used to determine headline earnings are described further in note 3.

7 Equity dividends

 

29 April 2017

£million

30 April
2016

£million

Amounts recognised as distributions to equity shareholders in the period

 - on ordinary shares of 0.1p each

 

 

Final dividend for the 13 months ended 2 May 2015 of 6.00p per ordinary share

-

69

Interim dividend for the year ended 30 April 2016 of 3.25p per ordinary share

-

37

Final dividend for the year ended 30 April 2016 of 6.50p per ordinary share

75

-

Interim dividend for the year ended 29 April 2017 of 3.50p per ordinary share

40

-

 

115

106

 

The following distribution is proposed but had not been effected at 29 April 2017 and is subject to shareholders' approval at the forthcoming Annual General Meeting:

 

£million

Final dividend for the year ended 29 April 2017 of 7.75p per ordinary share

89

 

 

 

8 Notes to the cash flow statement

a) Reconciliation of operating profit to net cash inflow from operating activities

 

Year ended

29 April 2017

£million

Year

 ended

30 April
2016

£million

Profit before interest and tax - continuing operations

418

304

Profit before interest and tax - discontinued operations

-

(4)

Depreciation and amortisation

186

177

Investment income

(8)

-

Share-based payment charge

17

10

Share of results of joint ventures

17

4

Impairments and other non-cash items

3

4

Operating cash flows before movements in working capital

633

495

 

 

 

Movements in working capital:

 

 

Increase in inventory

(112)

(16)

Increase in receivables

(130)

(245)

Increase in payables

110

170

(Decrease) / increase in provisions

(22)

83

 

(154)

(8)

 

 

 

Cash generated from operations

479

487

In the current year, the presentation of the above reconciliation and statement of cash flows include both continuing and discontinued operations. Comparative amounts have been presented accordingly.

 

b) Analysis of net debt

 

 

 

1 May
2016
£million

Cash flow
£million

Other
 non-cash
movements
£million

Currency
translation
 £million

29 April 2017
£million

Cash and cash equivalents

 

 

233

(39)

-

15

209

 

 

 

233

(39)

-

15

209

 

 

 

 

 

 

 

 

Borrowings due within one year

 

 

-

(10)

-

-

(10)

Borrowings due after more than one year

 

 

(409)

28

-

-

(381)

Obligations under finance leases

 

 

(91)

8

(6)

-

(89)

 

 

 

(500)

26

(6)

-

(480)

 

 

 

 

 

 

 

 

Net (debt) / funds

 

 

(267)

(13)

(6)

15

(271)

 

 

 

 

3 May
2015
£million

Cash flow
£million

Other
 non-cash
movements
£million

Currency
translation
 £million

30 April 2016
£million

Cash and cash equivalents

 

 

163

53

-

17

233

 

 

 

163

53

-

17

233

 

 

 

 

 

 

 

 

Borrowings due within one year

 

 

(55)

55

-

-

-

Borrowings due after more than one year

 

 

(330)

(80)

-

1

(409)

Obligations under finance leases

 

 

(91)

6

(6)

-

(91)

 

 

 

(476)

(19)

(6)

1

(500)

 

 

 

 

 

 

 

 

Net (debt) / funds

 

 

(313)

34

(6)

18

(267)

 

 

 

 

8 Notes to the cash flow statement continued

c) Reconciliation of cash inflow from operations to free cash flow

 

Year ended

29 April 2017

£million

Year

 ended

30 April
2016

£million

Cash inflow from operations

479

487

Operating cash flows from discontinued operations

1

(2)

Taxation

(72)

(56)

Interest, facility arrangement fees, dividends from investments and repayment of finance leases

(15)

(31)

Capital expenditure

(242)

(221)

Proceeds from disposal of fixed assets

9

24

Other movements

-

1

Free cash flow

160

202

 

9 Discontinued operations and assets held for sale

 

a) Profit / (loss) after tax - discontinued operations

The net profit of £4 million recognised in the current year primarily relates to the income recognised relating to the Unieuro investment. In April 2017 the Group received £5 million as repayment of a loan to the disposed operation from the disposal in 2013, which was fully impaired as part of the loss on disposal. In the current year, as repayment of the principle has been made, this income has been classified as a discontinued operation as the original impairment of the loan was recognised in the original loss on disposal.

There were no other significant movements in results relating to other discontinued operations in the year ended 29 April 2017.

The net loss on disposal recognised in the prior year of £18 million primarily relates to working capital adjustments agreed with acquirers, adjustments to net assets disposed, the recycling of foreign currency translation reserves of discontinued operations and other costs associated with the exits.

b) Cash flows from discontinued operations

The net cash flows incurred by the discontinued operation during the year are as follows. These cash flows are included within the Consolidated cash flow statement:

Year ended

29 April 2017

£million

Year

 ended

 30 April
2016

£million

Operating activities

(1)

2

Investing activities

22

30

 

21

32

 

 

10 Related party transactions

 

Transactions between the Group's subsidiary undertakings, which are related parties, have been eliminated on consolidation and accordingly are not disclosed.

The Group had the following transactions and balances with its associates and joint venture:

 

29 April 2017

£million

30 April
2016

£million

Revenue from sale of goods and services

11

24

Amounts owed to the Group

6

2

 

All transactions entered into with related parties were completed on an arm's length basis.

 

 

11 Restatement of comparative information

During the year, the iD mobile operations in the Republic of Ireland and the Sprint Joint Venture in the United States have been classified as 'businesses to be exited' as set out in Note 3, and therefore classified in non-headline results. In accordance with the accounting policy as described in Note 1, comparative information for the financial year ended 30 April 2016 has been restated accordingly. The impact of the restatement has been set out below:

Consolidated income statement

The results of both operations have been reclassified from headline to non-headline results. There has been no impact on the total reported performance measures. The impact of the restatement has been set out below:

 

Headline results

Non-Headline results

Total

 

2015/16 as previously reported

£million

iD mobile Ireland

£million

Sprint Joint Venture

£million

2015/16 as restated

£million

2015/16 as previously reported

£million

iD mobile Ireland

£million

Sprint Joint Venture

£million

2015/16 as restated

£million

2015/16 as previously reported and restated
£million

Continuing operations

 

 

 

 

 

 

 

 

 

Revenue

9,738

(2)

-

9,736

-

2

-

2

9,738

Cost of sales

(7,553)

5

-

(7,548)

-

(5)

-

(5)

(7,553)

Gross profit

2,185

3

-

2,188

-

(3)

-

(3)

2,185

Operating expenses

(1,713)

3

-

(1,710)

(164)

(3)

-

(167)

(1,877)

Profit / (loss) from operations before share of results of joint ventures

472

6

-

478

(164)

(6)

-

(170)

308

Share of results of joint ventures

(4)

-

4

-

-

-

(4)

(4)

(4)

Profit / (loss) before interest and tax

468

6

4

478

(164)

(6)

(4)

(174)

304

Net finance costs

(21)

-

-

(21)

(20)

-

-

(20)

(41)

 

 

 

 

 

 

 

 

 

 

Profit / (loss) before tax

447

6

4

457

(184)

(6)

(4)

(194)

263

 

 

 

 

 

 

 

 

 

 

Income tax (expense) / credit

(110)

-

-

(110)

26

-

-

26

(84)

Profit / (loss) after tax - continuing operations

337

6

4

347

(158)

(6)

(4)

(168)

179

 

 

 

 

 

 

 

 

 

 

Loss after tax - discontinued operations

-

-

-

-

(18)

-

-

(18)

(18)

 

 

 

 

 

 

 

 

 

 

Profit / (loss) after tax for the period

337

6

4

347

(176)

(6)

(4)

(186)

161

 

 

 

 

 

 

 

 

 

 

Earnings per share (pence)

 

 

 

 

 

 

 

 

 

Basic - continuing operations

29.3p

0.5p

0.4p

30.2p

 

 

 

 

15.6p

Diluted - continuing operations

28.4p

0.5p

0.3p

29.2p

 

 

 

 

15.1p

Basic - total

 

 

 

 

 

 

 

 

14.0p

Diluted - total

 

 

 

 

 

 

 

 

13.6p

                       

 

Segmental information

The comparative segmental information provided in note 2 has been adjusted to reflect the above reclassifications. The iD mobile operations were previously included in the UK & Ireland operating segment and have decreased the headline external revenue of the UK & Ireland operating segment for 2015/16 by £2 million, from £6,404 million to £6,402 million. The headline EBIT of the UK & Ireland segment for 2015/16 has increased by £6 million from £365 million to £371 million. The Sprint Joint Venture operations were previously included in the Connected World Services operating segment, and the restatement has increased the headline EBIT of the Connected World Services operating segment by £4 million, from £7 million to £11 million.

Other disclosures

In accordance with the policy as set out in Note 1, there have been no restatements made to the consolidated balance sheet, consolidated statement of other comprehensive income, consolidated statement of changes in equity or consolidated cash flow statement, as these statements do not separately distinguish headline and non-headline measures.

                   Risks to Achieving the Group's Objectives

The Group is subject to a number of risks and uncertainties which could have a material effect on its results. The Group's principal risks, and the factors which mitigate them, are set out in the 2015/16 Annual Report and Accounts on pages 20 to 23. These risks remain relevant in the current period and are summarised below:

1.     Dependence on networks and key suppliers in driving profitability, cash flow and market share;

2.     Failure to maintain a sustainable business model in the face of a changing consumer environment could result in a loss of competitive advantage impacting financial performance;

3.     The Greek exit from the Euro could lead to a deterioration in consumer confidence impacting the performance of the Greek business, Kotsovolos;

4.     Failure to adequately invest in and integrate the Group's IT systems and infrastructure could result in restricted growth and reputational damage impacting financial performance;

5.     Failure in appropriately safeguarding sensitive information and responding to cyber risks could result in reputational damage, financial penalties and a resultant deterioration in financial performance;

6.     Failure to comply with FCA regulation could result in reputational damage, customer compensation, financial penalties and a resultant deterioration in financial performance;

7.     Failure to attract, develop and retain staff with sufficient talent and capabilities could lead to a loss of competitive advantage impacting financial performance;

8.     Business continuity plans are not effective and major incident response is inadequate resulting in reputational damage and a loss of competitive advantage;

9.     Failure to operate an effective fraud control environment may result in the loss of revenue and reputational damage;

10.  Failure to action appropriate Health and Safety measures resulting in injury could give rise to reputational damage and financial penalties; and

11.  The decision of the UK to leave the European Union could lead to a period of economic uncertainty and a loss of consumer confidence, foreign exchange volatility and long term changes in tax and other regulations which may impact the Group's ability to operate across our European businesses.

In the 2016/17 Annual Report and Accounts, dependence on networks and dependence on key suppliers (risk 1 above) have been specified as separate risks. In addition, in order to provide the Board of directors greater detail over specific elements of data protection risk, compliance with data protection legislation has now been specified as a separate risk from the information security risk above (risk 5). Failure to comply with data protection legislation may lead to reputational damage and financial penalties, which could lead to a loss of competitive advantage and deteriorating revenues and cash flows. The risk has been considered alongside potential mitigations, which include the Group currently engaging in preparations for the requirements of the EU General Data Protection Regulation ("GDPR"), which becomes effective in May 2018.

                   Glossary and definitions

Alternative performance measures (APMs)

In the reporting of financial information, the Group uses certain measures that are not required under IFRS. We consider that these additional measures (commonly referred to as 'alternate performance measures') provide additional information on the performance of the business and trends to shareholders. These measures are consistent with those used internally, and are considered critical to understanding the financial performance and financial health of the Group. APMs are also used to enhance the comparability of information between reporting periods, by adjusting for non-recurring or items considered to be distortive on trading performance which may affect IFRS measures, to aid the user in understanding the Group's performance. These alternative performance measures may not be directly comparable with other similarly titled measures or 'adjusted' revenue or profit measures used by other companies, and are not intended to be a substitute for, or superior to, IFRS measures.

Headline and non-headline measures

The Group's income statement and segmental analysis identify separately headline performance and non-headline items. Headline performance measures reflect adjustments to total performance measures. The directors consider 'headline' performance measures to be an informative additional measure of the ongoing trading performance of the Group. Headline results are stated before non-headline items.

Non-headlines items consist of the results of discontinued operations or exited / to be exited businesses, amortisation of acquisition intangibles, acquisition related costs, any exceptional items considered sufficiently material that they distort underlying performance (such as reorganisation costs, impairment charges, property rationalisation costs and other non-recurring charges), income from previously disposed operations and net pension interest costs.

Items excluded from headline results can evolve from one financial year to the next depending on the nature of exceptional items or one-off type activities. Where appropriate, for example where a business is classified as exited / to be exited, comparative information is restated accordingly.

Local currency

Some comparative performance measures are translated at constant exchange rates, called 'Local currency' measures. This restates the prior period results at a common exchange rate to the current year in order to provide appropriate year-on-year movement measures without the impact of foreign exchange movements.

In response to the Guidelines on Alternative Performance Measures issues by the European Securities and Markets Authority (ESMA), we have provided additional information on the APMs used by the Group below.

Alternative performance
measure

Closest equivalent GAAP measure

Reconciliation to IFRS measure

Definition and purpose

Revenue measures

 

 

 

Headline / non-headline Revenue

Revenue

See note 3 and note 11 for details of restated amounts for 2015/16.

Headline revenues represent the ongoing revenues of the Group, and are adjusted to remove non-headline revenue items. In the current and restated comparative periods, this relates to the iD mobile operations in Republic of Ireland, which is classified as a 'business to be exited' and therefore presented in non-headline results.

Like for Like (LFL) % change

No direct equivalent

Not applicable

Like-for-like revenue is calculated based on headline store and internet revenue using constant exchange rates. New stores are included where they have been open for a full financial year both at the beginning and end of the financial period. Revenue from franchise stores are excluded and closed stores are excluded for any period of closure during either period. Customer support agreement, insurance and wholesale revenues along with revenue from Connected World Services and other non-retail businesses are excluded from like-for-like calculations. We consider that LFL revenue represents a useful measure of the trading performance of our underlying and ongoing store and online portfolio.

Local currency % change

Revenue compared to prior period consolidated at a constant exchange rate.

Not applicable

Reflects total revenues on a constant currency and period basis. Provides a measure of performance excluding the impact of foreign exchange rate movements.

Profit measures

 

 

 

Headline / Non-headline profit/(loss) before tax, EBIT and profit/(loss) after tax

Profit/(loss) before interest and tax, profit/(loss) after interest and tax.

See Note 3 and note 11 for details of restated amounts for 2015/16.

As discussed above, the Group uses headline profit measures in order to provide a useful measure of the ongoing performance of the Group. These are adjusted from total measures to remove 'non-headline' items, the nature of which are disclosed above.

EBIT

Profit/(loss) before interest and tax

No reconciling items

Earnings before interest and tax (EBIT) is directly comparable to profit/(loss) before tax. The terminology used is consistent with that used historically and in external communications.

Other earnings measures

 

 

 

Headline / non-headline net finance costs

Net finance costs

See Note 3

Headline net finance costs are adjusted from total finance costs to remove non-headline finance cost items. Non-headline finance costs includes the finance charge of businesses to be exited, net pension interest costs, finance income from previously disposed operations not classified as discontinued, and other exceptional items considered so one-off and material that they distort underlying finance costs of the Group. Under IAS 19 'Employee Benefits', the net interest charge on defined benefit pension schemes is calculated based on corporate bond yield rates at a specific date, which, as can vary over time, creates volatility in the income statement and is unrepresentative of the actual investment gains or losses made on the liabilities. Therefore this item has been removed from our headline earnings measure in order to remove this non-cash volatility.

Headline / non-headline income tax expense / (credit)

Income tax expense / (credit)

See Note 3

Headline income tax expense / (credit) represents the income tax on headline earnings. Non-headline income tax expense / (credit) represents the tax on items classified as 'non-headline', either in the current year, or the current year effect of prior year tax adjustments on items previously classified as non-headline. We consider the headline income tax measures represent a useful measure of the ongoing tax charge / credit of the Group.

Headline / Total effective tax rate

No direct equivalent

 

The effective tax rate measures provide a useful indication of the tax rate of the Group. Headline effective tax is the rate of tax recognised on headline earnings, and total effective tax is the rate of tax recognised on total earnings.

Earnings per share measures

Headline basic EPS - continuing operations, headline diluted EPS - continuing operations, headline basic EPS - total, headline diluted EPS - total

Statutory EPS figures

Note 6

EPS measures are presented to reflect the impact of non-headline items in order to show a headline EPS figure, which reflects the headline earnings per share of the Group. We consider the headline EPS provides a useful measure of the ongoing earnings of the underlying Group.

Cash flow measures

 

 

 

Free Cash Flow

Cash generated from operations

See Note 8

Free Cash Flow comprises cash generated from / (utilised by) continuing operations before special pension contributions, less net finance expense, less income tax paid and net capital expenditure. The directors consider that 'Free Cash Flow' provides additional useful information to shareholders in respect of cash generation and is consistent with how business performance is measured internally.

Net debt

Cash and cash equivalents less loans and other borrowings and finance lease obligations.

See Note 8

Comprises cash and cash equivalents and short term deposits, less borrowings and finance lease creditors. We consider that this provides a useful measure of the indebtedness of the Group.

Other measures

 

 

 

Return on Capital Employed (ROCE)

No direct equivalent

Not applicable

Calculated on a pre-tax and lease adjusted basis. The return is based on headline EBIT, adjusted to add back the interest component associated with capitalising operating lease costs. Capital employed is based on net assets including capitalised leases, but excluding goodwill, cash, tax and the defined benefit pension obligations. The calculation is performed on a moving annual total in order to best match the return on assets in a year with the assets in use during the year to generate the return. We consider this a useful measure to understand how the Group has used the capital employed during the period.

 

Pro forma results

In previous periods (up to the Annual Report and Accounts 2015/16), the Group presented 'pro forma' comparative financial information in order to reflect results of both Carphone Warehouse and Dixons Retail throughout the comparative periods as if the Merger on 6 August 2014 had occurred at the start of the 2013/14 financial year. In the current year, pro forma information is not presented as does not affect the comparative periods for the current year, other than in the five year summary. For information on the pro forma financial information and reconciliations please refer to the 2015/16 Annual Report.

 

Other definitions

The following definitions apply throughout this Annual Report and Accounts unless the context otherwise requires:

Acquisition intangibles

Acquired intangible assets such as customer bases, brands and other intangible assets acquired through a business combination capitalised separately from goodwill. Where businesses have grown organically rather than through acquisition, there is no amortisation of acquired intangibles and therefore the non-cash amortisation charge is removed from our headline earnings measures in order to increase comparability between segments.

ADRs

American Depositary Receipts

ARPU

Average revenue per user

B2B

Business to business

Best Buy

Best Buy Co., Inc. (incorporated in the United States)‌‌ and its subsidiaries and interests in joint ventures and associates

Best Buy Europe

Best Buy Europe Distributions Limited and its subsidiaries and interests in joint ventures and associates (incorporated in England & Wales)‌‌

Board

The Board of directors of the Company

Businesses to be exited

Businesses exited or to be exited are those which the Group has exited or committed to or commenced to exit through disposal or closure but do not meet the definition of discontinued operations as stipulated by IFRS and are material to the results or operations of the Group. Comparative results in the statement of comprehensive income and the notes are restated accordingly for the impact of businesses exited or to be exited.

Carphone, Carphone Warehouse or Carphone Group

The Company or Group prior to the Merger on 6 August 2014

CGU

Cash Generating Unit

Company or the Company

Dixons Carphone plc (incorporated in England & Wales under the Act, with registered number 07105905)‌‌, whose registered office is at 1 Portal Way, London W3 6RS

CPW

The continuing business of the Carphone Group

CPW Europe

Best Buy Europe's core continuing operations

CPW Europe Acquisition

The Company's acquisition of Best Buy's interest in CPW Europe, which completed on 26 June 2013

CWS

The Connected World Services division of the Company

Dixons or Dixons Retail

Dixons Retail plc and its subsidiary companies

Dixons Carphone or Group

The Company, its subsidiaries, interests in joint ventures and other investments

Dixons Retail Merger or Merger

The all share merger of Dixons Retail plc and Carphone Warehouse plc which occurred on 6 August 2014

EBT

Employee benefit trust

ESOT

Employee share ownership trust

HMRC

Her Majesty's Revenue and Customs

Honeybee

Honeybee is our proprietary IT software, developed in-house initially to serve our mobile phone customers. It is a unique omni-channel, multi-industry software that simplifies the delivery and management of complex digital customer journeys.

IFRS

International Financial Reporting Standards as adopted by the European Union

Market position

Ranking against competitors in the electrical and mobile retail market, measured by market share. Market share is measured for each of the Group's markets by comparing data for revenue or volume of units sold relative to similar metrics for competitors in the same market

MNO

Mobile network operator

MVNO

Mobile virtual network operator

New CPW

Dixons Carphone Holdings Limited, previously called New CPW Limited (incorporated in England & Wales)‌‌

NPS

Net promoter score, a rating used by the Group to measure customers' likelihood to recommend its operations

Old Carphone Warehouse

TalkTalk Telecom Holdings Limited (formerly 'The Carphone Warehouse Group PLC')‌‌ (incorporated in England & Wales)‌‌

 

RCF

Revolving credit facility

SIMO

Sales of SIM-only contracts, without attached handset

Sharesave or SAYE

Save as you earn share scheme

Sprint JV

The 50% investment held by the Group in Sprint Connect LLC, a distribution joint venture held with Sprint LLC in the USA

SWAS

Stores-within-a-store

TalkTalk or TalkTalk Group

TalkTalk Telecom Group PLC and its subsidiaries and other investments

TSR

Total shareholder return

UK GAAP

United Kingdom Accounting Standards and applicable law

Virgin Mobile France

Omer Telecom Limited (incorporated in England & Wales)‌‌ and its subsidiaries, operating an MVNO in France as a joint venture between the Company, Bluebottle UK Limited and Financom S.A.S.

WAEP

Weighted average exercise price

 

 

                    Responsibility Statement

 

The 2016/17 Annual Report and Accounts which will be issued in August 2017, contains a responsibility statement in compliance with DTR 4.1.12 of the Listing Rules which sets out that as at the date of approval of the Annual Report and Accounts on 27 June 2017, the directors confirm to the best of their knowledge:

•   the Group and unconsolidated Company financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the Group and Company, respectively; and

•   the performance review contained in the Annual Report and Accounts includes a fair review of the development and performance of the business and the position of the Group together with a description of the principal risks and uncertainties that they face.

At the date of this statement, the directors are those listed in the Group's 2015/16 Annual Report and Accounts with the exception of the following appointments and resignations:

Appointments

Resignations

Fiona McBain (appointed 1 March 2017)

 

Graham Stapleton (resigned 27 April 2017)

Sir Charles Dunstone (resigned 30 April 2017)

 

The financial statements were approved by the directors on 27 June 2017 and signed on their behalf by:

Sebastian James

Group Chief Executive

Humphrey Singer

Group Finance Director

 

                     Retail Store Data

Number of stores

 

 

29 April
 2017

30 April
 2016

 

Own

 stores

Franchise stores

Total

Own

 stores

Franchise stores

Total

 

 

 

 

 

 

 

UK Dixons

355

-

355

419

-

419

Ireland Dixons

20

-

20

28

-

28

UK Carphone

687

-

687

734

-

734

Ireland Carphone

86

-

86

90

-

90

UK & Ireland

1,148

-

1,148

1,271

-

1,271

 

 

 

 

 

 

 

Norway

78

63

141

80

62

142

Sweden

111

51

162

118

39

157

Denmark

39

-

39

29

-

29

Finland

21

17

38

21

17

38

Other Nordics

-

13

13

0

13

13

Nordics

249

144

393

248

131

379

 

 

 

 

 

 

 

Greece

68

26

94

68

27

95

Spain

243

261

504

249

249

498

Southern Europe

311

287

598

317

276

593

 

 

 

 

 

 

 

Total

1,708

431

2,139

1,836

407

2,243

 

 

Selling space '000 sq ft

 

 

29 April
 2017

30 April
 2016

 

Own

 stores

Franchise stores

Total

Own

 stores

Franchise stores

Total

 

 

 

 

 

 

 

UK Dixons

5,757

-

5,757

6,545

-

6,545

Ireland Dixons

227

-

227

266

-

266

UK Carphone

580

-

580

645

-

645

Ireland Carphone

46

-

46

49

-

49

UK & Ireland

6,610

-

6,610

7,505

-

7,505

 

 

 

 

 

 

 

Norway

1,198

602

1,800

1,240

523

1,763

Sweden

1,302

312

1,614

1,290

287

1,577

Denmark

681

-

681

580

-

580

Finland

540

142

682

546

134

680

Other Nordics

-

87

87

-

78

78

Nordics

3,721

1,143

4,864

3,656

1,022

4,678

 

 

 

 

 

 

 

Greece

846

108

954

831

113

944

Spain

140

111

251

137

109

246

Southern Europe

986

219

1,205

968

222

1,190

 

 

 

 

 

 

 

Total

11,317

1,362

12,679

12,129

1,244

13,373

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR OKODDKBKBDAB
Close


London Stock Exchange plc is not responsible for and does not check content on this Website. Website users are responsible for checking content. Any news item (including any prospectus) which is addressed solely to the persons and countries specified therein should not be relied upon other than by such persons and/or outside the specified countries. Terms and conditions, including restrictions on use and distribution apply.

 


Dixons Carphone Preliminary Results 2016/17 - RNS