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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Currys plc | LSE:DC. | London | Ordinary Share | Ordinary Shares |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 135.30 | 135.00 | 135.20 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMDC.
RNS Number : 7713R
Dixons Carphone PLC
14 December 2016
Dixons Carphone plc
A strong half year with Headline profit before tax up 19%*
Highlights: Interim results for the 26 weeks ended 29 October 2016*
-- Group H1 like-for-like revenue(3) up 4%; Q2 like-for-like up 4%; statutory revenue for H1 up 11%
-- Market share gains across all markets -- Group Headline PBT(1) of GBP144 million (2015/16: GBP121 million), up 19% -- Group Headline EBIT(1) of GBP153 million (2015/16: GBP135 million) -- Group Headline basic EPS(1) from continuing operations 10.9p (2015/16: 7.5p)
-- Statutory profit before tax of GBP104 million (2015/16: GBP78 million) after non-Headline charges of GBP40 million (2015/16: GBP43 million), statutory basic EPS of 8.1p (2015/16: 4.8p)
-- Interim dividend of 3.5p, payable in January 2017, an increase of 8%
-- Free cash flow(8) of GBP65 million (2015/16: GBP64 million) and net debt of GBP285 million (2015/16: GBP378 million)
Hot Features
Premium
-- CWS: Announcement of connected home partnership with SSE
Headline profit
Headline revenue / (loss) (1)
(1)
----------------- ----- ------- --------------------------------------------- --------------------
H1 H1 Reported Local Like-for- H1 H1 15/16
16/17 15/16 rate currency(2) like 16/17
(3)
Note GBPm GBPm % change % change % change GBPm GBPm
----------------- ----- ------- ------- --------- ------------- ---------- -------- ----------
UK & Ireland (4) 2,988 2,872 4% 3% 5% 109 101
Nordics (5) 1,474 1,198 23% 5% 2% 34 30
Southern Europe (6) 309 257 20% 2% 7% 5 1
Connected
World Services (7) 98 67 46% 42% n/a 5 3
----------------- ----- ------- ------- --------- ------------- ---------- -------- ----------
Group 4,869 4,394 11% 5% 4% 153 135
----------------- ----- ------- ------- --------- ------------- ---------- -------- ----------
Net finance
costs (9) (14)
----------------- ----- ------- ------- --------- ------------- ---------- -------- ----------
Profit before
tax 144 121
Tax (19) (35)
----------------- ----- ------- ------- --------- ------------- ---------- -------- ----------
Profit after
tax 125 86
----------------- ----- ------- ------- --------- ------------- ---------- -------- ----------
Headline basic
EPS(1) 10.9p 7.5p
---------------------- ------ -----
Notes:
- In the UK & Ireland both like-for-like and total revenue were negatively affected by approximately 1% from refurbishment disruption.
- In the UK & Ireland, like-for-like revenue improved by approximately 3% as a result of sales transferred from closed stores.
* See notes on page 3 for an explanation of the basis of preparation and defined terms. This document also uses definitions that are set out in the Group's Annual Report and Accounts for the year ended 30 April 2016 on pages 154 to 156.
Q2 results
Reported Local Like-for-
rate currency(2) like (3)
% change % change % change
------------------------- --- --------- ------------ ---------
UK & Ireland 5% 4% 6%
Nordics 28% 6% 2%
Southern Europe 17% (3)% 1%
Connected World Services 48% 42% n/a
------------------------------ --------- ------------ ---------
Group 12% 5% 4%
------------------------------ --------- ------------ ---------
Notes:
- In the UK & Ireland both like-for-like and total revenue were negatively affected by approximately 1% from refurbishment disruption.
- In the UK & Ireland, like-for-like revenue improved by approximately 4% as a result of sales transferred from closed stores.
Seb James, Group Chief Executive, said:
"Two years ago when we combined the businesses of Dixons Retail and Carphone Warehouse, we set out a strategy to create a powerful engine to help our customers navigate an increasingly complex and interconnected world. It is therefore, very encouraging again to be able to report good growth in both sales and profits across all of our businesses.
Overall, it has been a strong start to the year with like-for-like growth of 4% and Headline PBT growth of 19%. The teams across the business have achieved this through the successful execution of a wide array of initiatives. These have varied from an extremely ambitious property programme in the UK and Ireland that is delivering exactly as expected, the commissioning of the most modern small products warehouse in Europe for our Nordic business, the near completion of our merger activities across the Group, the integration of two ancillary businesses including the UK's largest independent reseller of multiplay products, a totally new services proposition in Leeds, and a great many more. Together, these continue to improve the proposition that we put before our customers every single day, and are responsible for the continued growth in both customer satisfaction and market share that we have been enjoying. We are far from being satisfied, however. As we go into our most critical trading period, the teams are drawing up a programme for next year that is every bit as ambitious, innovative and customer-focused.
Looking forward, we remain optimistic about our ability to continue to gain market share in all our key markets, and, while we have still not seen any effect on consumer demand as a consequence of Brexit, we have been planning for the possibility of more uncertain times ahead. In particular, we have been focusing on reducing our fixed cost base, identifying areas of potential market share growth if the world becomes a tougher place for our competitors, and generally preparing for all eventualities - just in case. We are also planning our offer so that potential currency impacts are minimised for the customer, and are ensuring that next year, as always, everybody can be absolutely sure that they won't get a better deal anywhere.
We continue to make great progress within CWS and I am delighted to be announcing today a new strategic partnership with SSE who will be using our honeyBee software to enable, in time, their 5 million customers to monitor, control and maintain their homes and appliances at the touch of a button. Our leading services brand, Knowhow, will support the partnership with its comprehensive repair and maintenance infrastructure.
Finally, I would like to thank my 42,000 colleagues who make up the great shared enterprise that is Dixons Carphone for their impressive work this year and wish them all - from Miami to Malmö to Manchester - a very happy Christmas and New Year."
Investor and analyst call
There will be a conference call for investors and analysts at 9:00 am today:
Dial-in details - UK/International: +44(0) 20 3059 8125; passcode: 9524 (to be quoted to the operator)
Seven-day replay - UK/International: +44(0) 121 260 4861; passcode: 4868557 #
Accompanying slides will be available on the company website, www.dixonscarphone.com, at 7:00am
Next announcement
The Group will publish a trading update on 24 January 2017 and will host a management presentation that morning at the Deutsche Bank offices in London
For further information
IR, PR & Corporate
Kate Ferry Affairs Director +44 (0) 7748 933 206
Head of Investor
Mark Reynolds Relations +44 (0) 7979 696 498
Head of Media
Hannah Collyer 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 42,000 people in eleven 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
Knowhow.
Dixons Carphone's primary brands include Carphone
Warehouse, CurrysPCWorld and Simplifydigital in the
UK & Ireland, Elkjøp, Elkjøp Phonehouse,
Elgiganten, Elgiganten Phonehouse, Gigantti and Lefdal
in the Nordic countries, Kotsovolos in Greece, Dixons
Travel in a number of UK & Ireland airports and Phone
House in Spain. Our key service brands include 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, PC World 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 2016. ------------------------------------------------------------
Notes
(1) Headline results exclude amortisation of acquisition intangibles, Merger integration and transformation costs, property rationalisation costs, acquisition related costs, net interest on defined benefit pension schemes and discontinued operations (comprising Phone House operations in Germany, Netherlands and Portugal). Such excluded items are described as 'Non-Headline'. 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. For further details see notes 1 and 3 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 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. Revenue from Carphone Warehouse SWAS are included in like-for-like. We consider that like-for-like provides useful additional information to reported revenue as this enables performance of the Group to be measured on a consistent year-on-year basis.
(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 ("CWS") 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 and the Group's share of results of its joint venture.
(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. We consider this useful as it shows cash resources generated for the Group to invest in its future growth and to create shareholder value.
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.
Performance review
The performance review below refers, unless otherwise stated, to Headline information for continuing businesses. The basis for the preparation of this information is described on page 3.
Group
The Group has seen strong growth in the first half, on a local currency basis revenue has increased 5%. Like-for-like revenue increased 4%, with growth across all divisions. Total reported revenue has increased 11% to GBP4,869 million benefiting from the weakening of the Pound against the Euro and Norwegian Krone following the announcement of the UK's EU Referendum results.
Headline EBIT has increased 13% to GBP153 million (2015/16: GBP135 million), ahead of revenue growth, driven by solid trading results and the continued delivery of synergies related to the Merger.
In the first half the Group has successfully integrated the Simplifydigital and InfoCare businesses acquired in the prior year with these businesses contributing revenues of GBP20 million and GBP24 million respectively.
UK & Ireland
Revenue in the first half in the UK & Ireland increased by 3% on a local currency basis to GBP2,988 million (2015/16: GBP2,872 million). Like-for-like revenue increased 5% with the difference between total revenue and like-for-like revenue growth predominantly due to a reduction in store numbers following the property rationalisation programme, partly offset by revenues related to the Simplifydigital acquisition.
The mobile business continues to see strong performance in the UK postpay market and higher revenues in handset sales, whilst iD Mobile has now surpassed 450,000 customers.
The electricals business has delivered good growth in the first half, driven by white goods, consumer electronics and multiplay partially offset by decreased revenue from computing.
This revenue growth combined with cost savings resulted in Headline EBIT growth of 8% to GBP109 million (2015/16: GBP101 million).
The property rationalisation programme, as set out during 2015/16, remains on track.
Nordics
Whilst the Nordic business continues to experience a highly competitive environment, the first half has seen 5% local currency revenue growth and 2% on a like-for-like basis. Reported revenue in the first half was up 23% to GBP1,474 million (2015/16: GBP1,198 million) benefiting from the weakening in the Pound.
At the end of November 2015, as part of our services strategy, we acquired InfoCare Workshop, a service and repair business. This business has now been fully integrated delivering revenues of GBP24 million in the period.
Nordics Headline EBIT was GBP34 million (2015/16: GBP30 million) with the increase reflecting the weakening in the Pound, where in local currency the increase in revenues in the first half and cost saving initiatives was offset by a continued determination to offer competitive prices in the market.
Southern Europe
The strong Southern Europe results in the first half were driven by growth across all major categories in Greece reflecting a more stable economic environment, and in particular air conditioning was boosted by the hot summer temperatures.
Our Spanish business continues to face changes in market trends with post-pay volumes down year on year offset by increases in multiplay and handset only volumes. The business model continues to adapt to these market changes to retain market share and profitability by moving towards a franchise model. Total franchisees increased from 224 to 263 between October 2015 and October 2016.
Southern Europe Headline EBIT has increased to GBP5 million (2015/16: GBP1 million) primarily reflecting the strong performance in Greece and the weakening of the Pound against the Euro.
Connected World Services
CWS performed strongly in the first half, with revenue up 46% to GBP98 million (2015/16: GBP67 million) benefiting from the consultancy agreements with Sprint, licensing of the honeyBee platform and the new distribution agreement with Talk Talk announced in the prior year.
Headline EBIT has increased to GBP5 million in the period (2015/16: GBP3 million) reflecting the increased revenue noted above. Headline EBIT of GBP5 million includes GBP8 million share of losses from the Sprint joint venture reflecting the continued investment by both partners in the roll out of Sprint branded stores. The Sprint joint venture store rollout remains on track, with a total of 42 stores operational across 7 states as at the end of October 2016.
Today we have also announced a new strategic partnership with SSE. This is an excellent example of how adaptive our honeyBee software is. With SSE we are developing an interactive platform that will enable customers to monitor, control and maintain their homes and appliances at the touch of a button. This will be backed up by Knowhow, who will be providing the repair and support infrastructure necessary to meet all customers' maintenance needs.
Finance costs
Headline net finance costs have decreased from GBP14 million to GBP9 million largely as a result of charges relating to the renewed RCF recognised in the prior year. The Non-Headline costs of GBP8 million (2015/16: GBP8 million) relate to the interest on the UK defined benefit pension scheme. The total statutory net finance costs have decreased from GBP22 million to GBP17 million.
Tax
The Group's Headline effective rate of taxation before one off tax charges / credits for the full year has been estimated at 23% (2015/16: 25%) with this rate being applied to the half year results. The rate is higher than the UK statutory rate of 20% due mainly to higher statutory rates in the Nordics, and certain non-deductible items mainly in the UK. In calculating the total tax charge for the half year, a one-off tax credit of GBP16 million has been recognised following successful resolution of a prior year tax issue, which results in a total effective rate of taxation on Headline earnings of 13%, with an effective rate of taxation on Non-Headline earnings of 20% The total statutory effective rate of taxation is 11%.
Cash and movement on net debt
Free cash flow
H1 16/17 H1 15/16
GBPm GBPm
--------------------------------------- -------------------- --------------------
Headline EBIT 153 135
Share of results of Joint Venture 8 -
Depreciation and amortisation 75 65
Working capital 16 17
Capital expenditure (112) (110)
Taxation (16) (12)
Interest (15) (19)
Free cash flow before restructuring
items 109 76
Restructuring costs (44) (12)
--------------------------------------- -------------------- --------------------
Free cash flow - continuing operations 65 64
--------------------------------------- -------------------- --------------------
Free cash flow before restructuring in the first half was an inflow of GBP109 million (2015/16: GBP76 million). The Group had a working capital inflow of GBP16 million, comparable to the prior period.
Capital expenditure in the first half was GBP112 million comparable to the GBP110 million in the prior period. Capital expenditure in the current period reflects the continued spend on the integrated retail offering and the capital element of the property rationalisation programme announced in the prior year, investment in IT platforms and continued development in both our retail and Connected World Services businesses.
Taxation paid has increased from GBP12 million to GBP16 million largely due to the timing of tax payments and increased taxable profits, offset by a successful resolution of a prior year tax issue resulting in a cash receipt in the period.
The reduction in interest paid is as a result of facility fees that were paid in H1 2015/16 and the Group's new revolving credit facility incurring a lower interest rate. Restructuring costs primarily comprise the cash costs associated with the Merger and transformation activities and property rationalisation programme noted below within Non-Headline items.
A reconciliation of free cash flow to cash flow from operations is presented in note 9 to the financial information.
Funding
H1 16/17 H1 15/16
GBPm GBPm
------------------------------------- -------- --------
Free cash flow 65 64
Dividends (75) (69)
Acquisitions and disposals including
discontinued operations (2) (91)
Investment in joint venture (16) -
Net issue of new shares and purchase
of own shares - (7)
Pension contributions (18) (18)
Currency translation differences 28 3
------------------------------------- -------- --------
Movement in net debt (18) (118)
Opening net debt (267) (260)
------------------------------------- -------- --------
Closing net debt (285) (378)
------------------------------------- -------- --------
At 29 October 2016 the Group had net debt of GBP285 million (2015/16: GBP378 million). A reconciliation of net debt is presented in note 9 to the financial information. Free cash flow was an inflow of GBP65 million (2015/16: inflow of GBP64 million) for the reasons described on the previous page.
Of the free cash flow, GBP75 million was returned to shareholders in the form of dividends for the 2015/16 financial year.
Net outflows associated with acquisitions and disposals in the current period largely relates to deferred consideration payments for Simplifydigital of GBP10 million, the 'Epoq' kitchen business of GBP2 million and the acquisition of 10 FONA stores in Denmark of GBP6 million (2015/16: CPW Europe Acquisition final payment of GBP26 million).This is offset by cash inflows relating to discontinued operations of GBP16 million (2015/16: GBP65 million outflow).
The investment in joint venture of GBP16 million relates to additional contributions to the Sprint joint venture during the period.
Statutory results
Income statement - continuing operations
H1 16/17 H1 15/16
GBPm GBPm
------------------ -------- --------
Revenue 4,869 4,394
------------------ -------- --------
EBIT 121 100
Net finance costs (17) (22)
------------------ -------- --------
Profit before tax 104 78
Tax (11) (23)
Profit after tax 93 55
------------------ -------- --------
Basic EPS 8.1p 4.8p
Diluted EPS 8.0p 4.6p
------------------ -------- --------
EBIT increased from GBP100 million to GBP121 million predominantly reflecting the increased Headline EBIT as discussed above, which has been offset by the non-Headline costs recognised of GBP32 million (2015/16: GBP35 million).
Net finance costs have decreased by GBP5 million to GBP17 million largely as a result of charges relating to the renewed RCF recognised in the prior year.
The tax charge has been calculated based on the full year forecast effective tax rate of 23%, before the one-off tax charges / credits and has decreased from GBP23 million to GBP11 million largely as a result of the recognition of a one-off tax credit of GBP16 million during H1 2016/17 following the successful resolution of a prior year tax issue.
The increase in statutory basic EPS reflects the improved performance in the period, with no significant changes in the number of shares in issue.
Non-Headline items
Headline profit before tax is reported before Non-Headline charges. These charges are analysed below:
H1 16/17 H1 15/16
GBPm GBPm
----------------------------------- --------- ---------
Headline profit before tax -
continuing operations 144 121
Merger and transformation related
costs (15) (15)
Amortisation of acquisition
intangibles (17) (20)
Net pension interest (8) (8)
Profit before tax - continuing
operations 104 78
------------------------------------ --------- ---------
Costs incurred in relation to the Merger in the first half of 2016/17 relate to integration costs of GBP9 million (2015/16: GBP15 million) and functional transformation costs of GBP6 million (2015/16: GBPnil). 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.
The charge for the amortisation of acquisition intangibles was GBP17 million (2015/16: GBP20 million) with the decrease due to some of the acquisition intangibles arising on the CPW Europe Acquisition being fully amortised during the prior period.
Net pension interest was GBP8 million (2015/16: GBP8 million) reflecting the charge incurred in relation to the Dixons Retail UK pension scheme. Further details on the pension scheme can be found in the Pensions section later in this performance review.
For further details of Non-Headline items see note 3 to the interim financial information.
Discontinued operations
As previously reported, the Group's retail operations in Germany, the Netherlands and Portugal were treated as discontinued operations following the decision to exit these businesses. The sale of operations in Germany was completed on 5 May 2015, the Netherlands on 30 June 2015 and Portugal on 31 August 2015. A net loss of GBP9 million was recognised in relation to these businesses in H1 2015/16 (year ended 30 April 2016: GBP18m loss). No profit or loss relating to discontinued operations has been recognised in the 26 weeks to 29 October 2016.
Balance sheet
29 October 30 April
2016 2016
GBPm GBPm
---------------------------- ---------- --------
Goodwill 3,189 3,054
Other fixed assets 971 906
Investment in Joint Venture 12 5
Working capital (339) (361)
Net debt (285) (267)
Tax, pension & other (644) (477)
---------------------------- ---------- --------
2,904 2,860
---------------------------- ---------- --------
Goodwill has increased by GBP135 million to GBP3,189 million largely as a result of foreign exchange movements for goodwill held relating to the Nordics and Spain, and additions of GBP3 million relating to the acquisition of 10 FONA stores in Denmark.
The net working capital liability has decreased by GBP22 million to GBP339 million, largely as a result of the increase in the carrying value of ongoing network commission receivables. Overall net debt has increased by GBP18 million as described in the cashflow section above.
Tax, pension and other liabilities have increased by GBP167 million largely as a result of the increase in the UK defined benefit pension scheme of GBP174 million, offset by a decrease in deferred consideration of GBP10 million as a result of payments made during the year.
Cash flow statement
H1 16/17 H1 15/16
GBPm GBPm
---------------------------------------- -------------------- --------------------
EBIT 121 100
Depreciation and amortisation 92 85
Working capital (21) 11
Other operating cash flows (19) (22)
---------------------------------------- -------------------- --------------------
Cash flows from operating activities 173 174
Acquisitions (18) (26)
Investment in joint venture (16) -
Capital expenditure (112) (110)
Cash flows from investing activities (146) (136)
Dividends paid (75) (69)
Other financing cash flows (29) 56
Cash flows from financing activities (104) (13)
Cash flows from continuing operations (77) 25
Cash flows from discontinued operations 16 (9)
---------------------------------------- -------------------- --------------------
(61) 16
---------------------------------------- -------------------- --------------------
The statutory EBIT for the Group has increased for the reasons discussed in the performance section above. The statutory EBIT includes the charges of GBP32 million relating to the 'Non-Headline' items. Depreciation and amortisation charges remained relatively consistent in the period. Working capital movements are largely as a result of timing variances. Acquisitions outflows in the current period of GBP18 million relate to GBP10 million deferred consideration payment for the acquisition of Simplifydigital, GBP2 million in the Nordics in relation to the 'Epoq' kitchen business acquired in 2011/12 and GBP6 million for the acquisition of 10 FONA stores in Denmark. Investment in joint venture of GBP16 million relates to further contributions into the Sprint joint venture.
Other financing cash flows of GBP29 million primarily relate to the repayment and drawdown of cash under the revolving credit facilities.
Comprehensive income / changes in equity
Total equity for the Group has increased from GBP2,860 million to GBP2,904 million primarily reflecting the total statutory profit of GBP93 million in the period, the gain on retranslation of overseas operations of GBP180 million, the payment of dividends of GBP75 million and the increase in the IAS19 defined benefit pensions deficit for the UK pension scheme, reflecting the change in discount and inflation rates in the period, resulting in an actuarial loss of GBP184 million.
Pensions
The IAS 19 accounting deficit of the defined benefit section of the UK pension scheme amounted to GBP646 million at 29 October 2016 (31 October 2015: GBP423 million, 30 April 2016: GBP472 million). Contributions during the period under the terms of the deficit reduction plan amounted to GBP18 million (2015/16: GBP18 million).
The deficit has increased during the first half largely as a result of changes in financial assumptions, primarily the discount and inflation rates, which determine liabilities, partially offset by an increase in asset values.
Dividends
The Board has declared an interim dividend of 3.5p per share, up from 3.25p per share last year. The ex-dividend date is 29 December 2016, with a record date of 30 December 2016 and an intended payment date of 27 January 2017.
Financial Information
Consolidated income statement
26 weeks ended 26 weeks ended
29 October 2016 31 October 2015
Unaudited Unaudited
------------------------------- -------------------------------
Headline* Non-Headline* Total Headline* Non-Headline* Total
Note GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------ ---- --------- ------------- ----- --------- ------------- -----
Continuing operations
Revenue 2 4,869 - 4,869 4,394 - 4,394
------------------------------ ---- --------- ------------- ----- --------- ------------- -----
Profit / (loss) from
operations before
share of results of
joint venture 161 (32) 129 135 (35) 100
Share of results of
joint venture (8) - (8) - - -
------------------------------ ---- --------- ------------- ----- --------- ------------- -----
Profit / (loss) before
interest and tax 2,3 153 (32) 121 135 (35) 100
------------------------------ ---- --------- ------------- ----- --------- ------------- -----
Finance income 7 - 7 9 - 9
Finance costs (16) (8) (24) (23) (8) (31)
------------------------------ ---- --------- ------------- ----- --------- ------------- -----
Net finance costs (9) (8) (17) (14) (8) (22)
------------------------------ ---- --------- ------------- ----- --------- ------------- -----
Profit / (loss) before
tax 144 (40) 104 121 (43) 78
Income tax (expense)
/ credit 4 (19) 8 (11) (35) 12 (23)
------------------------------ ---- --------- ------------- ----- --------- ------------- -----
Profit / (loss) after
tax - continuing operations 125 (32) 93 86 (31) 55
Loss after tax - discontinued
operations 10 - - - - (9) (9)
Profit / (loss) after
tax for the period 125 (32) 93 86 (40) 46
Earnings per share
(pence) 5
------------------------------ ---- --------- ------------- ----- --------- ------------- -----
Basic - continuing
operations 10.9p 8.1p 7.5p 4.8p
Diluted - continuing
operations 10.7p 8.0p 7.2p 4.6p
Basic - total 8.1p 4.0p
Diluted - total 8.0p 3.9p
* Headline results exclude amortisation of acquisition intangibles, Merger integration and transformation costs, property rationalisation costs, acquisition related costs, net interest on defined benefit pension schemes and discontinued operations (comprising Phone House operations in Germany, Netherlands and Portugal). Such excluded items are described as 'Non-Headline'. For further details see notes 3 and 10.
Consolidated income statement
Year ended 30 April
2016
Audited
-------------------------------
Headline* Non-Headline* Total
Note GBPm GBPm GBPm
------------------------------ ---- --------- ------------- -----
Continuing operations
Revenue 2 9,738 - 9,738
------------------------------ ---- --------- ------------- -----
Profit / (loss) from
operations before
share of results of
joint venture 2,3 472 (164) 308
Share of results of
joint venture (4) - (4)
------------------------------ ---- --------- ------------- -----
Profit / (loss) before
interest and tax 468 (164) 304
------------------------------ ---- --------- ------------- -----
Finance income 17 - 17
Finance costs (38) (20) (58)
------------------------------ ---- --------- ------------- -----
Net finance costs (21) (20) (41)
------------------------------ ---- --------- ------------- -----
Profit / (loss) before
tax 447 (184) 263
Income tax (expense)
/ credit 4 (110) 26 (84)
------------------------------ ---- --------- ------------- -----
Profit / (loss) after
tax - continuing operations 337 (158) 179 Loss after tax - discontinued operations 10 - (18) (18) Profit / (loss) after tax for the period 337 (176) 161 Earnings per share (pence) 5 ------------------------------ ---- --------- ------------- ----- Basic - continuing operations 29.3p 15.6p Diluted - continuing operations 28.4p 15.1p Basic - total 14.0p Diluted - total 13.6p
* Headline results exclude amortisation of acquisition intangibles, Merger integration and transformation costs, property rationalisation costs, acquisition related costs, net interest on defined benefit pension schemes and discontinued operations (comprising Phone House operations in Germany, Netherlands and Portugal). Such excluded items are described as 'Non-Headline'. For further details see notes 3 and 10.
Consolidated statement of comprehensive income
26 weeks 26 weeks Year
ended ended ended
29 31 30
October October April
2016 2015 2016
Unaudited Unaudited Audited
GBPm GBPm GBPm
------------------------------------------------------------------------------------------------------------------------ --------- --------- -------
Profit for the period 93 46 161
Items that may be reclassified
to the income statement in subsequent
years:
Cash flow hedges
Fair value remeasurement gains
/ (losses) 28 2 (12)
Revaluation of held for sale investments - 5 -
Exchange gain / (loss) arising
on translation of foreign operations 180 (71) 66
Other foreign exchange differences - (3) 2
------------------------------------------------------------------------------------------------------------------------- --------- --------- -------
208 (67) 56
------------------------------------------------------------------------------------------------------------------------ --------- --------- -------
Items that will not be reclassified
to the income statement in subsequent
years:
Actuarial (losses) / gains on defined
benefit pension schemes - UK (184) 54 (5)
- Overseas 1 - 2
Deferred tax on actuarial (losses)
/ gains on defined benefit pension
schemes (5) (20) (9)
(188) 34 (12)
------------------------------------------------------------------------------------------------------------------------ --------- --------- -------
Other comprehensive income / (expense)
for the period 20 (33) 44
------------------------------------------------------------------------------------------------------------------------- --------- --------- -------
Total comprehensive income / (expense)
for the period 113 13 205
------------------------------------------------------------------------------------------------------------------------- --------- --------- -------
Consolidated balance sheet
29 October 31 October 30 April
2016 2015 2016
Unaudited Unaudited Audited
Note GBPm GBPm GBPm
-------------------------------------- ---- ---------- ---------- --------
Non-current assets
Goodwill 3,189 2,928 3,054
Intangible assets 558 503 540
Property, plant & equipment 413 356 366
Interests in joint venture 12 - 5
Trade and other receivables 447 316 408
Deferred tax assets 223 225 234
-------------------------------------- ---- ---------- ---------- --------
4,842 4,328 4,607
-------------------------------------- ---- ---------- ---------- --------
Current assets
Inventory 1,348 1,186 958
Trade and other receivables 1,305 1,021 1,131
Short term investments - 53 -
Cash and cash equivalents 215 182 233
2,868 2,442 2,322
Total assets 7,710 6,770 6,929
-------------------------------------- ---- ---------- ---------- --------
Current liabilities
Trade and other payables (2,929) (2,319) (2,310)
Deferred and contingent consideration (2) (2) (12)
Income tax payable (82) (89) (89)
Loans and other borrowings (15) (55) -
Finance lease obligations (2) (2) (2)
Provisions (92) (53) (78)
(3,122) (2,520) (2,491)
-------------------------------------- ---- ---------- ---------- --------
Non-current liabilities
Trade and other payables (395) (498) (423)
Deferred and contingent consideration (21) (3) (21)
Loans and other borrowings (396) (415) (409)
Finance lease obligations (87) (88) (89)
Retirement benefit obligations 7 (649) (426) (474)
Deferred tax liabilities (113) (93) (115)
Provisions (23) (22) (47)
(1,684) (1,545) (1,578)
Total liabilities (4,806) (4,065) (4,069)
-------------------------------------- ---- ---------- ---------- --------
Net assets 2,904 2,705 2,860
-------------------------------------- ---- ---------- ---------- --------
Capital and reserves
Share capital 1 1 1
Share premium reserve 2,256 2,256 2,256
Accumulated profits 1,262 1,385 1,398
Translation reserve 135 (187) (45)
Demerger reserve (750) (750) (750)
Equity attributable to equity holders
of the parent company 2,904 2,705 2,860
-------------------------------------- ---- ---------- ---------- --------
Consolidated statement of changes in equity
Share
Share premium Accumulated Translation Demerger Total
capital reserve profits reserve reserve equity
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- -------- -------- ----------- ----------- -------- -------
At 1 May 2016 1 2,256 1,398 (45) (750) 2,860
Profit for the period - - 93 - - 93
Other comprehensive
income and expense
recognised directly
in equity - - (160) 180 - 20
-------------------------- -------- -------- ----------- ----------- -------- -------
Total comprehensive
income and expense
for the period - - (67) 180 - 113
Net purchase of own
shares - - - - - -
Equity dividends - - (75) - - (75)
Net movement in relation
to share schemes - - 6 - - 6
At 29 October 2016 1 2,256 1,262 135 (750) 2,904
-------------------------- -------- -------- ----------- ----------- -------- -------
Share
Share premium Accumulated Translation Demerger Total
capital reserve profits reserve reserve equity
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- -------- -------- ----------- ----------- -------- -------
At 2 May 2015 1 2,256 1,369 (113) (750) 2,763
Profit for the period - - 46 - - 46
Other comprehensive
income and expense
recognised directly
in equity - - 41 (74) - (33)
-------------------------- -------- -------- ----------- ----------- -------- -------
Total comprehensive
income and expense
for the period - - 87 (74) - 13
Net purchase of own
shares - - (7) - - (7)
Equity dividends - - (69) - - (69)
Net movement in relation
to share schemes - - 5 - - 5
At 31 October 2015 1 2,256 1,385 (187) (750) 2,705
-------------------------- -------- -------- ----------- ----------- -------- -------
Share
Share premium Accumulated Translation Demerger Total
capital reserve profits reserve reserve equity
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- -------- -------- ----------- ----------- -------- -------
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 - - (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
-------------------------- -------- -------- ----------- ----------- -------- -------
Consolidated cash flow statement
26 weeks 26 weeks Year
ended ended ended
29 31 30
October October April
2016 2015 2016
Unaudited Unaudited Audited
Note GBPm GBPm GBPm
------------------------------------------- ---- ---------- ---------- --------
Operating activities - continuing
operations
Cash inflow from operations 9 207 204 485
Special contributions to defined
benefit pension scheme (18) (18) (35)
Income tax paid (16) (12) (56)
-------------------------------------------- ---- ---------- ---------- --------
Net cash flows from operating activities 173 174 394
-------------------------------------------- ---- ---------- ---------- --------
Investing activities - continuing
operations
Acquisition of property, plant &
equipment and other intangibles (112) (110) (221)
Net cash outflow arising from acquisitions (18) (26) (50)
Proceeds from disposal of property,
plant & equipment - - 24
Investment in joint venture (16) - (9)
Net cash flows from investing activities (146) (136) (256)
-------------------------------------------- ---- ---------- ---------- --------
Financing activities - continuing
operations
Interest paid (11) (11) (20)
Facility arrangement fees paid (3) (5) (5)
Repayment of obligations under finance
leases (1) (4) (6)
Net purchase of own shares - (7) (5)
Equity dividends paid (75) (69) (106)
(Decrease) / increase in borrowings (14) 83 25
Net cash flows from financing activities (104) (13) (117)
-------------------------------------------- ---- ---------- ---------- --------
(Decrease) / increase in cash and
cash equivalents
Continuing operations (77) 25 21
Discontinued operations 10 16 (9) 32
-------------------------------------------- ---- ---------- ---------- --------
(61) 16 53
------------------------------------------- ---- ---------- ---------- --------
Cash and cash equivalents at beginning
of the period 233 163 163
Currency translation differences 28 3 17
-------------------------------------------- ---- ---------- ---------- --------
Cash and cash equivalents at end
of the period 200 182 233
-------------------------------------------- ---- ---------- ---------- --------
Notes to the financial information
1 Basis of preparation
The interim financial information for the 26 weeks ended 29 October 2016 was approved by the directors on 13 December 2016. The interim financial information, which is a condensed set of financial statements, has been prepared in accordance with the Listing Rules of the Financial Conduct Authority and International Accounting Standard 34 'Interim Financial Reporting' (IAS 34) as adopted by the European Union and has been prepared on the going concern basis as described further in the section on risks to achieving the Group's objectives.
The accounting policies adopted are those set out in the Group's Annual Report and Accounts for the year ended 30 April 2016 which were prepared in accordance with IFRS as adopted by the European Union. New accounting standards, amendments to standards and IFRIC interpretations which became applicable during the period were either not relevant or had no impact on the Group's net results or net assets.
The interim financial information uses definitions that are set out on pages 154 to 156 of the same document.
The interim financial information is unaudited and does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006, but has been reviewed by the auditor. The financial information for the year ended 30 April 2016 does not constitute the Company's statutory accounts for that period but has been extracted from those accounts which have been filed with the Registrar of Companies and are also available on the Group's corporate website www.dixonscarphone.com. The auditor has reported on those accounts, their report was unqualified, did not draw attention to any matters by way of emphasis, and did not contain statements under Sections 498 (2) or (3) of the Companies Act 2006.
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.
Headline results are stated before the results of discontinued operations or exited / to be exited businesses, amortisation of acquisition intangibles, acquisition related costs, any exceptional items considered so one-off and material that they distort underlying performance (such as reorganisation costs, impairment charges, property rationalisation costs and other non-recurring charges) and net pension interest costs. 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 and operations of the Group.
Non-Headline items in the current and prior periods comprise amortisation of acquisition intangibles, Merger integration and transformation costs, property rationalisation costs, acquisition related costs, net interest on defined benefit pension schemes 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 operates four operating segments as described below. Discontinued operations are excluded from this segmental analysis.
The Group's reportable segments have been identified as follows:
-- UK & Ireland comprises operations in the UK and Ireland and the Dixons Travel business. -- 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, and the Group's share of results of the Sprint Connect joint venture.
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)
(a) Segmental results
26 weeks ended
29 October 2016
------------------ -------- ------- --------- ------------------------------
Connected
UK & Southern World
Ireland Nordics Europe Services Eliminations Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------ -------- ------- --------- --------- ------------ -----
Headline external
revenue 2,988 1,474 309 98 - 4,869
Inter-segmental
revenue 28 - - - (28) -
-------------------- -------- ------- --------- --------- ------------ -----
Total Headline
revenue 3,016 1,474 309 98 (28) 4,869
-------------------- -------- ------- --------- --------- ------------ -----
Headline EBIT
before share of
results of joint
venture 109 34 5 13 - 161
-------------------- -------- ------- --------- --------- ------------ -----
Share of Headline
results of joint
venture - - - (8) - (8)
-------------------- -------- ------- --------- --------- ------------ -----
Headline EBIT 109 34 5 5 - 153
-------------------- -------- ------- --------- --------- ------------ -----
Reconciliation of Headline profit to total profit
26 weeks ended
29 October 2016
------------------------- --------- --------------- -------------------------- ---------
Merger
integration
Headline Amortisation and Pension Total
profit of acquisition transformation scheme profit
/ (loss) intangibles costs interest / (loss)
GBPm GBPm GBPm GBPm GBPm
------------------------- --------- --------------- --------------- --------- ---------
UK & Ireland 109 (9) (15) - 85
Nordics 34 (6) - - 28
Southern Europe 5 (1) - - 4
Connected World Services 13 (1) - - 12
EBIT before share
of results of joint
venture 161 (17) (15) - 129
Share of results of
joint venture (8) - - - (8)
--------------------------- --------- --------------- --------------- --------- ---------
EBIT 153 (17) (15) - 121
Finance income 7 - - - 7
Finance costs (16) - - (8) (24)
--------------------------- --------- --------------- --------------- --------- ---------
Profit / (loss) before
tax 144 (17) (15) (8) 104
--------------------------- --------- --------------- --------------- --------- ---------
2 Segmental analysis (continued)
(a) Segmental results
26 weeks ended
31 October 2015
------------------ -------- ------- --------- ------------------------------
Connected
UK & Southern World
Ireland Nordics Europe Services Eliminations Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------ -------- ------- --------- --------- ------------ -----
Headline external
revenue 2,872 1,198 257 67 - 4,394
Inter-segmental
revenue 33 - - - (33) -
-------------------- -------- ------- --------- --------- ------------ -----
Total Headline
revenue 2,905 1,198 257 67 (33) 4,394
-------------------- -------- ------- --------- --------- ------------ -----
Headline EBIT
before share of
results of joint
venture 101 30 1 3 - 135
-------------------- -------- ------- --------- --------- ------------ -----
Share of Headline
results of joint -
venture - - - - -
------------------ -------- ------- --------- --------- ------------ -----
Headline EBIT 101 30 1 3 - 135
-------------------- -------- ------- --------- --------- ------------ -----
Reconciliation of Headline profit to total profit
26 weeks ended
31 October 2015
-------------------------- --------- --------------- -----------------------------
Headline Amortisation Dixons Pension Total
profit of acquisition Retail scheme profit
/ (loss) intangibles Merger interest / (loss)
GBPm GBPm GBPm GBPm GBPm
-------------------------- --------- --------------- ------- --------- ---------
UK & Ireland 101 (12) - - 89
Nordics 30 (6) - - 24
Southern Europe 1 (1) - - -
Connected World Services 3 (1) - - 2
Unallocated - - (15) - (15)
EBIT before share of
results of joint venture 135 (20) (15) - 100
Share of results of -
joint venture - - - -
-------------------------- --------- --------------- ------- --------- ---------
EBIT 135 (20) (15) - 100
Finance income 9 - - - 9
Finance costs (23) - - (8) (31)
---------------------------- --------- --------------- ------- --------- ---------
Profit / (loss) before
tax 121 (20) (15) (8) 78
---------------------------- --------- --------------- ------- --------- ---------
2 Segmental analysis (continued)
(a) Segmental results (continued)
Year ended 30
April 2016
------------------ -------- ------- --------- ------------------------------
Connected
UK & Southern World
Ireland Nordics Europe Services Eliminations Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------ -------- ------- --------- --------- ------------ -----
Headline external
revenue 6,404 2,632 550 152 - 9,738
Inter-segmental
revenue 60 - - - (60) -
-------------------- -------- ------- --------- --------- ------------ -----
Total Headline
revenue 6,464 2,632 550 152 (60) 9,738
-------------------- -------- ------- --------- --------- ------------ -----
Headline EBIT
before share of
results of joint
venture 365 79 17 11 - 472
Share of Headline
results of joint
venture - - - (4) - (4)
Headline EBIT 365 79 17 7 - 468
-------------------- -------- ------- --------- --------- ------------ -----
Reconciliation of Headline profit to total profit
Year ended 30
April 2016
-------------------------- --------- --------------- ------- ---------------- ---------------------------------
Headline Amortisation Dixons Property Pension Total
profit of acquisition Retail rationalisation Acquisition scheme profit
/ (loss) intangibles Merger costs related interest / (loss)
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- --------- --------------- ------- ---------------- ----------- --------- ---------
UK & Ireland 365 (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 venture 472 (40) (48) (70) (6) - 308
Share of results of
joint venture (4) - - - - - (4)
-------------------------- --------- --------------- ------- ---------------- ----------- --------- ---------
EBIT 468 (40) (48) (70) (6) - 304
Finance income 17 - - - - - 17
Finance costs (38) - (4) - - (16) (58)
-------------------------- --------- --------------- ------- ---------------- ----------- --------- ---------
Profit / (loss) before
tax 447 (40) (52) (70) (6) (16) 263
-------------------------- --------- --------------- ------- ---------------- ----------- --------- ---------
(b) Seasonality
The Group's business is highly seasonal, with a substantial proportion of its revenue and EBIT generated during its third quarter, which includes the Christmas and New Year season.
3 Non-Headline items
26 weeks 26 weeks Year
ended ended ended
29 October 31 October 30 April
2016 2015 2016
Note GBPm GBPm GBPm
------------------------------------------ ------ ----------- ----------- ----------
Included in profit / (loss) before
interest and tax:
Amortisation of acquisition intangibles (i) (17) (20) (40)
Merger and transformation related
costs (ii) (15) (15) (48)
Property rationalisation costs (iii) - - (70)
Acquisition related (iv) - - (6)
(32) (35) (164)
------------------------------------------------- ----------- ----------- ----------
Included in net finance costs:
Net non-cash finance costs on defined
benefit pension schemes (v) (8) (8) (16)
Merger and transformation related
costs (ii) - - (4)
------------------------------------------ ------ ----------- ----------- ----------
Total impact on profit / (loss) before
tax (40) (43) (184)
-------------------------------------------------- ----------- ----------- ----------
Tax on Non-Headline items 8 12 26
-------------------------------------------------- ----------- ----------- ----------
Total impact on profit / (loss) after
tax (32) (31) (158)
-------------------------------------------------- ----------- ----------- ----------
Non-Headline items also include discontinued operations, which comprise the results of the Phone House operations in Germany, the Netherlands and Portugal. The post-tax results of these businesses have been reported separately and are further described in note 10.
(i) Amortisation of acquisition intangibles:
This relates to acquisition intangibles arising on the CPW Europe Acquisition, the Dixons Retail Merger and Simplifydigital acquisition.
(ii) Merger and transformation related costs:
The Merger has given rise to the following costs which have been treated as non-Headline:
-- Merger integration costs of GBP9 million (2015/16: GBP15 million, year ended 30 April 2016: GBP48 million) 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. In H1 2015/16, the cost recognised of GBP6 million primarily relates 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 half year.
(iii) 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, were treated as exceptional items in the year ended 30 April 2016.
(iv) Acquisition related:
Acquisition related comprised an increase in the deferred consideration payable on a business acquired by Dixons in the Nordics in 2011/12 (GBP5 million), which was recorded in the second half of 2015/16, and costs incurred in the acquisition of Simplifydigital and InfoCare incurred in the same period.
(v) Net non-cash financing costs on defined benefit pension schemes:
The net interest charge on defined benefit pension schemes represents the non-cash remeasurement calculated by applying the corporate bond yield rates applicable on the last day of the previous financial year to the net defined benefit obligation. As a non-cash remeasurement cost which is unrepresentative of the actual investment gains or losses made or the liabilities paid and payable the accounting effects of this is excluded from Headline earnings.
4 Tax
The Group's Headline effective rate of taxation before one off tax charges / credits for the full year has been estimated at 23% (2015/16: 25%) with this rate being applied to the half year results. The rate is higher than the UK statutory rate of 20% due mainly to higher statutory rates in the Nordics, and certain non-deductible items mainly in the UK. In calculating the total tax charge for the half year, a one-off tax credit of GBP16 million has been recognised following successful resolution of a prior year tax issue, which results in a total effective rate of taxation on Headline earnings of 13%, with an effective rate of taxation on Non-Headline earnings of 20%. The total statutory effective rate of taxation is 11%.
The UK corporation tax rate for the 26 weeks ended 29 October 2016 was 20% (26 weeks ended 31 October 2015: 20%).
5 Earnings / (loss) per share
26 weeks 26 weeks Year
ended ended ended
29 October 31 October 30 April
2016 2015 2016
GBPm GBPm GBPm
------------------------------------------- ----------- ----------- ----------
Headline earnings
Continuing operations 125 86 337
Total earnings / (loss)
Continuing operations 93 55 179
Discontinued operations - (9) (18)
-------------------------------------------- ----------- ----------- ----------
Total 93 46 161
-------------------------------------------- ----------- ----------- ----------
Million Million Million
------------------------------------------- ----------- ----------- ----------
Weighted average number of shares
Average shares in issue 1,152 1,151 1,151
Less average holding by Group ESOT (1) (1) (1)
-------------------------------------------- ----------- ----------- ----------
For basic earnings per share 1,151 1,150 1,150
Dilutive effect of share options and
other incentive schemes 12 41 38
For diluted earnings per share 1,163 1,191 1,188
-------------------------------------------- ----------- ----------- ----------
Pence Pence Pence
------------------------------------------- ----------- ----------- ----------
Basic earnings / (loss) per share
Total (continuing and discontinued
operations) 8.1 4.0 14.0
Adjustment in respect of discontinued
operations - 0.8 1.6
-------------------------------------------- ----------- ----------- ----------
Continuing operations 8.1 4.8 15.6
Adjustments for non-Headline items
- continuing operations (net of taxation) 2.8 2.7 13.7
-------------------------------------------- ----------- ----------- ----------
Headline basic earnings per share 10.9 7.5 29.3
-------------------------------------------- ----------- ----------- ----------
Diluted earnings / (loss) per share
Total (continuing and discontinued
operations) 8.0 3.9 13.6
Adjustment in respect of discontinued
operations - 0.7 1.5
-------------------------------------------- ----------- ----------- ----------
Continuing operations 8.0 4.6 15.1
Adjustments for non-Headline items
- continuing operations (net of taxation) 2.7 2.6 13.3
-------------------------------------------- ----------- ----------- ----------
Headline diluted earnings per share 10.7 7.2 28.4
-------------------------------------------- ----------- ----------- ----------
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.
6 Dividends
26 weeks 26 weeks Year
ended ended ended
29 October 31 October 30 April
2016 2015 2016
GBPm GBPm GBPm
--------------------------------------- ----------- ----------- ----------
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 - 69 69
Interim dividend for the year ended
30 April 2016 of 3.25p - - 37
Final dividend for the year ended
30 April 2016 of 6.50p 75 - -
---------------------------------------- ----------- ----------- ----------
75 69 106
--------------------------------------- ----------- ----------- ----------
The proposed interim dividend for the year ending 29 April 2017 is 3.50p per share. The expected cost of this dividend is GBP40 million and incorporates the agreement of the Group's Employee Share Ownership Trust to waive its rights to receive dividends.
7 Retirement benefit obligations
29 October 31 October 30 April
2016 2015 2016
GBPm GBPm GBPm
--------------------------------------------------------- ---------- ---------- --------
Retirement benefit obligations
- UK 646 423 472
- Nordics 3 3 2
Net obligation 649 426 474
----------------------------------------------------------- ---------- ---------- --------
The Group operates a number of defined contribution and defined benefit pension schemes. The principal scheme operates in the UK and includes a funded defined benefit section, the assets of which are held in a separate trustee administered fund. The defined benefit section of the scheme was closed to future accrual on 30 April 2010. The net obligations of this scheme, calculated in accordance with IAS 19, are analysed as follows:
29 October 31 October 30 April
2016 2015 2016
GBPm GBPm GBPm
--------------------------------- ---------- ---------- --------
Fair value of plan assets 1,109 913 923
Present value of defined benefit
obligations (1,755) (1,336) (1,395)
Net obligation (646) (423) (472)
----------------------------------- ---------- ---------- --------
The value of obligations is particularly sensitive to the discount rate applied to liabilities at the assessment date as well as mortality rates. The value of the plan assets is sensitive to market conditions, particularly equity values. The assumptions used in the valuation of obligations are listed below:
29 October 31 October 30 April
2016 2015 2016
-------------------------------- ------------- ---------- ---------- --------
Rates per annum:
Discount rate 2.75% 3.85% 3.50%
Rate of increase in pensions - pre April
in payment / deferred pensions 2006 3.30% 2.90% 2.90%
- post April
2006 2.25% 1.90% 2.10%
Inflation 3.40% 3.10% 2.95%
----------------------------------------------- ---------- ---------- --------
Mortality rates are based on historical experience and standard actuarial tables and include an allowance for future improvements in longevity.
8 Financial instruments, loans and other borrowings
The Group holds the following financial instruments at fair value:
29 October 31 October 30 April
2016 2015 2016
GBPm GBPm GBPm
-------------------------------------- ---------- ---------- --------
Short-term investments - 53 -
Net derivative financial instruments 10 5 (24)
Deferred and contingent consideration (23) (5) (33)
---------------------------------------- ---------- ---------- --------
The fair value of short-term investments have values determined by 'Level 1' inputs as defined by the fair value hierarchy of IFRS 13 'Fair Value Measurement'. Short-term investments comprised shares held in Drillisch AG, a telecommunications providers and listed stock corporation in Germany, which were received as consideration regarding the disposal of Phone House Germany.
The significant inputs required to fair value the Group's currency contracts and interest rate swaps, are observable and are classified as 'Level 2' in the fair value hierarchy.
Deferred and contingent consideration is categorised as 'Level 3' in the fair value hierarchy as the valuation requires the use of significant unobservable inputs. The fair value of contingent consideration arrangements has been estimated by applying the income approach. A reduction in growth assumptions used in the fair value methodology would result in a reduction in the amount of contingent consideration payable. The movement in deferred and contingent consideration during the period is due to cash payments of the amounts due.
Fair values have been arrived at by discounting future cash flows (where the impact of discounting is material), assuming no early redemption, or by revaluing forward currency contracts and interest rate swaps to period end market rates as appropriate to the instrument.
Network commission receivables are classified as loans and receivables as defined in IAS 39 and are therefore accounted for at amortised cost. The carrying value of such network commission receivables is GBP961 million (31 October 2015: GBP716 million, 30 April 2016: GBP904 million) which is approximately equal to their fair value.
There have been no transfers of assets or liabilities between levels of the fair value hierarchy. For all other financial assets and liabilities, the carrying amount approximates their fair value.
On 8 October 2015 the Group signed a new multi-currency revolving credit facility for GBP800 million, which matures in October 2020 and replaced the multi-currency term and revolving credit facility which was previously in place. On 7 October 2016 this facility was extended to mature in October 2021.
On 7 October 2016 a further GBP250 million multi-currency revolving credit facility was signed which matures in 2020. In addition, on 28 October 2016, an additional EUR50 million term loan facility was also signed, which also matures in 2020.
The main terms and conditions of all these facilities are similar.
9 Note to the cash flow statement
26 weeks 26 weeks Year
ended ended ended
29 October 31 October 30 April
2016 2015 2016
GBPm GBPm GBPm
-------------------------------------------- ----------- ----------- ----------
Profit before interest and tax - continuing
operations 121 100 304
Depreciation and amortization 92 85 177
Share-based payment charge 6 7 10
Share of results of joint venture 8 - 4
Impairments and other non-cash items 1 1 4
Operating cash flows before movements
in working capital 228 193 499
Movements in working capital:
Increase in inventory (321) (294) (18)
Increase in receivables (157) (106) (247)
Increase in payables 471 416 168
(Decrease) / increase in provisions (14) (5) 83
-------------------------------------------- ----------- ----------- ----------
(21) 11 (14)
-------------------------------------------- ----------- ----------- ----------
Cash inflow from operations 207 204 485
-------------------------------------------- ----------- ----------- ----------
Restricted funds, which predominantly comprise funds held under trust to fund potential customer support agreement liabilities and cash held by the Group's insurance business for regulatory reserve requirements, were GBP58m (31 October 2015: GBP91 million; 30 April 2016: GBP67 million).
Reconciliation of cash inflow from operations to free cash flow
26 weeks 26 weeks Year
ended ended ended
29 October 31 October 30 April
2016 2015 2016
GBPm GBPm GBPm
--------------------------------------- ----------- ----------- ----------
Cash inflow from operations 207 204 485
Taxation (16) (12) (56)
Interest, facility arrangement fees
and repayment of finance leases (15) (20) (31)
Capital expenditure (112) (110) (221)
Proceeds from disposal of fixed assets - - 24
Other movements 1 2 1
--------------------------------------- ----------- ----------- ----------
Free cash flow 65 64 202
--------------------------------------- ----------- ----------- ----------
Reconciliation of Net Debt
26 weeks 26 weeks Year
ended ended ended
29 October 31 October 30 April
2016 2015 2016
GBPm GBPm GBPm
--------------------------- ----------- ----------- ----------
Cash 215 182 233
Loans and other borrowings (411) (470) (409)
Finance lease obligations (89) (90) (91)
(285) (378) (267)
--------------------------- ----------- ----------- ----------
10 Discontinued operations and assets held for sale
As previously reported the sale of operations in Germany was completed on 5 May 2015, the Netherlands on 30 June 2015 and Portugal on 31 August 2015. No profit or loss has been recognised in relation to these businesses in the 26 weeks ended 29 October 2016 (31 October 2015: GBP9 million; 30 April 2016: GBP18 million).
(a) Loss after tax - discontinued operations
There was no revenue, expenses or profit / (loss) on disposal of discontinued operations in the 26 weeks ended 29 October 2016. The results of discontinued operations in previous periods are comprised as follows:
26 weeks ended
31 October 2015
---------------------------- -------- ------------------------------
Phone Phone Phone
House House House
Germany Netherlands Portugal Total
GBPm GBPm GBPm GBPm
---------------------------- -------- ------------ --------- -----
Revenue - 19 13 32
Expenses - (20) (16) (36)
------------------------------ -------- ------------ --------- -----
- (1) (3) (4)
(Loss) / profit on disposal (7) (2) 4 (5)
------------------------------ -------- ------------ --------- -----
(7) (3) 1 (9)
---------------------------- -------- ------------ --------- -----
Year ended 30
April 2016
---------------------------- -------- ------------------------------
Phone Phone Phone
House House House
Germany Netherlands Portugal Total
GBPm GBPm GBPm GBPm
---------------------------- -------- ------------ --------- -----
Revenue - 19 13 32
Expenses - (20) (16) (36)
------------------------------ -------- ------------ --------- -----
- (1) (3) (4)
(Loss) / profit on disposal (10) (6) 2 (14)
(10) (7) (1) (18)
---------------------------- -------- ------------ --------- -----
(b) Cash flows from discontinued operations
26 weeks 26 weeks Year
ended ended ended
29 October 31 October 30 April
2016 2015 2016
GBPm GBPm GBPm
--------------------- ----------- ----------- ----------
Operating activities - 2 2
Investing activities 16 (11) 30
--------------------- ----------- ----------- ----------
16 (9) 32
--------------------- ----------- ----------- ----------
The cash inflow from investing activities relates to the cash receipt of the working capital payment in relation to the disposal of the Group's retail operations in Germany.
11 Contingent liabilities
29 October 31 October 30 April
2016 2015 2016
GBPm GBPm GBPm
----------------------- ---------- ---------- --------
Contingent liabilities - 3 -
----------------------- ---------- ---------- --------
In addition to the figures shown in the table above, contingent liabilities exist in respect of lease covenants relating to premises assigned to third parties.
In recent years the Group has entered into agreements to dispose of certain operations. As part of these disposal agreements, the Group has provided the acquirer with general and tax related warranties. Some of these warranties remain open and it is possible that claims could arise under these warranties.
Due to the nature of these contingent liabilities, it is not practicable to estimate their timing or possible financial impact.
12 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:
26 weeks 26 weeks Year
ended ended ended
29 October 31 October 30 April
2016 2015 2016
GBPm GBPm GBPm
------------------------------ ----------- ----------- ----------
Revenue for services provided 5 8 24
Amounts owed to the Group 5 5 2
------------------------------ ----------- ----------- ----------
All transactions entered into with related parties were completed on an arm's length basis.
Risks to achieving the Group's objectives
The Board continually reviews and monitors the 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. A potential 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 action appropriate Health and Safety measures resulting in injury could give rise to reputational damage and financial penalties;
10. Failure to operate an effective fraud control environment may result in the loss of revenue and reputational damage; 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 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.
The directors have prepared the interim financial information on a going concern basis. In considering the going concern basis, the directors have considered the above mentioned principal risks and uncertainties, especially in the context of a highly competitive consumer and retail environment as well as the wider macro-economic environment and how these factors might influence the Group's objectives and strategy.
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 and that the Group has a robust policy towards liquidity and cash flow management.
Accordingly the directors have a reasonable expectation that the Group has 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.
Responsibility Statement
The directors confirm that to the best of their knowledge:
-- the interim financial information has been prepared in accordance with IAS 34 as adopted by the European Union;
-- the financial highlights, performance review and interim financial information include a fair review of the information required by DTR 4.2.7R (indication of important events during the first 26 weeks and description of principal risks and uncertainties for the remaining 26 weeks of the year); and
-- the financial highlights and performance review includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).
At the date of this statement, the directors are those listed in the Group's 2015-16 Annual Report and Accounts.
By order of the Board
Sebastian James Humphrey Singer Group Chief Executive Group Finance Director 13 December 2016 13 December 2016
Independent review report
To Dixons Carphone plc
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the interim statement for the 26 weeks ended 29 October 2016 which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated statement of changes in equity, the consolidated cash flow statement and related notes 1 to 12. We have read the other information contained in the interim statement and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The interim statement, including the condensed set of financial statements contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim statement in accordance with the Disclosure and Transparency Rules of the UK Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this interim statement has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting" (IAS 34) as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the interim statement based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed set of financial statements in the interim statement for the 26 weeks ended 29 October 2016 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the European Union and the Disclosure and Transparency Rules of the UK Financial Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
London, UK
13 December 2016
Retail Store Data
29 October 2016 30 April 2016
Own Franchise Own Franchise
stores stores Total stores stores Total
-------------------- -------- ---------- ------ -------- ---------- ------
UK Dixons 370 - 370 419 - 419
Ireland Dixons 22 - 22 28 - 28
UK Carphone 722 - 722 734 - 734
Ireland Carphone 86 - 86 90 - 90
---------------------- -------- ---------- ------ -------- ---------- ------
Total UK & Ireland 1,200 - 1,200 1,271 - 1,271
Norway 80 61 141 80 62 142
Sweden 114 46 160 118 39 157
Denmark 40 - 40 29 - 29
Finland 21 17 38 21 17 38
Other Nordics - 13 13 - 13 13
---------------------- -------- ---------- ------ -------- ---------- ------
Nordics 255 137 392 248 131 379
Greece 68 26 94 68 27 95
Spain 248 263 511 249 249 498
---------------------- -------- ---------- ------ -------- ---------- ------
Southern Europe 316 289 605 317 276 593
Total 1,771 426 2,197 1,836 407 2,243
---------------------- -------- ---------- ------ -------- ---------- ------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR AKNDPFBDDOBD
(END) Dow Jones Newswires
December 14, 2016 02:00 ET (07:00 GMT)
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