Share Name Share Symbol Market Type Share ISIN Share Description
Dixons Carphone Plc LSE:DC. London Ordinary Share GB00B4Y7R145 ORD 0.1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +2.45p +1.94% 128.85p 128.60p 128.70p 129.25p 123.45p 127.00p 4,139,043 16:35:11
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
General Retailers 10,433.0 -259.0 -27.6 - 1,498

Dixons Carphone PLC Dixons Carphone plc 2018/19 Preliminary Results

20/06/2019 7:15am

UK Regulatory (RNS & others)


Dixons Carphone (LSE:DC.)
Historical Stock Chart

6 Months : From Apr 2019 to Oct 2019

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TIDMDC.

RNS Number : 8658C

Dixons Carphone PLC

20 June 2019

Preliminary results for the 12 months to 27th April 2019

FY19 financial results in line with our plan

   --       Gained market share in Electricals in all territories 

-- Group FY like-for-like revenue(3) up 1%; UK & Ireland electricals like-for-like revenue(3) up 1%; International like-for-like revenue(3) up 4%; UK & Ireland mobile like-for-like revenue(3) down 4%

   --       Statutory revenue down 1% to GBP10,433 million 
   --       Group headline PBT(1) of GBP298 million (2017/18: GBP382 million): 

-- Statutory loss before tax of GBP259 million (2017/18: profit of GBP289 million), including non-headline charges of GBP557 million (2017/18: GBP93 million), primarily non-cash impairments relating to the changing UK mobile market, as outlined in December interim results, mainly goodwill(4)

-- Free cash flow(5) of GBP153 million (2017/18: GBP172 million). Operating cash flow of GBP286 million (2017/18: GBP312 million)

   --       Net debt(6) of GBP265 million (2017/18: GBP249 million) 

-- Final dividend of 4.50p proposed (2017/18: 7.75p), full year dividend at 6.75p (2017/18: 11.25p)

Alex Baldock, Group Chief Executive, said:

"The past year has seen us keep our promises to investors, delivering around GBP300 million of headline profit, resilient free cash flow, and continued growth in sales and market share in UK & Ireland electricals and International. And we've taken the first big strides in our transformation.

But we know we have it in us to be a much more valuable business. That will take time. In December, we set out a clear strategy to help everyone enjoy amazing technology, and early progress is promising.

In UK & Ireland electricals, we expect growing sales and headline profits this year and beyond. We've made significant gains in Credit and Online - both big profitable growth opportunities for us. Early steps towards an easier customer experience have seen satisfaction scores start to rise. And we've laid important foundations for Services to make our customer relationships stickier and more valuable.

The same focus on Credit, Online and Services will ensure our strong International business continues its trajectory of growing sales and market share, while further improving profitability.

In UK mobile, the market is changing in the way we described in December, but doing so faster. So, we're moving faster to respond: we've renegotiated all our legacy network contracts, we're developing our new customer offer, and are accelerating the integration of Mobile and Electricals into one business. This means taking more pain in the coming year, when Mobile will make a significant loss. But accelerating our transformation provides certainty that this year is the trough, as during next year the legacy contractual constraints on our Mobile business lift, and the integration cost benefits build. We expect Mobile will at least break even within two years, and beyond that, equipped with a stronger and unconstrained offer, we will of course aim to do better. In any case, cash generation from Mobile will be strong.

Overall, with investment in our transformation underpinning UK & Ireland electricals and International growth in sales and headline profits, and accelerating the changes in Mobile, we're confident to bring forward our long-term ambitions. We still commit to over GBP1 billion of Group free cash flow over the five year plan, but also to accelerate our GBP200 million cost reduction promise by two years, and our promise of at least 3.5% Group EBIT margins by a year.

I want to thank my tens of thousands of colleagues at Dixons Carphone for their unrelenting hard work. This business matters, not just to us, but to the millions of people whose lives we can improve through the power of amazing technology. So it's with a sense of responsibility that we commit to transforming Dixons Carphone into a world class business for colleagues, customers and shareholders. We believe we will."

5 year transformation plan: earlier forecast delivery of Group cost savings and margin

-- Group headline EBIT margin improvement to at least 3.5% by FY23, a year earlier than originally planned

-- Underpinned by GBP200 million of identified gross cost savings, delivered two years earlier by FY22, with more thereafter

-- Combination of transformation benefits and Mobile improvement to drive headline PBT to over GBP300 million by FY22

-- Nordics to benefit from adoption of Group strategy in Services, Credit and Online, taking margins to at least 3.5%

-- On track for over GBP1 billion of cumulative free cash flow over the plan, including working capital improvements of over GBP500 million, mostly from Mobile debtor

FY20 Group financial guidance(7),(9),(10)

   --       Sales and profit to grow in Electricals in both UK & Ireland and International 

-- UK mobile: significantly loss making this year; improving materially in following two years by accelerating transformation

-- Headline PBT expected to be around GBP210 million, with growth thereafter as transformation benefits feed through

-- Capex of circa GBP275 million, in line with overall transformation capex guidance; peak year of transformation investment

   --       Exceptional cash costs expected of circa GBP80 million 

-- Net debt broadly flat year on year given strong cash flow from working capital improvements

-- Full year dividend expected to be flat year on year reflecting confidence in both cash flow and future profit growth

Headline results

 
                                                      Headline revenue(1)                    Headline profit 
                                                                                                 / (loss)(1) 
--------------------  ------  --------  ----------------------------------------------  -------------------- 
                                                                             Like-for- 
                                                                     Local        like 
                               2018/19   2017/18   Reported    currency(2)         (3)    2018/19    2017/18 
                       Notes      GBPm      GBPm   % change       % change    % change       GBPm       GBPm 
--------------------  ------  --------  --------  ---------  -------------  ----------  ---------  --------- 
 UK & Ireland 
  electricals           (4)      4,475     4,412         1%             1%          1%        180        231 
 UK & Ireland 
  mobile                (4)      1,998     2,233      (11)%          (11)%        (4)%          9         43 
--------------------  ------  --------  --------  ---------  -------------  ----------  ---------  --------- 
 UK & Ireland                    6,473     6,645       (3)%           (3)%           -        189        274 
--------------------  ------  --------  --------  ---------  -------------  ----------  ---------  --------- 
 Nordics                         3,501     3,470         1%             4%          3%        112        106 
 Greece                            459       410        12%            13%         13%         21         20 
--------------------  ------  --------  --------  ---------  -------------  ----------  ---------  --------- 
 International                   3,960     3,880         2%             5%          4%        133        126 
--------------------  ------  --------  --------  ---------  -------------  ----------  ---------  --------- 
 Group                          10,433    10,525       (1)%              -          1%        322        400 
 Net finance costs                                                                           (24)       (18) 
--------------------  ------  --------  --------  ---------  -------------  ----------  ---------  --------- 
 Profit before 
  tax                                                                                         298        382 
 Tax                                                                                         (62)       (79) 
--------------------  ------  --------  --------  ---------  -------------  ----------  ---------  --------- 
 Profit after 
  tax                                                                                         236        303 
--------------------  ------  --------  --------  ---------  -------------  ----------  ---------  --------- 
 Total non-headline 
  items                                                                                     (556)      (137) 
--------------------  ------  --------  --------  ---------  -------------  ----------  ---------  --------- 
 Statutory (loss) 
  / profit after 
  tax                                                                                       (320)        166 
--------------------  ------  --------  --------  ---------  -------------  ----------  ---------  --------- 
 Headline basic 
  EPS(1)                                                                                    20.4p      26.2p 
--------------------  ------  --------  --------  ---------  -------------  ----------  ---------  --------- 
 

Revenue summary

 
                                          Peak 2018/19(8)                    Post Peak 2018/19(8)                              H2 2018/19 
--------------  -----  ----------------------------------      ----------------------------------      ---------------------------------- 
                                         Local  Like-for-                        Local  Like-for-                        Local  Like-for- 
                                                     like                                    like                                    like 
                        Reported   currency(2)        (3)       Reported   currency(2)        (3)       Reported   currency(2)        (3) 
                Notes   % change      % change   % change       % change      % change   % change       % change      % change   % change 
--------------  -----  ---------  ------------  ---------      ---------  ------------  ---------      ---------  ------------  --------- 
UK & Ireland 
 electricals     (4)          2%            2%         2%           (1)%          (1)%          -             1%            1%         1% 
UK & Ireland 
 mobile          (4)       (12)%         (12)%       (7)%          (16)%         (16)%       (8)%          (16)%         (16)%       (8)% 
--------------  -----  ---------  ------------  ---------      ---------  ------------  ---------      ---------  ------------  --------- 
UK & Ireland                (2)%          (2)%          -           (7)%          (7)%       (3)%           (5)%          (5)%       (2)% 
--------------  -----  ---------  ------------  ---------      ---------  ------------  ---------      ---------  ------------  --------- 
Nordics                       2%            3%         3%             1%            4%         2%             1%            4%         3% 
Greece                       18%           18%        19%             8%            9%        10%            13%           14%        14% 
--------------  -----  ---------  ------------  ---------      ---------  ------------  ---------      ---------  ------------  --------- 
International                 4%            5%         5%             1%            5%         3%             2%            5%         4% 
--------------  -----  ---------  ------------  ---------      ---------  ------------  ---------      ---------  ------------  --------- 
Group                          -             -         1%           (3)%          (2)%      (1 )%           (2)%          (1)%          - 
--------------  -----  ---------  ------------  ---------      ---------  ------------  ---------      ---------  ------------  --------- 
 

This release contains inside information

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

For further information

 
                      Group Corporate Affairs 
 Assad Malic           Director                          +44 (0) 7414 191 044 
 Amy Shields          Head of External Communications    +44 (0) 7588 201 442 
 Tim Danaher, Nick 
  Beswick             Brunswick Group                    +44 (0) 207 4040 5959 
-------------------  ---------------------------------  ---------------------- 
 
 
 
 
 
 About Dixons Carphone: 
  Dixons Carphone plc is a leading multinational consumer electrical 
  and mobile retailer and services company, employing over 42,000 people 
  in nine countries. We Help Everyone Enjoy Amazing Technology, however 
  they choose to shop with us. 
  We are the market leader in the UK & Ireland, throughout the Nordics 
  and in Greece. With a full range of services and support, we make it 
  easy for our customers to discover, choose and enjoy the right technology 
  for them, throughout the life of the product. Our core multichannel 
  operations are supported by an impressive distribution network and 
  sourcing office in Hong Kong and a state-of-the-art repair facility 
  in Newark, UK. 
  Our brands include Currys PC World and Carphone Warehouse in the UK 
  & Ireland and iD Mobile in the UK; Elkjøp, Elgiganten and Gigantti 
  in the Nordics; and Kotsovolos in Greece. Our Dixons Travel brand has 
  a presence across several UK airports as well as in Dublin and Oslo, 
  and our services are provided through Team Knowhow in the UK, Ireland 
  and the Nordics. 
--------------------------------------------------------------------------- 
 

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, significant reorganisation costs, significant impairments, businesses to be exited, property rationalisation costs, acquisition-related costs, net interest on defined benefit pension schemes and discontinued operations. Such excluded items are described as 'non-headline'. For further details see note 3 of the Financial Information.

(2) Change in local currency revenue reflects total revenue on a constant currency and period basis as defined in the glossary on page 34.

   (3)    Like-for-like revenue is defined in the glossary on page 34 

(4) During the period, the reportable segments of the Group have been changed and comparatives restated accordingly. The restatement is detailed in note 2 to the Financial Information. As part of the strategic review, the Group has separated the previous UK & Ireland operating segment into the separate electricals and mobile operating segments. Given the challenges in the mobile market, and the corresponding change in the UK & Ireland mobile performance in the period, the Group has changed the information presented to the Board to provide greater clarity over the relative performance of the two UK & Ireland businesses and to support decisions related to the allocation of the Group's resources. This change has included the provision of separate financial information in respect of the UK & Ireland mobile and electricals segments. As a result of the change, the goodwill previously allocated to the UK & Ireland was separated into UK & Ireland electricals and UK & Ireland mobile and an impairment review was then performed over the new segments. This identified a material non-cash impairment charge of GBP225 million recorded over the goodwill of the UK & Ireland mobile segment, together with impairment of related assets of GBP122 million and additional onerous lease charges of GBP36 million recorded against individual stores.

   (5)    Free cash flow is defined in the glossary on page 36 
   (6)    Net debt is defined in the glossary on page 36 

(7) Dixons Carphone has in place substantial contingency plans to mitigate the operational disruption expected in the event of a 'hard Brexit'. However, all financial guidance is provided on the basis that there is no significant change in macroeconomic outlook

   (8)    Peak and Post Peak are defined in the glossary on page 38 

(9) Group financial guidance is excluding any impact arising as a result of the adoption of IFRS 16

(10) Group financial guidance excludes any revaluation of mobile network debtor which may arise, up or down

First Big Strides in our Transformation

"We Help Everyone Enjoy Amazing Technology"

The strategy to deliver our vision as outlined in December focuses on our core, and on four things that matter most: two big profitable growth opportunities in Online and Credit, giving customers an easy experience and revitalising our Mobile business. We are delivering this through three enablers: Capable and Committed Colleagues; working in One Business with Stronger Infrastructure.

Earlier forecast delivery of cost savings and margin over 5 year transformation plan

We are making good early progress on our strategy. We've made significant improvements in Online and Credit and early steps towards an easier customer experience have seen satisfaction scores rise. We've done good work within Services, we're investing in our colleagues and we're on our way towards being genuinely One Business, and towards Stronger Infrastructure - all important for lower costs as well as for sustainable growth. In Mobile we are accelerating our transformation.

We are delivering this transformation in the right way for our customers. The protection of data is at the heart of our business and is an area where we've fallen short in the past but where we continue to increase investment. We must also remain focused on treating our customers fairly, as the FCA fine in March 2019 for historic mobile phone insurance mis-selling reminds us.

UK & Ireland electricals: making strong progress across our transformation

Online

This is a big, profitable opportunity for the Group and we are making good early progress, with online growth in UK & Ireland electricals up 9%, accounting for 28% of sales. We are outperforming the market and now taking market share both online and in stores.

We are making it easy for customers to find and buy what they want by increasing the online range by 5,000 products this year, an increase of over 60% year on year, and we are on track for 40,000, as promised, over the plan. We have made improvements in the online customer experience, are focusing on smartphone first and will launch a transactional app in FY20. We are also strengthening online margins through making it easier for customers to adopt credit and services online.

We're making more of online and stores working together at scale. Stores have to be exciting for customers to discover the right tech for them. This includes face-to-face advice, demos so customers can experience the tech for themselves and giving more space in stores to growth categories such as gaming, large screen TVs and home tech. We are putting slower-moving lines online and through the roll-out of our Store Mode tablets to all stores (5,500 tablets), we can now sell the whole online range in stores. Later this year we will also be able to complete transactions on the tablet as well.

We are making our biggest investment in stores in five years with the introduction of Experience Zones and the roll-out of Gaming Battlegrounds.

Credit

Credit is another big profitable growth opportunity across the Group; we have strong foundations and we've made some good early progress in FY19. Credit adoption is now over 9% (+150bps year on year) and our number of credit customers is over 900,000, (+50% year on year). Credit sales are now GBP420 million, up over 20% year on year and we are on track for customer take up of credit to increase to 16% of UK & Ireland electricals revenue over the course of the plan.

With credit, customers can afford more and better technology and customer satisfaction is higher. Credit gives customers another reason to shop with us, they are stickier and more valuable with lifetime profit on credit customers three times that of other customers. Adoption of other services by credit customers is 45% higher.

We are going about credit in the right way as a responsible retailer; we now have 21,000 fully compliant credit trained colleagues. We have better capabilities and expertise in-house and better partnerships; in December we agreed a new relationship with BNP Paribas to give us breadth of offer and better economics, still without taking on credit or fraud risk. We are putting credit at the heart of what we do and our customer journeys and making better use of data, for example by building awareness through CRM.

Easy Customer Experience

We want to build a reputation as an easy and reliable place to shop and we are making good early progress such as in our supply chain on right first time delivery: up 2.5 percentage points versus last year and in our contact centres: where first time customer issue resolution is up 22%.

Services are important for all of our businesses and within this we have been working to make Protection a bigger, more sustainable part of our business. We know customers value product protection and we will be launching revamped products and selling processes this year, market-leading, customer-friendly products based on customer needs. With our scale, we can offer protection others can't.

Last year, profit contribution to UK & Ireland electricals stepped down as we focused on revamping our Protection offer and making it even better value. Early results from the revamp have been encouraging.

Core enablers

Capable and Committed Colleagues are our greatest advantage: in FY20, we are increasing the frontline training budget by four times and, following a successful trial of a new assisted selling model, 'Freedom within a Framework', we will be rolling this out across the estate, empowering employees to really focus on customer needs. We announced the launch of a colleague share ownership scheme in December which saw every permanent colleague with 12 months' service granted at least GBP1,000 worth of shares each over the next three years. By making every colleague a future shareholder we are energising our colleagues behind the vision and strategy in a way that will benefit customers and shareholders.

One Business: We have plans, including IT, Supply Chain and central costs, to deliver our GBP200 million of cost savings which we expect to achieve by FY22, two years ahead of plan.

Stronger Infrastructure: A big part of better infrastructure is better IT. We are underway with our plans to upgrade our infrastructure to enable our transformation which will allow us to meet our delivery promises and give us faster product set-up, lower cost to operate and standardised processes.

International: further potential to enhance growth and margins

Our International business will account for over half our profits in FY20 with strong continued top and bottom line gains and further progress in EBIT margins. It continues to grow its market leading positions, supported by a strong management team. Our International business will benefit from the new Group strategy with growth opportunities in B2B, Online, Credit, an easy customer experience and focused on two growth categories, smart home and kitchen. In June 2019, Erik Sønsterud took over the role of CEO International. Over the past two years as CFO International, Erik has overseen strong performance and led the development of our strategy for Nordics.

We believe that we can further enhance the margin in our International business, by making the most of Group synergies, and are now targeting Nordic EBIT margin of at least 3.5% over the plan (from 3.2% today), making them a still more valuable part of the Group.

UK mobile: accelerating transformation

In December, we identified the challenges we faced in a changing market. Since then these market trends are moving at pace so we are accelerating our transformation to respond.

As we have outlined before, the overall UK mobile market has seen a decline in total handset volumes as well as a change in mix as customers move away from 24 month postpay towards SIMO and more flexible credit-based contracts.

Given our lower share and margin in SIMO and current absence in the more flexible credit-based offers, these mix changes have impacted our share and profitability (which led to a non-cash impairment of UK mobile assets in FY19). This has been compounded by our legacy network contracts, where we could face large penalties for missing volume commitments, and a cost base that is inflexible and too high.

Last year, we successfully renegotiated all our legacy network contracts, resulting in lower volume commitments with better economics. We now have a better choice of connectivity to offer our customers, including a wider choice of networks, more SIMO products and better security of supply through our own MVNO, iD Mobile, where last year our subscriber base grew to over one million customers.

We are revamping our offer, reflecting how customers want to buy. We are developing our own credit bundles as well as intending to sell network credit bundles. We expect to have our offer in the market in FY20 and making a meaningful contribution in FY21, ahead of our initial plans. We will be ready with our new offers for when postpay volume commitments lift during FY21.

We are accelerating our transformation towards One Business to deliver a lower and more flexible cost base. We are underway getting after cost benefits as we move to a single IT platform and earlier decommissioning of legacy systems. We expect to achieve our overall GBP200 million cost reduction two years early circa GBP100 million of it will benefit Mobile, which gives us good confidence in Mobile reaching at least break even in FY22.

Headline performance review

The performance review below refers, unless otherwise stated, to headline information for continuing businesses. The basis for the preparation of this information, including restatements due to businesses to be exited, discontinued operations and segmental classification, is described above. Statutory results are described on page 9.

Group

Group headline revenue decreased by 1% in Sterling terms to GBP10,433 million (2017/18: GBP10,525 million) and was flat on a local currency basis. Like-for-like revenue growth was 1%, reflecting strong performance in Greece (like-for-like growth of 13%) and the Nordic region (like-for-like growth of 3%). UK & Ireland electricals delivered 1% like-for-like growth whilst UK & Ireland mobile declined by 4%.

Headline EBIT decreased GBP78 million to GBP322 million, as higher headline EBIT in our International businesses was more than offset by lower headline EBIT in UK & Ireland electricals and UK & Ireland mobile.

UK & Ireland electricals

Headline revenue increased by 1% to GBP4,475 million (2017/18: GBP4,412 million), with full year like-for-like revenue growth of 1%. Overall market share increased and growth was predominantly driven by large screen TVs, gaming, small white goods and smart home and fitness products. Softer categories included imaging and audio. Our online business continued to grow strongly with revenue growth of 9% and, increasingly, customers took advantage of the ability to order online and collect in store.

Headline EBIT decreased by GBP51 million to GBP180 million (2017/18: GBP231 million). Gross margins were down 100bps, with the majority of this in the first half, negatively impacted by changes in channel mix which drove higher demand for delivery and installation, and lower services adoption rates as we reconfigured our service proposition. Year-on-year EBIT was impacted by prior year systems reconciliation releases (GBP16 million), prior year benefit from changes in the cost profile of customer support agreements (GBP4 million) and negative impact from the current year implementation of IFRS15 on revenue from customer support agreements (GBP5 million). In total these items accounted for GBP25 million of the year-on-year decline, of which GBP15 million occurred in the second half of the year. There were also benefits from the previously announced reorganisation, offset by higher depreciation from IT systems brought online during the year.

UK & Ireland mobile

Total headline revenue of GBP1,998 million was recognised in the year (2017/18: GBP2,233 million) which included GBP7 million of out of period revenue (2017/18: GBP3 million). Like-for-like revenue for the full year were down 4%. The like-for-like decrease reflected the decline in the 24 month postpay market during the period. Online continued to grow as share of business and our MVNO, iD Mobile, saw good growth, to reach a million customers. Overall revenue was impacted by store closures, network commissions income and lower Connected World Services activity.

Headline EBIT decreased by GBP34 million to GBP9 million (2017/18: GBP43 million) reflecting the decrease in sales. Overall gross margins were up 50bps year-on-year. Headline EBIT included negative revaluations of GBP32 million (2017/18: GBP30 million) due to changes in customer behaviour and legislative impacts on previously recognised transactions. In year network commissions income was impacted by the recent implementation of customer bill capping and provisions for future regulatory changes (GBP31 million). Current year EBIT included an GBP18 million depreciation benefit from asset impairments recognised in the first half, cost savings from store closures and benefits flowing from the previously announced reorganisation, whilst prior year EBIT included GBP9 million benefit from systems reconciliation releases which have not been repeated in the current year.

Nordics

The year saw a strong performance in the Nordics with 4% local currency revenue growth. Reported revenue was up 1% to GBP3,501 million (2017/18: GBP3,470 million), the difference from local currency due to the strengthening in the Pound.

Like-for-like revenue grew by 3%, and market share increased, with good growth in most categories particularly in telecoms, gaming and white goods, supported by strong online growth of 24%. Softer categories included computing and consumer electronics.

Gross margin improved c.10bps, coupled with improved distribution cost efficiencies following the previously announced investments in the Jönköping distribution centre, as well as efficiencies resulting from the consolidation of brands in Norway, with the rebranding of Lefdal.

As a result, Nordics headline EBIT improved by GBP6 million to GBP112 million (2017/18: GBP106 million).

Greece

Greece continued to grow strongly, with like-for-like revenue increasing 13%, local currency revenue increasing 13% and reported revenue increasing 12% to GBP459 million (2017/18: GBP410 million), with market share increasing across all categories. Gross margins remained stable, and reported EBIT increased to GBP21 million (2017/18: GBP20 million), reflecting continued investment in core operations to support future growth.

Net finance costs

Headline net finance costs were GBP24 million (2017/18: GBP18 million). The increase in net financing costs reflected higher usage of the revolving credit facility as the supplier funding working capital facility was used less. Finance income included within the net finance cost reduced by GBP3 million to GBP11 million due to the financing element of network income declining with total network income.

Tax

The headline effective tax rate for the full year was 21% (2017/18: 21%). The rate was higher than the UK statutory rate of 19% mainly due to higher statutory rates in the Nordics and certain non-deductible items mainly in the UK.

Cash and movement on net debt

Free Cash Flow

 
                                                           2018/19      2017/18 
                                                        GBPmillion   GBPmillion 
-----------------------------------------------------  -----------  ----------- 
Headline EBIT                                                  322          400 
Depreciation and amortisation                                  146          160 
Working capital                                                 24         (80) 
Capital expenditure                                          (166)        (173) 
Taxation                                                      (45)         (63) 
Interest                                                      (30)         (25) 
Other items                                                      9            - 
-----------------------------------------------------               ----------- 
Free cash flow before exceptional items - continuing 
 operations                                                    260          219 
Exceptional costs                                            (107)         (47) 
-----------------------------------------------------  -----------  ----------- 
Free Cash Flow                                                 153          172 
-----------------------------------------------------  -----------  ----------- 
 

Free Cash Flow was an inflow of GBP153 million (2017/18: GBP172 million), a decrease of 11% for the reasons described below.

The Group experienced a working capital inflow of GBP24 million (2017/18: GBP80 million outflow), largely as a result of the unwind of the capitalised network debtor. This was partly offset by an increase in the UK & Ireland electricals inventory of GBP37 million including a buffer in case of 'hard Brexit', lower than planned sales at year end because of the unusually warm Easter weekend, favourable payment timings last year not repeated and adverse debtor timing this year end. Overall GBP30 million of this working capital movement will reverse in FY20.

Capital expenditure in the period was GBP166 million (2017/18: GBP173 million). The year-on-year decrease reflected a small pause whilst new strategy plans were completed. Investment will build in FY20 as the transformation accelerates.

Taxation paid in the year reduced from GBP63 million to GBP45 million due to overpayments in prior periods recovered in the year and the impact of reduced profitability.

The increase in interest paid was primarily as a result of higher usage on the revolving credit facility as explained above.

Exceptional costs primarily comprised of the cash costs associated with the transformation activities, the property rationalisation programme and the regulatory fine noted below within non-headline items.

A reconciliation of cash inflow from operations to free cash flow is presented in note 8c to the Financial Information.

Funding

 
                                                                   2018/19      2017/18 
                                                                GBPmillion   GBPmillion 
-------------------------------------------------------------  -----------  ----------- 
Free Cash Flow                                                         153          172 
Dividends                                                            (116)        (130) 
Acquisitions and disposals including discontinued operations           (1)           24 
Special pension contributions                                         (46)         (46) 
Other items                                                            (6)            2 
-------------------------------------------------------------  -----------  ----------- 
Movement in net debt                                                  (16)           22 
Opening net debt                                                     (249)        (271) 
-------------------------------------------------------------  -----------  ----------- 
Closing net debt                                                     (265)        (249) 
-------------------------------------------------------------  -----------  ----------- 
 

At 27 April 2019 the Group had net debt of GBP265 million, an increase of GBP16 million from GBP249 million in the prior year. Free Cash Flow was an inflow of GBP153 million (2017/18: GBP172 million) for the reasons described above.

Dividend cash outflows decreased from GBP130 million in the prior year to GBP116 million in current year reflecting a year-on-year decrease in FY 2018/19 interim dividend paid.

Net cash outlows of GBP1 million from acquisitions and disposals in the current year primarily related to deferred consideration paid for the historical acquisition of the Epoq kitchen business, consideration received for the sale of honeybee of GBP8 million, offset by GBP5 million of additional payments for honeybee related costs, GBP3 million payment for warranties in relation to previously disposed operations in Portugal. Prior year cash outflows related to cash received following the sale of the Group's Sprint joint venture and Spanish operations, net of the operating and investing cash flows associated with the now discontinued honeybee operations.The pension contributions reflected the agreed deficit reduction plan following the 2016 triennial valuation. Other items primarily related to foreign exchange movements on net debt.

The average net debt during the year was GBP439 million (2017/18: GBP405 million) up year-on-year because of the lower usage of the supplier funding working capital facility. The year end net debt balance was GBP265 million with the difference between this and the average net debt representing the seasonal funding requirements of the Group.

Statutory performance review

Income statement - continuing operations

 
                                                        2018/19       2017/18 
                                                     GBPmillion    GBPmillion 
--------------------------------------------------  -----------  ------------ 
Revenue                                                  10,433        10,531 
--------------------------------------------------  -----------  ------------ 
EBIT                                                      (223)           321 
Net finance costs                                          (36)          (32) 
--------------------------------------------------  -----------  ------------ 
(Loss) / profit before tax                                (259)           289 
Tax                                                        (52)          (53) 
--------------------------------------------------  -----------  ------------ 
(Loss) / profit after tax - continuing operations         (311)           236 
(Loss) after tax - discontinued operations                  (9)          (70) 
--------------------------------------------------  -----------  ------------ 
(Loss) / profit after tax for the period                  (320)           166 
--------------------------------------------------  -----------  ------------ 
Basic (Loss) / Earnings per share                       (27.6)p         14.4p 
Diluted (Loss) / Earnings per share                     (27.6)p         14.3p 
--------------------------------------------------  -----------  ------------ 
 

Revenue decreased 1% to GBP10,433 million due to the reasons discussed earlier in this report.

Profit before interest and tax decreased from GBP321 million to a loss of GBP223 million in the current period, largely due to the reasons discussed above and the non-headline costs incurred as described later in this report.

Net finance costs were GBP4 million higher than the prior year at GBP36 million for those reasons described earlier in this report offset by a reduction in the net interest on defined benefit obligations as a result of the lower opening discount rates year-on-year.

The tax charge was flat year-on-year. There was a tax provision in the year of GBP46 million as outlined below, offset by additional tax credits due to the non-headline charges recorded.

Basic and diluted EPS both decreased year-on-year reflecting the loss after tax in the current year.

Non-headline items

Statutory loss before tax of GBP259 million (2017/18: GBP289 million profit) includes non-headline charges of GBP557 million (2017/18: GBP93 million) . These charges are analysed below. Further details can be found in note 3 to the Financial Information.

 
                                  2018/19      2017/18 
                               GBPmillion   GBPmillion 
----------------------------  -----------  ----------- 
Acquisition and disposal 
 related items                       (23)         (29) 
Strategic change programmes          (67)         (52) 
Data Incident costs                  (20)            - 
Regulatory costs                     (52)            - 
Impairment losses and 
 onerous leases                     (383)            - 
Share plan taxable 
 benefits                               -            2 
----------------------------  -----------  ----------- 
Total non-headline 
 items before interest 
 and tax                            (545)         (79) 
Net pension interest                 (12)         (14) 
----------------------------  -----------  ----------- 
Total non-headline 
 items before tax                   (557)         (93) 
Tax regulatory matters               (46)            - 
Tax on other non-headline 
 items                                 56           26 
Profit / (loss) after 
 tax - discontinued 
 operations                           (9)         (70) 
----------------------------  -----------  ----------- 
Total non-headline 
 items                              (556)        (137) 
----------------------------  -----------  ----------- 
 

Acquisition and disposal related costs in the current year related to amortisation of acquisition intangibles and the release of contingent consideration for a previous acquisition. Prior year costs related to amortisation of acquisition intangibles, results of businesses to be exited and income received from previously disposed businesses.

Strategic change programmes relate to significant reorganisation, additional property rationalisation costs provided and costs to exit non-core businesses. Prior year costs included functional transformation costs and property rationalisation costs.

Data incident costs related to costs associated with the data incident announced on 13 June 2018, regulatory matters included an increase in pension liabilities as a result of Guaranteed Minimum Pension equalisation of GBP15 million, on-going employee related matters, GBP30 million FCA fine imposed following the conclusion of an investigation into historical Geek Squad mobile phone insurance selling process and other ongoing regulatory matters.

As part of the strategic review, the Group separated the previous operating segment in the UK & Ireland into the separate electricals and mobile operating segments. Given the challenges in the mobile market, and the corresponding change in the UK & Ireland mobile performance in the period, the Group changed the information presented to the Board to provide greater clarity over the relative performance of the two UK & Ireland businesses and to support decisions related to the allocation of the Group's resources. This change included the provision of separate financial information in respect of the UK & Ireland mobile and electricals segments. As a result of the change, the goodwill previously allocated to the UK & Ireland was separated into UK & Ireland electricals and UK & Ireland mobile and an impairment review was then performed over the new segments. This change, together with a deterioration in the forecast performance of the UK & Ireland mobile business identified a material non-cash impairment charge of GBP225 million to be recorded over the goodwill of the UK & Ireland mobile segment, together with impairment of related assets of GBP122 million and additional onerous lease charges of GBP36 million to be recorded against individual stores.

Net pension interest was GBP12 million (2017/18: GBP14 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.

The tax credit of GBP10 million represented a tax credit on the above non-headline items of GBP56 million, offset by an additional tax provision of GBP46 million in relation to pre-merger legacy corporate transactions.

Discontinued operations

On 4 May 2018, the Group agreed to sell the honeybee operations through an asset sale, which was completed on 31 May 2018. These operations were classified as a disposal group held for sale in the year ended 28 April 2018. During year ended 27 April 2019, additional costs of GBP7 million have been recorded following the sale in relation to onerous contracts and compensation to previous employees. Other items in the current year relate to settlement of warranty provisions, provision for employee related matters in previously disposed businesses and tax credits relating to capital allowances.

Balance Sheet

 
                           2018/19      2017/18 
                        GBPmillion   GBPmillion 
---------------------  -----------  ----------- 
Goodwill                     2,840        3,088 
Other fixed assets             740          872 
Working capital              (159)         (96) 
Net debt (note 8b)           (265)        (249) 
Tax, pension & other         (516)        (419) 
                             2,640        3,196 
---------------------  -----------  ----------- 
 

Goodwill and other fixed assets have decreased primarily due to the non-cash impairments described above.

Working capital has decreased in the year by GBP63 million as a result of the unwind of the capitalised network debtor and an increase in provisions in the period as a result of the non-headline charges described above mostly offset by a decrease in trade payables from a change in mix of supplier terms, timing of payments and an increase in inventory held at the year end.

Net debt has increased as described above.

Other net liabilities (tax, pension & other) have increased as a result of the increase in the IAS19 accounting pension deficit described below, and an increase in income tax payable as a result of a provision in relation to pre-merger legacy corporate transactions.

Cash flow statement

 
                                                                2018/19      2017/18 
                                                             GBPmillion   GBPmillion 
----------------------------------------------------------  -----------  ----------- 
EBIT - continuing operations                                      (223)          321 
EBIT - discontinued operations                                     (14)         (83) 
Depreciation and amortisation                                       174          204 
Working capital                                                      72         (92) 
Impairments                                                         347            - 
Other operating items                                              (70)         (38) 
----------------------------------------------------------  -----------  ----------- 
Cash flows from operating activities                                286          312 
 
Acquisitions                                                        (1)         (10) 
Capital expenditure                                               (166)        (187) 
Other investing cash flows                                           17           65 
----------------------------------------------------------  -----------  ----------- 
Cash flows from investing activities                              (150)        (132) 
 
Dividends paid                                                    (116)        (130) 
Other financing cash flows                                         (93)         (62) 
----------------------------------------------------------  -----------  ----------- 
Cash flows from financing activities                              (209)        (192) 
 
Decrease in cash and cash equivalents and bank overdrafts          (73)         (12) 
----------------------------------------------------------  -----------  ----------- 
 

The statutory EBIT decrease, dividend cash flows, capital expenditure and working capital inflows in the year are for those reasons previously outlined in this report.

Other operating items related to pension contributions and taxation cash outflows, offset by the reversal of non-cash share based payment charges included in EBIT.

Acquisition outflow of GBP1 million (2017/18: GBP10 million outflow) related to deferred consideration payments in the Nordics for the 'Epoq' kitchen business. Prior year acquisition cash outflows comprised GBP7 million of deferred consideration payments for the acquisitions of Simplifydigital of GBP5 million and the 'Epoq' kitchen business in the Nordics of GBP2 million together with GBP3 million of capital injected into the US joint venture with Sprint prior to disposal.

Other investing cash flows related to proceeds on disposal being consideration for a property sold in the previous period and the consideration received for the honeybee assets. Prior year inflow related to proceeds received following the disposal of the Group's Spanish operations and the disposal of the Sprint joint venture and additional consideration received in relation to prior period disposals.

Other financing cash outflows of GBP93 million related to interest and finance lease payments in the year and repayment of external borrowing. The increase in out flows from the prior year related to repayments of borrowings under the revolving credit facility and higher interest cost.

Comprehensive income / changes in equity

Total equity of the Group has decreased from GBP3,196 million to GBP2,640 million primarily reflecting the total statutory loss of GBP320 million, the loss on retranslation of overseas operations of GBP30 million and actuarial loss (net of taxation) relating to the defined benefit pension scheme of GBP107 million and the payment of dividends of GBP116 million.

Other matters

Pensions

The IAS 19 accounting deficit of the defined benefit section of the UK pension scheme of Dixons Retail amounted to GBP579 million at 27 April 2019 compared to GBP470 million at 28 April 2018. Contributions during the period under the terms of the deficit reduction plan amounted to GBP46 million (2017/18: GBP46 million), with future contributions under the current agreement with the Trustees of the fund, of GBP46 million per annum to be paid until 2028/29, with a further payment of GBP25 million in 2029/30. The deficit has increased during the year as a result of changes in market based financial assumptions, primarily the discount and inflation rates.

Dividends

The Board declared an interim dividend of 2.25p per share which was paid on 25 January 2019.

We are proposing a final dividend of 4.50p per share. The final dividend is subject to shareholder approval at the Company's forthcoming Annual General Meeting. The ex-dividend date is 5 September 2019, with a record date of 6 September 2019 and an intended final dividend payment date of 27 September 2019

Consolidated income statement

 
 
                                                            Year ended 27 April                    Year ended 28 April 
                                                                           2019                                   2018 
                                          -------------------------------------  ------------------------------------- 
                                                              Non-                                   Non- 
                                            Headline*    headline*        Total    Headline*    headline*        Total 
                                    Note   GBPmillion   GBPmillion   GBPmillion   GBPmillion   GBPmillion   GBPmillion 
----------------------------------  ----  -----------  -----------  -----------  -----------  -----------  ----------- 
Continuing operations 
Revenue                              2         10,433            -       10,433       10,525            6       10,531 
----------------------------------  ----  -----------  -----------  -----------  -----------  -----------  ----------- 
 
Profit / (loss) before interest 
 and tax                            2,3           322        (545)        (223)          400         (79)          321 
----------------------------------  ----  -----------  -----------  -----------  -----------  -----------  ----------- 
 
Finance income                                     11            -           11           14            -           14 
Finance costs                                    (35)         (12)         (47)         (32)         (14)         (46) 
----------------------------------  ----  -----------  -----------  -----------  -----------  -----------  ----------- 
Net finance costs                    4           (24)         (12)         (36)         (18)         (14)         (32) 
----------------------------------  ----  -----------  -----------  -----------  -----------               ----------- 
 
Profit / (loss) before tax                        298        (557)        (259)          382         (93)          289 
 
Income tax (expense) / credit        5           (62)           10         (52)         (79)           26         (53) 
----------------------------------  ----  -----------  -----------  -----------  -----------  -----------  ----------- 
Profit / (loss) after tax - 
 continuing 
 operations                                       236        (547)        (311)          303         (67)          236 
 
Loss after tax - discontinued 
 operations                          9              -          (9)          (9)            -         (70)         (70) 
 
Profit / (loss) after tax for 
 the period                                       236        (556)        (320)          303        (137)          166 
 
Earnings / (loss) per share 
 (pence)                             6 
----------------------------------  ----  -----------  -----------  -----------  -----------  -----------  ----------- 
                                                                         (26.8) 
Basic - continuing operations                   20.4p                         p        26.2p                     20.4p 
                                                                         (26.8) 
Diluted - continuing operations                 20.2p                         p        26.1p                     20.3p 
                                                                         (27.6) 
Basic - total                                                                 p                                  14.4p 
                                                                         (27.6) 
Diluted - total                                                               p                                  14.3p 
----------------------------------  ----  -----------  -----------  -----------  -----------  -----------  ----------- 
 

*Headline results reflect adjustments to total performance measures. The directors consider headline performance to reflect the ongoing trading performance of the Group and are consistent with how the business performance is measured internally. Such excluded items are described as 'non-headline' as discussed in note 3. Discontinued operations are disclosed in note 9.

Consolidated statement of comprehensive income

 
                                                                                                                                 Year        Year 
                                                                                                                                ended       ended 
                                                                                                                             27 April    28 April 
                                                                                                                                 2019        2018 
                                                                                                                           GBPmillion  GBPmillion 
-------------------------------------------------------------------------------------------------------------------------  ----------  ---------- 
(Loss) / profit after tax for the period                                                                                        (320)         166 
 
Items that may be reclassified to the income statement in 
 subsequent years: 
Cash flow hedges 
  Fair value movements recognised in other comprehensive 
   income                                                                                                                          10         (5) 
  Reclassified and reported in income statement                                                                                  (19)        (11) 
  Amount recognised in inventories                                                                                                  1          29 
Financial assets designated as FVTOCI 
  Gains / (losses) arising during the period                                                                                        1         (2) 
Exchange (loss) / gain arising on translation of foreign 
 operations                                                                                                                      (30)           8 
Tax on items that may be subsequently reclassified to profit 
 or loss                                                                                                                            2           - 
-------------------------------------------------------------------------------------------------------------------------  ----------  ---------- 
                                                                                                                                 (35)          19 
-------------------------------------------------------------------------------------------------------------------------              ---------- 
 
Items that will not be reclassified to the income statement 
 in subsequent years: 
Actuarial (losses) / gains on defined benefit pension schemes 
 - UK                                                                                                                           (128)          87 
                                                                                                                - 
                                                                                                                 Overseas         (1)         (1) 
Deferred tax on actuarial (losses) / gains on defined benefit 
 pension schemes                                                                                                                   22        (15) 
                                                                                                                           ---------- 
                                                                                                                                (107)          71 
-------------------------------------------------------------------------------------------------------------------------              ---------- 
 
Other comprehensive (expense) / income for the period (taken 
 to equity)                                                                                                                     (142)          90 
-------------------------------------------------------------------------------------------------------------------------  ----------  ---------- 
 
Total comprehensive (expense) / income for the period                                                                           (462)         256 
-------------------------------------------------------------------------------------------------------------------------  ----------  ---------- 
 

Consolidated balance sheet

 
                                                               27 April     28 April 
                                                                   2019         2018 
                                                      Note   GBPmillion   GBPmillion 
----------------------------------------------------  ----  -----------  ----------- 
Non-current assets 
Goodwill                                                          2,840        3,088 
Intangible assets                                                   464          478 
Property, plant & equipment                                         276          394 
Investments                                                          18           17 
Interests in joint ventures and associates                            -            1 
Trade and other receivables                                         387          507 
Deferred tax assets                                                 282          240 
----------------------------------------------------  ----  -----------  ----------- 
                                                                  4,267        4,725 
----------------------------------------------------  ---- 
Current assets 
Inventory                                                         1,156        1,145 
Trade and other receivables                                       1,039        1,154 
Derivative assets                                                    18           27 
Assets held for sale                                   9              -           17 
Cash and cash equivalents                                           125          228 
                                                            ----------- 
                                                                  2,338        2,571 
                                                            ----------- 
Total assets                                                      6,605        7,296 
----------------------------------------------------  ----               ----------- 
 
Current liabilities 
Trade and other payables                                        (2,350)      (2,505) 
Derivative liabilities                                              (6)          (7) 
Contingent consideration                                            (1)          (1) 
Income tax payable                                                 (76)         (72) 
Loans and other borrowings                                         (19)         (63) 
Finance lease obligations                                           (3)          (3) 
Liabilities held for sale                              9              -          (2) 
Provisions                                                         (86)         (67) 
----------------------------------------------------  ----  -----------  ----------- 
                                                                (2,541)      (2,720) 
----------------------------------------------------  ----               ----------- 
 
Non-current liabilities 
Trade and other payables                                          (252)        (318) 
Contingent consideration                                            (4)         (12) 
Loans and other borrowings                                        (288)        (329) 
Finance lease obligations                                          (80)         (82) 
Retirement benefit obligations                                    (579)        (472) 
Deferred tax liabilities                                          (156)        (135) 
Provisions                                                         (65)         (32) 
                                                            ----------- 
                                                                (1,424)      (1,380) 
                                                            ----------- 
Total liabilities                                               (3,965)      (4,100) 
----------------------------------------------------  ----  -----------  ----------- 
Net assets                                                        2,640        3,196 
----------------------------------------------------  ----               ----------- 
 
Capital and reserves 
Share capital                                                         1            1 
Share premium reserve                                             2,263        2,263 
Accumulated profits                                               1,117        1,643 
Translation reserve                                                   9           39 
Demerger reserve                                                  (750)        (750) 
Equity attributable to equity holders of the parent 
 company                                                          2,640        3,196 
----------------------------------------------------  ----  -----------  ----------- 
 

Consolidated statement of changes in equity

 
                                                             Share 
                                                Share      premium  Accumulated  Translation     Demerger        Total 
                                              capital      reserve      profits      reserve      reserve       equity 
                                    Note   GBPmillion   GBPmillion   GBPmillion   GBPmillion   GBPmillion   GBPmillion 
----------------------------------  ----  -----------  -----------  -----------  -----------  -----------  ----------- 
At 29 April 2017                                    1        2,260     1,513              31        (750)        3,055 
 
Profit for the period                               -            -      166           -                 -          166 
Other comprehensive income and 
 expense 
 recognised directly in equity                      -            -      82            8                 -           90 
----------------------------------  ----  -----------  -----------  -----------  -----------  -----------  ----------- 
Total comprehensive income and 
 expense 
 for the period                                     -            -      248           8                 -          256 
 
Ordinary shares issues                              -            3      (2)           -                 -            1 
Equity dividends                     7              -            -     (130)          -                 -        (130) 
Net movement in relation to share 
 schemes                                            -            -      14            -                 -           14 
At 28 April 2018                                    1        2,263     1,643         39             (750)        3,196 
 
Adjustment on initial application 
 of IFRS 15 
 (net of tax)                                       -            -       4            -                 -            4 
Adjustment on initial application 
 of IFRS 9 
 (net of tax)                                       -            -      (1)           -                 -          (1) 
----------------------------------  ----  -----------  -----------  -----------  -----------  -----------  ----------- 
  Adjusted balance at 28 April 
   2018                                             1        2,263     1,646         39             (750)        3,199 
 
Loss for the period                                 -            -     (320)          -                 -        (320) 
Other comprehensive income and 
 expense 
 recognised directly in equity                      -            -     (112)        (30)                -        (142) 
----------------------------------  ----  -----------  -----------  -----------  -----------  -----------  ----------- 
Total comprehensive income and 
 expense 
 for the period                                     -            -     (432)        (30)                -        (462) 
 
Ordinary shares issued                              -            -       -                 -            -            - 
Equity dividends                     7              -            -     (116)               -            -        (116) 
Net movement in relation to share 
 schemes                                            -            -      19                 -            -           19 
At 27 April 2019                                    1        2,263     1,117               9        (750)        2,640 
----------------------------------  ----  -----------  -----------  -----------  -----------  -----------  ----------- 
 

Consolidated cash flow statement

 
                                                                          Year         Year 
                                                                         ended        ended 
                                                                      27 April     28 April 
                                                                          2019         2018 
                                                             Note   GBPmillion   GBPmillion 
-----------------------------------------------------------  ----  -----------  ----------- 
Operating activities 
Cash generated from operations                                8            377          420 
Special contributions to defined benefit pension scheme                   (46)         (46) 
Income tax paid                                                           (45)         (62) 
-----------------------------------------------------------  ----  -----------  ----------- 
Net cash flows from operating activities                                   286          312 
-----------------------------------------------------------  ----               ----------- 
Investing activities 
Net cash outflow arising from acquisitions                                 (1)          (7) 
Proceeds from disposal of property, plant & equipment                        9            2 
Proceeds on sale of business                                                 8           63 
Acquisition of property, plant & equipment and other 
 intangibles                                                             (166)        (187) 
Investment in joint ventures                                                 -          (3) 
Net cash flows from investing activities                                 (150)        (132) 
-----------------------------------------------------------  ----  -----------  ----------- 
Financing activities 
Interest paid                                                             (23)         (19) 
Repayment of obligations under finance leases                              (8)         (10) 
Issue of ordinary shares                                                     -            1 
Equity dividends paid                                                    (116)        (130) 
Decrease in borrowings                                                    (61)         (32) 
Facility arrangement fees paid                                             (1)          (2) 
Net cash flows from financing activities                                 (209)        (192) 
-----------------------------------------------------------  ----  -----------  ----------- 
 
Decrease in cash and cash equivalents and bank overdrafts                 (73)         (12) 
 
Cash and cash equivalents and bank overdrafts at beginning 
 of the period                                                             185          199 
Currency translation differences                                           (6)          (2) 
-----------------------------------------------------------  ----  ----------- 
Cash and cash equivalents and bank overdrafts at end 
 of the period                                                8            106          185 
-----------------------------------------------------------  ----  -----------  ----------- 
 

Notes to the Financial Information (continued)

   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 27 April 2019 and 28 April 2018, 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 27 April 2019 which were approved by the directors on 19 June 2019. Statutory accounts for the year ended 28 April 2018 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 27 April 2019 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 27 April 2019.

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 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 material that they distort underlying performance (such as reorganisation costs, impairment charges and property rationalisation costs), income from previously disposed operations 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/or operations of the Group.

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.

Changes to operating segments

During the period, the operating and reporting segments of the Group have changed, and reflect the updated segments reported to the Board, who are considered the Chief Operating Decision Maker under IFRS 8 "Operating Segments". The previously disclosed UK & Ireland segment has been separated into UK & Ireland electricals and UK & Ireland mobile. Given the challenges in the mobile market, and the corresponding change in the UK & Ireland mobile performance in the period, the Group has changed the information presented to the Board to provide greater clarity over the relative performance of the two elements of the UK & Ireland businesses and to support decisions related to the allocation of the Group's resources. This change has included the provision of separate financial information in respect of the UK & Ireland mobile and electricals segments. The UK & Ireland electricals operating segment consists of the CurrysPCWorld and Dixons Travel businesses, and the UK & Ireland mobile segment relates to the Carphone Warehouse, iD mobile and Simplify Digital businesses and the Connected World Services B2B operations.

In addition, as disclosed in the Annual Report and Accounts for the year ended 28 April 2018, following the classification of the results of the honeybee segment as discontinued operations, these are no longer presented as a separate operating segment.

The restatement of comparative information for these segments has been set out below.

Discontinued operations are excluded from this segmental analysis. Results are reviewed by the Board on a headline basis by segment.

The Groups operating and reportable segments have therefore been identified as follows:

UK & Ireland electricals comprises operations of CurrysPCWorld and the Dixons Travel business.

UK & Ireland mobile comprises the Carphone Warehouse, iD Mobile and Simplify Digital businesses and the Connected World Services B2B operations.

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

Greece, consisting of our ongoing operations in Greece and, for non-headline items, our previously disposed operations in Southern Europe.

Non-headline results are allocated to each reportable segment. Where these relate to businesses to be exited or income or expense from previously disposed operations, they are allocated where practicable to the region in which the operation was originally held.

UK & Ireland electricals, UK & Ireland mobile, Nordics and Greece 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

 
                                                                                              Year ended 27 
                                                                                                 April 2019 
                            ------------  -----------  -----------  ------------  ------------------------- 
                                    UK &         UK & 
                                 Ireland      Ireland 
                             electricals       mobile      Nordics        Greece  Eliminations        Total 
                              GBPmillion   GBPmillion   GBPmillion    GBPmillion    GBPmillion   GBPmillion 
--------------------------  ------------  -----------  -----------  ------------  ------------  ----------- 
Headline external revenue          4,475        1,998        3,501           459             -       10,433 
Inter-segmental revenue               79           90            -             -         (169)            - 
--------------------------  ------------  -----------  -----------  ------------  ------------  ----------- 
Total headline revenue             4,554        2,088        3,501           459         (169)       10,433 
-------------------------- 
 
Headline EBIT                        180            9          112            21             -          322 
--------------------------  ------------  -----------  -----------  ------------  ------------  ----------- 
 

Reconciliation of headline profit to total profit before tax

 
 
                                                                              Impairment 
                  Headline  Acquisition                                           losses 
                    profit   / disposal   Strategic        Data                      and      Pension        Total 
                         /      related      change    incident   Regulatory     onerous       scheme       profit 
                    (loss)        items  programmes       costs        costs      leases     interest     / (loss) 
                GBPmillion   GBPmillion  GBPmillion  GBPmillion   GBPmillion  GBPmillion   GBPmillion   GBPmillion 
------------    ----------               ----------  ----------  -----------  ----------  -----------  ----------- 
UK & Ireland 
 electricals           180         (14)        (44)        (12)         (16)           -            -           94 
UK & Ireland 
 mobile                  9            3        (23)         (8)         (36)       (383)            -        (438) 
Nordics                112         (12)           -           -            -           -            -          100 
Greece                  21            -           -           -            -           -            -           21 
EBIT                   322         (23)        (67)        (20)         (52)       (383)            -        (223) 
Finance income          11            -           -           -            -           -            -           11 
Finance costs         (35)            -           -           -            -           -         (12)         (47) 
--------------  ----------  -----------  ----------  ----------  -----------  ----------  -----------  ----------- 
Profit / 
 (loss) 
 before tax            298         (23)        (67)        (20)         (52)       (383)         (12)        (259) 
--------------  ----------  -----------  ----------  ----------  -----------  ----------  -----------  ----------- 
 

2 Segmental analysis (continued)

 
                                                                                             Year ended 28 
                                                                                                April 2018 
                            ------------  -----------  -----------  -----------  ------------------------- 
                                    UK &         UK & 
                                 Ireland      Ireland 
                             electricals       mobile      Nordics       Greece  Eliminations        Total 
                              GBPmillion   GBPmillion   GBPmillion   GBPmillion    GBPmillion   GBPmillion 
--------------------------  ------------  -----------  -----------  -----------  ------------  ----------- 
Headline external revenue          4,412        2,233        3,470          410             -       10,525 
Inter-segmental revenue               86           66            -            -         (152)            - 
--------------------------  ------------  -----------  -----------  -----------  ------------  ----------- 
Total headline revenue             4,498        2,299        3,470          410         (152)       10,525 
--------------------------  ------------  -----------  -----------  -----------  ------------  ----------- 
 
Headline EBIT                        231           43          106           20             -          400 
--------------------------  ------------  -----------  -----------  -----------  ------------  ----------- 
 

Reconciliation of headline profit to total profit before tax

 
 
                             Headline  Acquisition                       Share 
                               profit   / disposal    Strategic   plan taxable      Pension        Total 
                             / (loss)      related       change        benefit       scheme       profit 
                          (restated)*        items   programmes   compensation     interest     / (loss) 
                           GBPmillion   GBPmillion   GBPmillion     GBPmillion   GBPmillion   GBPmillion 
---------------------    ------------  -----------  -----------  -------------  -----------  ----------- 
UK & Ireland 
 electricals                      231         (13)         (32)              2            -          188 
UK & Ireland mobile                43         (13)          (6)              -            -           24 
Nordics                           106         (12)         (14)              -            -           80 
Greece                             20            9            -              -            -           29 
EBIT                              400         (29)         (52)              2            -          321 
Finance income                     14            -            -              -            -           14 
Finance costs                    (32)            -            -              -         (14)         (46) 
-----------------------  ------------  -----------  -----------  -------------  -----------  ----------- 
Profit / (loss) before 
 tax                              382         (29)         (52)              2         (14)          289 
-----------------------  ------------  -----------  -----------  -------------  -----------  ----------- 
 
 

Restatement of segmental information

As discussed above, during the period the Group's reportable segments have been changed, and comparatives have been restated accordingly. The below tables provide reconciliations for the headline revenue and headline EBIT for the year ended 28 April 2018. The relevant adjustment is the reconciliation of the UK & Ireland results between the UK & Ireland electricals and UK & Ireland mobile segments and the reallocation of central costs between the Groups reportable segments.

Year ended 28 April 2018

 
                                                   Total                  Reallocate 
                                                headline     Reallocate         UK & 
                                                 revenue   UK & Ireland      Ireland 
                                           as previously    electricals       mobile 
                                                reported        revenue      revenue        Total 
                                              GBPmillion     GBPmillion   GBPmillion   GBPmillion 
--------------------------------------    --------------  -------------  -----------  ----------- 
UK & Ireland electricals                               -          4,412            -        4,412 
UK & Ireland mobile                                    -              -        2,233        2,233 
UK & Ireland (as previously reported)              6,645        (4,412)      (2,233)            - 
Nordics                                            3,470              -            -        3,470 
Greece                                               410              -            -          410 
----------------------------------------  --------------  -------------  -----------  ----------- 
Total headline revenue                            10,525              -            -       10,525 
----------------------------------------  --------------  -------------  -----------  ----------- 
 

2 Segmental analysis (continued)

 
                                                  Total 
                                               headline 
                                                   EBIT     Reallocate     Reallocate     Reallocate 
                                          as previously   UK & Ireland   UK & Ireland        central 
                                               reported    electricals         mobile          costs        Total 
                                             GBPmillion     GBPmillion     GBPmillion     GBPmillion   GBPmillion 
--------------------------------------   --------------  -------------  -------------  -------------  ----------- 
UK & Ireland electricals                              -            233              -            (2)          231 
UK & Ireland mobile                                   -              -             48            (5)           43 
UK & Ireland (as previously reported)               281          (233)           (48)              -            - 
Nordics                                             101              -              -              5          106 
Greece                                               18              -              -              2           20 
Total headline EBIT                                 400              -              -              -          400 
---------------------------------------  --------------  -------------  -------------  -------------  ----------- 
 

The Group's disaggregated revenue recognised under 'Revenue from Contracts with Customers' in accordance with IFRS 15 relates to the following operating segments and revenue streams:

 
                                                                        Year ended 27 April 
                                                                                       2019 
                                                      ------------------------------------- 
                                   UK &         UK & 
                                Ireland      Ireland 
                            electricals       mobile      Nordics       Greece        Total 
                             GBPmillion   GBPmillion   GBPmillion   GBPmillion   GBPmillion 
-------------------------  ------------  -----------  -----------  -----------  ----------- 
Sale of goods                     4,085          474        3,161          437        8,157 
Commission revenue                    9        1,401          263            1        1,674 
Support services revenue            275            -           25           14          314 
Other services revenue               99          123           52            7          281 
Other revenue              7             -            -            -            7 
-------------------------  ------------  -----------  -----------  -----------  ----------- 
Total headline revenue     4,475         1,998        3,501        459          10,433 
-------------------------  ------------  -----------  -----------  -----------  ----------- 
 
 
                                                                        Year ended 28 April 
                                                                                       2018 
                                                      ------------------------------------- 
                                   UK &         UK & 
                                Ireland      Ireland 
                            electricals       mobile      Nordics       Greece        Total 
                             GBPmillion   GBPmillion   GBPmillion   GBPmillion   GBPmillion 
-------------------------  ------------  -----------  -----------  -----------  ----------- 
Sale of goods                     4,005          532        3,135          391        8,063 
Commission revenue                    8        1,578          258            1        1,845 
Support services revenue            285            -           24           12          321 
Other services revenue              112          123           53            6          294 
Other revenue                         2            -            -            -            2 
-------------------------  ------------  -----------  -----------  -----------  ----------- 
Total headline revenue     4,412         2,233         3,470       410          10,525 
-------------------------  ------------  -----------  -----------  -----------  ----------- 
 

Revenue from support services relates predominantly to customer support agreements, while other services revenue comprises delivery and installation, product repairs and product support.

3 Non-headline items

 
                                                                            Year         Year 
                                                                           ended        ended 
                                                                        27 April     28 April 
                                                                            2019         2018 
                                                              Note    GBPmillion   GBPmillion 
-----------------------------------------------------------  ------  -----------  ----------- 
Included in revenue: 
     Businesses to be exited                                  (i)              -            6 
-----------------------------------------------------------  ------  -----------  ----------- 
                                                                               -            6 
-----------------------------------------------------------  ------  -----------  ----------- 
 
Included in profit / (loss) before interest and tax: 
     Acquisition / disposal related items                     (i)           (23)         (29) 
     Strategic change programmes                              (ii)          (67)         (52) 
     Data incident costs                                     (iii)          (20)            - 
     Regulatory costs                                         (iv)          (52)            - 
     Impairment losses and onerous leases                     (v)          (383)            - 
     Share plan taxable benefit compensation                  (vi)             -            2 
                                                                           (545)         (79) 
-----------------------------------------------------------  ------  -----------  ----------- 
 
Included in net finance costs: 
     Net non-cash finance costs on defined benefit pension 
      schemes                                                (vii)          (12)         (14) 
 
Total impact on profit / (loss) before tax                                 (557)         (93) 
-----------------------------------------------------------  ------  -----------  ----------- 
 
Tax on regulatory matters                                    (viii)         (46)            - 
Tax on non-headline items                                     (ix)            56           26 
-----------------------------------------------------------  ------  -----------  ----------- 
Total impact on profit / (loss) after tax - continuing 
 operations                                                                (547)         (67) 
-----------------------------------------------------------  ------  -----------  ----------- 
 
Discontinued operations                                        9             (9)         (70) 
-----------------------------------------------------------  ------  -----------  ----------- 
Total impact on profit / (loss) after tax                                  (556)        (137) 
-----------------------------------------------------------  ------  -----------  ----------- 
 
   (i)    Acquisition / disposal related items 

Amortisation of acquisition intangibles:

A charge of GBP28 million (28 April 2018: GBP32 million) relates to acquisition intangibles arising on the CPW Europe acquisition, the Dixons Retail merger and Simplify Digital acquisition.

Acquisition related:

Acquisition related income of GBP5 million primarily relates to the release of deferred consideration for a previous acquisition no longer payable given the strategic change of the business (28 April 2018: GBP2 million release).

Unieuro income:

In November 2013, the Group disposed of its Unieuro operations, but retained an investment of 14.96% in the operations. The investment was initially recognised at GBPnil 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.

In October 2017, IEH announced a corporate restructuring, whereby the Group obtained direct control of the investment of 7.18% of Unieuro, together with a receivable for previous dividends and the share sales. The amount realised as a result of the dividend and share sale of GBP10 million has been recycled to the income statement in the year ended 28 April 2018.

   (i)   Businesses to be exited: 

Comprises the trading result of businesses to be exited where they do not meet the criteria under IFRS 5 "Non-Current Assets Held for Sale and Discontinued Operations", for separate disclosure as discontinued operations. In the prior period, this comprises the results of the iD mobile operations in the Republic of Ireland. There has been no profit or loss in relation to businesses to be exited in the current period (2017/18: GBP9 million).

(ii) Strategic change programmes:

During the current period, costs of GBP49 million have been incurred in relation to the strategic change programme, to set a clear long-term direction for the business which sharpens our focus on the core and that better joins up our offer to customers and our business behind the scenes. The costs incurred relate to the following:

   -    GBP11 million in relation to costs of implementing the strategy; 

- GBP21 million cost in relation to restructuring and redundancy costs for central operations organisational design;

3 Non-headline items (continued)

GBP9 million in relation to the closure of non-core operations, relating to certain of our concession arrangements across the CurrysPCWorld, Carphone Warehouse and Dixons Travel brands and our energy switching business; and

- GBP8 million in relation to further rationalisation of our property estate, including the closure of Carphone Warehouse stores in the UK as announced on 4 May 2018.

Property rationalisation:

Additional costs of GBP18 million have been provided in relation to additional provisions for the remaining stores under the Currys PC World 3-in-1 and Carphone Warehouse programme announce in 2015/16, due to the challenges in the UK retail property market. In the prior year ended 28 April 2018, an additional charge of GBP29 million was recorded.

Merger and transformation costs:

There has been no profit or loss in relation to previous merger and transformation programmes in the current period. Transformation costs of GBP23 million in the prior year ended 28 April 2018 related to business restructuring in the Nordics of GBP14 million, together with UK business restructuring and functional transformation costs of GBP9 million primarily related to redundancy and consultancy fees.

(iii) Data incident costs:

During the period, costs associated with the data incident announced on 13 June 2018 of GBP20 million have been recorded. GBP14 million of these costs, related to investigation and remediation activities, were incurred during the year, with the remaining costs expected to be incurred within the next twelve months.

(iv) Regulatory costs:

A charge of GBP52 million has been recorded in relation to pension related costs, employee related costs and other regulatory matters in the current period. This includes:

- An additional pension related cost of GBP15 million. On 26 October 2018, the High Court issued a judgement in a claim to address the issues of unequal Guaranteed Minimum Pensions (GMPs) in the Lloyds Banking Group's defined benefit pension schemes (the "Lloyds case"). This will potentially impact the DSG Retirement and Employee Security Scheme operating in the UK. The Group is working through the details of the ruling and assessing its impact on the liability valuation of the scheme. We currently estimate that this will increase the liability by GBP15 million, and therefore have recorded this as a past service cost in the current period. There are a number of uncertainties surrounding the change, including the method of calculation of the equalisation and any potential appeals against the ruling, therefore we consider that the amount is subject to further change, however currently represents our best estimate.

- Costs of GBP1 million have also been provided for in relation to redress for ongoing employee related matters for historical periods.

- GBP30 million FCA fine imposed following the conclusion of an investigation into historical Geek Squad mobile phone insurance selling processes.

   (v)   Impairment losses and onerous leases: 

As part of the strategic review performed by the Group, and as discussed in note 2, the Group has separated the operating segments in the UK & Ireland into the separate electricals and mobile operating segments. As a result of the change, the goodwill previously allocated the UK & Ireland group of cash generating units ("CGUs") has been separated into the UK & Ireland electricals and UK & Ireland mobile CGUs. This allocation has been performed on a relative value basis on the value of the two operating segments. In separating the goodwill, an impairment review has been performed over both operating segments based on our future projections and cash flows, reflecting the conclusions of the Group's strategic review which has been undertaken since the year end. This change, together with a deterioration in the forecast performance of the UK & Ireland mobile business, identified a material non-cash impairment charge to be recorded over the goodwill of the UK & Ireland mobile segment, together with impairment of related assets and additional onerous lease charges to be recorded against individual stores. The breakdown of the impairment recorded in relation to the UK & Ireland mobile operating segment asset base was as follows:

- GBP225 million representing the goodwill associated with the UK & Ireland mobile operating segment

   -    GBP10 million of acquisition intangibles recognised during the previous acquisitions 

- GBP75 million of intangible assets, primarily relating to capitalised software development costs

   -    GBP25 million of central property, plant and equipment 
   -    GBP12 million of store assets 

In addition, GBP36 million of onerous lease provisions for stores within the UK & Ireland mobile operating segment have been recognised.

(vi) Share plan taxable benefit compensation:

A provision of GBP11 million was recognised in 2016/17 in relation to taxable benefits arising to participants of the Share Plan, as discussed in the Remuneration Committee Chairman's statement on page 61 of the 2016/17 Annual Report. In 2017/18, the excess portion of the provision was released following the payment of compensation of the scheme.

3 Non-headline items (continued)

(vii) 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 effect of this is excluded from headline earnings.

   (viii)       Tax regulatory matters: 

As previously disclosed, the Group has been co-operating with HMRC in relation to the tax treatment arising due to pre-merger legacy corporate transactions. The Group maintains the tax treatment was appropriate, however, the likelihood of litigation, and therefore risk associated with this matter, has increased and therefore a provision has been recognised.

(ix) Taxation:

The effective tax rate on non-headline earnings and costs is 2%. Once the impact of the provision of GBP46 million is removed, the effective tax rate is 10%. The rate of relief is lower than the UK statutory rate of 19% predominantly due to non-deductible goodwill impairment and regulatory costs. For the year ended 28 April 2018, the effective tax rate on non-headline items was 28% due to a one-off credit in relation to the recognition of previously unrecognised deferred tax assets in Greece of GBP10 million.

4 Net finance costs

 
                                                                Year         Year 
                                                               ended        ended 
                                                            27 April     28 April 
                                                                2019         2018 
                                                          GBPmillion   GBPmillion 
-------------------------------------------------------  -----------  ----------- 
Unwind of discounts on trade receivables                          11           14 
Finance income                                                    11           14 
-------------------------------------------------------  -----------  ----------- 
 
Interest on bank overdrafts, loans and borrowings               (17)         (13) 
Finance lease interest payable                                   (6)          (6) 
Net interest on defined benefit pension obligations(i)          (12)         (14) 
Unwind of discounts on liabilities                               (4)          (6) 
Amortisation of facility fees                                    (2)          (1) 
Other interest expense                                           (6)          (6) 
Finance costs                                                   (47)         (46) 
-------------------------------------------------------  -----------  ----------- 
 
Total net finance costs                                         (36)         (32) 
-------------------------------------------------------  -----------  ----------- 
 
Headline total net finance costs                                (24)         (18) 
-------------------------------------------------------  -----------  ----------- 
 

(i) Headline finance costs exclude net interest on defined benefit pension obligations (see note 3).

5 Tax

The effective tax rate on headline earnings of 21% (2017/18: 21%). Items attracting no tax relief or liability relate mainly to non-deductible depreciation in the UK business. The effective tax rate on non-headline earnings and costs is 2% (2017/18: 28%), further information is outlined in note 3. A further reduction in the UK corporation tax rate to 17% from 1 April 2020 has been substantively enacted by the balance sheet date and has been used in the recognition of deferred tax balances.

6 Earnings per share

 
                                                                Year         Year 
                                                               ended        ended 
                                                            27 April     28 April 
                                                                2019         2018 
                                                          GBPmillion   GBPmillion 
-----------------------------------------------------   ------------  ----------- 
Headline earnings 
Continuing operations                                            236          303 
------------------------------------------------------  ------------  ----------- 
 
Total (loss) / earnings 
Continuing operations                                          (311)          236 
Discontinued operations                                          (9)         (70) 
------------------------------------------------------  ------------  ----------- 
Total                                                          (320)          166 
------------------------------------------------------  ------------  ----------- 
 
                                                             Million      Million 
-----------------------------------------------------   ------------  ----------- 
Weighted average number of shares 
Average shares in issue                                        1,160        1,157 
Less average holding by Group ESOT                               (1)          (1) 
------------------------------------------------------  ------------  ----------- 
For basic earnings per share                                   1,159        1,156 
Dilutive effect of share options and other incentive 
 schemes                                                           9            4 
For diluted earnings per share                                 1,168        1,160 
------------------------------------------------------  ------------  ----------- 
 
                                                               Pence        Pence 
-----------------------------------------------------   ------------  ----------- 
Basic earnings per share 
Total (continuing and discontinued operations)                (27.6)         14.4 
Adjustment in respect of discontinued operations                 0.8          6.0 
------------------------------------------------------  ------------  ----------- 
Continuing operations                                         (26.8)         20.4 
Adjustments for non-headline - continuing operations 
 (net of taxation)                                              47.2          5.8 
------------------------------------------------------  ------------  ----------- 
Headline basic earnings per share                               20.4         26.2 
------------------------------------------------------  ------------  ----------- 
 
Diluted earnings per share 
Total (continuing and discontinued operations)                (27.6)         14.3 
Adjustment in respect of discontinued operations                 0.8          6.0 
------------------------------------------------------  ------------  ----------- 
Continuing operations                                         (26.8)         20.3 
Adjustments for hon-headline - continuing operations 
 (net of taxation)                                              47.0          5.8 
------------------------------------------------------  ------------  ----------- 
Headline diluted earnings per share                             20.2         26.1 
------------------------------------------------------  ------------  ----------- 
 

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

 
                                                                27 April     28 April 
                                                                    2019         2018 
                                                              GBPmillion   GBPmillion 
-----------------------------------------------------------  -----------  ----------- 
Amounts recognised as distributions to equity shareholders 
 in the period 
 - on ordinary shares of 0.1p each 
Final dividend for the year ended 29 April 2017 of 7.75p 
 per ordinary share                                                    -           89 
Interim dividend for the year ended 28 April 2018 of 3.50p 
 per ordinary share                                                    -           41 
Final dividend for the year ended 28 April 2018 of 7.75p 
 per ordinary share                                                   90            - 
Interim dividend for the year ended 27 April 2019 of 2.25p 
 per ordinary share                                                   26            - 
-----------------------------------------------------------  ----------- 
                                                                     116          130 
-----------------------------------------------------------  -----------  ----------- 
 

The following distribution is proposed but had not been effected at 27 April 2019 and is subject to shareholders' approval at the forthcoming Annual General Meeting:

 
                                                                        GBPmillion 
----------------------------------------------------------------------  ---------- 
Final dividend for the year ended 27 April 2019 of 4.50p per ordinary 
 share                                                                          52 
----------------------------------------------------------------------  ---------- 
 

The payment of this dividend will not have any tax consequences for the Group.

8 Notes to the cash flow statement

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

 
                                                                         Year         Year 
                                                                        ended        ended 
                                                                     27 April     28 April 
                                                                         2019         2018 
                                                                   GBPmillion   GBPmillion 
----------------------------------------------------------------  -----------  ----------- 
(Loss) / profit before interest and tax - continuing operations         (223)          321 
Loss before interest and tax - discontinued operations                   (14)         (83) 
Depreciation and amortisation                                             174          204 
Investment income                                                           -            - 
Share-based payment charge                                                 21           14 
Share of results of joint ventures                                          -            3 
Profit / (loss) on disposal of subsidiary                                   -          (2) 
Profit / (loss) on disposal of fixed assets                                 -          (1) 
Impairments and other non-cash items (see note 3 (v))                     347           56 
Operating cash flows before movements in working capital                  305          512 
 
Movements in working capital: 
     Increase in inventory                                               (26)         (72) 
     Decrease / (increase) in receivables                                 226         (32) 
     (Decrease) / increase in payables                                  (182)           17 
     Increase / (decrease) in provisions                                   54          (5) 
----------------------------------------------------------------  -----------  ----------- 
                                                                           72         (92) 
 
Cash generated from operations                                            377          420 
----------------------------------------------------------------  -----------  ----------- 
 

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

8 Notes to the cash flow statement (continued)

b) Analysis of net debt

 
                                                                       Other 
                                          29 April         Cash     non-cash      Currency     27 April 
                                              2018         flow    movements   translation         2019 
                                        GBPmillion   GBPmillion   GBPmillion    GBPmillion   GBPmillion 
-----------------------------------    -----------  -----------  -----------  ------------  ----------- 
Cash and cash equivalents                      228         (97)            -           (6)          125 
Bank Overdrafts                               (43)           24            -             -         (19) 
-------------------------------------  -----------  -----------  -----------  ------------  ----------- 
Cash and cash equivalents and bank 
 overdrafts                                    185         (73)            -           (6)          106 
 
Borrowings due within one year                (20)           20            -             -            - 
Borrowings due after more than one 
 year                                        (329)           41            -             -        (288) 
Obligations under finance leases              (85)            8          (6)             -         (83) 
-------------------------------------  -----------  -----------  -----------  ------------  ----------- 
                                             (434)           69          (6)             -        (371) 
  -----------------------------------  -----------  -----------  -----------  ------------  ----------- 
 
Net debt                                     (249)          (4)          (6)           (6)        (265) 
-------------------------------------  -----------  -----------  -----------  ------------  ----------- 
 
 
                                                                       Other 
                                          30 April         Cash     non-cash      Currency     28 April 
                                              2017         flow    movements   translation         2018 
                                        GBPmillion   GBPmillion   GBPmillion    GBPmillion   GBPmillion 
-----------------------------------    -----------  -----------  -----------  ------------  ----------- 
Cash and cash equivalents                      209           21            -           (2)          228 
Bank Overdrafts                               (10)         (33)            -             -         (43) 
-------------------------------------  -----------  -----------  -----------  ------------  ----------- 
Cash and cash equivalents and bank 
 overdrafts                                    199         (12)            -           (2)          185 
 
Borrowings due within one year                   -         (20)            -             -         (20) 
Borrowings due after more than one 
 year                                        (381)           52            -             -        (329) 
Obligations under finance leases              (89)           10          (6)             -         (85) 
-------------------------------------  -----------  -----------  -----------  ------------  ----------- 
                                             (470)           42          (6)             -        (434) 
  -----------------------------------  -----------  -----------  -----------  ------------  ----------- 
 
Net (debt) / funds                           (271)           30          (6)           (2)        (249) 
-------------------------------------  -----------  -----------  -----------  ------------  ----------- 
 

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

 
                                                                         Year         Year 
                                                                        ended        ended 
                                                                     27 April     28 April 
                                                                         2019         2018 
                                                                   GBPmillion   GBPmillion 
----------------------------------------------------------------  -----------  ----------- 
Cash inflow from operations                                               377          420 
Operating cash flows from discontinued operations*                          8           11 
Taxation                                                                 (45)         (63) 
Interest, facility arrangement fees, dividends from investments 
 and repayment of finance leases                                         (30)         (24) 
Capital expenditure                                                     (166)        (173) 
Proceeds from disposal of fixed assets                                      9            2 
Other movements                                                             -          (1) 
----------------------------------------------------------------  -----------  ----------- 
Free cash flow                                                            153          172 
----------------------------------------------------------------  -----------  ----------- 
 

* Operating cash flows from discontinued operations are removed in the above reconciliation as free cash flow is presented on a continuing basis.

9 Discontinued operations and assets held for sale

There have been no additional operations classified as discontinued during the year ended 27 April 2019. The following were classified as discontinued in the year ended 28 April 2018 and have continued to incur costs in the current financial year:

honeybee

On 4 May 2018, the Group agreed to sell the honeybee operations through an asset sale, which was completed on 31 May 2018. These operations were classified as a disposal group held for sale and presented separately in the balance sheet. An impairment of GBP55 million was recognised on classification to assets held for sale, representing the difference between the expected proceeds and

the book value of the related assets. The impairment, together with the trading loss recognised during the year of GBP21 million were classified as a discontinued operation in the year ended 28 April 2018.

For the year ended 27 April 2019, no profit or loss on disposal was recognised from the completion of the sale of the operations. Additional costs of GBP7 million have been recorded in relation to onerous contracts following the sale and compensation to previous employees.

A deferred tax credit of GBP4 million in relation to a prior year adjustment relating to accelerated capital allowances has been recognised.

Spain

On 29 September 2017, the Group completed the disposal of The Phone House Spain S.L.U., Connected World Services Europe S.L. and Smarthouse Spain S.A. which together represented the trading operations in Spain. A gain of GBP1 million arose on the disposal, being the difference between the proceeds of disposal and the carrying amount of the subsidiaries' net assets and attributable goodwill. The trading results of the operations up to the date of disposal were classified as discontinued.

For the year ended 27 April 2019, the GBP1 million tax credit is in relation to the reversal of previously held provisions for tax risks where statute of limitations have now lapsed.

Sprint

On 7 June 2017 agreement was reached to dispose of the Group's 50% interest in the Sprint Connect LLC joint venture to Sprint Corporation. Proceeds of $22 million (GBP17 million) were received and GBPnil gain or loss was recognised in relation to the disposal. The share of results of the operation to the date of disposal in the year ended 28 April 2018 were classified as discontinued (GBP3 million loss).

Other

As previously reported the sale of operations in Germany was completed on 5 May 2015, the Netherlands on 30 June 2015, Portugal on 31 August 2015 and Virgin Mobile France on 4 December 2014. Additional costs of GBP2 million have been recorded in settlement of warranties in Portugal and a GBP5 million provision has been recognised in the current year in relation to employee matters in previously disposed businesses.

9 Discontinued operations and assets held for sale

a) (Loss) / profit after tax - discontinued operations

 
                                                                        Year ended 27 
                                                                           April 2019 
                     -----------  -----------  ------------  ------------------------ 
                                                     Sprint 
                                                      Joint 
                        honeybee        Spain       Venture        Other        Total 
                      GBPmillion   GBPmillion    GBPmillion   GBPmillion   GBPmillion 
------------------   -----------  -----------  ------------  -----------  ----------- 
Revenue                        -            -             -            -            - 
Expenses                     (7)            -             -          (7)         (14) 
 
(Loss) before tax            (7)            -             -          (7)         (14) 
Income tax                     4            1             -            -            5 
                             (3)            1             -          (7)          (9) 
 ------------------  -----------  -----------  ------------  -----------  ----------- 
 
 
                                                                                        Year ended 28 
                                                                                           April 2018 
                                     -----------  -----------  ------------  ------------------------ 
                                                                     Sprint 
                                                                      Joint 
                                        honeybee        Spain       Venture        Other        Total 
                                      GBPmillion   GBPmillion    GBPmillion   GBPmillion   GBPmillion 
----------------------------------   -----------  -----------  ------------  -----------  ----------- 
Revenue                                        3          144             -            -          147 
Expenses                                    (24)        (144)           (6)            -        (174) 
Impairment of assets                        (55)            -             -            -         (55) 
Share of results of joint venture              -            -          ( 3)            -          (3) 
 
(Loss) before tax                           (76)            -           (9)            -         (85) 
Income tax                                    13            -             -            -           13 
Profit on disposal                             -            1             -            1            2 
-----------------------------------  -----------  -----------  ------------  -----------  ----------- 
                                            (63)            1           (9)            1         (70) 
 ----------------------------------  -----------  -----------  ------------  -----------  ----------- 
 

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 27 
                                                                              April 2019 
                        -----------  -----------  ------------  ------------------------ 
                                                        Sprint 
                                                         Joint 
                           honeybee        Spain       Venture        Other        Total 
                         GBPmillion   GBPmillion    GBPmillion   GBPmillion   GBPmillion 
---------------------   -----------  -----------  ------------  -----------  ----------- 
Operating activities            (5)            -             -          (3)          (8) 
Investing activites               8            -             -            -            8 
                                  3            -             -          (3)            - 
 ---------------------  -----------  -----------  ------------  -----------  ----------- 
 
 
                                                                           Year ended 28 
                                                                              April 2018 
                        -----------  -----------  ------------  ------------------------ 
                                                        Sprint 
                                                         Joint 
                           honeybee        Spain       Venture        Other        Total 
                         GBPmillion   GBPmillion    GBPmillion   GBPmillion   GBPmillion 
---------------------   -----------  -----------  ------------  -----------  ----------- 
Operating activities            (7)          (3)           (2)            1         (11) 
Investing activites            (12)           44            14            -           46 
                               (19)           41            12            1           35 
 ---------------------  -----------  -----------  ------------  -----------  ----------- 
 

9 Discontinued operations and assets held for sale (continued)

c) Assets and liabilities held for sale

The assets and liabilities held for sale relate to the honeybee operations. The major classes of assets and liabilities comprising the operations classified as held for sale are as follows:

 
                                                   27 April     28 April 
                                                       2019         2018 
                                                 GBPmillion   GBPmillion 
----------------------------------------------  -----------  ----------- 
Intangible assets                                         -            8 
Trade receivables                                         -            9 
----------------------------------------------  -----------  ----------- 
Total assets classified as held for sale                  -           17 
----------------------------------------------  -----------  ----------- 
                                                          - 
Deferred income                                           -          (2) 
----------------------------------------------  -----------  ----------- 
Total liabilities classified as held for sale             -          (2) 
----------------------------------------------  -----------  ----------- 
                                                          - 
Net assets of disposal group                              -           15 
----------------------------------------------  -----------  ----------- 
 

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:

 
                                             27 April     28 April 
                                                 2019         2018 
                                           GBPmillion   GBPmillion 
                                          -----------  ----------- 
Revenue from sale of goods and services            13           11 
Amounts owed to the Group                           2            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 updated risks and uncertainties are listed below (including new product safety and Long term & diversification of funding risks). Risks 1 to 10, and the factors which mitigate them, are set out in more detail in the 2017-18 Annual Report and Accounts on pages 15 to 18 and remain relevant in the current period.

A potential Greek exit from the Euro has been removed from the Group Risk register given the developments in the Greek economy over the past few years and the successful performance of the Kotsovolos business.

The risk of failure to operate an effective fraud control environment has been removed from the Group Risk register.

Dependence on networks in driving profitability, cash flow and market share has been incorporated into risk 3 and hence removed as a stand-alone risk. The board believe that the nature or relationships with network providers is one of the core elements of the Dixons Carphone business model. The mitigating actions with regards to dependency on network contracts remain unchanged and will be monitored as part of the review of risk 3.

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

2. 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 operations and financial performance;

3. 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;

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

5. Failure in appropriately safeguarding sensitive information and failure to comply with legislation could result in reputational damage, financial penalties and a resultant deterioration in financial performance;

6. Failure to appropriately safeguard against cyber risks and associated attacks could result in reputational damage, customer compensation, financial penalties and a resultant deterioration in financial performance;

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

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

10. Crystallisation of potential tax exposures resulting from legacy corporate transactions, employee and sales taxes arising from periodic tax audits and investigations across various jurisdictions in which the Group operates may impact cash flows for the Group;

11. Product safety where poor quality or unsafe products provided to customers which pose risk to customer health, and result in fines, prosecution and significant reputational damage has been added to the Group Risk profile. Whilst the Board is assured that the business operates effective controls to mitigate this risk through the businesses Technical and Quality processes and procedures, it wishes to ensure that the risk receives a level of Board oversight; and

12. Long term diversification of funding has been added to the Group Risk profile. Given the current funding arrangements (see note 8 of the financial information included in this report), the new management team wish to explore the potential for broader, more diverse sources of funding.

The directors have prepared the preliminary 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, including seasonal borrowing requirements and available facilities on a monthly basis. 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.

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    Closest equivalent         Reconciliation 
 measure                    GAAP measure               to IFRS measure       Definition and purpose 
-------------------------  -------------------------  ---------------------  ----------------------------------------- 
  Revenue measures 
-------------------------  -------------------------  ---------------------  ----------------------------------------- 
  Headline / non-headline    Revenue                    See note 3             Headline revenue represent 
   Revenue                                               for details            the ongoing revenue of the 
                                                         of non-headline        Group, and are adjusted to 
                                                         revenue                remove non-headline revenue 
                                                                                items. In the current and 
                                                                                restated comparative periods, 
                                                                                this relates to the iD mobile 
                                                                                operations in the Republic 
                                                                                of Ireland, which is classified 
                                                                                as a 'business to be exited' 
                                                                                and therefore presented in 
                                                                                non-headline results. 
-------------------------  -------------------------  ---------------------  ----------------------------------------- 
  Like for Like              No direct equivalent       Not applicable         Like-for-like revenue is calculated 
   (LFL) % change                                                               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 revenue 
                                                                                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             Revenue compared           Not applicable         Reflects total revenue on 
   % change                   to prior period                                   a constant currency and period 
                              consolidated                                      basis. Provides a measure 
                              at a constant                                     of performance excluding the 
                              exchange rate.                                    impact of foreign exchange 
                                                                                rate movements. 
-------------------------  -------------------------  ---------------------  ----------------------------------------- 
  Profit measures 
-------------------------  -------------------------  ---------------------  ----------------------------------------- 
  Headline / Non-headline    Profit/(loss)              See note 2             As discussed above, the Group 
   profit/(loss)              before interest            for reconciliation     uses headline profit measures 
   before tax, EBIT           and tax, profit/(loss)     of headline            in order to provide a useful 
   and profit/(loss)          after interest             profit measures        measure of the ongoing performance 
   after tax                  and tax.                   to statutory           of the Group. These are adjusted 
                                                         profit measures        from total measures to remove 
                                                                                'non-headline' items, the 
                                                                                nature of which are disclosed 
                                                                                above. 
-------------------------  -------------------------  ---------------------  ----------------------------------------- 
  EBIT                       Profit/(loss)              No reconciling         Earnings before interest and 
                              before interest            items                  tax (EBIT) is directly comparable 
                              and tax                                           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                See notes 3            Headline net finance costs 
   net finance costs          costs                      and 4                 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                 See note 3             Headline income tax expense 
   income tax expense         expense / (credit)                                / (credit) represents the 
   / (credit)                                                                   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           No direct equivalent       See note 3             The effective tax rate measures 
   effective tax                                                                provide a useful indication 
   rate                                                                         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             Statutory EPS              See note 6             EPS measures are presented 
   EPS - continuing           figures                                           to reflect the impact of non-headline 
   operations, headline                                                         items in order to show a headline 
   diluted EPS -                                                                EPS figure, which reflects 
   continuing operations,                                                       the headline earnings per 
   headline basic                                                               share of the Group. We consider 
   EPS - total,                                                                 the headline EPS provides 
   headline diluted                                                             a useful measure of the ongoing 
   EPS - total                                                                  earnings of the underlying 
                                                                                Group. 
                           -------------------------  ---------------------  ----------------------------------------- 
  Cash flow measures 
                           -------------------------  ---------------------  ----------------------------------------- 
  Free Cash Flow             Cash generated             See note 8             Free Cash Flow comprises cash 
                              from operations                                   generated from / (utilised 
                                                                                by) continuing operations 
                                                                                before special pension contributions, 
                                                                                less net finance expense, 
                                                                                less income tax paid and less 
                                                                                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              See note 8             Comprises cash and cash equivalents 
                              equivalents                                       and short term deposits, less 
                              less loans                                        borrowings and finance lease 
                              and other borrowings                              creditors. We consider that 
                              and finance                                       this provides a useful measure 
                              lease obligations.                                of the indebtedness of the 
                                                                                Group. 
-------------------------  -------------------------  ---------------------  ----------------------------------------- 
  Other measures 
-------------------------  -------------------------  ---------------------  ----------------------------------------- 
  Return on Capital          No direct equivalent       Not applicable         Calculated on a pre-tax and 
   Employed (ROCE)                                                              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. 
-------------------------  -------------------------  ---------------------  ----------------------------------------- 
 

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           Businesses exited or to be exited are those 
   exited                     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         The Company or Group prior to the Merger on 
   Warehouse or Carphone      6 August 2014 
   Group 
-------------------------  --------------------------------------------------------- 
  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 
-------------------------  --------------------------------------------------------- 
  CRM                        Customer Relationship Management 
-------------------------  --------------------------------------------------------- 
  CWS                        The Connected World Services division of the 
                              Company 
-------------------------  --------------------------------------------------------- 
  Dixons or Dixons           Dixons Retail plc and its subsidiary companies 
   Retail 
-------------------------  --------------------------------------------------------- 
  Dixons Carphone or         The Company, its subsidiaries, interests in 
   Group                      joint ventures and other investments 
-------------------------  --------------------------------------------------------- 
  Dixons Retail Merger       The all share merger of Dixons Retail plc and 
   or Merger                  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 was our proprietary IT software, developed 
                              in-house initially to serve our mobile phone 
                              customers. It is a unique omni-channel, multi-industry 
                              software that simplified 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) 
-------------------------  --------------------------------------------------------- 
 
 
  Peak / post peak                 Peak refers to the 10 week trading period ending 
                                    on 5 January 2019 as reported in the Group's 
                                    Christmas Trading statement on 22 January 2019. 
                                    Post peak refers to the trading period from 
                                    6th January 2019 to the Group's year-end on 
                                    27 April 2019 
                                 ---------------------------------------------------- 
  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 previously held by the Group 
                                    in Sprint Connect LLC, a distribution joint 
                                    venture held with Sprint LLC in the USA 
-------------------------------  ---------------------------------------------------- 
  Special pension contributions    Represent contributions made under the schedule 
                                    of contributions agreed with the scheme trustees 
                                    following the 2016 triennial review 
-------------------------------  ---------------------------------------------------- 
  SWAS                             Stores-within-a-store 
-------------------------------  ---------------------------------------------------- 
  TalkTalk or TalkTalk             TalkTalk Telecom Group PLC and its subsidiaries 
   Group                            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 2018/19 Annual Report and Accounts which will be issued in July 2019, 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 19 June 2019, 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 2017/18 Annual Report and Accounts with the exception of the following appointments and resignations:

 
Appointments                            Resignations 
--------------------------------------  ---------------------------------- 
                                        Jock Lennox (resigned 31 December 
Jonny Mason (appointed 13 August 2018)   2018) 
 Eileen Burbidge (appointed 1 January    Humphrey Singer (resigned 21 June 
 2019)                                   2018) 
--------------------------------------  ---------------------------------- 
 

The financial statements were approved by the directors on 19 June 2019 and signed on their behalf by:

 
 Alex Baldock             Jonny Mason 
  Group Chief Executive    Group Chief Financial Officer 
 

Number of stores (unaudited)

 
                                       27 April                   28 April 
                                           2019                       2018 
                      -------------------------  ------------------------- 
                          Own  Franchise             Own  Franchise 
                       stores     stores  Total   stores     stores  Total 
--------------------  -------  ---------  -----  -------  ---------  ----- 
 
UK electricals            314          0    314      322          -    322 
UK Dixons Travel           29          0     29       28          -     28 
Ireland electricals        18          0     18       18          -     18 
UK mobile                 560          0    560      662          -    662 
Ireland mobile             70          0     70       73          -     73 
--------------------  -------  ---------  ----- 
UK & Ireland              991          0    991    1,103          -  1,103 
 
Norway                     80         67    147       83         64    147 
Sweden                    110         62    172      111         55    166 
Denmark                    38          0     38       37          -     37 
Finland                    22         19     41       20         18     38 
Other Nordics               0         13     13        -         13     13 
--------------------  -------  ---------  -----  -------  ---------  ----- 
Nordics                   250        161    411      251        150    401 
 
Greece                     70         25     95       69         26     95 
 
Total                   1,311        186  1,497    1,423        176  1,599 
--------------------  -------  ---------  -----  -------  ---------  ----- 
 

Selling space '000 sq ft (unaudited)

 
                                        27 April                    28 April 
                                            2019                        2018 
                      --------------------------  -------------------------- 
                          Own  Franchise              Own  Franchise 
                       stores     stores   Total   stores     stores   Total 
--------------------  -------  ---------  ------  -------  ---------  ------ 
 
UK electricals          5,613          0   5,613    5,659          -   5,659 
UK Dixons Travel           42          0      42       36          -      36 
Ireland electricals       204          0     204      206          -     206 
UK mobile                 493          0     493      567          -     567 
Ireland mobile             44          0      44       43          -      43 
--------------------  -------  ---------  ------ 
UK & Ireland            6,396          0   6,396    6,511          -   6,511 
 
Norway                  1,100        630   1,730    1,145        607   1,752 
Sweden                  1,260        345   1,605    1,294        337   1,631 
Denmark                   691          0     691      653          -     653 
Finland                   537        163     700      536        153     689 
Other Nordics               0         90      90        -         87      87 
--------------------  -------  ---------  ------  -------  ---------  ------ 
Nordics                 3,588      1,228   4,816    3,628      1,184   4,812 
 
Greece                    886        101     987      881        108     989 
 
Total                  10,870      1,329  12,199   11,020      1,292  12,312 
--------------------  -------  ---------  ------  -------  ---------  ------ 
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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