Dixons Carphone plc 2018/19 Preliminary Results

Currys PLC

Jun 20 2019 08:15 BSTSource: RNS

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 £10,433 million

• Group headline PBT⁽¹⁾ of £298 million (2017/18: £382 million):

• Statutory loss before tax of £259 million (2017/18: profit of £289 million), including non-headline charges of £557 million (2017/18: £93 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 £153 million (2017/18: £172 million). Operating cash flow of £286 million (2017/18: £312 million)

• Net debt⁽⁶⁾ of £265 million (2017/18: £249 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 £300 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 £1 billion of Group free cash flow over the five year plan, but also to accelerate our £200 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 £200 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 £300 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 £1 billion of cumulative free cash flow over the plan, including working capital improvements of over £500 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 £210 million, with growth thereafter as transformation benefits feed through

• Capex of circa £275 million, in line with overall transformation capex guidance; peak year of transformation investment

• Exceptional cash costs expected of circa £80 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⁾
		2018/19	2017/18	Reported	Local currency⁽²⁾	Like-for- like ⁽³⁾	2018/19	2017/18
	Notes	£m	£m	% change	% change	% change	£m	£m
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
	Notes	Reported % change	Local currency⁽²⁾ % change	Like-for- like ⁽³⁾ % change	Reported % change	Local currency⁽²⁾ % change	Like-for- like ⁽³⁾ % change	Reported % change	Local currency⁽²⁾ % change	Like-for- like ⁽³⁾ % 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

Assad Malic	Group Corporate Affairs 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 £225 million recorded over the goodwill of the UK & Ireland mobile segment, together with impairment of related assets of £122 million and additional onerous lease charges of £36 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 £420 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 £1,000 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 £200 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 £200 million cost reduction two years early circa £100 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 £10,433 million (2017/18: £10,525 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 £78 million to £322 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 £4,475 million (2017/18: £4,412 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 £51 million to £180 million (2017/18: £231 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 (£16 million), prior year benefit from changes in the cost profile of customer support agreements (£4 million) and negative impact from the current year implementation of IFRS15 on revenue from customer support agreements (£5 million). In total these items accounted for £25 million of the year-on-year decline, of which £15 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 £1,998 million was recognised in the year (2017/18: £2,233 million) which included £7 million of out of period revenue (2017/18: £3 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 £34 million to £9 million (2017/18: £43 million) reflecting the decrease in sales. Overall gross margins were up 50bps year-on-year. Headline EBIT included negative revaluations of £32 million (2017/18: £30 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 (£31 million). Current year EBIT included an £18 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 £9 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 £3,501 million (2017/18: £3,470 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 £6 million to £112 million (2017/18: £106 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 £459 million (2017/18: £410 million), with market share increasing across all categories. Gross margins remained stable, and reported EBIT increased to £21 million (2017/18: £20 million), reflecting continued investment in core operations to support future growth.

Net finance costs

Headline net finance costs were £24 million (2017/18: £18 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 £3 million to £11 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 £million	2017/18 £million
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 £153 million (2017/18: £172 million), a decrease of 11% for the reasons described below.

The Group experienced a working capital inflow of £24 million (2017/18: £80 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 £37 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 £30 million of this working capital movement will reverse in FY20.

Capital expenditure in the period was £166 million (2017/18: £173 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 £63 million to £45 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 £million	2017/18 £million
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 £265 million, an increase of £16 million from £249 million in the prior year. Free Cash Flow was an inflow of £153 million (2017/18: £172 million) for the reasons described above.

Dividend cash outflows decreased from £130 million in the prior year to £116 million in current year reflecting a year-on-year decrease in FY 2018/19 interim dividend paid.

Net cash outlows of £1 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 £8 million, offset by £5 million of additional payments for honeybee related costs, £3 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 £439 million (2017/18: £405 million) up year-on-year because of the lower usage of the supplier funding working capital facility. The year end net debt balance was £265 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 £million	2017/18 £million
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 £10,433 million due to the reasons discussed earlier in this report.

Profit before interest and tax decreased from £321 million to a loss of £223 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 £4 million higher than the prior year at £36 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 £46 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 £259 million (2017/18: £289 million profit)‌ includes non-headline charges of £557 million (2017/18: £93 million)‌‌. These charges are analysed below. Further details can be found in note 3 to the Financial Information.

	2018/19 £million	2017/18 £million
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 £15 million, on-going employee related matters, £30 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 £225 million to be recorded over the goodwill of the UK & Ireland mobile segment, together with impairment of related assets of £122 million and additional onerous lease charges of £36 million to be recorded against individual stores.

Net pension interest was £12 million (2017/18: £14 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 £10 million represented a tax credit on the above non-headline items of £56 million, offset by an additional tax provision of £46 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 £7 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 £million	2017/18 £million
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 £63 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 £million	2017/18 £million
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 £1 million (2017/18: £10 million outflow) related to deferred consideration payments in the Nordics for the 'Epoq' kitchen business. Prior year acquisition cash outflows comprised £7 million of deferred consideration payments for the acquisitions of Simplifydigital of £5 million and the 'Epoq' kitchen business in the Nordics of £2 million together with £3 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 £93 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 £3,196 million to £2,640 million primarily reflecting the total statutory loss of £320 million, the loss on retranslation of overseas operations of £30 million and actuarial loss (net of taxation) relating to the defined benefit pension scheme of £107 million and the payment of dividends of £116 million.

Other matters

Pensions

The IAS 19 accounting deficit of the defined benefit section of the UK pension scheme of Dixons Retail amounted to £579 million at 27 April 2019 compared to £470 million at 28 April 2018. Contributions during the period under the terms of the deficit reduction plan amounted to £46 million (2017/18: £46 million), with future contributions under the current agreement with the Trustees of the fund, of £46 million per annum to be paid until 2028/29, with a further payment of £25 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 2019			Year ended 28 April 2018
	Note	Headline* £million	Non- headline* £million	Total £million	Headline* £million	Non- headline* £million	Total £million
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
Basic - continuing operations		20.4p		(26.8)‌‌p	26.2p		20.4p
Diluted - continuing operations		20.2p		(26.8)‌‌p	26.1p		20.3p
Basic - total				(27.6)‌‌‌‌p			14.4p
Diluted - total				(27.6)‌‌‌‌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 ended 27 April 2019 £million	Year ended 28 April 2018 £million
(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

	Note	27 April 2019 £million	28 April 2018 £million
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

	Note	Share capital £million	Share premium reserve £million	Accumulated profits £million	Translation reserve £million	Demerger reserve £million	Total equity £million
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

	Note	Year ended 27 April 2019 £million	Year ended 28 April 2018 £million
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 & Ireland electricals £million	UK & Ireland mobile £million	Nordics £million	Greece £million	Eliminations £million	Total £million
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


	Headline profit / (loss) £million	Acquisition / disposal related items £million	Strategic change programmes £million	Data incident costs £million	Regulatory costs £million	Impairment losses and onerous leases £million	Pension scheme interest £million	Total profit / (loss) £million
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 & Ireland electricals £million	UK & Ireland mobile £million	Nordics £million	Greece £million	Eliminations £million	Total £million
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 profit / (loss) (restated)* £million	Acquisition / disposal related items £million	Strategic change programmes £million	Share plan taxable benefit compensation £million	Pension scheme interest £million	Total profit / (loss) £million
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 headline revenue as previously reported £million	Reallocate UK & Ireland electricals revenue £million	Reallocate UK & Ireland mobile revenue £million	Total £million
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 as previously reported £million	Reallocate UK & Ireland electricals £million	Reallocate UK & Ireland mobile £million	Reallocate central costs £million	Total £million
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 & Ireland electricals £million	UK & Ireland mobile £million	Nordics £million	Greece £million	Total £million
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 & Ireland electricals £million	UK & Ireland mobile £million	Nordics £million	Greece £million	Total £million
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

	Note	Year ended 27 April 2019 £million	Year ended 28 April 2018 £million
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 £28 million (28 April 2018: £32 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 £5 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: £2 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 £nil based on the fair value of the retained interest. In March 2017, Unieuro undertook an IPO for 31.8% of its shareholdings, which reduced the Group's investment to 10.2% of the Unieuro operations.

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 £10 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: £9 million).

(ii) Strategic change programmes:

During the current period, costs of £49 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:

- £11 million in relation to costs of implementing the strategy;

- £21 million cost in relation to restructuring and redundancy costs for central operations organisational design;

3 Non-headline items (continued)

£9 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

- £8 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 £18 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 £29 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 £23 million in the prior year ended 28 April 2018 related to business restructuring in the Nordics of £14 million, together with UK business restructuring and functional transformation costs of £9 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 £20 million have been recorded. £14 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 £52 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 £15 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 £15 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 £1 million have also been provided for in relation to redress for ongoing employee related matters for historical periods.

- £30 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:

- £225 million representing the goodwill associated with the UK & Ireland mobile operating segment

- £10 million of acquisition intangibles recognised during the previous acquisitions

- £75 million of intangible assets, primarily relating to capitalised software development costs

- £25 million of central property, plant and equipment

- £12 million of store assets

In addition, £36 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 £11 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 £46 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 £10 million.

4 Net finance costs

	Year ended 27 April 2019 £million	Year ended 28 April 2018 £million
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 ended 27 April 2019 £million	Year ended 28 April 2018 £million
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 2019 £million	28 April 2018 £million
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:

	£million
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 ended 27 April 2019 £million	Year ended 28 April 2018 £million
(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

	29 April 2018 £million	Cash flow £million	Other non-cash movements £million	Currency translation £million	27 April 2019 £million
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)‌‌‌‌

	30 April 2017 £million	Cash flow £million	Other non-cash movements £million	Currency translation £million	28 April 2018 £million
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 ended 27 April 2019 £million	Year ended 28 April 2018 £million
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 £55 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 £21 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 £7 million have been recorded in relation to onerous contracts following the sale and compensation to previous employees.

A deferred tax credit of £4 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 £1 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 £1 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 (£17 million) were received and £nil 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 (£3 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 £2 million have been recorded in settlement of warranties in Portugal and a £5 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
	honeybee £million	Spain £million	Sprint Joint Venture £million	Other £million	Total £million
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
	honeybee £million	Spain £million	Sprint Joint Venture £million	Other £million	Total £million
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
	honeybee £million	Spain £million	Sprint Joint Venture £million	Other £million	Total £million
Operating activities	(5)‌‌	-	-	(3)‌‌	(8)‌‌
Investing activites	8	-	-	-	8
	3	-	-	(3)‌‌	-

				Year ended 28 April 2018
	honeybee £million	Spain £million	Sprint Joint Venture £million	Other £million	Total £million
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 2019 £million	28 April 2018 £million
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 2019

£million

28 April
2018

£million

Revenue from sale of goods and services

Amounts owed to the Group

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 measure	Closest equivalent GAAP measure	Reconciliation to IFRS measure	Definition and purpose
Revenue measures
Headline / non-headline Revenue	Revenue	See note 3 for details of non-headline revenue	Headline revenue represent the ongoing revenue of the Group, and are adjusted to remove non-headline revenue items. In the current and restated comparative periods, this relates to the iD mobile operations in the Republic of Ireland, which is classified as a 'business to be exited' and therefore presented in non-headline results.
Like for Like (LFL) % change	No direct equivalent	Not applicable	Like-for-like revenue is calculated based on headline store and internet revenue using constant exchange rates. New stores are included where they have been open for a full financial year both at the beginning and end of the financial period. Revenue from franchise stores are excluded and closed stores are excluded for any period of closure during either period. Customer support agreement, insurance and wholesale 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 % change	Revenue compared to prior period consolidated at a constant exchange rate.	Not applicable	Reflects total revenue on a constant currency and period basis. Provides a measure of performance excluding the impact of foreign exchange rate movements.
Profit measures
Headline / Non-headline profit/(loss) before tax, EBIT and profit/(loss) after tax	Profit/(loss) before interest and tax, profit/(loss) after interest and tax.	See note 2 for reconciliation of headline profit measures to statutory profit measures	As discussed above, the Group uses headline profit measures in order to provide a useful measure of the ongoing performance of the Group. These are adjusted from total measures to remove 'non-headline' items, the nature of which are disclosed above.
EBIT	Profit/(loss) before interest and tax	No reconciling items	Earnings before interest and tax (EBIT) is directly comparable to profit/(loss) before tax. The terminology used is consistent with that used historically and in external communications.
Other earnings measures
Headline / non-headline net finance costs	Net finance costs	See notes 3 and 4	Headline net finance costs are adjusted from total finance costs to remove non-headline finance cost items. Non-headline finance costs includes the finance charge of businesses to be exited, net pension interest costs, finance income from previously disposed operations not classified as discontinued, and other exceptional items considered so one-off and material that they distort underlying finance costs of the Group. Under IAS 19 'Employee Benefits', the net interest charge on defined benefit pension schemes is calculated based on corporate bond yield rates at a specific date, which, as can vary over time, creates volatility in the income statement and is unrepresentative of the actual investment gains or losses made on the liabilities. Therefore this item has been removed from our headline earnings measure in order to remove this non-cash volatility.
Headline / non-headline income tax expense / (credit)	Income tax expense / (credit)	See note 3	Headline income tax expense / (credit) represents the income tax on headline earnings. Non-headline income tax expense / (credit) represents the tax on items classified as 'non-headline', either in the current year, or the current year effect of prior year tax adjustments on items previously classified as non-headline. We consider the headline income tax measures represent a useful measure of the ongoing tax charge / credit of the Group.
Headline / Total effective tax rate	No direct equivalent	See note 3	The effective tax rate measures provide a useful indication of the tax rate of the Group. Headline effective tax is the rate of tax recognised on headline earnings, and total effective tax is the rate of tax recognised on total earnings.
Earnings per share measures
Headline basic EPS - continuing operations, headline diluted EPS - continuing operations, headline basic EPS - total, headline diluted EPS - total	Statutory EPS figures	See note 6	EPS measures are presented to reflect the impact of non-headline items in order to show a headline EPS figure, which reflects the headline earnings per share of the Group. We consider the headline EPS provides a useful measure of the ongoing earnings of the underlying Group.
Cash flow measures
Free Cash Flow	Cash generated from operations	See note 8	Free Cash Flow comprises cash generated from / (utilised by) continuing operations before special pension contributions, less net finance expense, less income tax paid and 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 equivalents less loans and other borrowings and finance lease obligations.	See note 8	Comprises cash and cash equivalents and short term deposits, less borrowings and finance lease creditors. We consider that this provides a useful measure of the indebtedness of the Group.
Other measures
Return on Capital Employed (ROCE)	No direct equivalent	Not applicable	Calculated on a pre-tax and lease adjusted basis. The return is based on headline EBIT, adjusted to add back the interest component associated with capitalising operating lease costs. Capital employed is based on net assets including capitalised leases, but excluding goodwill, cash, tax and the defined benefit pension obligations. The calculation is performed on a moving annual total in order to best match the return on assets in a year with the assets in use during the year to generate the return. We consider this a useful measure to understand how the Group has used the capital employed during the period.

Other definitions

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

Acquisition intangibles	Acquired intangible assets such as customer bases, brands and other intangible assets acquired through a business combination capitalised separately from goodwill. Where businesses have grown organically rather than through acquisition, there is no amortisation of acquired intangibles and therefore the non-cash amortisation charge is removed from our headline earnings measures in order to increase comparability between segments
ADRs	American Depositary Receipts
ARPU	Average revenue per user
B2B	Business to business
Best Buy	Best Buy Co., Inc. (incorporated in the United States)‌‌ and its subsidiaries and interests in joint ventures and associates
Best Buy Europe	Best Buy Europe Distributions Limited and its subsidiaries and interests in joint ventures and associates (incorporated in England & Wales)‌‌
Board	The Board of directors of the Company
Businesses to be exited	Businesses exited or to be exited are those which the Group has exited or committed to or commenced to exit through disposal or closure but do not meet the definition of discontinued operations as stipulated by IFRS and are material to the results or operations of the Group. Comparative results in the statement of comprehensive income and the notes are restated accordingly for the impact of businesses exited or to be exited.
Carphone, Carphone Warehouse or Carphone Group	The Company or Group prior to the Merger on 6 August 2014
CGU	Cash Generating Unit
Company or the Company	Dixons Carphone plc (incorporated in England & Wales under the Act, with registered number 07105905)‌‌, whose registered office is at 1 Portal Way, London W3 6RS
CPW	The continuing business of the Carphone Group
CPW Europe	Best Buy Europe's core continuing operations
CPW Europe Acquisition	The Company's acquisition of Best Buy's interest in CPW Europe, which completed on 26 June 2013
CRM	Customer Relationship Management
CWS	The Connected World Services division of the Company
Dixons or Dixons Retail	Dixons Retail plc and its subsidiary companies
Dixons Carphone or Group	The Company, its subsidiaries, interests in joint ventures and other investments
Dixons Retail Merger or Merger	The all share merger of Dixons Retail plc and Carphone Warehouse plc which occurred on 6 August 2014
EBT	Employee benefit trust
ESOT	Employee share ownership trust
HMRC	Her Majesty's Revenue and Customs
honeybee	honeybee 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 Group	TalkTalk Telecom Group PLC and its subsidiaries and other investments
TSR	Total shareholder return
UK GAAP	United Kingdom Accounting Standards and applicable law
Virgin Mobile France	Omer Telecom Limited (incorporated in England & Wales)‌‌ and its subsidiaries, operating an MVNO in France as a joint venture between the Company, Bluebottle UK Limited and Financom S.A.S.
WAEP	Weighted average exercise price

Responsibility Statement

The 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

Jonny Mason (appointed 13 August 2018)

Eileen Burbidge (appointed 1 January 2019)

Jock Lennox (resigned 31 December 2018)

Humphrey Singer (resigned 21 June 2018)

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

Alex Baldock

Group Chief Executive

Jonny Mason

Group Chief Financial Officer

Number of stores (unaudited)

	27 April 2019			28 April 2018
	Own stores	Franchise stores	Total	Own stores	Franchise 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 2019			28 April 2018
	Own stores	Franchise stores	Total	Own stores	Franchise 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

FR KMGZVKGZGLZG

Company Announcements

Dixons Carphone plc 2018/19 Preliminary Results