Company Announcements

Interim Results 2020/21

Source: RNS
RNS Number : 7755I
Dixons Carphone PLC
16 December 2020
 

Unaudited Results for the Half Year Ended 31 October 2020

Online success and accelerating transformation drive strong performance

Key Highlights:

·   Kept colleagues safe and provided customers with vital technology during the pandemic

·   Adapted quickly to overcome challenges of multiple lockdowns

·   Strong trading across all markets; market share gains in every channel when open

·   Electricals online sales growth +114% to £1.8bn; UK&I Electricals online +145% to £1.3bn

·   Significant acceleration in omnichannel transformation

·   Further development of colleague tools and training; all invested in our success through continued share awards

Group Financial Performance:

·   Electricals LFL +17%, despite UK, Ireland and Greece stores shut for substantial periods

·   Group adjusted* profit before tax £89m (1H 2019/20: £2m)

·   Group statutory profit before tax of £45m (1H 2019/20: loss of £(86)m)

·   Since start of pandemic, estimated** impact on profit before tax of store restrictions in UK&I was £155m (1H 2020/21: £80m, 2019/20: £75m)

·   Over the same period furlough payments to colleagues and business rates tax relief was £103m (1H 2020/21: £80m, 2019/20: £23m)

·   Net cash* £269m (H1 2019/20: net debt £(208)m, FY 2019/20: net debt £(204)m)

·   Free cash flow* £499m (H1 2019/20: £77m), including £509m working capital* benefit (H1 2019/20: £137m) 

·   No Interim dividend declared

Current trade remains strong:

·   Electricals LFL +16% over six weeks to 12 December, despite extensive store closures in UK and Greece

* See page 2 for the basis of preparation for all performance measures and guidance given

** See page 3 for more details. Based on management estimates.

Alex Baldock, Group Chief Executive

"I'm especially proud of our colleagues today. Thanks to them, we've come through an exceptionally challenging time and emerged a better business. Our UK stores were closed for months, but our colleagues adapted fast, continuing to help millions of people enjoy the technology that's playing an ever-more vital role in their lives, and doing so safely. We've grown sales and profits, preserving our market leadership while accelerating our transformation in the UK, and continuing to power ahead internationally.

We've achieved this performance by doing what we said we'd do. We're winning online, and have triple-digit growth and rapid market share gains to show for it. Still, most customers prefer to buy technology through a mix of online and in store, and we've innovated fast to bring the best of both digital and physical shopping to every customer. In particular, ShopLive 24/7 live video shopping points to a retail future where every customer online can get face-to-face advice from an expert store colleague. Meanwhile, we've continued to build lasting and valuable customer relationships. Our Customer Club grew spectacularly, and now has a third of Nordics households signed up. In the UK, we helped ten million credit and services customers, and we now account for more than half of all UK retail electricals recycling.

We've also been responsible in our use of government support. We used the furlough scheme to preserve jobs in the first lockdown, and didn't use the scheme at all in the second. Meanwhile, leaders have taken salary cuts and waived bonuses, and we suspended the dividend.

The outlook remains uncertain, and we're still nowhere near our full potential. Much hard work lies ahead. But this year has shown this business's qualities, especially the grit and skill of our colleagues. Our strategy has been stress-tested as never before, we've had one arm tied behind our back versus our competitors, and we've responded with stronger performance and an accelerating transformation. I'm more confident than ever that we're on the right path to create a world class business for colleagues, customers, shareholders and society." 

 

Divisional highlights:

·   UK&I Electricals revenue +15% (LFL +16%), adjusted EBIT £95m, +£63m year on year (Statutory EBIT £69m)

o Online sales +145%, almost £800m more sales year on year, offsetting sales loss from enforced store closures and in Dixons Travel

o Online market share gain +6.5%pts, store market share up when stores open

o Lost profit from enforced temporary store closures partially offset by strong omnichannel performance

·   International revenue +16% (LFL +18%), adjusted EBIT £81m, +£20m year on year (Statutory EBIT £75m)

o Online sales +57%, over £160m more sales year on year contributing 21% of sales, +5%pts year on year

o Nordics share growth +1.5%pts, gaining market share in all countries and all categories

o Nordics on course for another year of strong profit growth, Greece impacted by closures

·   UK&I Mobile revenue (54)%, adjusted EBIT loss £(36)m, +£9m year on year (Statutory EBIT loss £(44)m)

o Sales decline due to UK standalone Carphone Warehouse store closures announced in March

o Network debtor unwind funding restructuring costs and drove segmental free cash flow of £2m

Transformation progress accelerating despite Covid-19 interruption:

·   Omnichannel: Group online sales +53% to £3.6bn in the last twelve months

·   Credit:  UK Electricals Credit sales up +25% year on year, total customers over 1.3m

·   Services: Nordics Customer Club to over 4.3m members and almost 40% of revenue

·   Mobile: Restructuring on track, on course to deliver positive cashflow target

 

Basis of preparation

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 'alternative performance measures' or "APMs") 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. These APMs, including adjusted results, free cash flow, net debt, currency % neutral change and like-for-like % change are defined in the glossary on page 46. The Directors consider free cash flow to be a useful measure as, unlike statutory equivalents, it is a good indicator of cash generated from continuing operations which is available to fund future growth or be distributed to shareholders. Free cash flow includes adjusted working capital as defined in the glossary on page 46.

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.

Items excluded from adjusted results can evolve from one financial year to the next depending on the nature of exceptional items or one-off type activities. The Group adopted IFRS 16: 'Leases' using the modified retrospective approach in the prior year. In order to aid comparability with prior year measures, the impact of IFRS 16 was included within adjusting items, which were reported under IAS 17. Following the adoption, and ability to report comparatives under IFRS 16, the impact of such is no longer considered to be an adjusting item. The adjusted results and adjusting items for the comparative reporting periods ended 26 October 2019 and 2 May 2020 have subsequently been restated in to reflect this. Details of all adjustments are included within the glossary and definitions section of the report on page 46.

During the period the Group has redefined net cash / debt to comprise only cash and cash equivalents and short-term deposits, less borrowings, excluding the previously included IAS 17 finance leases. The Directors consider the revised definition to be a more useful measure of the indebtedness of the Group. A full reconciliation to net cash / debt can be found in note A10 within the glossary and definitions.

Throughout results statement references are made to earnings before interest and tax (EBIT), as this is directly comparable to profit / (loss) before interest and taxation. The terminology used is consistent with that used historically and in external communications.

 

 

Summary of Performance

Half Year Statutory Revenue

H1 2020/21
£m

H1 2019/20
£m

Reported

% change

Currency neutral*

% change

Like-for-

Like*

% change 

  UK & Ireland Electricals

2,266

1,979

15%

14%

16%

  International

2,209

1,904

16%

16%

18%

   - Nordics

1,952

1,677

16%

17%

19%

   - Greece

257

227

13%

11%

10%

Electricals

4,475

3,883

15%

15%

17%

  UK & Ireland Mobile

384

830

(54)%

(54)%


Group

4,859

4,713

3%

3%


*See page 46 for further information on our alternative performance measures (APMs) and glossary. This includes definitions, purpose, changes to the prior year, and reconciliation to the nearest IFRS measures. The basis of preparation of our IFRS measures is included on page 2.

Online share of business*

H1 2020/21

H1 2019/20

YoY (%pts)

  UK & Ireland Electricals

58%

27%

+31%

  International

21%

16%

+5%

   - Nordics

22%

17%

+5%

   - Greece

8%

5%

+3%

Electricals

40%

22%

+18%

UK & Ireland: Stores were closed from start of period on 2 May (lockdown started on 24 March), with reopening starting in Ireland from 18 May and UK from 15 June. Greece stores closed:  7 - 30 October. Sales only through internet and call centres.

Sales have been strong across all Electricals markets as we helped customers choose, afford and enjoy the vital technology we sell to keep them connected with loved ones, their families fed, clean and entertained, to work from home and home-school their children. 

At the start of the pandemic, sales were particularly strong in refrigeration and TVs. As the crisis developed and customers across our markets spent more time at home, the technology they needed changed and we saw increased sales of items such as food processors and fitness trackers. All areas of computing (laptops, desktops, tablets and gaming) have been very strong throughout the period.  

In the UK, Ireland and Greece we have traded into and out of multiple lockdowns, each time rapidly transferring sales from stores to online and back again. It is a testament to the scale and adaptability of our business that growth has remained so robust throughout. We have also quickly pivoted to make even more of our expert colleagues, with 2,100 now trained to use ShopLive, our video shopping service, and a further 500 having moved from retail operations to contact centres to cope with elevated demand.

The impact of Covid-19 accelerated the pace of change in the business, with new ways of working making us faster and smarter. This is evidenced by the speed and scale of innovation in some of the most important omnichannel growth areas.

In UK & Ireland our sales and profit have been impacted by Covid-19 and government closure of our stores twice, for a total of four months as we were classified as non-essential. This left us disadvantaged against our principal competitors. Grateful though we are for vital government support, we have lost more profit from lost store sales due to restrictions on stores than we have received in government support. In assessing the enforced store closures, we have estimated the impact on revenue and profits generated by stores. In doing so we have considered the movements in these metrics compared to the comparative period, historic trading patterns and the sales trends that we saw when stores were open. We estimate the cumulative impact of the enforced store closures and the reduction in our Travel business (a strong business that has effectively closed due to travel restrictions) have reduced store sales by at least £320m (1H 2020/21: £185m, 2019/20: £135m). In combination with the ongoing restrictions when stores opened and the shift towards lower margin online sales, this negatively impacted profit before tax by £155m (1H 2020/21: £80m, 2019/20: £75m), including c.£15m we have spent on keeping our colleagues and customers safe, on distancing, hygiene and protective equipment. UK and Irish government schemes paid furlough to our colleagues and allowed relief on business rates tax, totalling £103m (1H 2020/21: £80m, 2019/20: £23m). Together with executive pay cuts, bonus cancellation and suspension of dividend, this allowed us to keep thousands of colleagues employed even as our stores were required to temporarily close. Despite further store closures in the second lockdown, we have not used the Job Retention Scheme since October.

Nevertheless, the strong sales we have seen through our omnichannel model has partly enabled UK & Ireland online sales growth of +145% resulting in additional sales of almost £800m in the period.  This meant that our profits are improved against the first half last year despite the enforced store closures. This profit outturn and a focus on cash has resulted in a net positive cash position at the half year and unused committed debt facilities of £1.3bn.

Profit and EPS* 

1H 2020/21
£m

1H 2019/20
£m

Reported

% change

Currency neutral*

% change

2019/20
£m

Adjusted EBITDA

305

216

41%

43%

556

Adjusted EBITDA margin

6.3%

4.6%

170 bps

180 bps

5.4%







Depreciation on right-of-use assets

(101)

(107)



(217)

Depreciation on other assets

(39)

(41)



(81)

Amortisation

(25)

(20)



(44)

Adjusted EBIT

140

48

192%

211%

214

Adjusted EBIT margin

2.9%

1.0%

190 bps


2.1%







  UK & Ireland Electricals

95

32

197%

197%

164

  International

 81

 61

33%

40%

 147

   - Nordics

74

52

42%

50%

126

   - Greece

7

9

(22)%

(25)%

21

Electricals

176

93

89%

96%

311

Adjusted EBIT margin

3.9%

2.4%

150 bps


3.6%

  UK & Ireland Mobile

(36)

(45)

20%

20%

(97)

Adjusted EBIT

140

48

192%

211%

214







Interest on right-of-use assets

(39)

(38)



(80)

Finance income

4

5



10

Finance costs

 (16)

 (13)



 (28)

Adjusted PBT

89

2

4350%

n/a

116

Adjusted PBT margin

1.9%

0.0%

190 bps

n/a

1.1%







Tax

(20)

 (1)



(41)

Adjusted Profit after tax

69



75

Adjusted EPS

6.0p

0.1p 



6.5p 







Statutory reconciliation






Adjusting items to EBITDA

(27)

(68)



(217)

Statutory EBITDA

278

148



339

Adjusting items to DA

 (13)

 (13)



 (25)

Statutory EBIT

100

(33)

403%

389%

(28)

EBIT Margin

2.1%

(0.7)%

280 bps

280 bps

(0.3)%







Adjusting items to finance income

 -

 -



 -

Adjusting items to finance costs

 (4)

 (7)



 (14)

Statutory PBT

45

(86)



(140)

Adjusting items to Tax

(8)

 17



20

Discontinued operations

 -

 (2)



 (2)

Profit / (Loss) after tax

17

(72)



(163)

EPS

1.5p

(6.2)p



(14.1)p

*All financials include leases prepared in accordance with IFRS16 unless otherwise stated. See page 46 for further information on our alternative performance measures (APMs) and glossary. This includes definitions, purpose, changes to the prior year, and reconciliation to the nearest IFRS measures. The basis of preparation of our IFRS measures is included on page 2.

Cashflow

1H 2020/21

1H 2019/20

Reported % change

Currency neutral*

% change

2019/20
£m

Adjusted EBITDA*

305

216

41%

43%

556

Leasing costs in EBITDA

4

15



40

Adjusted EBITDAR

309

231

34%

35%

596

Adjusted EBITDAR margin

6.4%

4.9%

150 bps

150 bps

5.8%







Repayment of leasing debt & interest**

(159)

(155)



(299)

Cash payments for leasing costs in EBITDA

 (4)

 (15)



(40)

Other non-cash items in EBIT

10

15



27

Operating cashflow

156

76

105%

112%

284

Operating cashflow margin

3.2%

1.6%

160 bps


2.8%







Capital expenditure

 (58)

 (98)

41%


 (191)

Adjusting items to cashflow

(80)

(21)

(281)%


 (79)

Free cash flow before working capital

18

(43)



14

Adjusted working capital

 509

 137



141

Segmental free cash flow

527

94

461%

 499%

155

Cash tax paid

(16)

(5)



(20)

Cash interest paid

(12)

(12)



(26)

Free cash flow

499

77

548%

592%

109

Dividend

-

(52)



(78)

Net purchase of own shares

(3)

(5)



(12)

Pension

(23)

(46)



(46)

Other

-

-



5

Movement in net cash / (debt)

473

(26)



(22)







Net Cash / (debt)***

269

(208)



(204)

*All financials include leases prepared in accordance with IFRS16 unless otherwise stated. See page 46 for further information on our alternative performance measures (APMs) and glossary. This includes definitions, purpose, changes to the prior year, and reconciliation to the nearest IFRS measures. The basis of preparation of our IFRS measures is included on page 2.

**Repayment of leasing debt and interest includes non-trading stores. The non-trading stores predominantly relate to the closed standalone UK Carphone Warehouse stores as announced on 17th March 2020 and the remaining closed stores under the Currys PC World 3-in-1 and Carphone Warehouse programme announced in 2015/16.

*** During the period the Group has redefined net debt to comprise only cash and cash equivalents and short-term deposits, less borrowings.

 

Impact of IFRS16

Accounts are presented using IFRS16 accounting. To aid understanding and comparability with previous periods, here we present the impact of IFRS16 accounting.


Reported

IFRS16

Excluding IFRS16

Adjusted EBIT




  UK & Ireland Electricals

95

(11)

84

  International

 81

(7)

74

   - Nordics

74

(6)

68

   - Greece

7

(1)

6

Electricals

176

(18)

158

Adjusted EBIT margin

3.9%


3.3%

  UK & Ireland Mobile

(36)

(1)

(37)

Adjusted EBIT

140

(19)

121

Adjusted EBIT margin

2.9%


2.5%





Finance costs

(51)

36

(15)

Adjusted PBT

89

17

106

Adjusted PBT margin

1.9%


2.2%

 

Current trade

Trading since the period end has continued strongly. In UK&I Electricals, like-for-like growth was +11% despite our stores in England, Wales, Scotland and Northern Ireland having been closed for substantial periods. Online growth was +117%. International growth was +23% despite sales decline in Greece due to store closures.

Like-for-like growth*

6 Weeks to 12 December

UK&I Electricals

+11%

International

+23%

Nordics

+29%

Greece

(12)%

Total Electricals

+16%

UK&I: England stores closed 5 November to 1 December, with stores in Wales, Scotland and Northern Ireland closed for meaningful periods
Greece stores closed:  November 7 and reopened on 14 December for collection-only.

Outlook & Financial Guidance 

Millions of customers increasingly recognise the vital role that technology plays in their lives and we continue to make it easier for them to shop with us via digital-first omnichannel, and build customers for life. This is our route to sustainable profits and cashflow through credit and services that help customers get tech working, keep it working, get the most out of it and recycle it.

The immediate outlook is less certain. There will be further economic consequences of the pandemic, continued impact on International travel, we may face further enforced store closures and there could be disruption from Brexit. While the relief from business rate taxation in the period has been beneficial, we urge the Government to carefully review business rates which are a significant and unbalanced tax on a store retail sector which has seen an accelerated shift to online. Specifically, we urge a resettlement of business rates based on current rental values. This will increase the rates burden on warehousing and reduce it on retail stores. It could be self-financing, would preserve hundreds of thousands of viable retail jobs, also help the hard-pressed leisure and hospitality sector, and oblige everyone to pay their fair share.

We continue to discuss the possibility of listing a minority stake of our Nordics business in 2021 with our shareholders and other stakeholders.

Current year guidance - as previously guided:

·   Mobile adjusted EBIT losses to be slightly worse than 2019/20 and cashflow from Mobile to be slightly negative as operating losses and restructuring costs will be largely offset by net working capital unwind

·   Transformation cash costs to be c.£175m, mainly related to previously announced Mobile restructuring

·   Group capital expenditure to be around £175m

 

Medium term guidance - as previously guided:

·   Group to generate cumulative free cash flow of more than £1bn over FY20 to FY24

·   No change to previous profitability expectations (at least 3.5% EBIT margin on pre-IFRS16 basis). Group moving to cashflow based targets at year end

·   Total positive cashflow from UK&I Mobile will be in the range of £125m-175m

·  Annual pension contributions will rise to £78m from 2021/22, from £46m this year

 

 

Results presentation webcast

There will be a recorded presentation for investors and analysts available at 8:00am today, followed by a live Q&A at 9:00am. The presentation slides will be available via the webcast and on www.dixonscarphone.com 

Next scheduled announcement

The Group is scheduled to publish its Peak trading statement covering the 10 weeks to 9 January 2021 on Wednesday 20 January 2020.

For further information

Assad Malic

Group Strategy & Corporate Affairs Director

+44 (0)7414 191044

Dan Homan

Head of Investor Relations

+44 (0)7400 401442

Amy Shields

Director of External Communications

+44 (0)7588 201442

Tim Danaher, Sam Chiene

Brunswick Group

+44 (0)207 4045959

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

Follow us on Twitter: @dixonscarphone

About Dixons Carphone

Dixons Carphone plc is a leading omnichannel retailer of technology products and services, operating through 932 stores and 16 websites in eight 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, employing over 22,000 capable and committed colleagues in the UK & Ireland and approximately 32,500 globally across the Group. Our full range of services and support makes it easy for our customers to discover, choose, afford and enjoy the right technology for them, throughout their lives. The Group's core operations are supported by an extensive distribution network, enabling delivery to stores and homes, a 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.

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.

 

 

We Help Everyone Enjoy Amazing Technology

Choose, Afford, Enjoy. For Life

 

Our vision is to help customers choose, afford and enjoy amazing technology however they choose to shop with us. By offering the best range of products, credit and services through digital-first omnichannel we will build customer relationships that are stickier and more valuable over time. This will benefit our customers, our colleagues, our shareholders and society.  

 

Strategic Review

Omnichannel

Omnichannel is our way of bringing the strengths of all our channels, stores and online, to all our customers, however they may be shopping.

In the period, our omnichannel capabilities were tested as never before. We innovated and improved our offer at unprecedented speed, driving our already large online business to grow significantly faster than the market.

In UK & Ireland, we landed multiple improvements to the website, app and our stores to deliver a better experience for customers. These enabled UK & Ireland online sales growth of +145%, additional sales of almost £800m in the period. We grew online market share by 6.5%pts while also gaining share in stores during the periods they were able to open. This means we have considerably narrowed the gap between our overall market share of 25% and our online market share which is now 22%.

We have achieved this through delivering the plan for stronger online we first set out in December 2018. We have grown our online range by 42%. In UK & Ireland we now sell 17,000 products, having added 5,000 in the period, and expect to have over 20,000 on sale by year end. We are now more authoritative in such categories as heating and cooling, musical instruments, personal care, PC gaming and smart home.  We remain on track to reach our target of 40,000 products in the medium term, with the Nordics now at 80,000 products.

We have maintained our leading market position on availability despite strong demand from customers. The past six months show the advantages of being number one. As the most important retail customer to our suppliers, we have consistently been first in the queue for sometimes scarce stock.

We are also now on the money on price. Two years ago, we were c.5% more expensive than the competition. We have now made the necessary investment to substantiate our unambiguous price promise: "You won't get it cheaper. Full stop". Together with necessary investment in catching up on delivery (where we've seen a +30%pts improvement in customer satisfaction in two years), and some marketing investment, we've now substantially completed the necessary gross margin investment in the customer proposition that we flagged two years ago.

We've also made online an easier place to shop, with the introduction of new capabilities such as contactless order & collect, which allows customers to buy online and collect in an hour from stores, straight into the boot of the car if the customer wants.

Our UK & Ireland business faced sharply increased demand at the same time as unprecedented disruption and substantial change. The vast majority of our customers still had a good experience as evidenced by stable overall customer satisfaction, which is a great credit to our colleagues. Nevertheless, some stresses and strains were evident to some customers, for which we've apologised. We've taken urgent and effective action throughout the period, directed substantial further resources into customer service, including an extra 1,000 colleagues managing customer queries. Customers have seen the improvement.

Even now, when we have seen a shift to customers shopping online, 60% of our customers still prefer to use both online and stores channels. Customers value stores for the face-to-face advice and product demonstrations they get from our 22,000 expert store colleagues.

But it's the combination of our stores and online working together that customers value the most. Customers in stores can access our full range online for delivery to their home through 'Order Online In-Store' via our StoreMode tablets. Sales through this rose +245% when stores were open. Meanwhile, customers can order online and collect in store, with such sales growing +76% post-lockdown. Customers online can also, of course, use our in-store services to get this tech working (eg setting up a laptop), keep it working (repair), trade it in, and recycle it.

We now have strong foundations in omnichannel but there is a lot more to go for here. We will continue to build on our progress, as demonstrated by innovations like ShopLive. This allows every store, whatever its size and stock, to offer our full range to every customer. This service brings the best of stores (face-to-face advice from trusted experts) to customers online. Customers prefer this to unassisted online sales: they are four times as likely to purchase, spend 50% more, and tell us they are more satisfied. We also like ShopLive as an innovation competitors will struggle to copy at scale: only we already have thousands of expert colleagues, as well as hundreds of stores (our ready-made stage sets). With digital technology, we can match a customer's specific need with a relevant store expert, anywhere in the country, and who's free that moment. And our scale (thousands of colleagues, millions of customers) allows this to be cost-efficient as well as effective (in producing incremental sales over and above unassisted online). That's why we are scaling this up. Initially starting with 12 colleagues, we have now trained 2,100 colleagues on ShopLive. These colleagues can serve customers both online and in store, flexing according to how our customers wish to shop. The platform was developed in the UK and the Nordics business is now using the UK platform - an example of the cross-fertilisation possible in a Group such as ours.

In Nordics, our stores remained open and generated like-for-like growth despite some acceleration in the shift towards online shopping. Our online business grew +55%, driven by increased traffic and big improvements in conversion and average basket value. Collect@store online sales grew +65% and now contribute 41% of all online sales. We expect significant improvements in omnichannel as a result of the rollout of our Next Generation Retail platform in the coming months.

In Greece, online grew +84% from a low base, with each store developing a back of house logistics capability to serve remote orders and fast Pay & Collect orders, payments and returns. Four new regional hubs mean we now have capacity to handle four times as many big box deliveries per day than we did a year ago.

Credit

Credit appeals to customers as technology is exciting but expensive, and it makes the amazing technology customers want more affordable by allowing them to spread the cost.

UK credit adoption is now over 11.5% (+60bps year on year) and the number of active credit customers is over 1.3m, +31% year on year, resulting in +25% growth in Credit sales. Credit adoption increased across both channels with the online adoption rate now above 10%.

In Nordics, we are also developing credit, with new agreements with strategic partners to give customers more flexible payment options.  

Services

We are uniquely positioned to provide services to our customers to help them enjoy technology for life. We can provide this range of services at scale in ways no competitor can match.

We can get the products working through delivery, installation and set-up. Last year, we delivered 15m products, including almost 5m large products through our own two-person delivery network, installed over 1.3m products, including 600,000 technical installs, and set up over 700,000 products for customers.

We keep the products working, and in the UK alone, our 1,500-person repair team fixes over 1 million products each year, including nearly half a million computing and vision repairs, over 250,000 mobile phones and more than 350,000 white goods repairs, most of these in customers' homes.

We also help customers get the most out of their products: through cloud subscriptions and lifestyle subscriptions, such as the Apple bundle of Apple Music, Apple Arcade and Apple News+ that has just launched. We are also the only nationwide retailer to offer broadband switching from a range of suppliers.

We are also there for customers at the end of the product life. Our trade-in enables customers to get value from old products, making new technology more affordable and preventing items entering the waste stream.  Through our reuse partners we repair and refurbish products to support low-income families, including over 10,000 families in the UK last year.

We recycle over 100,000 tonnes of Waste Electrical and Electronic Equipment (WEEE) each year. We will recycle all tech brought into stores for free, whether you bought it from us or not, and now account for more than half of all UK retail recycling.  We are also committed to a 'Greener' product range in the UK and Nordics to help customers make more sustainable choices. In the UK, our 'Go Greener' campaign included free recycling, resulting in a +76% growth in the number of appliances collected from customers' homes. Finally, we are the first specialist electricals retailer in the UK to commit to net zero carbon by 2040 and to electric vehicles by 2030.

We are continuing to join up these services with improved data to create customers for life. Our Nordics Customer Club continues to grow, and we had 4.3m members at the end of the period which contributed 38% of sales, well up on the 32% in H2 2019/20.

Mobile

Our UK & Ireland Mobile sales declined (54)% given the permanent closure of our standalone Carphone Warehouse UK stores announced in March. In the UK, the contract we had with EE expired at the end of September and our only remaining volume-based contract is with Vodafone. In the spring we will launch our own Mobile offer which will be much more relevant for the needs of today's mobile customers and subsequently we will be able to streamline much of the legacy cost base of Mobile.  

Capable and Committed Colleagues

There remains no bigger priority than colleague and customer safety. During the various lockdowns across the Group operating countries, we have protected colleagues while meeting high customer demand. We have implemented extensive hygiene and social distancing measures at our facilities and stores to ensure our sites are Covid-secure. This has enabled our colleagues to safely continue delivering vital technology to customers.

We continue to make all our colleagues shareholders, ensuring we're all invested in our future success. Over these last six months we have repeatedly seen just how capable and committed our colleagues are. The examples of colleagues going above and beyond are numerous and humbling: from our installation teams making sure that vulnerable customers had access to cooking equipment at the height of the first lockdown; to supply chain colleagues adapting to Peak sales levels every day; to store colleagues coping with reopening stores with such enthusiasm while maintaining rigorous hygiene standards.

The crisis has also driven new and better ways of working. We have combined the online, technology and transformation teams together. This has enabled the faster rollout of ideas with test-and-learn becoming our normal model. Order & Collect and ShopLive were instigated this way and took only weeks to get from idea to test to rollout.

Our central commercial and operation teams moved into new "category squads" during the first lockdown and found it far more agile and effective. This is now a permanent change. These cross-functional teams can better solve for a good end-to-end customer experience and profitability and are empowered to do so. We're making faster and better decisions as a result.

A top priority for our business is colleague engagement, as happier colleagues make for happier customers. To support this, we implemented a new colleague listening strategy alongside our new performance management system, which closely aligns reward to personal performance. This complements our colleague shareholder scheme which saw a further 2,500 newly eligible colleagues granted share awards. To thank our capable and committed colleagues for everything they do for our business, we're closing the UK business on New Year's Day to give colleagues an additional day off over the festive period.

One Business & Stronger Infrastructure

We are making progress in becoming One Business that is a clearer, simpler and faster place to work. Long overdue, we have moved all UK & Ireland colleagues to a single payroll system (previously 7 different systems) with harmonised employment terms.

The foundation of our strength is our significant infrastructure which serves stores and customers' homes while providing services wherever they are wanted. We have over 100 warehousing and logistics facilities in 8 countries covering 5m sqft of space. Across our supply chain and IT infrastructure in every market we've scaled up our operations to respond to strong demand, including trebling IT capacity in the UK.

Our investment in our future infrastructure was suspended during the early months of the crisis but has resumed since. We have recently opened a new Regional Distribution Centre (RDC) in Bolton to amalgamate existing centres in Leeds and Manchester which will improve efficiency and increase delivery capacity. Across the UK & Ireland supply chain we have also started to replace our decade-old Warehouse Management System, driving better forecasting and more efficient operating across Newark and our four RDCs.

In stores we launched a suite of enhanced and more efficient marketing tools for colleagues, these make much of the instore marketing faster, with less chance of error and at lower costs. During the period, we started the roll-out of our Next Generation Retail platform in the Nordics. This is an update of many of our online and store systems and an overhaul of processes that will generate a seamless omnichannel experience for our customers. The systems were successfully rolled out to stores in Denmark in Q1, followed by our call centres and our B2B platform. The remaining countries and all the websites will be updated through 2021. Delivery of this programme is on time despite the impact of Covid-19.

 

Performance Review

UK & Ireland Electricals


1H 2020/21

1H 2019/20

Reported % change

Currency neutral % change*

FY 2019/20

INCOME STATEMENT






Revenue

             2,266

             1,979

15%

14%

             4,538







Adjusted EBITDA*

184

120

53%

54%

344

Adjusted EBITDA margin

8.1%

6.1%

200 bps


7.6%







Depreciation on right-of-use assets

 (54)

 (55)



 (111)

Depreciation on other assets

 (20)

 (22)



 (44)

Amortisation

 (15)

 (11)



 (25)

Adjusted EBIT

95

32

197%

197%

164

Adjusted EBIT margin

4.2%

1.6%

260 bps


3.6%







Adjusting items to EBIT

 (26)

 (13)



 (45)

Statutory EBIT

69

19

263%

263%

119

Margin

3.0%

1.0%

200 bps


2.6%







CASHFLOW






Adjusted EBITDA

184

120

53%


344

Leasing costs in EBITDA

-

3



24

Adjusted EBITDAR

184

123

50%


368

Adjusted EBITDAR margin

8.1%

6.2%

190 bps


8.1%







Repayment of leasing debt & interest**

 (77)

 (82)



 (155)

Cash payments for leasing costs in EBITDA

 -

 (3)



 (24)

Other non-cash items in EBIT

3

7



12

Operating cashflow

110

45

144%

144%

201

Operating cashflow margin

4.9%

2.3%

260 bps


4.4%







Capital expenditure

 (27)

 (48)

44%


 (106)

Adjusting* items to cashflow

 (28)

(12)

(133)%


 (37)

Free cash flow before working capital

55

(15)



58

Adjusted working capital

309

78



 34

Segmental free cash flow

364

63

478%

 478%

92

*All financials include leases prepared in accordance with IFRS16 unless otherwise stated. See page 46 for further information on our alternative performance measures (APMs) and glossary. This includes definitions, purpose, changes to the prior year, and reconciliation to the nearest IFRS measures. The basis of preparation of our IFRS measures is included on page 2.

**Repayment of leasing debt and interest includes non-trading stores. The non-trading stores predominantly relate the remaining closed stores under the CurrysPCWorld 3-in-1 and Carphone Warehouse programme announced in 2015/16.


Sales increased +15%, as the impact of temporary store closures was more than offset by strong online sales growth. In total, we estimate that the enforced store closures and the closure of our Dixons Travel stores reduced sales by at least £150m, or 8%, for the half year, this includes the impact of increased online sales while the stores were closed.

Over the period, online sales grew +145% and were 58% of our total sales, +31%pts higher than last year. During the four months when our stores were open online sales grew at +119% and were 55% of our total sales, +23%pts higher than last year.

At the start of the pandemic, sales were particularly strong in refrigeration and TVs. As the situation developed and customers across our markets were spending more time at home, we saw increased sales in items such as food processors and hair clippers. All areas of computing; laptops, desktops, tablets and gaming, have been incredibly strong throughout the period.

The market grew +23% over the period as the store channel declined (40)% and the online market grew +105%. Currys PC World lost (1.0)% of share due to the enforced store closures. Our online market share grew +6.5%pts and, in the periods when they were open, our market share in stores also grew.

Gross margin declined (350)bps predominantly driven by the shift of sales to our lower margin online business and the loss of higher margin Dixons Travel sales. The operating expense to sales ratio improved by +610bps, with around +300bps of improvement coming from government schemes, with the UK&I business rates tax relief and Coronavirus Job Retention Scheme lowering operating costs by £30m (FY 2019/20: £4m) and £38m (FY2019/20: £16m) respectively. We estimate that the enforced store closures, the accelerated shift to online sales and reduction in our Travel sales net of the operating expense reduction as a result of the schemes, reduced profit in the period by c.£10m. The remaining +310bps improvement came from operating leverage and other savings.

As a result, adjusted EBIT increased +£63m to £95m in 1H 2020/21, from £32m in 1H 2019/20. We estimate that the adjusted EBIT under pre-IFRS16 accounting would have been £84m, at a margin of 3.7%, a £53m improvement on prior year.

In the period, adjusting items to EBIT totalled £(26)m. These primarily related to the ongoing strategic change programme and amortisation of acquisition intangibles. Alongside previously provided amounts these had a cash impact of £(28)m in the period. The statutory EBIT increased by £50m to £69m.


H1 2020/21

H1 2019/20 

2019/20 


P&L

Cash

P&L

Cash

P&L

Cash

Acquisition / disposal related items

(7)

-

(7)

-

 (14)

-

Strategic change programmes

(24)

(32)

 (6)

(8)

 (13)

 (32)

Data incident costs

-

(1)

-

(4)

-

(5)

Impairment losses



-


(18)

-

Other

5

5






 (26)

 (28)

 (13)

 (12)

 (45)

 (37)


The operating cashflow increased by +144% to £110m, mostly driven by the better profit outturn. Capital expenditure was £27m, with significant areas of expenditure including supply chain investments in our new distribution centres and IT investments. Expenditure was down from last year due to the suspension of projects during the first UK lockdown.  Adjusting items are described above. Adjusted working capital inflow of £309m was driven by strong trading and higher stock turn. There was a temporary benefit from deferral of £64m VAT payments in the period.  In combination this resulted in segmental free cash flow of £364m.

 

Nordics


1H 2020/21

1H 2019/20

Reported % change

Currency neutral % change*

FY 2019/20

Income Statement






Revenue

             1,952

             1,677

16%

17%

3,573







Adjusted EBITDA*

131

109

20%

25%

240

Adjusted EBITDA margin

6.7%

6.5%

20 bps


6.7%







Depreciation on right-of-use assets

 (38)

 (36)



 (74)

Depreciation on other assets

 (13)

 (13)



 (25)

Amortisation

 (6)

 (8)



 (15)

Adjusted EBIT

74

52

42%

50%

126

Adjusted EBIT margin

3.8%

3.1%

70 bps


3.5%







Adjusting items to EBIT

 (6)

 (6)



 (11)

Statutory EBIT

68

46

48%

57%

115

Margin

3.5%

2.7%

80 bps


3.2%







CASHFLOW






Adjusted EBITDA

131

109

20%


240

Leasing costs in EBITDA

2

4



8

Adjusted EBITDAR

133

113

18%


248

Adjusted EBITDAR margin

6.8%

6.7%

10 bps


6.9%







Repayment of leasing debt & interest

 (47)

 (44)



 (83)

Cash payments for leasing costs in EBITDA

 (2)

 (4)



 (8)

Other non-cash items in EBIT

3

3



5

Operating cashflow

87

68

28%

34%

162

Operating cashflow margin

4.5%

4.1%

40 bps


4.5%







Capital expenditure

 (26)

 (35)

26%


 (63)

Adjusting items to cashflow:

 (2)

 -

-


-

Free cash flow before working capital

59

33



99

Adjusted working capital

 59

 21



117

Segmental free cash flow

118

54

119%

150%

216

*All financials include leases prepared in accordance with IFRS16 unless otherwise stated. See page 46 for further information on our alternative performance measures (APMs) and glossary. This includes definitions, purpose, changes to the prior year, and reconciliation to the nearest IFRS measures. The basis of preparation of our IFRS measures is included on page 2.


Revenue grew by +17% on a currency neutral basis, with double digit growth in all markets. This was driven by like-for-like growth of +19% and included online growth of +55% as online sales grew to 22% of total sales, +5%pts higher than last year. Our store sales also saw like-for-like growth for the period as almost all stores were open for the entire period.  This resulted in overall market share increasing +1.5%pts to 27.2%, with share gains across every market and every category.

Sales of laptops, smart TVs and gaming equipment saw significant increases as people spent more time working and more leisure time at home. Fitness wearables had good growth due to public gym closures and people working out on their own, while domestic appliances were strong as customers upgraded their homes.  

Gross margin declined (70)bps predominantly driven by the shift of sales towards the lower margin online channel. The operating expense to sales ratio improved by +140bps, due to operating leverage.

As a result, adjusted EBIT increased +£22m to £74m in 1H 2020/21, from £52m in 2019/20.    We estimate that the EBIT under pre-IFRS16 accounting would have been £68m, at a margin of 3.5%, a +70bps improvement on prior year.

In the period, adjusting items to EBIT totalled £6m. The related to amortisation of acquisition intangibles and have no cash impact, although there was £2m cash adjusting items related to other costs. The statutory EBIT increased £22m to £68m

The operating cashflow increased by 28% to £87m, driven by the better profit outturn. Capital expenditure was £26m, with significant areas of expenditure including our Next Generation Retail platform and store refits. The total spend was down on last year as we held back on some spend at the start of the Covid crisis and a couple of investments, including electronic shelf edge labelling, were finished last year. Adjusted working capital inflow of £59m was driven by improved stock turn due to strong trading.

 

Greece


1H 2020/21

1H 2019/20

Reported % change

Currency neutral % change*

FY 2019/20

Income Statement






Revenue

             257

             227

13%

11%

470







Adjusted EBITDA*

17

17

-%

(6)%

40

Adjusted EBITDA margin

6.6%

7.5%

(90) bps


8.5%







Depreciation on right-of-use assets

 (6)

 (6)



 (13)

Depreciation on other assets

 (3)

 (2)



 (5)

Amortisation

 (1)

 -



 (1)

Adjusted EBIT

7

9

(22)%

(25)%

21

Adjusted EBIT margin

2.7%

4.0%

(130) bps


4.5%







Adjusting items to EBIT

 -

 -



 (1)

Statutory EBIT

7

9

(22)%

(22)%

20

Margin

2.7%

4.0%

(130) bps


4.3%







CASHFLOW






Adjusted EBITDA

17

17

-%


40

Leasing costs in EBITDA

 1

1



2

Adjusted EBITDAR

18

18

-%


42

Adjusted EBITDAR margin

7.0%

7.9%

(90) bps


8.9%







Repayment of leasing debt & interest

 (7)

 (6)



 (13)

Cash payments for leasing costs in EBITDA

 (1)

 (1)



 (2)

Share-based payments

 1

-



1

Operating cashflow

11

11

-%

(9)%

28

Operating cashflow margin

4.3%

4.8%

(50) bps


6.0%







Capital expenditure

 (4)

 (8)

50%


 (15)

Adjusting items to cashflow

 -

 -

-%


 -

Free cash flow before working capital

7

3



13

Adjusted working capital

 36

 1



 (57)

Segmental free cash flow

43

4

975%

 925%

(44)

*All financials include leases prepared in accordance with IFRS16 unless otherwise stated. See page 46 for further information on our alternative performance measures (APMs) and glossary. This includes definitions, purpose, changes to the prior year, and reconciliation to the nearest IFRS measures. The basis of preparation of our IFRS measures is included on page 2.


Revenue increased +11% on a currency neutral basis, with like-for-like sales +10% over the period. Across the period, online sales grew +84% and contributed 8% of sales. Stores were open for the majority of the period having originally been shut on March 10 to May 11 and again after the period end on November 7 to 14 December when they reopened for outside collection only. Stores will not open for normal trading until at least 7 January 2021.

At the start of the pandemic sales were particularly strong in white goods and services. As the situation developed and customers spent more time at home we saw increased sales in all areas of computing, laptops, desktops, tablets, gaming and gym equipment.

Gross margin was down (290)bps over prior year as a result of lower achieved product margin due to channel and category mix and additional costs of fulfilling online sales as well as collection costs for consumer credit. Operating costs decreased due to enforcement by government of a 40% rental reduction for May and June and general expenses reductions like travel and consulting.

As a result, adjusted EBIT decreased (22)% to £7m in 1H 2020/21, from £9m in 1H 2019/20. We estimate that the EBIT under pre-IFRS16 accounting would have been £6m, at a margin of 2.3%, a (70)bps reduction on prior year.

In the period, adjusting items totalled £1m. These primarily related to the ongoing strategic change programme and had no cash impact in the period. The statutory EBIT declined £(2)m to £7m.

The operating cashflow was unchanged at £11m. Capital expenditure was £(4)m, with significant areas of expenditure including digital transformation and property. Adjusted working capital inflow of £36m was driven by strong trading.

 

UK & Ireland Mobile


1H 2020/21

1H 2019/20

Reported % change

Currency neutral % change*

FY 2019/20

Income Statement






Adjusted Revenue

             384

             856

(55)%

(55)%

             1,636

Statutory revenue

384

830

(54)%

(54)%

1,589







Adjusted EBITDA*

(27)

(30)

10%

7%

(68)

Adjusted EBITDA margin

(7.0)%

(3.5)%

(350) bps


(4.2)%







Depreciation on right-of-use assets

 (3)

 (10)



 (19)

Depreciation on other assets

 (3)

 (4)



 (7)

Amortisation

 (3)

 (1)



 (3)

Adjusted EBIT

(36)

(45)

20%

20%

(97)

Adjusted EBIT margin

(9.4)%

(5.3)%

(410) bps


(5.9)%







Adjusting items to EBIT

 (8)

 (62)



 (185)

Statutory EBIT

(44)

(107)

59%

59%

(282)

Margin

(11.5)%

(12.9)%

140 bps


(17.7)%







CASHFLOW






Adjusted EBITDA

(27)

(30)

10%


(68)

Leasing costs in EBITDA

1

7



6

Adjusted EBITDAR

(26)

(23)

(13)%


(62)

Adjusted EBITDAR margin

(6.8)%

(2.7)%

(410) bps


(3.8)%







Repayment of leasing debt & interest**

 (28)

 (23)



 (48)

Cash payments for leasing costs in EBITDA

 (1)

 (7)



 (6)

Share-based payments

3

5



9

Operating cashflow

(52)

(48)

(8)%

(11)%

(107)

Operating cashflow margin

(13.5)%

(5.6)%

(790) bps


(6.5)%







Capital expenditure

 (1)

 (7)

86%


 (7)

Adjusting items to cashflow

 (50)

 (9)

(456)%


(42)

Free cash flow before working capital

(103)

(64)



(156)

Network debtor

83

(15)



133

Other adjusted working capital

 22

 52



 (86)

Segmental free cash flow

2

(27)

107%

108%

(109)

*All financials include leases prepared in accordance with IFRS16 unless otherwise stated. See page 46 for further information on our alternative performance measures (APMs) and glossary. This includes definitions, purpose, changes to the prior year, and reconciliation to the nearest IFRS measures. The basis of preparation of our IFRS measures is included on page 2.

**Repayment of leasing debt and interest includes non-trading stores. The non-trading stores predominantly relate to the closed standalone UK Carphone Warehouse stores as announced on 17th March 2020.


Revenue decreased by (54)% reflecting our decision in March 2020 to close the Carphone Warehouse standalone stores in the UK and the negative impact from the enforced closures of our larger stores in the UK due to Covid-19.

The slight improvement in adjusted EBIT to a £(36)m loss mostly reflects the substantial cost savings due to the closure of our UK standalone stores announced in March of this year which offset the lost gross profit. We estimate that sales and profit loss from enforced store closures was broadly equal to the reduction in costs as a result of the UK Job Retention Scheme and business rates tax relief. We estimate that the EBIT loss under pre-IFRS16 accounting would have been £(37)m loss, compared to £(49)m loss in the prior year.

In the period, adjusting items to EBIT totalled £(8)m. These primarily related to the ongoing strategic change programme. Together with previously provided items the adjusting items to cashflow were £(50)m in the period. Statutory EBIT loss was £(44)m, an improvement on £(107)m loss in H1 2019/20.


H1 2020/21

H1 2020/21 

2019/20 


P&L

Cash

P&L

Cash

P&L

Cash

Mobile network debtor revaluations

-


(26)


(47)


Acquisition / disposal related items

-

(2)

 (1)

(1)

 (1)

-

Strategic change programmes

(6)

(43)

 (5)

(6)

 (107)

 (30)

Regulatory

-

(3)

(30)

(2)

(30)

(12)

Other

(2)

(2)






 (8)

 (50)

 (62)

(9)

 (185)

 (42)

 

The operating cashflow decreased from £(48)m to £(52)m. Capital expenditure was almost nil. Adjusting items are described above. The network debtor unwound by £83m and other adjusted working capital inflow was £22m, with deferral of £69m of VAT payments in the period.

 

Finance costs
Interest on lease liabilities was £39m, a slight decrease on prior year due to lower capitalised leases, the cash impact of this interest is included with segmental free cash flow.

The net adjusted finance income and finance costs were broadly stable on last year, as the improved debt position was offset by amortisation of new facility arrangement fees. The net cash impact of these costs was £16m. The finance costs on the defined benefit pension scheme is an adjusting item and has declined in line with the assumptions used in the valuation of the pension obligations.


1H 2020/21

1H 2019/20

FY 2019/20

Interest on lease liabilities

(39)

(38)

 (80)

Finance income

4

5

10

Finance costs

 (16)

 (13)

 (28)

Adjusted net finance costs

 (51)

 (46)

 (98)





Finance costs on defined benefit pension schemes

 (4)

 (7)

 (14)

Net finance costs

 (55)

 (53)

 (112)

 

Tax
The full year adjusted effective tax rate at 24% was higher than the prior year rate of 21% due to a higher proportion of International profits, together with the impact of prior period adjustments. The cash tax paid in the period was £16m.

Cash flow

Cashflow

1H 2020/21

1H 2019/20

Reported % change

Currency neutral*

% change

2019/20
£m

Operating cashflow*

156

76

105%

112%

284

Capital expenditure

 (58)

 (98)

41%


 (191)

Adjusting items to cashflow

(80)

 (21)

(281)%


 (79)

Free cash flow before working capital

18

(43)



14

Adjusted working capital and network commissions

 509

 137



141

Segmental free cash flow

527

94

461%

499% 

155

Cash tax paid

(16)

(5)



(20)

Cash interest paid

(12)

(12)



(26)

Free cash flow

499

77

548%

592%

109

Dividend

-

(52)



(78)

Net purchase of own shares

(3)

(5)



(12)

Pension

(23)

(46)



(46)

Other

-

-



5

Movement in net debt

473

(26)



(22)







Opening net cash / (debt)

(204)

(182)



(182)

Closing net cash / (debt)**

269

(208)



(204)

*All financials include leases prepared in accordance with IFRS16 unless otherwise stated. See page 46 for further information on our alternative performance measures (APMs) and glossary. This includes definitions, purpose, changes to the prior year, and reconciliation to the nearest IFRS measures. The basis of preparation of our IFRS measures is included on page 2.

** During the period the Group has redefined net debt to comprise only cash and cash equivalents and short-term deposits, less borrowings.


Segmental free cash flow was an inflow of £527m (1H 2019/20: £94m) and interest and tax totalled £(28)m as described, resulting in free cash flow of £499m (1H 2019/20: £77m)

The Board decided not to pay a final year dividend for the previous year and no cash was returned to shareholders in the period.  The employee benefit trust acquired £3m of shares to satisfy share awards to colleagues.

Pension contributions of £(23)m in the period are lower than previous year as payments are now made in monthly instalments rather than an annual lump sum. Annual contribution will rise to £78m from FY 2021/22, in line with the current agreement with the Trustees of the fund.

The closing net cash position was £269m, compared to a net debt position of £(204)m at 2 May 2020 and £(208)m at 26 October 2019. This included £36m of restricted cash (2 May 20: £32m, 26 October 19: £44m). The average net cash over the period was £194m, compared to an average net debt position of £(359)m over H1 2019/20 and £(355)m over FY 2019/20.

During the period the Group has redefined net debt to comprise cash and cash equivalents and short-term deposits, less borrowings but exclude IAS17 Finance leases. Including these in net cash/(debt) would have reduced the balance by £71m to £198m (2 May 20: £(284)m debt).

 

Balance sheet


31 October 2020

26 October 2019

2 May 2020


£m

£m

£m

Goodwill

2,845

2,821

2,803

Other fixed assets

1,803

1,835

1,823

Network commission receivables and contract assets

533

785

616

Working capital

(1,102)

(819)

(645)

Net debt**

269

(208)

(204)

Capitalised leases*

(1,393)

(1,384)

(1,439)

Pension

(585)

(586)

(550)

Deferred tax

81

143

97

Provisions

(99)

(118)

(150)

Other

(53)

(41)

(71)


2,299

2,428

2,280

*All financials include leases prepared in accordance with IFRS16 unless otherwise stated. See page 46 for further information on our alternative performance measures (APMs) and glossary. This includes definitions, purpose, changes to the prior year, and reconciliation to the nearest IFRS measures. The basis of preparation of our IFRS measures is included on page 2.

** During the period the Group has redefined net debt to comprise only cash and cash equivalents and short-term deposits, less borrowings.

 

Goodwill increased in the period as a due to currency revaluation of Nordics goodwill.

Other fixed assets decreased in the period by £20m with a depreciation charge of £(39)m offset by additions.

Network commission receivables and contract assets decreased by £83m as the scale of our mobile business reduced and the amount of new revenue capitalised revenue was lower than the payments received.

At 31 October total working capital was £(1,102)m. Group inventory was £1,306m, slightly lower than prior year as stock turn increased to 6.6x (H1 2019/20: 5.8x) due to strong trading and due to the growing portion of sales fulfilled by our less stock intensive online business. Trade receivables decreased by £53m to £303m (H1 2019/20: £356m) as a result of the Mobile balance sheet winding down. Trade payables decreased by £74m to £(1,947)m (H1 2019/20 £(2,021)m) also driven by Mobile, as payables days fell from 82 to 77 in H1 2020/21. At the period end, and throughout the period, the supplier financing facility utilisation was £nil (2 May 20: £51m, 26 October 19: £165m).

Other receivables decreased by £55m compared to H1 2019/20 due to prepayment and accrued income decline with reduced Mobile operation. Other payables increased by £140m compared to H1 2019/20 due to the VAT deferrals in UK&I, the total working capital benefit from VAT deferrals in the period was £133m and total period end VAT deferral was £145m.

 


31 October 2020

26 October 2019

2 May 2020


£m

£m

£m

Inventory

1,306

1,387

970

Trade Receivables

303

356

340

Trade Payables

(1,947)

(2,021)

(1,232)

Trade working capital

(338)

(278)

78

Other Receivables

190

245

169

Other Payables

(945)

(805)

(916)

Derivatives

(9)

19

24

Working capital

(1,102)

(819)

(645)

 

Capitalised leases reduced slightly due to a small number of store closures in the period and a small decrease in the average lease length outstanding.

The IAS 19 accounting deficit of the defined benefit section of the UK pension scheme amounted to £585m at 31 October 2020 (2 May 2020: £550m, 26 October 2019: £585m). Contributions during the period under the terms of the deficit reduction plan amounted to £23m (2018/19: £46m).

The deficit increased largely as a result of increases in inflation rate assumptions reflecting changes in long term RPI expectations, offset by increased values of underlying assets and the contributions in the period. Pension contributions are tax deductible and there is a £59m deferred tax asset associated with the pension liabilities.

Deferred tax decreased as a result of a reassessment of the deferred tax asset position due to the loss in year.

Provisions primarily relate to reorganisation and property provisions. In the period the balance reduced by £(51)m primarily as a result of utilisation of strategic change provisions, mainly related to Mobile restructuring.

Comprehensive income / changes in equity

Total equity for the Group increased from £2,280m to £2,299m in the period, driven by the statutory profit of £17m, gain on retranslation of overseas operations of £53m and other gains of £10m offset by the actuarial loss (net of taxation) on the defined benefit pension deficit for the UK pension scheme of £(45)m and hedging losses of £(16)m.

 

Financial information

 

Consolidated income statement

 



 

 





Note

 

 

 

26 weeks ended

 31 October 2020

Unaudited
£m

26 weeks ended

 26 October 2019

Unaudited
£m

Year ended

2 May 2020

Audited

£m

Continuing operations








Revenue

2




4,859

4,713

10,170









Profit / (loss) before interest and tax

2




100

(33)

(28)









Finance income





4

5

10

Finance costs





(59)

(58)

(122)

Net finance costs





(55)

(53)

(112)









Profit / (loss) before tax





45

(86)

(140)









Income tax (expense) / credit





(28)

16

(21)

Profit / (loss) after tax - continuing operations





17

(70)

(161)









Loss after tax - discontinued operations

8




-

(2)

(2)









Profit / (loss) after tax for the period





17

(72)

(163)









Earnings / (loss) per share (pence)

3







Basic - continuing operations





1.5p

(6.0)p

(13.9)p

Diluted - continuing operations





1.4p

(6.0)p

(13.9)p

Basic - total





1.5p

(6.2)p

(14.1)p

Diluted - total





1.4p

(6.2)p

(14.1)p









 

 

Financial information

 

Consolidated statement of comprehensive income

 



26 weeks ended
31 October 2020

Unaudited
£m

26 weeks ended
26 October 2019

Unaudited
£m

Year ended
2 May

 2020

Audited
£m

Profit / (loss) after tax for the period


17

(72)

(163)






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





Cash flow hedges





Fair value movements recognised in other comprehensive income


(15)

14

26

Reclassified and reported in income statement


15

(12)

12

Exchange gains / (losses) arising on translation of foreign operations


53

(22)

(39)

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


-

-

-



53

(20)

(1)






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





Actuarial losses on defined benefit pension schemes: - UK


(54)

(46)

(3)

                                                                                        - Overseas


-

-

(1)

Tax on actuarial losses on defined benefit pension schemes


9

9

(39)

Fair value through other comprehensive income financial assets





Gains / (losses) arising during the period


3

(1)

(8)



(42)

(38)

(51)






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


11

(58)

(52)






Total comprehensive income / (expense) for the period


28

(130)

(215)






 

 

Financial information

 

Consolidated balance sheet

 


Note

31 October 2020 Unaudited £m

26 October 2019 (restated) Unaudited
£m

2 May 2020 Audited
£m

Non-current assets





Goodwill


2,845

2,821

2,803

Intangible assets


471

478

469

Property, plant & equipment


226

236

240

Right-of-use assets


1,106

1,121

1,114

Lease receivable


4

5

4

Investments

6

13

17

10

Trade and other receivables


245

366

294

Deferred tax assets


239

296

259



5,149

5,340

5,193

Current assets





Inventory


1,306

1,387

970

Lease receivable


1

1

1

Trade and other receivables


781

1,020

831

Derivative assets

6

38

39

76

Cash and cash equivalents*


340

691

660



2,466

3,138

2,538

Total assets


7,615

8,478

7,731

Current liabilities





Trade and other payables


(2,780)

(2,717)

(2,017)

Derivative liabilities

6

(47)

(20)

(52)

Contingent consideration

6

(2)

(1)

(1)

Income tax payable


(64)

(55)

(78)

Loans and other borrowings*


(1)

(599)

(584)

Lease liabilities


(225)

(226)

(258)

Provisions


(81)

(112)

(114)



(3,200)

(3,730)

(3,104)

Non-current liabilities





Trade and other payables


(112)

(109)

(131)

Contingent consideration

6

-

(2)

(2)

Loans and other borrowings


(70)

(300)

(280)

Lease liabilities


(1,173)

(1,164)

(1,186)

Retirement benefit obligations

5

(585)

(586)

(550)

Deferred tax liabilities


(158)

(153)

(162)

Provisions


(18)

(6)

(36)



(2,116)

(2,320)

(2,347)

Total liabilities


(5,316)

(6,050)

(5,451)

Net assets


2,299

2,428

2,280

Capital and reserves





Share capital


1

1

1

Share premium account


2,263

2,263

2,263

Accumulated profits**


770

905

791

Other reserves**


(735)

(741)

(775)

Equity attributable to equity holders of the parent company


2,299

2,428

2,280

*   Cash and cash equivalents and loans and other borrowings have been restated as at 26 October 2019 to meet the presentational requirements of IAS 32 as further described in note 12. This has had no impact on net assets.

** In order to provide better visibility of reserves, the position as at 26 October 2019 has been restated to reclassify certain reserves balances, separately presenting 'other reserves'. This is to separately disclose the hedging, investment in own shares and investment revaluation reserve which were previously presented within accumulated profits. Other reserves also include the previously disclosed translation and demerger reserves. A full reconciliation of these reserves as at 26 October 2019 is provided in note 12.

 

 

Financial information

 

Consolidated statement of changes in equity

 


Note


Share
capital
£m

Share
premium account
£m

Other reserves
£m

Accumulated profits
£m

Total equity
£m

At 2 May 2020



1

2,263

(775)

791

2,280

Profit for the period



-

-

-

17

17

Other comprehensive income / (expense) recognised directly in equity



-

-

56

(45)

11

Total comprehensive income / (expense)
for the period



-

-

56

(28)

28

Cash flow hedge amounts transferred to the carrying value of inventory



-

-

(16)

-

(16)

Net movement in relation to share schemes



-

-

(3)

7

4

Purchase of own shares



-

-

3

-

3

At 31 October 2020



1

2,263

(735)

770

2,299

 


Note


Share
capital
£m

Share
premium account
£m

Other reserves*
£m

Accumulated profits
£m

Total equity
£m

As reported at 27 April 2019



1

2,263

(713)

1,089

2,640

Adjustment on initial application of IFRS 16



-

-

-

(45)

(45)

Taxation on IFRS 16 transition adjustment



-

-

-

8

8

Adjusted balance at 27 April 2019



1

2,263

(713)

1,052

2,603

Loss for the period



-

-

-

(72)

(72)

Other comprehensive income and expense recognised directly in equity



-

-

(21)

(37)

(58)

Total comprehensive income and expense
for the period



-

-

(21)

(109)

(130)

Cash flow hedge amounts transferred to the carrying value of inventory



-

-

(2)

-

(2)

Equity dividends

4


-

-

-

(52)

(52)

Net movement in relation to share schemes



-

-

-

14

14

Purchase of own shares



-

-

(5)

-

(5)

At 26 October 2019



1

2,263

(741)

905

2,428

 

*   In order to provide better visibility of reserves, the position as at 26 October 2019 has been restated to reclassify certain reserves balances, separately presenting 'other reserves'. This is to separately disclose the hedging, investment in own shares and investment revaluation reserve which were previously presented within accumulated profits. Other reserves also include the previously disclosed translation and demerger reserves. A full reconciliation of these reserves as at 26 October 2019 is provided in note 12.

 


Note


Share
capital
£m

Share
premium account
£m

Other reserves
£m

Accumulated profits
£m

Total equity
£m

As reported at 27 April 2019



1

2,263

(713)

1,089

2,640

Adjustment on initial application of IFRS 16



-

-

-

(45)

(45)

Taxation on IFRS 16 transition adjustment



-

-

-

8

8

Adjusted balance at 27 April 2019



1

2,263

(713)

1,052

2,603

Loss for the period



-

-

-

(163)

(163)

Other comprehensive expense recognised directly in equity



-

-

(9)

(43)

(52)

Total comprehensive expense
for the period



-

-

(9)

(206)

(215)









Cash flow hedge amounts transferred to the carrying value of inventory purchased during the year



-

-

(41)

-

(41)

Equity dividends

4


-

-

-

(78)

(78)

Net movement in relation to share schemes



-

-

-

23

23

Purchase of own shares



-

-

(12)

-

(12)

At 2 May 2020



1

2,263

(775)

791

2,280

 

 

Financial information

 

Consolidated cash flow statement

 



Note

26 weeks
ended
31 October 2020

 

Unaudited

£m

26 weeks
ended
26 October 2019

 

Unaudited

£m

Year
ended
2 May

 2020

 

Audited

£m

Operating activities






Cash generated from operations


7

745

347

649

Special contributions to defined benefit pension scheme



(23)

(46)

(46)

Income tax paid



(16)

(5)

(20)

Net cash flows from operating activities



706

296

583

Investing activities






Net cash outflow arising from acquisitions



(1)

(2)

(3)

Proceeds on sale of business



2

-

2

Acquisition of property, plant & equipment and other intangibles



(58)

(98)

(191)

Net cash flows from investing activities



(57)

(100)

(192)

Financing activities






Interest paid



(52)

(52)

(106)

Capital repayment of lease liabilities



(119)

(116)

(219)

Purchase of ordinary shares



(3)

(5)

(12)

Equity dividends paid



-

(52)

(78)

(Repayment) / drawdown of borrowings



(249)

53

36

Facility arrangement fees paid



-

-

(4)

Net cash flows from financing activities



(423)

(172)

(383)







Increase in cash and cash equivalents and bank overdrafts



226

24

8













Cash and cash equivalents and bank overdrafts at beginning of the period



120

106

106

Currency translation differences



(7)

5

6

Cash and cash equivalents and bank overdrafts at end of the period



339

135

120

 

 

Financial information

 

Notes to the financial information

 

 

1      Accounting policies

a) Basis of preparation

The interim financial information for the 26 weeks ended 31 October 2020 was approved by the directors on 15 December 2020.  The interim financial information, which is a condensed set of financial statements, has been prepared in accordance with the Listing Rules of the Financial Conduct Authority and International Accounting Standard 34 "Interim Financial Reporting" (IAS 34) as adopted by the European Union and has been prepared on the going concern basis as described further in the section on risks to achieving the Group's objectives.

The accounting policies adopted are those set out in the Group's Annual Report and Accounts for the year ended 2 May 2020 which were prepared in accordance with IFRS as adopted by the European Union. New accounting standards, amendments to standards and IFRIC interpretations which became applicable during the period were either not relevant or had not impact on the Group's net results or net assets.

In preparing the condensed consolidated financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the 53 week period ended 2 May 2020.

The interim financial information uses definitions that are set out on page 46 of this document.

The interim financial information is unaudited and does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006, but has been reviewed by the auditor.  The financial information for the year ended 2 May 2020 does not constitute the Company's statutory accounts for that period but has been extracted from those accounts which have been filed with the Registrar of Companies and are also available on the Group's corporate website www.dixonscarphone.com. The auditor has reported on those accounts, their report was unqualified, did not draw attention to any matters by way of emphasis, and did not contain statements under Sections 498 (2) or (3) of the Companies Act 2006.

In the prior 26 weeks ended 26 October 2019, the financial statements included presentation of alternative performance measures in addition to IFRS measures. In the current reporting period, the financial statements present only IFRS measures which are in line with the basis of preparation disclosed above. The alternative performance measures used by the Group are included within the glossary and decision section on page 46. This includes further information on the definitions, purpose and reconciliations to IFRS measures.

Going Concern

The directors have prepared the interim financial information on a going concern basis. In considering the going concern basis, the directors have considered the principal risks and uncertainties as detailed on page 42, especially in the context of the ongoing uncertainty regarding the impact of Covid-19, future relationships with the European Union as well as the wider macro-economic environment and how these factors might influence future revenue, earnings and the Group's objectives and strategy.

The directors have reviewed the Group's cash forecasts and profit projections over the outlook period to the end of FY23. These derive from the board approved budget and 3-year plan and are based on observable market data and recent past experience, including the effect of lockdown periods where stores have been impacted by government restrictions, changing consumer trends and consumer shopping habits.

In addition to their outlook for the financial performance of the Group, the Directors have reviewed a reasonable 'worst case' scenario, assuming a resurgence of the pandemic in the new year and mandatory closure of all stores in the UK and Greece in January followed by a further mandatory closure for 2 weeks in March. The scenario also models an increase in recessionary impact across all territories. The scenario models approximately £550m lower sales over a 12 month going concern period compared to a similar 12 month period of the board approved budget which includes management's assumptions around Covid-19. Within this scenario there are a number of mitigating actions available to the Group that have been included to offset the potential impacts. These include, but are not limited to; cost savings through adjustments in variable costs and benefitting from government assistance where it has been confirmed to remain in place.

The directors also reviewed a reverse stress test scenario that models the estimated decline in sales that the Group would be able absorb before the current available credit facilities or covenants are breached. Such a scenario, and the sequence of events which could lead to it, are considered to be remote.

As at 31 October 2020, the Group had a net cash position of £269m representing an improvement of £473m against the year end reporting date. The Group had access to £1,050m of revolving credit facilities, of which £70m was drawn, which are not set to expire until October 2022. As announced in April 2020, the Group had also secured a further £266m under a one-year revolving credit facility with a number of relationship banks to help mitigate any potential impact of Covid-19. This is additional to the £1,050m stated above and remains undrawn.

The financing facilities contain financial covenants relating to fixed charge cover (1.75x) and leverage (2.5x) ratios that are tested bi-annually. As at 31 October 2020 these financial covenants were met. Under the reasonable 'worst case' scenario described above, factoring in the mitigations within the Group's control, the Group is forecast to comply with all financial covenants throughout the going concern period.

As a result, the directors are of the opinion that the Group's forecast 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.

 

 

1      Accounting policies (continued)

a) Basis of preparation (continued)

Accordingly, the directors have reasonable expectation that the Group has adequate resources to continue in operation for the foreseeable future and consequently the directors have applied the going concern basis in the preparation of the financial statements. The long-term impact of Covid-19 is uncertain and should the impacts of the pandemic on trading conditions be more prolonged or severe than what the Directors consider to be reasonably possible, the Group would need to implement additional operational or financial measures.

2   Segmental analysis

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

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

·      UK & Ireland Electricals comprises operations of Currys PCWorld 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 with franchise operations in Iceland, Greenland and Faroe Islands.

·      Greece, consisting of our ongoing operations in Greece.

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.

In accordance with IFRS 5, discontinued operations are disclosed separately as a single amount within the Group's consolidated income statement after profit after tax for continuing operations. Discontinued operations are therefore excluded from the segmental analysis. Further information on the Group's operations classified as discontinued in outlined in note 8.

 

 

2      Segmental analysis (continued)

(a)   Segmental results

 







26 weeks ended 31 October 2020




UK & Ireland Electricals £m

UK & Ireland Mobile

£m

Nordics

£m

 Greece
£m

Eliminations

£m

Total
 £m

External revenue



2,266

384

1,952

257

-

4,859

Inter-segmental revenue



34

53

-

-

(87)

-

Total revenue



2,300

437

1,952

257

(87)

4,859










Profit / (loss) before interest and tax



69

(44)

68

7

-

100










 





26 weeks ended 26 October 2019




UK & Ireland Electricals £m

UK & Ireland Mobile

£m

Nordics

£m

 Greece
£m

Eliminations

£m

Total
 £m

External revenue



1,979

830

1,677

227

-

4,713

Inter-segmental revenue



43

42

-

-

(85)

-

Total revenue



2,022

872

1,677

227

(85)

4,713










Profit / (loss) before interest and tax



19

(107)

46

9

-

(33)










 





Year ended 2 May 2020




UK & Ireland Electricals £m

UK & Ireland Mobile

£m

Nordics

£m

 Greece
£m

Eliminations

£m

Total
 £m

External revenue



4,538

1,589

3,573

470

-

10,170

Inter-segmental revenue



86

98

-

-

(184)

-

Total revenue



4,624

1,687

3,573

470

(184)

10,170










Profit / (loss) before interest and tax



119

(282)

115

20

-

(28)










 

 

2      Segmental analysis (continued)

(a)   Segmental results (continued)

 













26 weeks ended

31 October 2020

£m 

26 weeks ended

26 October 2019

£m 

Year ended

2 May

2020

£m 

UK & Ireland Electricals






69

19

119

UK & Ireland Mobile






(44)

(107)

(282)

Nordics






68

46

115

Greece






7

9

20

Profit / (loss) before interest and tax






100

(33)

(28)

Finance income






4

5

10

Finance costs






(59)

(58)

(122)

Profit / (loss) before tax






45

(86)

(140)

 

(b)   Seasonality

The Group's business is highly seasonal, with a substantial proportion of its revenue and profit / (loss) before interest and tax generated during its third quarter, which includes Black Friday and the Christmas and New Year season.

 (c)  Geographical information

Revenues are allocated to countries according to the entity's country of domicile. Revenue by destination is not materially different to that shown by domicile. Non-current assets exclude financial instruments and deferred tax assets.


26 weeks ended 31 October 2020

26 weeks ended 26 October 2019


UK

£m

Norway

£m

Sweden

£m

Other

£m

Total

£m

UK

£m

Norway

£m

Sweden

£m

Other

£m

Total

£m

Revenue

2,522

592

641

1,104

4,859

2,694

537

507

975

4,713

Non-current assets

3,131

535

414

783

4,863

3,254

564

401

768

4,987

Capital expenditure

27

18

3

10

58

55

25

6

12

98

 



Year ended 2 May 2020







UK

£m

Norway

£m

Sweden

£m

Other

£m

Total

£m

Revenue






5,865

1,119

1,121

2,065

10,170

Non-current assets






3,184

519

453

729

4,885

Capital expenditure






111

43

13

24

191

 

 

2      Segmental analysis (continued)

(d)   Disaggregation of revenues

 

26 weeks ended 31 October 2020







 




UK & Ireland Electricals

£m

UK & Ireland Mobile

£m

Nordics

£m

 Greece
£m

Total
 £m

Sales of goods



2,083

99

1,771

244

4,197

Commission revenue



3

249

132

1

385

Support services revenue



132

-

18

8

158

Other services revenue



46

35

31

4

116

Other revenue



2

1

-

-

3

Total revenue



2,266

384

1,952

257

4,859









 

26 weeks ended 26 October 2019







 




UK & Ireland Electricals

£m

UK & Ireland Mobile

£m

Nordics

£m

 Greece
£m

Total
 £m

Sales of goods



1,789

196

1,506

215

3,706

Commission revenue



2

576

126

1

705

Support services revenue



140

-

14

8

162

Other services revenue



46

57

31

3

137

Other revenue



2

1

-

-

3

Total revenue



1,979

830

1,677

227

4,713









 

Year ended 2 May 2020







 




UK & Ireland Electricals

£m

UK & Ireland Mobile

£m

Nordics

£m

 Greece
£m

Total
 £m

Sales of goods



4,147

397

3,218

446

8,208

Commission revenue



5

1,090

268

1

1,364

Support services revenue



285

-

30

17

332

Other services revenue



97

102

57

6

262

Other revenue



4

-

-

-

4

Total revenue



4,538

1,589

3,573

470

10,170









 

 

3   Earnings / (loss) per share



26 weeks ended

31 October

2020

£m

26 weeks ended

26 October

2019

£m

 

Year ended

2 May

 2020

£m

Total profit / (loss)





Continuing operations


17

(70)

(161)

Discontinued operations


-

(2)

(2)

Total


17

(72)

(163)








Million

Million

Million

Weighted average number of shares





Average shares in issue


1,165

1,162

1,162

Less average holding by Group EBT


(10)

(2)

(5)

For basic earnings per share


1,155

1,160

1,157

Dilutive effect of share options and other incentive schemes


22

18

25

For diluted earnings per share


1,177

1,178

1,182








Pence

Pence

Pence

Basic earnings / (loss) per share





Total (continuing and discontinued operations)


1.5

(6.2)

(14.1)

Adjustment in respect of discontinued operations


-

0.2

0.2

Continuing operations


1.5

(6.0)

(13.9)






Diluted earnings / (loss) per share





Total (continuing and discontinued operations)


1.4

(6.2)

(14.1)

Adjustment in respect of discontinued operations


-

0.2

0.2

Continuing operations


1.4

(6.0)

(13.9)

 

Basic and diluted earnings per share are based on the profit for the period attributable to equity shareholders.

 

4      Dividends



26 weeks ended 31 October

2020

£m

26 weeks ended 26 October

2019

£m

 

Year ended

2 May

 2020

£m

Amounts recognised as distributions to equity shareholders in the period - on ordinary shares of 0.1p each





Final dividend for the year ended 27 April 2019 of 4.50p


-

52

52

Interim dividend for the year ended 2 May 2020 of 2.25p


-

-

26

Final dividend for the year ended 2 May 2020 of nil


-

-

-



-

52

78

No interim dividend is proposed for the year ending 1 May 2021.

5      Retirement benefit obligations




31 October 2020

£m

26 October 2019

£m

2 May

2020
£m

Retirement benefit obligations              - UK



585

585

550

                                                                - Nordics



-

1

-

Net obligation



585

586

550

The Group operates a number of defined contribution and defined benefit pension schemes. The principal scheme operates in the UK and includes a funded defined benefit section, the assets of which are held in a separate trustee administered fund. The defined benefit section of the scheme was closed to future accrual on 30 April 2010. The net obligations of this scheme, calculated in accordance with IAS 19 "Employee Benefits", are analysed as follows:




31 October 2020

£m

26 October 2019

£m

2 May

2020
£m

Fair value of plan assets



1,359

1,324

1,300

Present value of defined benefit obligations



(1,944)

(1,909)

(1,850)

Net obligation



(585)

(585)

(550)

The value of obligations is particularly sensitive to the discount rate applied to liabilities at the assessment date as well as mortality rates. The value of the plan assets is sensitive to market conditions, particularly equity values. The assumptions used in the valuation of obligations are listed below:



31 October 2020

26 October 2019

2 May

2020

Rates per annum:





Discount rate


1.65%

1.95%

1.60%

Rate of increase in pensions in payment / deferred pensions

- pre April 2006

2.95%

2.95%

2.55%


- post April 2006

2.10%

2.10%

1.95%

Inflation


3.00%

2.95%

2.55%

 

Mortality rates are based on historical experience and standard actuarial tables and include an allowance for future improvements in longevity.

On 20 November 2020, the High Court issued a judgement in relation to historical transfer values impacted by Guaranteed Minimum Pensions (GMPs) equalisation in the Lloyds Banking Group's defined benefits pension schemes.  This judgement is in addition to an earlier judgement on unequal GMPs in October 2018. The Group is assessing the impact of this ruling on the DSG Retirement and Employee Security Scheme, however does not expect this decision to materially impact the liability valuation of the Scheme.

 

6      Financial instruments, loans and other borrowings

 

The Group holds the following financial instruments at fair value:




31 October 2020

£m

26 October 2019

£m

2 May

2020
£m

Investments



13

17

10

Derivative financial assets



38

39

76

Derivative financial liabilities



(47)

(20)

(52)

Deferred and contingent consideration



(2)

(3)

(3)

 

The fair value of short-term investments has values determined by 'Level 1' inputs as defined by the fair value hierarchy of IFRS 13 "Fair Value Measurement". Investments comprise shares indirectly held in Unieuro S.p.A., an omni-channel distributor of consumer electronics and household appliances, listed on the Borsa Italiana.

The significant inputs required to fair value the Group's net derivatives are observable and are classified as 'Level 2' in the fair value hierarchy.

Deferred and contingent consideration is categorised as 'Level 3' in the fair value hierarchy as the valuation requires the use of significant unobservable inputs. The fair value of contingent consideration arrangements has been estimated by applying the income approach. A reduction in growth assumptions used in the fair value methodology would result in a reduction in the amount of contingent consideration payable. The movement in deferred and contingent consideration during the period is due to cash payments of the amounts due.

Fair values have been arrived at by discounting future cash flows (where the impact of discounting is material), assuming no early redemption, or by revaluing forward currency contracts and interest rate swaps to period end market rates as appropriate to the instrument.

The Group has assessed network commission receivables to be accounted for at amortised cost under IFRS 9 "Financial Instruments: Recognition and Measurement". The carrying value of such ongoing network commission contract receivables (net of commission received at the point of connection) is £533m (26 October 2019: £785m, 2 May 2020: £616m). If network receivables were alternatively classified at fair value through profit or loss these receivables would be categorised as level 3 in the fair value hierarchy as the valuation requires the use of significant unobservable inputs. Under this alternative measurement basis their fair value is approximately equal to their current carrying value.

There have been no transfers of assets or liabilities between levels of the fair value hierarchy. For all other financial assets and liabilities, the carrying amount approximates their fair value.

In October 2015, the Group signed a five-year £800m Revolving Credit Facility ('RCF') with a number of relationship banks; this facility was extended in October 2016 and December 2017 by an additional year and the facility currently expires in October 2022. The interest rate payable for drawings under this facility is at a margin over LIBOR (or other applicable interest basis) for the relevant currency and for the appropriate period. The actual margin applicable to any drawing depends on the fixed charges cover ratio calculated in respect of the most recent accounting period. A non-utilisation fee is payable in respect of amounts available but undrawn under this facility and a utilisation fee is payable when aggregate drawings exceed certain levels. At 31 October 2020 the Group had drawn down on this facility by £70m (26 October 2019: £300m, 2 May 2020: £280m)

In October 2016, the Group signed a four year £250m RCF with a group of relationship banks; this facility is on broadly similar terms to the £800m RCF; this facility was extended in February 2019 by an additional two years and the facility expires October 2022. This facility was undrawn at 31 October 2020 (26 October 2019 and 2 May 2020: undrawn).

In April 2020, the Group signed a one-year £266m RCF to mitigate any potential impact of the Covid-19 crisis with a group of relationship banks; this facility is on broadly similar terms to the £800m and £250m RCF. This facility was undrawn at 31 October 2020 and no amounts were drawn down between April 2020 and 31 October 2020.

The Group also has overdrafts and short-term money market lines from UK and European banks denominated in various currencies, all of which are repayable on demand. Interest is charged at the market rates applicable in the countries concerned and these facilities are used to assist in short term liquidity management. Total available facilities are £50m (26 October 2019: £109m, 2 May 2020: £57m).

For the comparative periods the Group had access to a €50m term loan with BBVA. The terms of this facility were broadly similar to the £800m and £250m RCF and was fully drawn at 26 October 2019 and 2 May 2020. The facility expired in October 2020.

 

7      Note to the cash flow statement

 


26 weeks ended 31 October

2020

£m

26 weeks ended 26 October

2019

£m

 

Year ended

2 May

 2020

£m

Profit / (loss) before interest and tax - continuing operations

100

(33)

(28)

Loss before interest and tax - discontinued operations

-

(2)

(2)

Depreciation and amortisation

178

181

367

Share-based payment charge

12

15

23

(Profit) / loss on disposal of fixed assets

(2)

1

3

Impairments and other non-cash items

-

-

51

Operating cash flows before movements in working capital

288

162

414





Movements in working capital:




   (Increase) / decrease in inventory

(318)

(246)

156

   Decrease in receivables

106

15

284

   Increase / (decrease) in payables

721

400

(248)

(Decrease) / increase in provisions

(52)

16

43


457

185

235









Cash inflow from operations

745

347

649

 

Restricted funds, which predominantly comprise funds held by the Group's insurance business for regulatory reserve requirements, were £36m (26 October 2019: £44m; 2 May 2020: £32m).

For the comparative periods trade payables include amounts due where extended payment terms have been agreed with the supplier using a supplier financing facility. These payment terms are customary in the industry and in line with credit terms offered by our other suppliers of similar products. These terms are made available and administered under arrangements between the supplier and third-part banks selected by the supplier. The total amount outstanding on such extended payment terms at 26 October 2019 was £165m and 2 May 2020 was £51m.

 

 

7      Note to the cash flow statement (continued)

 

Changes in liabilities arising from financing activities

 

The table below details changes in the Group's liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group's consolidated cash flow statement as cash flows from financing activities.

 

 

 


3 May

2020

£m


Financing cash flows

£m

New leases

£m

Other changes

£m

31 October

2020

£m

Loans and other borrowings

(324)


262

-

(8)

(70)

Lease liabilities


(62)

(1,398)

Total liabilities arising from financing activities


(62)

(1,468)

 

 


28 April

2019

£m

Adjustment on initial application of IFRS 16

£m

Financing cash flows

£m

New leases

£m

Other changes

£m

26 October

2019

£m

Loans and other borrowings

(288)

-

(40)

-

(15)

(343)

Lease liabilities

(1,403)

(29)

(1,390)

Total liabilities arising from financing activities

(1,403)

(29)

(1,733)

 

 


28 April

2019

£m

Adjustment on initial application of IFRS 16

£m

Financing cash flows

£m

New leases

£m

Other changes

£m

2 May

2020

£m

Loans and other borrowings

(288)

-

(10)

-

(26)

(324)

Lease liabilities

(1,403)

(194)

(1,444)

Total liabilities arising from financing activities

(1,403)

(194)

(1,768)

 

 

8      Discontinued operations

honeybee

No profit or loss has been recognised in relation to the disposal of the honeybee operation in the 26 weeks ended 31 October 2020 nor in either comparative reporting period.

For the 26 weeks ended 31 October 2020 the Group received £2m (26 weeks ended 26 October 2019: £2m, year ended 2 May 2020: £2m) fixed payments in relation to the disposal.

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. For the 26 weeks ended 31 October 2020, a credit of £2m was recognised in relation to the reversal of previously held provisions.

 

8      Discontinued operations (continued)

Other

During the prior year, VAT assessments were issued for historical periods relating to the disposed Phonehouse Germany business. These assessments fall under warranties given as part of the sale agreement and as such, it is probable that the Group will need to pay these amounts. Therefore, the full amount of these assessment has been provided, resulting in a current year charge of £2m (26 weeks ended 26 October 2019: £6m, year ended 2 May 2020: £6m).

During the 26 weeks ended 31 October 2020 no profit or loss has been recognised in relation to other previously disposed operations (26 weeks ended 26 October 2019: £4m credit, year ended 2 May 2020: £4m credit in relation to other legacy European Carphone operations which are now in liquidation).

(a)  Loss after tax - discontinued operations




26 weeks ended 31 October 2020




honeybee
£m

Spain
£m

Other

 £m

Total
£m

Revenue



-

-

-

-

Expenses



-

2

(2)

-

Loss before tax



-

2

(2)

-

Income tax



-

-

-

-




-

2

(2)

-

 




26 weeks ended 26 October 2019





honeybee

£m

Other

 £m

Total
£m

Revenue




-

-

-

Expenses




-

(2)

(2)

Loss before tax




-

(2)

(2)

Income tax




-

-

-





-

(2)

(2)

 




Year ended 2 May 2020





honeybee

£m

Other

£m

Total
£m

Revenue




-

-

-

Expenses




-

(2)

(2)

Loss before tax




-

(2)

(2)

Income tax




-

-

-





-

(2)

(2)

 

8      Discontinued operations (continued)

 

(b)   Cash flows from discontinued operations

 




26 weeks ended 31 October 2020




honeybee

£m

Spain

£m

Other

£m

Total
£m

Operating activities



-

-

-

-

Investing activities



2

-

-

2




2

-

-

2

 

 




26 weeks ended 26 October 2019





honeybee

£m

Other

£m

Total
£m

Operating activities




2

-

2

Investing activities




-

-

-





2

-

2

 

 




Year ended 2 May 2020





honeybee

£m

Other

£m

Total
£m

Operating activities




-

(1)

(1)

Investing activities




2

-

2





2

(1)

1

 

9      Contingent liabilities

 

The Group continues to cooperate with HMRC in relation to open tax enquiries arising from pre-merger legacy corporate transactions in the Carphone Warehouse group. There are two separate material underlying transactions where there are open enquiries. One of the enquiries has resulted in a contingent liability being disclosed. This determination is based on the strength of third-party legal advice on the matter and therefore the Group does not consider it "more likely than not" that these enquiries will result in an economic outflow. The potential range of tax exposures relating to this enquiry is estimated to be approximately £nil - £220m excluding interest and penalties. Interest on the upper end of the range is approximately £50m to 31 October 2020. Penalties could range from nil to 30% of the principal amount of any tax.

 

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:


26 weeks ended 31 October

2020

£m

26 weeks ended 26 October

2019

£m

 

Year ended

2 May

 2020

£m

Revenue for services provided

7

6

14

Amounts owed to the Group

1

2

2

 

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

 

11    Government support

 

During the 26 weeks ended 31 October 2020, the Group has received further government support designed to mitigate the impact of Covid-19 in several countries in which the Group operates.

In the United Kingdom, the Group received government grants to cover the salaries for those employees who had been 'furloughed' through the Coronavirus Job Retention Scheme. All colleagues furloughed under this scheme were paid at 80% of their salary, with the Group making up any difference beyond the subsidy limit of £2,500. A total of £47m has been recognised in the period (year ended 2 May 2020: £18m) and has been recorded against employee costs.

A further £4m (year ended 2 May 2020: £1m) in government grant income has been recognised related to similar employment cost subsidy schemes in Ireland and the Nordics.

The UK government introduced a business rates tax holiday for the retail, hospitality and leisure industry for the 2020-21 tax year. This has allowed the Group to reduce operating costs by £30m in the period (year ended 2 May 2020: £4m).

In addition, the Group has made use of government-backed tax, VAT and social security payment deferral schemes. Under this arrangement tax of £133m that was due between May and June 2020 can be deferred until March 2021 in the UK, and a further £6m of tax, VAT and social security has been deferred in the Nordics. At the reporting date, the Group had an amount deferred on the balance sheet totalling £151m (year ended 2 May 2020:  £88m).

Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. There are no unfulfilled conditions or contingencies attached to these grants.

12    Restatement of comparative information

(a)  Capital and reserves

As set out in the consolidated balance sheet and statement of changes in equity, in order to provide better visibility of reserves and accumulated profits, the Group has reclassified certain balances. This is to separately disclose the hedging, investment in own shares, and investment revaluation reserves which were previously included within accumulated profits.  Other reserves also include the previously disclosed translation and demerger reserves. In accordance with the requirements, the position as at 26 October 2019 has been restated. The results for the year ended 2 May 2020 already reflected this reclassification. The restatement has had no impact on equity attributable to equity holders of the parent company.

The impact of the restatement on the Group's consolidated reserves has been set out below:


Share
capital
£m

Share
premium account
£m

Other reserves
£m

Accumulated profits
£m

Translation reserve
£m

Demerger reserve
£m

Total equity
£m

As reported at 26 October 2019

1

2,263

-

927

(13)

(750)

2,428

Demerger reserve

-

-

(750)

-

-

750

-

Translation reserve

-

-

(13)

-

13

-

-

Investments revaluation reserve

-

-

17

(17)

-

-

-

Hedging reserve

-

-

11

(11)

-

-

-

Investments in own shares

-

-

(6)

6

-

-

-

26 October 2019 restated

1

2,263

(741)

905

-

-

2,428

(b)  Cash and cash equivalents and loans and other borrowings

It has also been determined that the Group's cash and overdrafts within notional cash pooling arrangements did not meet the requirements for offsetting in accordance with IAS 32: "Financial Instruments: Presentation" and should not have been presented net on the balance sheet. For presentational purposes, amounts have therefore been restated for the 26 weeks ended 26 October 2019. The impact of this change is to increase cash and cash equivalents and overdrafts within loans and other borrowings by £556m in the Group's consolidated balance sheet. The results for the year ended 2 May 2020 have not been restated as already reflect the correct presentational requirements of IAS 32.

During the 26 weeks ended 31 October 2020, the Group adjusted its cash pooling so that all material balances meet the presentational requirements for offsetting in accordance with IAS 32.

This has had no impact on net assets as seen on the face of the Consolidated balance sheet.

 

Risks to achieving the Group's objectives

 

 

The Board continually reviews and monitors the risks and uncertainties which could have a material effect on the Group's results. The updated risks and uncertainties, which are consistent with those detailed in the 2019-20 Annual Report and Accounts, are listed below. The Group's risks, and the factors which mitigate them, are set out in more detail in the 2019-20 Annual Report and Accounts on pages 20 to 23 and remain relevant in the current period.

1.     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;

2.     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;

3.     Failure to deliver an effective business transformation programme in response to a changing consumer environment could result in a loss of competitive advantage impacting financial performance;

4.     Responding to the circumstances of Covid-19 which impacts all areas of the business with risks to Customer and Colleague wellbeing, Group revenue and profit;

5.     Uncertainty over future relationships with 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;

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

7.     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;

8.     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;

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

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

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

12.   Failure to sufficiently diversify the Group's long term funding could result in restricted growth and reputational damage; and

13.   Failure to employ adequate procedures and due diligence regarding product quality and safety could result in the provision of products which pose a risk to customer health, resulting in fines, prosecution and significant reputational damage.

The directors have continued to prepare the interim financial information on a going concern basis. In considering the going concern basis, the directors have considered the above mentioned principal risks and uncertainties especially in the context of the ongoing uncertainty regarding the impact of Covid-19, future relationships with the European Union as well as the wider macro-economic environment and how these factors might influence future revenue, earnings and the Groups objectives and strategy.

The directors have reviewed the Group's future cash flow forecasts and profit projections, along with the financial position of the Group,  cash flows, liquidity position and borrowing facilities as presented in the balance sheet, cash flow statement and accompanying notes to the financial statements.

The assessment approach for going concern is outlined within the accounting policy disclosure in note 1 of the consolidated financial statements. Accordingly the directors have a reasonable expectation that the Group has adequate resources to continue in operations for the foreseeable future and consequently the directors continue to apply the going concern basis in the preparation of the financial statements.

 

 

 

The directors confirm that to the best of their knowledge:

•    the interim financial information has been prepared in accordance with IAS 34 as adopted by the European Union;

•    the financial highlights, performance review and interim financial information include a fair review of the information required by DTR 4.2.7R (indication of important events during the first 26 weeks and description of principal risks and uncertainties for the remaining 26 weeks of the year); and

•    the financial highlights and performance review includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).

At the date of this statement, the directors are those listed in the Group's 2019-20 Annual Report and Accounts.

 

By order of the Board 

Alex Baldock

Group Chief Executive

15 December 2020

Jonny Mason

Group Chief Financial Officer

15 December 2020

 

 

Independent review report

 

 

To Dixons Carphone plc

 

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the interim statement for the 26 weeks ended 31 October 2020 which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated statement of changes in equity, the consolidated cash flow statement and related notes 1 to 12.  We have read the other information contained in the interim statement and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council.  Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The interim statement, including the condensed set of financial statements contained therein, is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the interim statement in accordance with the Disclosure and Transparency Rules of the UK Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union.  The condensed set of financial statements included in this interim statement has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting" (IAS 34) as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the interim statement based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council for use in the UK.  A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed set of financial statements in the interim statement for the 26 weeks ended 31 October 2020 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the European Union and the Disclosure and Transparency Rules of the UK Financial Conduct Authority.

 

 

Deloitte LLP

Statutory Auditor

London, UK

15 December 2020

 

 

Retail store data (unaudited)

 

 

Number of stores









At 31 October 2020


At 2 May 2020




Own stores

Franchise stores

Total 


Own stores

Franchise stores

Total 











UK Dixons



304

-

304


309

-

309

UK Dixons Travel



33

-

33


33

-

33

Ireland Dixons



16

-

16


16

-

16

UK & Ireland Electricals



353

-

353


358

-

358

UK Carphone



-

-

-


-

-

-

Ireland Carphone



68

-

68


70

-

70

UK & Ireland Mobile



68

-

68


70

-

70

Total UK & Ireland



421

-

421


428

-

428











Norway



86

68

154


83

67

150

Sweden



102

70

172


104

70

174

Denmark



38

-

38


38

-

38

Finland



22

20

42


22

19

41

Other Nordics



-

13

13


-

13

13

Nordics



248

171

419


247

169

416











Greece



73

19

92


75

20

95

Greece



73

19

92


75

20

95











Total



742

190

932


750

189

939

 

Selling space '000 sq ft









At 31 October 2020


At 2 May 2020




Own stores

Franchise stores

Total 


Own stores

Franchise stores

Total 











UK Dixons



5,477

-

5,477


5,542

-

5,542

UK Dixons Travel



40

-

40


40

-

40

Ireland Dixons



207

-

207


207

-

207

UK & Ireland Electricals



5,724

-

5,724


5,789

-

5,789

UK Carphone



-

-

-


-

-

-

Ireland Carphone



43

-

43


44

-

44

UK & Ireland Mobile



43

-

43


44

-

44

Total UK & Ireland



5,767

-

5,767


5,833

-

5,833











Norway



1,090

674

1,764


1,096

637

1,733

Sweden



1,243

368

1,611


1,194

371

1,565

Denmark



667

-

667


691

-

691

Finland



512

179

691


530

163

693

Other Nordics



-

90

90


-

90

90

Nordics



3,512

1,311

4,823


3,511

1,261

4,772











Greece



941

71

1,012


953

76

1,029











Total



10,220

1,382

11,602


10,297

1,337

11,634

 

 

Glossary and definitions

 

 

Alternative performance measures ('APMs')

In the reporting of financial information, the Group uses certain measures that are not required under IFRS. These are presented in accordance with the Guidelines on APMs issued by the European Securities and Markets Authority ("ESMA"). We consider that these additional measures (commonly referred to as 'alternative 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.

Adjusting items

Included within our APMs we report adjusted revenue, adjusted PBT, adjusted EBIT, adjusted EBITDA, adjusted EBITDAR and adjusted EPS. These measures exclude items which are significant in size or volatility or by nature are non-trading or highly infrequent. Adjusted results are stated before the results of discontinued operations or exited / to be exited businesses, amortisation of acquisition intangibles, acquisition related costs, any items considered so material that they distort underlying performance (such as reorganisation costs, impairment charges and property rationalisation costs, out of period mobile network debtor revaluations and non-recurring charges), income from previously disposed operations, finance costs related to the unwind of lease liabilities for non-trading stores and net pension interest costs. There are no adjustments made to exclude the impact of Covid-19. 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.

Items excluded from adjusted 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.

Impact of IFRS 16: 'Leases'

The Group adopted IFRS 16: 'Leases' using the modified retrospective approach in the prior year. In order to aid comparability with prior year measures, the impact of IFRS 16 was included within adjusting items, which are reported under IAS 17.

Following the adoption, and ability to report comparatives under IFRS 16, the impact of such is no longer considered to be an adjusting item. The adjusted results and adjusting items for the comparative reporting periods ended 26 October 2019 and 2 May 2020 have subsequently been restated in to reflect this.  

Currency neutral

Some comparative performance measures are translated at constant exchange rates, called 'currency neutral' 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.

Definitions and reconciliations

In line with the Guidelines on Alternative Performance Measures issued by the European Securities and Markets Authority ('ESMA'), we have provided additional information on the APMs used by the Group below, including full reconciliations back to the closest equivalent statutory measure.

Alternative performance
measure

Closest equivalent GAAP measure

Reconciliation to IFRS measure

Definition and purpose

Revenue measures




Adjusted revenue

Revenue

See notes A1

Adjusted revenues are adjusted to remove out of period mobile network debtor revaluations and the revenues of those operations in which the Group classifies as exited or to be exited but do not meet the definition of discontinued in accordance with IFRS 5 "Non-Current Assets Held for Sale and Discontinued Operations".

Like-for-like (LFL) % change

No direct equivalent

Not applicable

Like-for-like revenue is calculated based on adjusted store and online revenue (including order & collect, Online In-Store and ShopLive) 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 (where closed by the Company's decision and not where closed due to government imposed restrictions related to the global Covid-19 pandemic) are excluded for any period of closure during either period. Customer support agreement, insurance and wholesale revenues along with revenue 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.

Currency neutral % change

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

Not applicable

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

Profit measures




Adjusted profit / (loss) before tax, adjusted EBIT and adjusted profit / (loss) after tax

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

See notes A2 and A5

As discussed above, the Group uses adjusted profit measures in order to provide a useful measure of the ongoing performance of the Group. These are adjusted from total measures to remove adjusting 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.

Adjusted EBITDA

Profit / (loss) before interest and tax

See note A4

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

EBITDA

Profit / (loss) before interest and tax

See note A3

Earnings before interest, tax, depreciation and amortisation (EBITDA). Provides a measure of profitability based on profit / (loss) before tax, and after adding back depreciation and amortisation expense.

The terminology used is consistent with that used historically and in external communications.

Adjusted EBITDAR

Profit / (loss) before interest and tax

See note A4

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

EBITDAR

Profit / (loss) before interest and tax

See note A3

Earnings before interest, tax, depreciation, amortisation and rental expense (EBITDAR). Provides a measure of profitability based on profit / (loss) before tax, and after adding back depreciation, amortisation and rental expenses outside the scope of IFRS 16.

Other earnings measures




Adjusted net finance costs

Net finance costs

See note A5 and A7

Adjusted net finance costs exclude certain adjusted finance cost items from total finance costs. The adjusting items include 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 or 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 adjusted earnings measure in order to remove this non-cash volatility.

Adjusted income tax expense / (credit)

Income tax expense / (credit)

See notes A5

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

Adjusted / Total effective tax rate

No direct equivalent

See note A6

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

 

 

 

 

 

 

Adjusted basic EPS - continuing operations, adjusted diluted EPS - continuing operations, adjusted basic EPS - total, adjusted diluted EPS - total

Statutory EPS figures

See note A8

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

Cash flow measures




Adjusted working capital

No direct equivalent

See note A11

Adjusted working capital comprises movements in inventory, trade receivables, trade payables and provisions and is adjusted to remove movements arising from adjusting items, the nature of which are disclosed above.

Free cash flow

Cash generated from operations

See note A9

Free cash flow comprises cash generated from / (utilised by) continuing operations including restructuring costs, but before cash generated from / (utilised by) businesses exited / to be exited, less net finance expense, less income tax paid, less net capital expenditure and before any special pension contributions and dividends. Free cash flow is derived from adjusted EBIT which excludes adjusting items as described above.

Operating cash flow

Cash generated from operations

See page 5

Operating cash flow comprises cash generated from / (utilised by) continuing operations, but before cash generated from / (utilised by) discontinued operations, adjusting items, the nature of which are disclosed above, and movements in working capital.

Net debt

Cash and cash equivalents less loans and other borrowings.

See note A10

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

 

A1   Reconciliation from statutory to adjusted revenue







26 weeks ended 31 October 2020




UK & Ireland Electricals £m

UK & Ireland Mobile

£m

Nordics

£m

 Greece
£m

Eliminations

£m

Total
 £m

Statutory and adjusted external revenue



2,266

384

1,952

257

-

4,859

Inter-segmental revenue



34

53

-

-

(87)

-

Total statutory and adjusted external revenue



2,300

437

1,952

257

(87)

4,859

 





26 weeks ended 26 October 2019




UK & Ireland Electricals £m

UK & Ireland Mobile

£m

Nordics

£m

 Greece
£m

Eliminations

£m

Total
 £m

Statutory external revenue



1,979

830

1,677

227

-

4,713

Out of period mobile network debtor revaluation

-

26

-

-

-

26

Adjusted external revenue



1,979

856

1,677

227

-

4,739

Inter-segmental revenue



43

42

-

-

(85)

-

Total adjusted revenue



2,022

898

1,677

227

(85)

4,739










 

 

A1   Reconciliation from statutory to adjusted revenue (continued)

 





Year ended 2 May 2020




UK & Ireland Electricals £m

UK & Ireland Mobile

£m

Nordics

£m

 Greece
£m

Eliminations

£m

Total
 £m

Statutory External revenue



4,538

1,589

3,573

470

-

10,170

Out of period mobile network debtor revaluation

-

47

-

-

-

47

Adjusted external revenue



4,538

1,636

3,573

470

-

10,217

Inter-segmental revenue



86

98

-

-

(184)

-

Total adjusted revenue



4,624

1,734

3,573

470

(184)

10,217







 

 



A2   Reconciliation from statutory profit / (loss) before interest and tax to adjusted EBIT and adjusted PBT

26 weeks ended 31 October 2020


Total
profit / (loss)

£m

Acquisition / disposal related items

 £m

Strategic change programmes

£m

Other

£m

Pension scheme interest

£m

 

Adjusted
profit / (loss)

£m

UK & Ireland Electricals

69

7

24

(5)

-

95

UK & Ireland Mobile

(44)

-

6

2

-

(36)

Nordics

68

6

-

-

-

74

Greece

7

-

-

-

-

7

EBIT

100

13

30

(3)

-

140

Finance income

4

-

-

-

-

4

Finance costs

(59)

-

-

-

4

(55)

Profit / (loss) before tax

45

13

30

(3)

4

89

 

 

26 weeks ended 26 October 2019


 

Total
profit / (loss)

£m

Mobile network debtor revaluations

£m

Acquisition / disposal related items

 £m

Strategic change programmes

£m

Regulatory costs
£m

Pension scheme interest

£m

Adjusted
profit / (loss)

(restated)*

£m

UK & Ireland Electricals

19

-

7

6

-

-

32

UK & Ireland Mobile

(107)

26

1

5

30

-

(45)

Nordics

46

-

6

-

-

-

52

Greece

9

-

-

-

-

-

9

EBIT

(33)

26

14

11

30

-

48

Finance income

5

-

-

-

-

-

5

Finance costs

(58)

-

-

-

-

7

(51)

 (Loss) / profit before tax

(86)

26

14

11

30

7

2

 

A2   Reconciliation from statutory profit / (loss) before interest and tax to adjusted EBIT and adjusted PBT (continued)


Total
profit / (loss)

£m

Mobile network debtor revaluations

£m

Acquisition / disposal related items

 £m

Strategic change programmes

£m

Regulatory costs
£m

Impairment losses

£m

Pension scheme interest

£m

 

Adjusted
profit / (loss)

(restated)*

£m

UK & Ireland Electricals

119

-

14

13

-

18

-

164

UK & Ireland Mobile

(282)

47

1

107

30

-

-

(97)

Nordics

115

-

11

-

-

-

-

126

Greece

20

-

-

1

-

-

-

21

EBIT

(28)

47

26

121

30

18

-

214

Finance income

10

-

-

-

-

-

-

10

Finance costs

(122)

-

-

-

-

-

14

(108)

 (Loss) / profit before tax

(140)

47

26

121

30

18

14

116

*      Adjusted results for the 26 weeks ended 26 October 2019 and the year ended 2 May 2020 have been restated from those previously announced to exclude the impact of IFRS 16 from adjusting items.

 

A3   Reconciliation from statutory profit / (loss) before interest and tax to EBITDA and EBITDAR




31 October 2020

£m

26 October 2019

£m

2 May

2020
£m

Profit / (loss) before interest and tax



100

(33)

(28)

Depreciation



140

148

298

Amortisation



38

33

69

EBITDA



278

148

339

Leasing costs in EBITDA



4

15

40

EBITDAR



282

163

379

 

A4   Reconciliation from adjusted EBIT to adjusted EBITDA and adjusted EBITDAR




31 October 2020

£m

26 October 2019

(restated)*

£m

2 May

2020

(restated)*
£m

Adjusted EBIT



140

48

214

Depreciation



140

148

298

Amortisation



25

20

44

Adjusted EBITDA



305

216

556

Leasing costs in EBITDA



4

15

40

Adjusted EBITDAR



309

231

596

*      Adjusted results for the 26 weeks ended 26 October 2019 and the year ended 2 May 2020 have been restated from those previously announced to exclude the impact of IFRS 16 from adjusting items. 

 

A5   Further information on the adjusting items between statutory profit to adjusted profit measures noted above


Note

26 weeks ended

31 October

2020

£m

26 weeks ended 26 October

2019 (restated)*

£m

 

Year ended

2 May

 2020 (restated)*

£m






Included in revenue:





   Mobile network debtor revaluation

(i)

-

26

47



-

26

47






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





   Mobile network debtor revaluation

(i)

-

26

47

   Acquisition / disposal related items

(ii)

13

14

26

   Strategic change programmes

(iii)

30

11

121

   Regulatory costs

(iv)

-

30

30

Impairment losses           

(v)

-

-

18

Other

(vi)

(3)

-

-



40

81

242






Included in net finance costs:





   Net non-cash finance costs on defined benefit pension schemes

(vii)

4

7

14

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


44

88

256






Tax regulatory matters

(viii)

-

-

(17)

Tax on other adjusting items

(ix)

8

(17)

(3)

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


52

71

236






Discontinued operations

8

-

2

2

Total impact on profit / (loss) after tax


52

73

238

*      Adjusted results for the 26 weeks ended 26 October 2019 and the year ended 2 May 2020 have been restated from those previously announced to exclude the impact of IFRS 16 from adjusting items.

(i) Mobile network debtor revaluations

Changes in consumer behaviour and legislative impacts on previously recognised transactions have led to negative revaluations of network receivables of £26m in the 26 weeks ended 26 October 2019 and £47m for the year ended 2 May 2020. There has been no further impact for the current period. 

(ii)                   Acquisition / disposal related items

 

A charge of £13m (half 26 weeks ended 26 October 2019: £14m, year ended 2 May 2020: £26m) relates primarily to amortisation of acquisition intangibles arising on the Dixons Retail Merger.

 

A5   Further information on the adjusting items between statutory profit to adjusted profit measures noted above (continued)

(iii)  Strategic change programmes:

        During the current period the Group announced that it would be streamlining the store management structure across the UK & Ireland to improve the customer experience by becoming clearer, simpler and faster. As a result of this announcement a charge of £22m was recognised.

        Further charges of £13m have also been recognised in relation to restructuring and redundancy costs for central operations organisational design (26 weeks ended 26 October 2019: £11m, year ended 2 May 2020: £56m) and £3m related to the initial transfer of contact centre operations.

        Property rationalisation:

        The Group has released £14m (2 May 2020: £6m credit) of property provisions related to previously announced store and concession programmes that were no longer required following the exit. This has primarily been offset by £4m related to business rates and other property related costs for previously closed and non-trading stores which are not provided.

        For the year ended 2 May 2020, a further £71m of property costs was recognised following the closure of the Carphone Warehouse standalone stores in the United Kingdom.       

(iv)  Regulatory costs:

        In the comparative periods, the Group provided £30m for redress related to the mis-selling of Geek Squad mobile phone insurance policies following the FCA investigation for periods prior to June 2015. All customer claims are carefully considered by the Group on a case by case basis with the majority of claims received being invalid. The Group has paid no further amounts in respect of customer compensation in the period.

(v)     Impairment losses:

        For the year ended 2 May 2020, an impairment indicator was identified following the unprecedented effects of Covid-19 and the enforced closure of the UK & Ireland store estate. Management considered future cash flow forecasts and adjusted for the negative impact of Covid-19 using the best available information at the time. This resulted in an impairment of £18m being recorded over right-of-use assets in the UK & Ireland Electricals operating segment.

For the 26 weeks ended 31 October 2020, management have closely reviewed the trading performance of the omnichannel business against the expected impact of Covid-19 and identified no impairment.       

(vi)    Other:

        Credits of £3m primarily relate to compensation received following the settlement of a legal case in relation to anti-competitive behaviour engaged by the counterparty.

(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 adjusted 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, one of the underlying pre-merger transactions under enquiry is considered to have a 'more likely than not' chance resulting in settlement and a provision was recognised. The enquiry is still open and a release of £17m was made in the year ended 2 May 2020 to reflect the status of discussions.   

(ix)  Tax on other adjusting items:

For the 26 weeks ended 31 October 2020, a credit of £10m was recognised in relation to tax on adjusting items which has been more than offset following the derecognition of deferred tax assets in the period.

           

A6   Adjusted effective tax rate

The Group's adjusted effective rate of taxation for the full year has been estimated at 24% (2019/20: 21%). A rate of 22% (2019/20: 23%) has been applied to the adjusted half year results due to the weighting of profit in different jurisdictions.

 

A7   Reconciliation from Statutory net finance costs to adjusted net finance costs




31 October 2020

£m

26 October 2019

(restated)*

£m

2 May

2020

(restated)*
£m

Total net finance costs



(55)

(53)

(112)

Net interest on defined benefit pension



4

7

14

Adjusted total net finance costs



(51)

(46)

(98)

*      Adjusted results for the 26 weeks ended 26 October 2019 and the year ended 2 May 2020 have been restated from those previously announced to exclude the impact of IFRS 16 from adjusting items.

A8   Adjusted earnings per share



26 weeks ended 31 October

2020

£m

26 weeks ended 26 October

2019 (restated)*

£m

 

Year ended

2 May

 2020 (restated)*

£m

Adjusted earnings





Continuing operations


69

1

75






Total earnings / (loss)





Continuing operations


17

(70)

(161)

Discontinued operations


-

(2)

(2)

Total


17

(72)

(163)








Million

Million

Million

Weighted average number of shares





Average shares in issue


1,165

1,162

1,162

Less average holding by Group EBT


(10)

(2)

(5)

For basic earnings per share


1,155

1,160

1,157

Dilutive effect of share options and other incentive schemes


22

18

25

For diluted earnings per share


1,177

1,178

1,182








Pence

Pence

Pence

Basic earnings / (loss) per share





Total (continuing and discontinued operations)


1.5

(6.2)

(14.1)

Adjustment in respect of discontinued operations


-

0.2

0.2

Continuing operations


1.5

(6.0)

(13.9)

Adjustments - continuing operations (net of taxation)


4.5

6.1

20.4

Adjusted basic earnings per share


6.0

0.1

6.5






 

A8   Adjusted earnings per share (continued)

Diluted earnings / (loss) per share





Total (continuing and discontinued operations)


1.4

(6.2)

(14.1)

Adjustment in respect of discontinued operations


-

0.2

0.2

Continuing operations


1.4

(6.0)

(13.9)

Adjustments - continuing operations (net of taxation)


4.5

6.1

20.3

Adjusted diluted earnings per share


5.9

0.1

6.4

*      Adjusted results for the 26 weeks ended 26 October 2019 and the year ended 2 May 2020 have been restated from those previously announced to exclude the impact of IFRS 16 from adjusting items.

Basic and diluted earnings per share are based on the profit for the period attributable to equity shareholders. Adjusted earnings per share is presented in order to show the underlying performance of the Group. Adjustments used to determine adjusted earnings are described further in note A5.

 

A9   Reconciliation of cash inflow from operations to free cash flow

 


26 weeks ended 31 October

2020

£m

26 weeks ended 26 October

2019

£m

 

Year ended

2 May

 2020

£m

Cash inflow from operations

745

347

649

Operating cash flows from discontinued operations*

-

(2)

1

Taxation

(16)

(5)

(20)

Interest, facility arrangement fees, dividends from investments and other

(13)

(10)

(31)

Repayment of leases

(159)

(155)

(299)

Capital expenditure

(58)

(98)

(191)

Free cash flow

499

77

109

 

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

 

A9   Reconciliation of cash inflow from operations to free cash flow (continued)

Reconciliation of adjusted EBIT to free cash flow

 




31 October 2020

£m

26 October 2019

(restated)*

£m

2 May

2020

(restated)*
£m

Adjusted EBIT (note A2)



140

48

214

Depreciation and amortisation (note A4)



165

168

342

Adjusted working capital (note A11)



509

137

141

Share based payments**



12

15

23

Capital expenditure



(58)

(98)

(191)

Taxation



(16)

(5)

(20)

Interest



 (12)

(12)

(26)

Repayment of leases



(159)

(155)

(299)

Other**



(2)

-

4

Free cash flow before exceptional items



579

98

188

Exceptional costs



(80)

(21)

(79)

Free cash flow



499

77

109

 

*      Adjusted results for the 26 weeks ended 26 October 2019 and the year ended 2 May 2020 have been restated from those previously announced to exclude the impact of IFRS 16 from adjusting items.

**    Other non-cash items in EBIT, as disclosed within the Summary of Performance section, comprises share-based payments and other items in the above reconciliation to free cash flow.

 

A10 Reconciliation from liabilities arising from financing activities to net debt




31 October 2020

£m

26 October 2019

(restated)*

£m

2 May

2020

(restated)*
£m

Loans and other borrowings



(70)

(343)

(324)

Lease liabilities



(1,398)

(1,390)

(1,444)

Total liabilities from financing activities



(1,468)

(1,733)

(1,768)

Cash and cash equivalents



340

691

660

Overdrafts



(1)

(556)

(540)

Add back lease liabilities



1,398

1,390

1,444

Net cash / (debt)



269

(208)

(204)

*      Net cash / (debt) as at 26 October 2019 and 2 May 2020 has been restated from the amounts previously announced to reflect the new definition as discussed on page 2 in the Basis of Preparation.

 

 

A11 Reconciliation of statutory working capital cash inflow to adjusted working capital cash inflow




31 October 2020

£m

26 October 2019

(restated)*

£m

2 May

2020

(restated)*
£m

Working capital cash inflow



457

185

235

Discontinued operations



-

(2)

-

Exceptional provision



52

(20)

(43)

Network debtor out of period revaluation



-

(26)

(47)

Facility arrangement fee



-

-

(4)

Adjusted working capital



509

137

141

*      Adjusted results for the 26 weeks ended 26 October 2019 and the year ended 2 May 2020 have been restated from those previously announced to exclude the impact of IFRS 16 from adjusting items.

 

A12 Summary of working capital presented within the performance review




31 October 2020

£m

26 October 2019

(restated)*

£m

2 May

2020

(restated)*
£m

Non-current assets






Trade and other receivables**



30

35

35







Current assets






Inventory



1,306

1,387

970

Trade and other receivables**



463

566

474

Derivative assets



38

39

76







Current liabilities






Trade and other payables



(2,780)

(2,717)

(2,017)

Derivative liabilities



(47)

(20)

(52)







Non-current liabilities






Trade and other payables



(112)

(109)

(131)

Working capital presented within the performance review



(1,102)

(819)

(645)

*      Working capital presented within the performance review as at 26 October 2019 and 2 May 2020 has been restated from the amounts previously announced to reflect the separate presentation of provision balances within the performance review balance sheet summary.

**    Trade and other receivables excludes network commission receivables and contract assets of £533m (26 October 2019: £785, 2 May 2020: £616m) as these are presented separately within the condensed balance sheet in the performance review.

 

 

Other definitions

The following definitions may apply throughout this interim statement and the Annual Report and Accounts 2019/20 previously published:

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

Active credit customers

Customers with an open "Your Plan" account

ADRs

American Depositary Receipts

ARPU

Average revenue per user

B2B

Business to business

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

Colleague engagement

Measured using 'Make a Difference' survey in Greece and UK & Ireland and a colleague engagement survey in the Nordics

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

Credit adoption

Sales on Credit as a proportion of total sales

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

 

 

Electricals

Represents the combination of our UK & Ireland Electricals, Nordics and Greece operating segments

GfK

Growth from Knowledge

HMRC

Her Majesty's Revenue and Customs

honeybee

honeybee was our proprietary IT software for which an asset sale was completed on 31 May 2018

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

Mobile

Represents sales made from legacy Carphone brands, iD Mobile and SimplifyDigital

MVNO

Mobile virtual network operator

NPS

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

Online

Online sales and Online market share relate to all sales where the journey is completed via the website or app. This includes online home delivered, order and collect, Online In-Store and ShopLive

Online In-Store

Online-in-store is the term used for sales that are generated through in-store tablets for product that is not stocked in the store

Order & Collect

Order & Collect is the term used for sales where the sale is made via the website or app and collected in store

Peak / post peak

Peak refers to the 10 week trading period ending on 9 January 2021 as to be announced in the Group's Christmas Trading statement in January 2021. Post peak refers to the trading period from 10 January 2020 to the Group's year end on 1 May 2021

RCF

Revolving credit facility

Sharesave or SAYE

Save as you earn share scheme

ShopLive

The Group's own video shopping service where store colleagues can assist, advise and demonstrate the use of products to customers online face-to-face

SIMO

Sales of SIM-only contracts, without attached handset

SWAS

Stores-within-a-store

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

 

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