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Dixons Retail Plc a Year of Strong Performance

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Dixons Retail Plc a Year of Strong Performance PR 06/14 7.00am, Thursday, 26 June 2014 DIXONS RETAIL PLC A YEAR OF STRONG PERFORMANCE Dixons Retail plc, one of Europe’s leading specialist multi-channel electrical retail and services companies, today announces preliminary audited results for the financial year ended 30 April 2014. Key highlights Group underlying profit before tax increased by 76% to £166.2 million versus £94.5 million reported last year and up 10% on a restated basis (1), (2). – Further strong progress in the UK & Ireland with underlying operating profits up 24%(1) – Elkjøp delivered another strong year with record sales – Greece delivered an improved performance with some signs of stability returning to the market Another successful year for the Group, delivering on its key objectives: – Firm establishment of a sustainable business in a multi-channel world – Disposals of all non-core operations, leaving the Group with leading positions in all our core markets Proposed merger with Carphone Warehouse announced to develop a leading position across electricals, mobiles and connectivity. – European Commission has confirmed that it has unconditionally cleared the proposed merger Group online sales increased by 16% to £1 billion. Customer service metrics at their highest ever recorded levels in all markets. Return on capital employed of 16.3%, up from 14.9% in the prior year. Group costs reduced by a further £45 million completing the two year £90 million cost reduction initiative. Very strong cash generation with the Group ending the year with net cash increasing to £70.9 million. Financial highlights Total underlying Group sales up 3% at £7.22 billion (2012/13 £7.03 billion) (1). Group gross margins down 0.2% in the full year, with an improvement in the second half. Total profit before tax after non-underlying items increased by 53% to £132.9 million (2012/13 profit of £86.6 million). Post tax non-underlying charges of £186.0 million, relating mainly to disposals of non-core operations. (1) Underlying diluted earnings per share 3.0 pence (2012/13 earnings of 2.6 pence)(1). Basic loss per share including discontinued operations of (1.9) pence (2012/13 loss per share of (4.5) pence). Dixons Retail plc Page 1 of 36 Sebastian James, Group Chief Executive, commented: “This has been a great year for the Group with some excellent performances across our multi-channel businesses, together with the achievement of a number of important strategic objectives. Our profits are up 76% from those we reported a year ago. This not only reflects the fact we have now exited all of our non-core markets, meaning we are now a leader in all our core markets, but is also a testament to the creativity and hard work of our teams. The Group is in robust financial health with further cash generation resulting in a strong net cash position even after the costs incurred in exiting the non-core businesses. Best of all, our customer service metrics have again reached new records. All of this all means that the Group is stronger – both commercially and financially - than it has been for a number of years and we are well positioned to set sail into new waters. I am very excited about the opportunities that the proposed merger with Carphone Warehouse offers for the Group. We will build what I hope will be the first and best truly multi-channel proposition that allows customers not only to buy and experience the explosion of new connected products that are emerging, but to also get the advice, connectivity and services that will allow them to use technology as it should be used – to make their lives better. In turn, this will allow us profoundly to change the nature of what we do: we will move from a transactional to a lifelong relationship with customers everywhere. In the meantime the new financial year has started well, with an uplift in TV sales driven by the World Cup, but we also believe we are seeing the early glimmers of a consumer recovery. On this there is no certainty just yet, but what we know for sure is that if we maintain a tight rein on costs, our pricing sharp – against all comers – and our service levels high, customers will continue to choose us over others.” For further information David Lloyd-Seed IR & Corporate Affairs Director, Dixons Retail 01727 205 065 Hannah Collyer Head of Media Relations, Dixons Retail 01727 203 041 Nick Cosgrove Brunswick Group 020 7404 5959 Helen Smith Information on Dixons Retail plc is available at http://www.dixonsretail.com Follow us on Twitter: @DixonsRetail There will be a conference call for investors and analysts at 10.15am today. Dial in: +44(0)1452 555 566, conference ID: 63552964 Slides for use on this call will be available from 10.00am from www.dixonsretail.com A replay of this call will be available from 3.00pm today. Dial in. +44 (0) 1452 550 0000, conference ID: 63552964 Information contained on the Dixons Retail plc website or the Twitter feed does not form part of this announcement and should not be relied on as such. For further information on the proposed merger with Carphone Warehouse Group plc go to www.dixonsretail.com and click on the link “Recommended all-share merger of Dixons Retail and Carphone Warehouse.” Dixons Retail plc Page 2 of 36 Underlying sales and profit analysis Underlying sales Underlying profit/(loss) Year Year Year Year ended ended ended ended 30 April 30 April Like for 30 April 30 April 2014 2013 like(4) 2014 2013(5) Note £million £million % change % change £million £million UK & Ireland (6) 4,148.6 4,014.5 +3% +5% 141.0 113.3 Nordics (7) 2,789.8 2,733.3 +2% +2% 116.9 125.4 Greece (8) 279.2 278.8 Flat (9)% (10.5) (11.0) Central costs (19.2) (16.9) Total Group Retail 7,217.6 7,026.6 +3% +3% 228.2 210.8 Property losses (25.4) (24.4) EBIT (9) 202.8 186.4 Underlying net finance costs (36.6) (35.4) Group underlying profit before tax 166.2 151.0 Notes (1) Throughout this report, references are made to ‘underlying’ performance measures. Underlying results are defined as excluding trading results from businesses exited, amortisation of acquired intangibles, net restructuring and business impairment charges and other one off non-recurring items, profits / (losses) on sale of investments or businesses, net interest on defined benefit pension schemes, net fair value remeasurements of financial instruments and, where applicable, discontinued operations. These excluded items are described as ‘non-underlying’. The financial effect of these items is shown in the analyses on the face of the income statement and in note 3 to the financial information. (2) Underlying Profit before Tax originally reported for the year ended 30 April 2013 was £94.5 million, as reported on 20 June 2013. (3) Businesses exited comprise the operations of PC City Spain and Equanet. (4) Like for like sales are calculated based on underlying store and internet sales 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. Closed stores are excluded for any period of closure. Customer support agreement sales are excluded from all UK like for like calculations. (5) Underlying figures for the year ended 30 April 2013 have been re-presented to exclude discontinued operations. Discontinued operations comprise Electroworld in Turkey, Unieuro, PIXmania and Electroworld in the Czech Republic and Slovakia. (6) UK & Ireland comprises Currys, PC World, CurrysDigital, Dixons Travel, Harrods concession, operations in Ireland, DSGi Business and KNOWHOW. Like for like sales exclude DSGi Business. (7) Nordics comprises the Elkjøp group which operates in Norway, Sweden, Finland and Denmark. (8) Greece comprises the Kotsovolos business. (9) Earnings Before Interest and Tax (EBIT) equates to underlying operating profit and is defined as underlying earnings from retail operations, after property losses, before deduction of net finance costs and tax. (10) Free Cash Flow relates to continuing operations and comprises net cash flow from operating activities before special pension contributions, less net finance costs, less income tax paid and net capital expenditure. (11) 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. Dixons Retail plc Page 3 of 36 Group business performance Underlying Group sales were up 3% at £7,217.6 million (2012/13 £7,026.6 million) and up 3% on a like for like basis, outperforming local markets in general. Underlying Group sales were up 3% at constant exchange rates. Underlying profit before interest and tax was £202.8 million (2012/13 £186.4 million). Underlying profit before tax was up 10% year on year at £166.2 million (2012/13 £151.0 million). Group gross margins were down 0.2% across the full year, with improvements in the second half. UK & Ireland Underlying operating profit growth of 24% to £141.0 million Strong market share gains, especially in white goods Total sales in the UK & Ireland division were up 3% to £4,148.6 million (2012/13 £4,014.5 million) and like for like sales were up 5%.
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