REG - Currys PLC - Performance continues to strengthen
27/06/2024 07:00
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RNS Number : 0438U Currys PLC 27 June 2024
Audited Results for the Year Ended 27 April 2024
Performance continues to strengthen
We Help Everyone Enjoy Amazing Technology
Summary
· Group adjusted profit before tax £118m, +10% YoY
· Group net funds +£193m YoY
· Trading momentum improving throughout the year
· UK credit adoption +240bps to 20.1%, and +17% growth in active accounts
to 2.3m
· iD Mobile growing strongly to 1.8m subscribers, +34% YoY
· Colleague engagement score +3 to 81, amongst top 10% of global
companies(1)
· Customer satisfaction rising with UK NPS +4pts YoY and Nordics "Happy
or Not" climbing again
· Successful disposal of Greece business for a significant valuation
premium
Financial performance
· UK&I like-for-like revenue (2)% and adjusted EBIT £142m, (16)%
YoY
o Underlying gross margin improvement and cost savings offset sales decline
o Adjusted EBIT up +£2m excluding non-repeat of c.£30m of one-off mobile
revaluations in the prior year
· Nordics like-for-like revenue (3)% and adjusted EBIT £61m, +135% YoY
o Gaining share in a market that declined, with H2 market share +100bps YoY
o Gross margin returning close to level of two years ago
· Continuing operations statutory profit before tax of £28m, +£490m YoY
· Free cash flow of £82m, +£174m improvement YoY
· Year-end net cash of £96m, +£193m YoY
· Period end IAS 19 pension deficit £(171)m, +£78m improvement YoY
Outlook
· Group trading in early part of the new financial year has been in line
with expectations
· Group planning confidently for year ahead, expect profit and free cash
flow growth
· Targeting continued growth in high margin, recurring revenue services,
including reaching at least 2m iD Mobile subscribers before year end
Alex Baldock, Group Chief Executive
"Our performance continues to strengthen. We've kept up our encouraging
momentum in the UK&I, our Nordics business is getting back on track, and
we're stronger financially.
We can see our progress in ever-more engaged colleagues, more satisfied
customers and better financial performance. Continued growth in sales of
solutions and services were particular highlights: they're good for customers,
margins and recurring revenues, and they lean on Currys' competitive
strengths. We're planning prudently but confidently for the year ahead, on
course to grow both profits and cashflow while carefully stepping back up to
more normal investment levels.
Encouraged as we are by our progress, we know we can go further. For one
thing, we expect AI-powered technology to be the most exciting new product
cycle since the tablet in 2010. With our partnerships, scale and expert
colleagues to demystify AI, we're best-placed to benefit.
As ever, I'm thankful to our thousands of capable and committed colleagues,
whose skill and will is an inspiration to me. With them we can go so much
further, and they will benefit alongside customers, shareholders and society."
Performance Summary
Group like-for-like sales decreased (2)% with a decline in both segments as
high inflation and rising interest rates caused weak consumer confidence and
depressed demand.
Year-on-year
Revenue 2023/24 2022/23 Reported Currency neutral Like-for-Like
£m
£m
% change % change % change
- UK & Ireland 4,970 5,067 (2)% (2)% (2)%
- Nordics 3,506 3,807 (8)% (2)% (3)%
Continuing operations 8,476 8,874 (4)% (2)% (2)%
UK&I adjusted EBIT decreased (16)% YoY. This reflects a positive
underlying performance, offset by the non-repeat of c.£30m of mobile
revaluations in the prior year. Underlying improvements to gross margin were
driven through higher adoption of services and solutions, better monetisation
of our improved customer experience, a focus on more profitable sales, and
cost savings. Operating costs fell in absolute terms as savings across
property, marketing, central and IT costs more than offset inflationary cost
pressures.
Nordics adjusted EBIT increased +135% YoY. Despite a challenging consumer
spending environment, our disciplined focus on margins and costs is getting
this business back on track. A year-on-year gross margin increase of +190bps
has returned margins to the level of two years ago while cost savings have
largely offset the impact of inflation.
Group operating cash flow was broadly flat YoY as the small improvement in
adjusted EBIT was offset by lower depreciation. Free cash flow was an inflow
of £82m, a +£174m improvement YoY, largely reflecting lower capital
expenditure and a much-improved working capital outflow. Total cash inflow of
£193m was £334m better YoY due to the higher free cash flow, lower dividend,
reduced pension payments and the proceeds from the disposal of Kotsovolos.
Profit and Cash Flow Summary 2023/24 2022/23 2023/24 2022/23 Reported Currency neutral
£m £m Adjusted Adjusted % change % change
£m
(restated) £m
Segmental EBIT
- UK & Ireland 88 (353) 142 170 (16)% (16)%
- Nordics 29 (11) 61 26 +135% +163%
EBIT on continuing operations 117 (364) 203 196 +4% +8%
EBIT Margin 1.4% (4.1%) 2.4% 2.2% +20 bps +20 bps
Net interest expense on leases (59) (63) (59) (63) n/a
Other net finance costs (30) (35) (26) (26) n/a
Profit / (loss) before tax on continuing operations 28 (462) 118 107 +10% +16%
Tax on continuing operations (1) (30) (31) (25)
Profit / (loss) after tax on continuing operations 27 (492) 87 82
Profit after tax on discontinued operations 138 11
Profit after tax 165 (481)
Earnings / (loss) per share on continuing operations 2.4p (44.6)p 7.9p 7.4p +7%
Operating cash flow 246 244 +1% +5%
Operating cash flow margin 2.9% 2.7% +20 bps +20 bps
Cash generated from continuing operations 419 342
Free cash flow 82 (92) n/a
Net (cash) / debt 96 (97) n/a
Balance sheet and capital allocation
The Group has a clear capital allocation framework:
1. Maintain prudent balance sheet (defined as meeting banking covenants
and meeting our own targets for indebtedness fixed charge cover of >1.5x
and indebtedness leverage <2.5x)
2. Pay required pension cash contributions
3. Invest to grow business/profits/cashflow
4. Pay and grow ordinary dividend
5. Surplus capital available to return to shareholders
Trading over the last year, combined with the successful disposal of the
Greece business, means that the Group has finished the year with £96m net
cash and a pension deficit of £171m, a net position of £(75)m. This is a
more than £700m improvement compared to before the pandemic and represents a
healthy position from which the company can pay required pension
contributions, invest in future success and return cash to shareholders.
Currently, the Group continues to benefit from the relaxed bank covenants
and lower pension contributions that were negotiated in spring 2023, although
pension contributions will increase to £50m this year, and capital
expenditure will rise back towards normalised levels. In this context, the
Board has taken a prudent decision not to declare a dividend at this year-end.
Providing trading is in line with expectations, it is the Board's intention to
announce a recommencement of shareholder returns during the next twelve
months.
Current year guidance
The Group expects to see growth in profits and free cash flow
· Capital expenditure of around £90m, doubling YoY and returning to
normalised levels
· Net exceptional cash costs around £30m, due to lower restructuring
costs
· Pension contributions of £50m, in line with scheduled increase from
£36m in 2023/24
Other technical cashflow items:
· Depreciation & amortisation around £290m
· Cash payments of leasing costs, debt & interest around £260m
· Cash tax around £10m
· Cash interest of around £20m
2024/25 is a 53-week year. This will have a small impact on sales but
immaterial impact on profits and cashflows.
Longer term guidance
The Group is continuing to target at least 3% adjusted EBIT margin. This,
combined with maintained leading market share, tight discipline on capital
expenditure, controllable exceptional cash costs and working capital, is
expected to deliver improving free cash flow.
The Group pension contributions are scheduled to rise to £78m in 2025/26 and
for the following two years, before a final payment of £43m in 2028/29.
Pension contributions will cease ahead of schedule if the deficit falls to
zero on a defined basis agreed between the Group and the scheme trustees. The
next triennial valuation date is March 2025 and the Group will work
proactively with the scheme trustees through this process to maximise value
for all stakeholders.
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') and are consistent with those used internally by the Group's Chief
Operating Decision Maker to evaluate trends, monitor performance, and forecast
results. These APMs may not be directly comparable with other similarly titled
measures of 'adjusted' or 'underlying' revenue or profit measures used by
other companies, including those within our industry, and are not intended to
be a substitute for, or superior to, IFRS measures. Further information and
definitions can be found in the Notes to the Financial Information of this
report.
Unless otherwise stated, 2022/23 figures have been restated throughout this
report to exclude discontinued operations.
(1)Viva-Glint, December 2023.
We Help Everyone Enjoy Amazing Technology
Chief Executive's Review
Our priorities last year were simple: to get the Nordics back on track, to
keep the UK&I's encouraging momentum going, and to strengthen our balance
sheet and liquidity in a turbulent environment. I am pleased to say that we
made good progress in all three areas, and we can plan confidently for the
future.
In the Nordics, consumer demand remained weak. Headwinds of inflation and
interest rate rises impacted consumer confidence and drove a market decline of
(3)% YoY. Against this backdrop, we grew market share (1H: (90)bps, 2H:
+100bps), recovered our gross margin (+190bps) back to the level of two years
ago, and saw our profits more than double, despite a headwind from currency
translation.
In the UK&I, the market was similarly soft, declining (3)% YoY. We
maintained our #1 position but lost (70)bps of share, as we continued to focus
on more profitable sales. This focus saw UK&I gross margin improve +120bps
Yo2Y, and, alongside significant net cost savings, this resulted in adjusted
profits climbing +£25m compared to two years ago, despite a (9)% drop in
revenue over the same period.
These achievements have been built on our long-term strategy.
Our strategy starts with colleagues, as it is difficult in a business like
ours for the customer experience to exceed that of the colleague. We have
supported colleagues with better tools, training and reward, and now have
world class colleague engagement scores to show for it, with Group eSat
climbing +3 to 81, putting Currys plc in the top 10% of global companies. I am
lucky enough to see my colleagues in action every day, and the calibre of
people in our business, from my immediate leadership team through to
colleagues on the front line, has never been higher.
Second, we are making our customer proposition ever easier to shop. We look to
constantly improve on the retail fundamentals of range, price, and
availability. To this we add solution selling whereby we seek to sell the
customer everything they need (products, accessories and services) rather than
just a product on its own. We have seen a +10pts YoY improvement in UK&I
solutions adoption rates to nearly 30% of eligible products sold now have
ancillary products alongside, helping customers enjoy the technology to the
full while growing our profits. We are also doing more to get it 'Right First
Time' for customers. This big business-wide effort improves customer
satisfaction (they like it when the right washing machine arrives undamaged at
the appointed time, and can be installed there and then), and so indirectly
reduces customer acquisition costs. It also reduces the cost of repeat work
(by £8m last year), while boosting margins: customers will pay more for a
better service.
We are doing all this with the benefit of the omnichannel shopping model.
Customers clearly prefer to use stores as an integral part of their shopping
journey, and we have invested to continually improve that experience online
and in-store. This year will see prudent increases to those investments.
The third leg of our strategy is to create customers for life. At the heart of
this is our unique range of services that help customers afford and enjoy
amazing technology to the full.
We help customers afford tech through credit, and we have seen UK&I
adoption climb +240bps to 20.1%, and active customer accounts grow +17% to
almost 2.3m.
We help customers get tech started, through installation and set-up. Our
installation services are becoming ever more valued by customers, and 28% of
UK big box deliveries now include installation, a rise of +290bps YoY. Our
in-home customer satisfaction is amongst the highest of all activities we
carry out.
Once they have the tech, customers want to keep it working. We are uniquely
well placed to keep tech working as we operate repair services in Norway,
Sweden and the UK, where we have Europe's largest technology repair centre. We
are the only tech retailer that operates our own repair facilities, allowing
us to offer customers the protection they want at good value. The result of
this can been seen in the 12m protection plans in place across the Group.
During the year, our team of over 1,400 engineers successfully completed 1.4
million product repairs, both at our repair centres and in customers' homes.
When tech has reached the end of its life, we want everyone to bring their old
or unwanted tech into our stores to be reused or recycled for free - whether
they bought it from us or not. If we can't reuse it, then we can harvest the
parts which can be put to good use by our amazing repair colleagues in our
labs. Or we can recycle it.
Currys has worked on responsible recycling for many years. We provide free
in-store drop off and collect our customers' unwanted electrical equipment and
small electrical appliances for recycling when we deliver their new
technology. In 2023/24, 8.1 million e-waste products were collected for reuse
and recycling across the Group.
The circularity of trade-in, protection, repair, refurbishment, reuse and
recycling is not just a PR exercise for Currys, it's our business model.
Colleagues increasingly want to work for organisations with powerful societal
benefit, and customers want to shop there. Customers value the economic
benefit of pre-loved and repaired products. Currys' well-invested capabilities
in this area are barriers to competitors, while our unmatched scale makes
offering the complete set of activities more profitable for us.
Finally, we help customers get the most out of their tech, with connectivity
being the greatest enabler of this.
Our mobile business is growing, profitable and cash generative. iD Mobile, our
MVNO (Mobile Virtual Network Operator) in the UK, has been the standout
performer this year. It has grown +34% to 1.8m subscribers, as customers have
realised the value in the deals we offer. iD is an increasingly valuable asset
in the business, one that we intend to keep growing, targeting at least 2m
subscribers before year end.
Credit, protection plans and connectivity are all sources of higher margin,
recurring revenue. Our aim is to continue growing these, so that over time our
business mixes away from single product purchases to the more predictable,
recurring and higher margin revenue streams of solution sales.
All of this rests on important progress in collecting, protecting and using
data, evidenced by our Nordics Customer Club growing to 8.6m members, and 8.9m
Currys Perks members. These memberships generate over £4bn of customer
revenue per year.
Delivering on our strategy drives improved customer satisfaction, which has
climbed to record levels this year. It also drives improved profits.
Our UK&I gross margin is now +240bps higher than three years ago and our
Nordics gross margin has rebounded strongly, up +190bps YoY. The drivers of
gross margin are the same across the Group:
· Better bundling of products - Selling customers a complete solution
enhances customer satisfaction and our margins
· Higher adoption of services - Our services are higher margin than our
product sales, and produce recurring revenues
· Monetising the improved experience - As our strategy has improved the
customer experience we have been able to charge more for it
· Focus on higher margin sales - Our enhanced data and analytics have
provided a better understanding of end-to-end profitability, which we have
used not to chase sales that fall below internal margin thresholds
· Cost savings - We have delivered significant cost savings in our supply
chain and service operations through outsourcing and efficiencies
Cost savings have also reduced our operating costs, and in the UK&I we
have delivered £268m of total cost reductions over the last three years as a
result of actions in supply chain and service operations, stores, central
operations and IT. Cost saving processes and culture are now embedded across
the Group. There is more cost to go after, with more we can do on Group
synergies, and through process improvement enhanced by Artificial Intelligence
(AI) technology. We are in the early phases of exploring Generative AI and,
having identified over 60 potential use cases, we are focussing, with our
partners Accenture and Microsoft, on opportunities in aftersales returns and
repairs.
Alongside improved profitability, we have been prudent in deploying cash. Last
year, our capital expenditure was deliberately reduced and working capital was
tightly controlled. In April, we completed the disposal of our Greece business
for net proceeds of £156m, allowing us to focus on our larger businesses in
the UK&I and Nordics and further strengthening our balance sheet. We
finished the year with £96m net cash and a pension deficit of £(171)m. This
£(75)m net position is £700m better than it was four years ago at the start
of the pandemic.
We are the clear #1 brand in all our markets, with a diversified revenue base
and a strategy that is working. After a volatile five years that have been
impacted by the legacy issues in UK Mobile, the pandemic disruption, and a
challenging situation in the Nordics, we have delivered a year without any
surprises and with material progress in all three priorities of Nordics
recovery, UK&I momentum and financial strength. Our priority for the year
ahead is simple: to continue doing the same. We are planning prudently but
confidently on this basis.
After three years of revenue declines, there are also reasons to be more
cheerful about the outlook for topline growth. First, when we look at what we
sell, the coming wave of AI led technology offers arguably the most exciting
tech cycle since the Apple iPad in 2010. We are uniquely placed to help
consumers understand the power of this technology and are working closely with
suppliers on recent and upcoming product launches. For example, we were the
first retailer globally to launch Microsoft Copilot+PC. We also see
opportunities in product categories and services where we're growing but are
still underweight. Second, in terms of who we sell to, we are starting to see
consumers in all our markets recover, with confidence and spending indicators
increasing. We also have an opportunity in B2B, where we are well placed to
serve small and medium sized enterprises, a market almost as large as B2C
which currently represents only 6% of our sales. Finally, on how we sell
product, we will continue making improvements to our websites, and further
judicious investments in our stores.
We remain focussed on generating improved free cash flow through improved
operating performance, tight working capital management and increasing capital
expenditure back to normalised levels to support profitable growth and the
long-term success of this business.
Combined with our proactive actions to strengthen the balance sheet, this will
enable resumption and growth of shareholder returns. We will then see a
business that's increasingly valuable for shareholders as well as colleagues,
customers and society.
Results call
There will be a live presentation followed by Q&A call for investors and
analysts at 9:30am today.
It will be webcast here: https://brrmedia.news/CURY_FY24
(https://eur02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fbrrmedia.news%2FCURY_FY24&data=05%7C02%7Cir%40currys.co.uk%7Cde1c7c0b81b840031b1c08dc80ae81c0%7Cf4fd83f8cc5f4fc6bf6341c416a63bcd%7C0%7C0%7C638526734196234503%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=B0DZakspvDaPi3m0n4DboHtYJMyp9hFLKySxCcpk1q8%3D&reserved=0)
Next scheduled announcement
The Group is scheduled to publish a trading update at its AGM on 5 September
2024.
For further information
Dan Homan Investor Relations +44 (0)7401 400442
Carla Fabiano Investor Relations +44 (0)7460 944523
Toby Bates Corporate Communications +44 (0)7841 037946
Tim Danaher Brunswick Group +44 (0)2074 045959
Information on Currys plc is available at www.currysplc.com
(http://www.currysplc.com)
Follow us on Twitter: @currysplc
About Currys plc
Currys plc is a leading omnichannel retailer of technology products and
services, operating online and through 719 stores in 6 countries. We Help
Everyone Enjoy Amazing Technology, however they choose to shop with us.
In the UK & Ireland we trade as Currys and in the UK we operate our own
mobile virtual network, iD Mobile. In the Nordics we trade under the Elkjøp
brand. We're the market leader in all markets, able to serve all households
and employing 24,000 capable and committed colleagues.
We help everyone enjoy amazing technology. We believe in the power of
technology to improve lives, helping people stay connected, productive, fit,
healthy, and entertained. We're here to help everyone enjoy those benefits and
with our scale and expertise, we are uniquely placed to do so.
Our full range of services and support makes it easy for our customers to
discover, choose, afford and enjoy the right technology to the full. The
Group's operations include Europe's largest technology repair facility, a
sourcing office in Hong Kong and an extensive distribution network, centred on
Newark in the UK and Jönköping in Sweden, enabling fast and efficient
delivery to stores and homes.
We're a leader in giving technology a longer life through repair, recycling
and reuse. We're reducing our impact on the environment in our operations and
our wider value chain and we aim to achieve net zero emissions by 2040. We
offer customers products that help them save energy, reduce waste and save
water, and we partner with charitable organisations to bring the benefits of
amazing technology to those who might otherwise be excluded.
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
Currys plc website or the Twitter feed does not form part of this announcement
and should not be relied on as such.
Performance Review
The business is managed and evaluated across two reporting segments, UK &
Ireland and Nordics. The table below shows the combined Group results, with
further explanation following under each of the individual segments.
Following the disposal of Kotsovolos on 10 April 2024, the Greece reporting
segment has been removed from current and prior year results.
Income Statement 2023/24 2022/23 Reported Currency neutral
£m
(restated) % change % change
£m
Revenue 8,476 8,874 (4)% (2)%
Adjusted EBITDA 479 481 -% +3%
Adjusted EBITDA margin 5.7% 5.4% +30 bps +30 bps
Depreciation on right-of-use assets (178) (179)
Depreciation on other assets (41) (46)
Amortisation (57) (60)
Adjusted EBIT 203 196 +4% +8%
Adjusted EBIT margin 2.4% 2.2% +20 bps +20 bps
Interest on lease liabilities (59) (63)
Finance income 4 2
Adjusted finance costs (30) (28)
Adjusted PBT 118 107 +10% +16%
Adjusted PBT margin 1.4% 1.2% +20 bps +20 bps
Adjusted tax (31) (25)
Adjusted Profit after tax on continuing operations 87 82
Adjusted EPS 7.9p 7.4p
Statutory Reconciliation
Adjusting items to EBITDA (63) (537)
EBITDA 416 (56) n/a n/a
Adjusting items to depreciation and amortisation (23) (23)
EBIT 117 (364) n/a n/a
EBIT Margin 1.4% (4.1%) +550 bps +550 bps
Adjusting items to finance costs (4) (9)
PBT 28 (462) n/a n/a
Adjusting items to tax 30 (5)
Profit after tax on continuing operations 27 (492)
EPS - total 14.9p (43.6)p
Cash flow 2023/24 2022/23 Reported Currency neutral
% change
£m (restated) % change
£m
Adjusted EBITDAR 483 491 (2)% +2%
Adjusted EBITDAR margin 5.7% 5.5% +20 bps +20 bps
Cash payments of leasing costs, debt & interest(1) (247) (261)
Other non-cash items in EBIT 10 14
Operating cash flow 246 244 +1% +5%
Operating cash flow margin 2.9% 2.7% +20 bps +20 bps
Capital expenditure (48) (103)
Adjusting items to cash flow (48) (40)
Free cash flow before working capital 150 101 +49% +55%
Working capital (34) (127)
Segmental free cash flow 116 (26) n/a n/a
Cash tax paid (7) (40)
Cash interest paid (27) (26)
Free cash flow 82 (92) n/a n/a
Dividend - (35)
Purchase of own shares - share buyback - -
Purchase of own shares - employee benefit trust (12) (4)
Pension (36) (78)
Disposals including discontinued operations 162 22
Other (3) 46
Movement in net cash / (debt) 193 (141) n/a n/a
Net cash / (debt) 96 (97) n/a n/a
UK & Ireland
2023/24 2022/23
Number of stores
UK 282 285
Ireland 16 16
Total UK&I 298 301
Selling space '000 sq. ft
UK 5,223 5,262
Ireland 207 207
Total UK&I 5,430 5,469
2023/24 2022/23 Reported Currency neutral % change
£m £m % change
Income Statement
Revenue 4,970 5,067 (2)% (2)%
Adjusted EBITDA 294 325 (10)% (10)%
Adjusted EBITDA margin 5.9% 6.4% (50) bps (50) bps
Depreciation on right-of-use assets (97) (98)
Depreciation on other assets (18) (21)
Amortisation (37) (36)
Adjusted EBIT 142 170 (16)% (16)%
Adjusted EBIT margin 2.9% 3.4% (50) bps (50) bps
Adjusting items to EBIT (54) (523)
EBIT 88 (353) n/a n/a
EBIT margin 1.8% (7.0%) +880 bps +880 bps
Cash flow
Adjusted EBITDAR 298 332 (10)% (10)%
Adjusted EBITDAR margin 6.0% 6.6% (60) bps (60) bps
Cash payments of leasing costs, debt & interest (150) (161)
Other non-cash items in EBIT 8 10
Operating cash flow 156 181 (14)% (14)%
Operating cash flow margin 3.1% 3.6% (50) bps (50) bps
Capital expenditure (22) (58)
Adjusting items to cash flow (32) (36)
Free cash flow before working capital 102 87 +17% +17%
Working capital (19) (71)
Segmental free cash flow 83 16 +419% +419%
Total reported and like-for-like UK&I sales declined (2)% and the online
share of business was 45%, flat YoY.
The UK market shrank (3)% during the year with the store channel reducing by
around (6)% and the online market reducing by (3)%. Our market share was down
(70)bps compared to the previous year, in line with our focus on profitable
sales. In higher margin areas, our market share is stable. Mobile and services
were the strongest performing categories, in line with our plans to grow our
mix of recurring revenue. Sales of major domestic appliances fell slightly,
while consumer electronic and computing sales declined more steeply.
Gross margins decreased (40)bps (1H: +10bps, 2H: +(80) bps). The non-repeat of
£30 million mobile revaluations impacted margins by (60)bps. The underlying
improvement of +20bps reflects the investment in long-term transformation
activities which has yielded higher adoption rate of credit and other services
and allowed us to better monetise the improvements in our customer
proposition. Alongside this, improved understanding and analysis of the
end-to-end profitability has allowed for more selective promotional activity
and we have driven £35m of cost savings within supply chain. Operating costs
fell in absolute terms as wage and other inflation was offset by savings in
stores, IT, central and marketing costs. The operating expense to sales ratio
worsened by (10)bps due to operating deleverage.
Adjusted EBIT decreased to £142m at 2.9% EBIT margin, down (50)bps YoY.
In the period, adjusting items to EBIT totalled £(54)m mainly due to £(11)m
of restructuring charges, £(17)m of impairment losses and new provisions
related to historical regulatory matters. The cash costs in the period
primarily relate to ongoing strategic change and leases on closed properties.
2023/24 £m 2022/23 £m
P&L Cash P&L Cash
Acquisition / disposal related items (11) - (11) -
Strategic change programmes (11) (26) (8) (36)
Impairment losses and onerous contracts (17) (2) (511) -
Regulatory (13) (3) 7 -
Other (2) (1) - -
Total (54) (32) (523) (36)
Operating cash flow was down (14)% to £156m due to lower operating profit,
slightly offset by lower lease costs. Capital expenditure was down
significantly compared to last year due to deliberate decision to reduce spend
during the year, with £22m spent on a variety of small-scale IT and systems
upgrades. Adjusting items are described above. Working capital cash outflow
was driven by iD Mobile, offset by small inflows in the rest of the business
because of internal efficiencies and sales growth in the final few months of
the year. In combination, this resulted in segmental free cash inflow of
£83m, £67m higher than last year.
Nordics
2023/24 2022/23
Number of stores Own stores Franchise stores Total Own stores Franchise stores Total
Norway 80 64 144 87 63 150
Sweden 96 76 172 99 76 175
Denmark 47 - 47 44 - 44
Finland 20 22 42 21 21 42
Other Nordics - 16 16 - 15 15
Nordics 243 178 421 251 175 426
Selling space '000 sq ft Own stores Franchise stores Total Own stores Franchise stores Total
Norway 1,062 654 1,716 1,100 616 1,716
Sweden 1,150 389 1,539 1,182 389 1,571
Denmark 788 - 788 734 - 734
Finland 508 196 704 520 184 704
Other Nordics - 106 106 - 105 105
Nordics 3,508 1,345 4,853 3,536 1,294 4,830
2023/24 2022/23 Reported Currency neutral % change
£m £m % change
Income Statement
Revenue 3,506 3,807 (8)% (2)%
Adjusted EBITDA 185 156 +19% +29%
Adjusted EBITDA margin 5.3% 4.1% +120 bps +130 bps
Depreciation on right-of-use assets (81) (81)
Depreciation on other assets (23) (25)
Amortisation (20) (24)
Adjusted EBIT 61 26 +135% +163%
Adjusted EBIT margin 1.7% 0.7% +100 bps +120 bps
Adjusting items to EBIT (32) (37)
EBIT 29 (11) n/a n/a
EBIT margin 0.8% (0.3%) +110 bps +120 bps
Cash flow
Adjusted EBITDAR 185 159 +16% +26%
Adjusted EBITDAR margin 5.3% 4.2% +110 bps +120 bps
Cash payments of leasing costs, debt & interest (97) (100)
Other non-cash items in EBIT 2 4
Operating cash flow 90 63 +43% +58%
Operating cash flow margin 2.6% 1.7% +90 bps +100 bps
Capital expenditure (26) (45)
Adjusting items to cash flow (16) (4)
Free cash flow before working capital 48 14 +243% +273%
Working capital (15) (56)
Segmental free cash flow 33 (42) n/a n/a
Revenue declined by (2)% on a currency neutral basis, due to a like-for-like
sales decline of (3)%.
Compared to last year, the Nordic market declined around (3)%. Our market
share was 27.7%, +10bps higher than last year, with improving trajectory
throughout the year (1H: (80)bps, 2H: +100bps). Mobile and service revenues
saw growth, with all other product categories experiencing a sales decline,
particularly computing and consumer electronics.
Gross margin recovered strongly, growing +190bps YoY, almost back to level of
two years ago. This was driven through a better balance of trading in a market
where the inventory position and competitive intensity have normalised, but
consumer spending remains subdued. The operating expense to sales ratio
worsened by (90)bps as cost inflation meant that costs increased slightly,
despite the impact of cost savings delivered across marketing, procurement,
and IT expenditure.
As a result, adjusted EBIT increased +135% to £61m.
In the period, adjusting items to EBIT totalled £(32)m, with £(12)m due to
the amortisation of acquisition intangibles and £(15)m of asset impairments
which have no cash impact, as well as £(5)m of restructuring costs. The cash
cost of restructuring was £(16)m in the year.
2023/24 £m 2022/23 £m
P&L Cash P&L Cash
Acquisition / disposal related items (12) - (12) -
Strategic change programmes (5) (16) (18) (4)
Impairment losses and onerous contracts (15) - (7) -
Total (32) (16) (37) (4)
Operating cash flow increased by +43% to £90m, driven by the higher profit
outturn. Capital expenditure was £26m, a (42)% reduction YoY as investment
was reduced in line with group policy. Significant areas of expenditure
included store refits, IT transformation and the upgrades to our Nordic
Distribution Centre expansion in Jönköping. Working capital outflow was
£(15)m, driven mainly by the lower sales volumes.
Finance Costs
Interest on lease liabilities was £(59)m, lower than last year and in line
with our overall lease commitment. The cash impact of this interest is
included within "Cash payments of leasing costs, debt & interest" in
segmental free cash flow.
The adjusted net finance costs were lower than last year due to lower interest
on lease liabilities. The net cash impact of these costs was £(27)m from
£(26)m in the prior year.
The finance cost on the defined benefit pension scheme is an adjusting item
and increased by £4m compared to the prior year due to higher average
interest rates.
2023/24 2022/23 (Restated)
£m £m
Interest on lease liabilities (59) (63)
Finance income 4 2
Finance costs (30) (28)
Adjusted net finance costs (85) (89)
Finance costs on defined benefit pension schemes (11) (7)
Other finance costs 7 (2)
Net finance costs on continuing operations (89) (98)
Tax
The full year adjusted effective tax rate of 27% was higher than the previous
year rate of 23% due to the impact of the increase of the UK tax rate from 19%
to 25% in April 2023 on current year profits. Taxation payments of £7m
(2022/23: £40m) were lower due to the settlement of previously deferred
payments in the Nordics in the prior year. The cash tax rate of 6% is lower
than the adjusted effective rate of 27% primarily due to the tax impact of
adjusting items, which reduce taxes payable.
Cash flow
2023/24 2022/23 Reported Currency neutral
£m (restated) % change % change
£m
Operating cash flow 246 244 +1% +5%
Capital expenditure (48) (103)
Adjusting items to cash flow (48) (40)
Free cash flow before working capital 150 101 +49% +55%
Working capital and network receivables (34) (127)
Segmental free cash flow 116 (26) n/a n/a
Cash tax paid (7) (40)
Cash interest paid (27) (26)
Free cash flow 82 (92) n/a n/a
Dividend - (35)
Purchase of own shares - share buyback - -
Purchase of own shares - employee benefit trust (12) (4)
Pension (36) (78)
Disposals including discontinued operations 162 22
Other (3) 46
Movement in net cash 193 (141) n/a n/a
Opening net cash / (debt) (97) 44 n/a
Closing net cash / (debt) 96 (97) n/a n/a
Segmental free cash flow was an inflow of £116m (2022/23: outflow of £(26)m)
mainly due to improvements in working capital and lower capital expenditure as
described in segmental performance above. Interest and tax outflows totalled
£(34)m as described above, resulting in free cash flow of £82m (2022/23:
outflow of £(92)m).
During this period, the Group disposed of its Greece business, Kotsovolos,
generating cash proceeds of £162 million, with funds received upon completion
in the final month of the year. Fees associated with the transaction were paid
after the year end.
The employee benefit trust acquired £12m worth of shares to satisfy colleague
share awards.
Pension contributions of £36m (2022/23: £78m) were in line with the
contribution plan agreed with the pension fund trustees at the previous
triennial review.
Other movements relate to currency translation differences due to movements on
foreign net debt across multiple currencies.
The closing net cash position was £96m, compared to a net debt position of
£(97)m at 29 April 2023.
Balance sheet
The prior year balance sheet is shown including and excluding Greece. The
commentary below refers to the balance sheet movements excluding any impact
from the disposal of Greece.
27 April 2024 29 April 2023 29 April 2023
Group Group Excluding Greece Group
£m £m £m
Goodwill 2,237 2,270 2,270
Other fixed assets 1,156 1,385 1,500
Working capital (163) (220) (230)
Net cash / (debt) 96 (170) (97)
Net lease liabilities (999) (1,143) (1,228)
Pension (171) (248) (249)
Deferred tax 8 4 8
Provisions (72) (48) (48)
Income tax payable (20) (33) (34)
Net assets 2,072 1,797 1,892
Goodwill decreased £(33)m as currency revaluations impacted goodwill
allocated to Nordics.
Other fixed assets decreased by £(229)m, as reduced capital expenditure and
lease additions were more than offset by impairments, depreciation and
amortisation.
27 April 2024 29 April 2023 29 April 2023
Group Group Excluding Greece Group
£m £m £m
Inventory 1,034 1,004 1,151
Trade Receivables 195 261 299
Trade Payables (1,180) (1,248) (1,439)
Trade working capital 49 17 11
Network commission receivables and contract assets 66 116 116
Network accrued income 187 105 105
Network receivables 253 221 221
Other Receivables 269 207 259
Other Payables (743) (675) (731)
Derivatives 9 10 10
Working capital (163) (220) (230)
At year-end, total working capital was £(163)m (29 April 2023: £(220)m).
Group inventory was £1,034m, +3% higher than last year, due primarily to an
increase in mobile stock to support strong demand. Stock days remained flat
year-on-year at 61. Trade payable days slightly improved to 74 (2022/23: 73)
since 29 April 2023, trade payables decreased by £68m to £(1,180)m (29 April
2023: £(1,248)m).
Total network receivables increased £32m due to growth of iD Mobile.
The majority of the movement in other receivables and other payables is due to
a reclassification between the two balances, with the net payable increase of
£(6)m driven by lower contract assets and an increase in accruals.
Lease liabilities have reduced by £(144)m against 29 April 2023 due to the
closure of stores and reduction in rents at lease renewals.
The IAS 19 accounting deficit of the defined benefit pension scheme amounted
to £171m (30 April 2023: £248m). The reduction of £77m during the period
was primarily driven by £36m of contributions and £46m due to updated
assumptions on longevity and commutation. The application of a higher discount
rate was favourable for the deficit, but this was entirely offset by a lower
return on assets as the asset portfolio is structured to materially hedge the
scheme's funding position against movements in the discount rate.
As agreed during the last triennial valuation, pension contributions will rise
to £50m in 2024/25 and to £78m per annum for the following three years, with
a final payment of £43m in 2028/29, when deficit is scheduled to be closed.
As part of the triennial valuation, the Group has agreed to matching on
shareholder distributions such that distributions above £12m for 2024/25 and
above £60m for 2025/26 onwards will be matched by additional contributions to
the pension scheme.
27 April 2024 29 April 2023* 30 April 2022*
£m £m £m
Net cash / (debt) 96 (97) 44
Restricted cash (36) (30) (30)
Net lease liabilities (999) (1,228) (1,263)
Pension liability (171) (249) (257)
Total closing indebtedness (1,110) (1,604) (1,506)
Less: year-end net cash / (debt) (96) 97 (44)
Add: average net cash / (debt) (69) (96) 290
Total average indebtedness (1,275) (1,603) (1,260)
27 April 2024 29 April 2023* 30 April 2022*
£m £m £m
Operating cashflow 246 268 375
Cash payments of leasing costs, debt & interest 247 283 263
Operating cash flow plus cash payments of leasing 493 551 638
Bank covenant ratios
Fixed charges (cash lease costs + cash interest) 274 309 280
Fixed charge cover 1.80x 1.78x 2.28x
Net cash excluding restricted funds 60 (127) 14
Net debt leverage (0.24)x 0.47x (0.04)x
Net indebtedness ratios
Fixed charges (cash lease costs + cash interest + pension contributions) 310 387 358
Total indebtedness fixed charge cover 1.59x 1.42x 1.78x
Total closing indebtedness (1,110) (1,604) (1,506)
Total indebtedness leverage 2.25x 2.91x 2.36x
*The prior year figures have not been restated for the disposal of Kotsovolos
as these calculations are consistent with the covenants in place at the time
At 27 April 2024 the Group had a net cash position of £96m (2022/23: net debt
£(97)m) and average net debt for the year of £(69)m (2022/23: average net
debt £(96)m). The Group has access to £493m across two longer term revolving
credit facilities that expire in April 2026, and two additional short-term
credit facilities totalling £134m that expire in October 2024, taking total
available credit from revolving credit facilities to £627m. The covenants on
the debt facilities are net debt leverage <2.5x and fixed charge cover
>1.75x. In April 2023 the Group's supportive lending syndicate agreed to
relax the fixed charge cover covenant to >1.5x until after the October 2024
measurement date.
The deferred tax asset remained at £8m in the year and related primarily to
the Nordics business. The potential UK deferred tax asset remained
de-recognised in the year, which has been prudently assessed based on the
current macroeconomic uncertainty.
Provisions primarily relate to property, reorganisation and sales provisions.
The balance increased by £24m during the year due to additions for new
provisions related to historical regulatory matters, and reclassification of
balances related to insurance claim liabilities and commercial clawbacks.
Comprehensive income / Changes in equity
Total equity for the Group increased from £1,892m to £2,072m in the period,
driven by profit after tax of £165m, the actuarial gain (net of taxation) on
the defined benefit pension deficit for the UK pensions scheme of £57m,
hedging gains of £4m and movements in relation to share schemes of £8m. This
was partially offset by £(42)m for the translation of overseas operations and
purchase of own shares by the EBT of £(12)m.
Share count
The weighted average number of shares used for basic earnings increased by 2m
to 1,106m due to a small decrease in the average number of shares held by the
Group EBT to satisfy colleague shareholder schemes.
The dilutive effect of share options and other incentive schemes increased as
some schemes improved performance against vesting conditions.
27 April 2024 29 April 2023
Million Million
Weighted average number of shares
Average shares in issue 1,133 1,133
Less average holding by Group EBT and treasury shares held by Company (27) (29)
For basic earnings / (loss) per share 1,106 1,104
Dilutive effect of share options and other incentive schemes 22 20
For diluted earnings / (loss) per share 1,128 1,124
Financial Information
Consolidated Income Statement
(Restated)*
Period ended Period ended
27 April 29 April
2024 2023
£m £m
Note
Continuing Operations
8,476 8,874
Revenue 2
Profit before impairment of goodwill, interest and tax 2 117 147
Impairment of goodwill - (511)
Profit / (loss) before interest and tax 117 (364)
Finance income 4 2
Finance costs (93) (100)
Net finance costs 3 (89) (98)
Profit / (loss) before tax 28 (462)
Income tax expense (1) (30)
Profit / (loss) after tax for the period from continuing operations 27 (492)
Profit after tax for the period from discontinued operations 138 11
Profit / (loss) after tax for the period 165 (481)
Earnings per share (pence) 4
Basic - continuing operations 2.4p (44.6)p
Diluted - continuing operations 2.4p (44.6)p
Basic - total 14.9p (43.6)p
Diluted - total 14.6p (43.6)p
* The prior period has been restated to exclude discontinued operations
Financial Information
Consolidated Statement of Comprehensive Income
(Restated)*
Period ended Period ended
27 April 29 April
2024 2023
£m £m
Profit/(loss) after tax for the period 165 (481)
Items that may be reclassified to the income statement in subsequent periods:
Cash flow hedges
Fair value movements recognised in other comprehensive income 4 11
Reclassified and reported in income statement 6 3
Tax on movements on cash flow hedges (1) -
Loss arising on translation of foreign operations (41) (5)
Reclassification of foreign currency translation differences due to disposal (1) -
of foreign operations
(33) 9
Items that will not be reclassified to the income statement in subsequent
periods:
Actuarial gain/(loss) on defined benefit pension schemes - UK 52 (61)
- Overseas - -
Tax on movements on defined benefit pension schemes 5 (35)
57 (96)
Other comprehensive income/(expense) for the period (taken to equity) 24 (87)
Total comprehensive income/(expense) for the period - continuing operations 52 (579)
Total comprehensive income for the period - discontinued operations 137 11
Total comprehensive income/(expense) for the period 189 (568)
* The prior period has been restated to exclude discontinued operations
Financial Information
Consolidated Balance Sheet
27 April 29 April
2024 2023
£m £m
Non-current assets
Goodwill 2,237 2,270
Intangible assets 246 350
Property, plant & equipment 111 155
Right-of-use assets 799 995
Lease receivables 3 4
Trade and other receivables 101 148
Deferred tax assets 20 23
3,517 3,945
Current assets
Inventory 1,034 1,151
Lease receivables 1 1
Trade and other receivables 616 631
Income tax receivable 3 1
Derivative assets 13 23
Cash and cash equivalents 125 97
1,792 1,904
Total assets 5,309 5,849
Current liabilities
Trade and other payables (1,809) (2,067)
Derivative liabilities (4) (13)
Income tax payable (23) (35)
Loans and other borrowings (29) (16)
Lease liabilities (202) (213)
Provisions (64) (43)
(2,131) (2,387)
Non-current liabilities
Trade and other payables (114) (103)
Loans and other borrowings - (178)
Lease liabilities (801) (1,020)
Retirement benefit obligations (171) (249)
Deferred tax liabilities (12) (15)
Provisions (8) (5)
(1,106) (1,570)
Total liabilities (3,237) (3,957)
Net assets 2,072 1,892
Capital and reserves
Share capital 1 1
Share premium reserve 2,263 2,263
Other reserves (844) (804)
Accumulated profits 652 432
Equity attributable to equity holders of the parent company 2,072 1,892
Financial Information
Consolidated Statement of Changes in Equity
Share premium reserve
Share capital £m Other reserves Accumulated
£m £m profits Total equity
£m £m
At 1 May 2022 1 2,263 (803) 1,040 2,501
Profit for the period - - - (481) (481)
Other comprehensive income/(expense) recognised directly in equity
- - 9 (96) (87)
Total comprehensive income/(expense) for the period - - 9 (577) (568)
Amounts transferred to the carrying value of inventory purchased during the
period
- - (19) - (19)
Net movement in relation to share schemes - - 13 4 17
Purchase of own shares - employee benefit trust - - (4) - (4)
Equity dividend - - - (35) (35)
At 29 April 2023 1 2,263 (804) 432 1,892
Profit for the period - - - 165 165
Other comprehensive (expense)/income recognised directly in equity
- - (32) 56 24
Total comprehensive (expense)/income for the period
- - (32) 221 189
Amounts transferred to the carrying value of inventory purchased during the
period
- - (5) - (5)
Amounts transferred to accumulated profits
- - (1) 1 -
Net movement in relation to share schemes - - 10 (2) 8
Purchase of own shares - employee benefit trust - - (12) - (12)
Equity dividend - - - - -
At 27 April 2024 1 2,263 (844) 652 2,072
Financial Information
Consolidated Cash Flow Statement
(Restated)* Period ended
Period ended 29 April
27 April 2023
2024 £m
£m
Note
Operating activities
Cash generated from operations 6 419 342
Contributions to defined benefit pension scheme (36) (78)
Income tax paid (7) (40)
Net cash flows from operating activities - continuing operations 376 224
Net cash flows from operating activities - discontinued operations (10) 46
Net cash flows from operating activities 366 270
Investing activities
Acquisition of property, plant & equipment and other intangibles (48) (103)
Net cash flows from investing activities - continuing operations (48) (103)
Net cash flows from investing activities - discontinued operations (11) (8)
Net cash flows from investing activities - discontinued operations: proceeds 202 -
on sale of
business
Net cash flows from investing activities 143 (111)
Financing activities
Interest paid (87) (88)
Capital repayment of lease liabilities (195) (202)
Purchase of own shares - employee benefit trust (12) (4)
Equity dividends paid - (35)
(Repayment) / Drawdown of borrowings (178) 109
Cash (outflows) / inflows from derivative financial instruments (3) 43
Facility arrangement fees paid (1) (1)
Net cash flows from financing activities - continuing operations (476) (178)
Net cash flows from financing activities - discontinued operations (17) (19)
Net cash flows from financing activities (493) (197)
Increase / (decrease) in cash and cash equivalents and bank overdrafts 16 (38)
Cash and cash equivalents and bank overdrafts at the beginning of the period 81 124
Currency translation differences (1) (5)
Cash and cash equivalents and bank overdrafts at the end of the period 6 96 81
* The prior period has been restated to exclude discontinued operations
Financial Information
Notes to the Financial Information
1 Basis of preparation
The Financial Information, which comprises the consolidated income statement,
consolidated statement of comprehensive income, consolidated balance sheet,
consolidated statement of changes in equity, consolidated cash flow statement
and extracts from the notes to the accounts for the period ended 27 April 2024
and 29 April 2023, has been prepared in accordance with the accounting
policies set out in the full financial statements and on a going concern
basis.
Alternative performance measures ('APMs')
In addition to IFRS measures, the Group uses certain APMs that are considered
to be additional informative measures of ongoing trading performance of the
Group and are consistent with how performance is measured internally. The APMs
used by the Group in addition to IFRS measures are included within the
Glossary and definitions. This includes further information on the
definitions, purpose, and reconciliation to IFRS measures of those APMs that
are used for internal reporting and presented to the Group's Chief Operating
Decision Maker ('CODM'). The CODM has been determined to be the Board.
Going concern
Going concern is the basis of preparation of the financial statements that
assumes an entity will remain in operation for a period of at least 12 months
from the date of approval of these financial statements.
In their consideration of going concern, the directors have reviewed the
Group's future cash forecasts and profit projections, which are based on
market data and past experience. Given the short to medium term macroeconomic
uncertainty, Currys obtained a fixed charge cover covenant relaxation from its
banking syndicate covering the October 2023, April 2024, and October 2024 test
periods. The debt facilities modelled in the base case total £627m for May to
October 2024 and reduce to £492m from November 2024 onwards as the two
short-term facilities the Group arranged in October 2022 to mitigate any
potential short-medium term macroeconomic uncertainty come to an end in
October 2024.
As a result of the uncertainties surrounding the forecasts due to the current
macroeconomic environment, the Group has also modelled a severe but plausible
downside scenario by applying a sales risk of 5% in 2024/25 declining to 2% by
2026/27. This sales risk can be offset with controllable mitigations across
various operating expense line items and hence in this severe but plausible
downside scenario, the Group does not breach any of the Group's facilities or
banking covenants. Further, the Group has numerous other mitigations available
(in addition to those applied to the severe but plausible downside scenario)
which are considered controllable should sales drop below the severe but
plausible downside, before requiring additional sources of financing in excess
of those that are committed. Such a scenario, and the sequence of events which
could lead to it, is considered to be remote.
The directors are of the opinion that the Group's forecasts and projections,
which take into account reasonably possible changes in trading performance
including the impact of increased uncertainty and inflation in the wider
economic environment, show that the Group is able to operate within its
current facilities and comply with its banking covenants for at least 12
months from the date of approval of these financial statements. In arriving at
their conclusion that the Group has adequate financial resources, the
directors considered the level of borrowings and facilities and that the Group
has a robust policy towards liquidity and cash flow management.
For this reason, the Board considers it appropriate for the Group to adopt the
going concern basis in preparing the financial information. The long-term
effect of macroeconomic factors is uncertain and should the impact 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.
Further information
The Financial Information set out in this announcement does not constitute
statutory accounts within the meaning of Sections 434 to 436 of the Companies
Act 2006 and is an abridged version of the Group's financial statements for
the period ended 27 April 2024 which were approved by the directors on 27 June
2024. Statutory accounts for the period ended 29 April 2023 have been
delivered to the Registrar of Companies, the auditor has reported on those
accounts, their report was unqualified and did not contain statements under
Section 498(2) or (3) of the Companies Act 2006. Statutory accounts for the
period ended 27 April 2024 will be delivered in due course. The auditor has
reported on those accounts, their report was unqualified and did not contain
statements under Section 498 of the Companies Act 2006.
The consolidated financial statements have been prepared in accordance with
UK-adopted international accounting standards. The consolidated financial
statements incorporate the financial statements of the Company and its
subsidiary undertakings for the period ended 27 April 2024.
Financial Information
Notes to the Financial Information continued
2 Segmental analysis
The Group's operating segments reflect the segments routinely reviewed by the
CODM 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.
The Group's operating and reportable segments have been identified as follows:
· UK & Ireland; comprises the operations of Currys, iD Mobile
and B2B operations.
· Nordics; operates both franchise and own stores in Norway,
Sweden, Finland and Denmark with further franchise operations in Iceland,
Greenland and the Faroe Islands.
UK & Ireland and Nordics 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.
Segmental results
Period ended 27 April 2024
UK & Ireland Nordics Eliminations Total
£m £m £m £m
External revenue 4,970 3,506 - 8,476
Inter-segmental revenue 53 - (53) -
Total revenue 5,023 3,506 (53) 8,476
Profit before interest and tax 88 29 - 117
Finance income 4
Finance costs (93)
Profit before tax 28
Depreciation and amortisation (163) (136) - (299)
(Restated)*
Period ended 29 April 2023
UK & Ireland Nordics Eliminations Total
£m £m £m £m
External revenue 5,067 3,807 - 8,874
Inter-segmental revenue 59 - (59) -
Total revenue 5,126 3,807 (59) 8,874
Profit/(loss) before interest, tax and impairment of goodwill 158 (11) - 147
Impairment of goodwill (511) - - (511)
(Loss) before interest and tax (353) (11) - (364)
Finance income 2
Finance costs (100)
(Loss) before tax (462)
Depreciation and amortisation (166) (142) - (308)
* The prior period has been restated to exclude discontinued operations
No individual customer represented more than 10% of the Group's revenue
within the current or preceding period.
Financial Information
Notes to the Financial Information continued
2 Segmental analysis continued
Disaggregation of revenues
The Group's disaggregated revenue recognised under 'Revenue from Contracts
with Customers' in accordance with IFRS 15 relates to the following operating
segments and revenue streams:
Period ended 27 April 2024
UK & Ireland Nordics Total
£m £m £m
Sale of goods 4,296 3,208 7,504
Commission revenue 178 165 343
Support services revenue 229 43 272
Other services revenue 267 90 357
Total revenue from continuing operations 4,970 3,506 8,476
(Restated)*
Period ended 29 April 2023
UK & Ireland Nordics Total
£m £m £m
Sale of goods 4,391 3,480 7,871
Commission revenue 260 195 455
Support services revenue 242 53 295
Other services revenue 174 79 253
Total revenue from continuing operations 5,067 3,807 8,874
* The prior period has been restated to exclude discontinued operations
Revenue from commissions relates predominantly to network and insurance
commissions.
Financial Information
Notes to the Financial Information continued
3 Net finance costs
(Restated)*
Period ended Period ended
27 April 29 April
2024 2023
£m £m
Unwind of discounts on trade and other receivables 4 2
Finance income 4 2
Interest on bank overdrafts, loans and borrowings (21) (18)
Interest expense on lease liabilities (59) (63)
Net interest on defined benefit pension obligations (11) (7)
Amortisation of facility fees (2) (2)
Intercompany interest (3) (2)
Other interest expense 3 (8)
Finance costs (93) (100)
Total net finance costs (89) (98)
* The prior period has been restated to exclude discontinued operations
All finance costs in the above table represent interest costs of financial
liabilities and assets, other than amortisation of facility fees which
represent non-financial assets and net interest on defined benefit pension
obligations.
4 Earnings per share
Period ended Period ended
27 April 29 April
2024 2023
£m £m
Profit / (loss) for the period attributable to equity shareholders - continued 27 (492)
operations
Profit for the period attributable to equity shareholders - discontinued 138 11
operations
Profit / (loss) for the period - Total 165 (481)
Million Million
Weighted average number of shares
Average shares in issue 1,133 1,133
Less average holding by Group EBT and Treasury shares held by Company (27) (29)
For basic earnings per share 1,106 1,104
Dilutive effect of share options and other incentive schemes 22 20
For diluted earnings per share 1,128 1,124
Pence Pence
Earnings per share
Basic earnings per share - continuing operations 2.4 (44.6)
Diluted earnings per share - continuing operations 2.4 (44.6)
Basic earnings per share - discontinued operations 12.5 1.0
Diluted earnings per share - discontinued operations 12.2 1.0
Basic earnings per share - total 14.9 (43.6)
Diluted earnings per share - total 14.6 (43.6)
Financial Information
Notes to the Financial Information continued
5 Equity dividends
27 April 29 April
2024 2023
£m £m
Final dividend for the period ended 30 April 2022 of 2.15p per ordinary share - 24
Interim dividend for the period ended 29 April 2023 of 1.00p per ordinary - 11
share
Amounts recognised as distributions to equity shareholders in the period - on
ordinary shares of 0.1p each
- 35
The final dividend proposed for the period ended 27 April 2024 is nil:
£m
Final dividend for the period ended 27 April 2024 of nil per ordinary share -
6 Notes to the cash flow statement
a. Reconciliation of cash and cash equivalents and bank overdrafts at the
end of the period
Period ended Period ended
27 April 29 April
2024 2023
£m £m
Cash at bank and on deposit 125 97
Bank overdrafts (29) (16)
Cash and cash equivalents and bank overdrafts at end of the period 96 81
b. Reconciliation of operating profit to cash generated from continuing
operations
(Restated)*
Period ended Period ended
27 April 29 April
2024 2023
£m £m
Profit / (loss) before interest and tax 117 (364)
Depreciation and amortisation 299 308
Share-based payment charge 8 14
Profit on disposal of fixed assets - -
Impairments and other non-cash items 28 520
Operating cash flows before movements in working capital 452 478
Movements in working capital:
(Increase) / Decrease in inventory (43) 126
(Increase) / Decrease in receivables (36) 40
Increase / (Decrease) in payables 21 (286)
Increase / (Decrease) in provisions 25 (16)
(33) (136)
Cash generated from continuing operations 419 342
* The prior period has been restated to exclude discontinued operations
Financial Information
Notes to the Financial Information continued
6 Notes to the cash flow statement continued
c. 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.
Lease additions, modifications and disposals
£m
29 April Financing cash flows Foreign exchange 27 April
2023 £m £m Interest 2024
£m £m £m
Loans and other borrowings (178) 197 4 (1) (22) -
Lease liabilities(()(i)()) (1,233) 275 1((iii)) 18 (64) (1,003)
Total liabilities from financing activities (ii) (1,411) 472 5 17 (86) (1,003)
Lease additions, modifications and disposals
30 April Financing cash flows £m Foreign exchange 29 April
2022 £m £m Interest 2023
£m £m £m
Loans and other borrowings (80) (92) - 11 (17) (178)
Lease liabilities(()(i)()) (1,267) 285 (198) 15 (68) (1,233)
Total liabilities from financing activities (ii) (1,347) 193 (198) 26 (85) (1,411)
i. Lease liabilities are secured over the Group's right-of-use assets.
ii. In addition to the amounts shown above, facility arrangement fees of
£1m (2022/23: £1m) are included within cash flows from financing activities
in the consolidated cash flow statement.
iii. This figure includes the disposal of lease liabilities
related to Greece of £81m
The consolidated cash flow statement presents the drawdown and repayment of
loans and other borrowings on a net basis as these loans and other borrowings
are used as a key part of the Group's daily cash management, with daily
deposits and repayments, and the entire balance revolving within a matter of
days.
d. Proceeds on sale of business
On 10 April 2024, the Group announced that it has completed the sale of Dixons
South East Europe A.E.V.E., the holding company of Currys' entire Greece and
Cyprus retail business, trading as Kotsovolos, to Public Power Corporation
S.A. Total consideration received was £237m and £32m of cash was held in
Dixons South East Europe A.E.V.E. at the disposal date, resulting in a net
cash inflow on disposal of £205m. A further £3m of transaction fees
associated with the sale were paid during FY24, resulting in net proceeds on
disposal of £202m.
7 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:
27 April 29 April
2024 2023
£m £m
Revenue from sale of goods and services 14 13
Amounts owed to the Group 1 1
All transactions entered into with related parties were completed on an arm's
length basis.
Risks to Achieving the Group's Objectives
The Board continually reviews and monitors the risks and uncertainties which
could have a material effect on the Group's results. The Group's risks, and
the factors which mitigate them, are set out in more detail on pages 64 to 72
in the Annual Report and Accounts 2022/23 and remain relevant, but have
evolved, in the current period.
The updated risks and uncertainties are listed below:
1. Failure to actively understand, manage and deepen key supplier and
brand relationships who contribute materially to our business could weaken our
ability to respond to external shocks and, could result in a deterioration in
financial performance;
2. 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;
3. Failure to comply with financial services regulation could result
in reputational damage, customer compensation, financial penalties and a
resultant deterioration in financial performance;
4. 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;
5. 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;
6. Failure to appropriately safeguard against cyber risks and
associated attacks could result in reputational damage, customer compensation,
financial penalties and a resultant deterioration in financial performance;
7. Failure to action appropriate Health and Safety measures resulting
in injury could give rise to reputational damage and financial penalties;
8. Business continuity plans are not effective and major incident
response is inadequate resulting in reputational damage and a loss of
competitive advantage;
9. 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;
10. 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;
11. Failure to either deliver or adequately communicate our commitment to
sustainability and being a good corporate citizen could result in reduced cash
flow, reputational damage and loss of competitive advantage;
12. Failure to successfully navigate an increasingly pervasive set of
externally driven factors, inflation and cost of living pressures could result
in a deterioration in financial performance; and
13. Failure to manage Currys' access to sufficient liquidity at any given
time may impact the Group's ability to meet its financial obligations and
support business growth plans.
The directors have prepared the preliminary Financial Information on a going
concern basis. In considering the going concern basis, the directors have
considered the above-mentioned principal risks and uncertainties, especially
in the context of a highly competitive consumer and retail environment as well
as the wider macroeconomic environment and how these factors might influence
the Group's objectives and strategy.
In their consideration of going concern, the directors have reviewed the
Group's future cash forecasts and profit projections, which are based on
market data and past experience. The directors are of the opinion that the
Group's forecasts and projections, which take into account reasonably possible
changes in trading performance including the impact of increased uncertainty
and inflation in the wider economic environment, show that the Group is able
to operate within its current facilities and comply with its banking covenants
for at least 12 months from the date of approval of these condensed financial
statements. In arriving at their conclusion that the Group has adequate
financial resources, the directors considered the level of borrowings and
facilities and that the Group has a robust policy towards liquidity and cash
flow management.
As a result, the Board believes that the Group is well placed to manage its
financing and other significant risks satisfactorily and that the Group will
be able to operate within the level of its facilities for at least 12 months
from the date of approval of these condensed financial statements. For this
reason, the Board considers it appropriate for the Group to adopt the going
concern basis in preparing the financial information.
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'). These measures are consistent with those used internally by the
Group's Chief Operating Decision Maker ('CODM') in order to evaluate trends,
monitor performance and forecast results.
These APMs may not be directly comparable with other similarly titled measures
of 'adjusted' or 'underlying' revenue or profit measures used by other
companies, including those within our industry, and are not intended to be a
substitute for, or superior to, IFRS measures.
We consider these additional measures to provide additional information on the
performance of the business and trends to shareholders. The below, and
supplementary notes to the APMs, provides further information on the
definitions, purpose and reconciliations to IFRS measures of those APMs that
are used internally in order to provide parity and transparency between the
users of this financial information and the CODM in assessing the core results
of the business in conjunction with IFRS measures.
Adjusted results
Included within our APMs the Group reports a number of adjusted profit, and
earnings measures, all of which are described throughout this section. The
Group subsequently refers to adjusted results as those which reflect the
in-period trading performance of the ongoing omnichannel retail operations
(referred to below as underlying operations and trade) and excludes from IFRS
measures discontinued operations and certain items that are significant in
size or volatility or by nature are non-trading or highly infrequent.
Adjusting items
When determining whether an item is to be classified as adjusting, and the
departure from IFRS measures is deemed more appropriate than the additional
disclosure requirements for material items under IAS 1, it must meet at least
one of the following criteria:
o be one-off in nature and have a significant impact on amounts presented in
either the statutory income statement or statutory cash flow statement in any
set of annual Group financial statements; or
o recur for a finite number of years and do not reflect the underlying
trading performance of the business.
Management will classify items as adjusting where these criteria are met and
it is considered more useful for the users of the financial statements to
depart from IFRS measures.
Items excluded from adjusted results can evolve from one financial period 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.
Below highlights the grouping in which management allocate adjusting items and
provides further detail on how management consider such items to meet the
criteria set out above. Further information on the adjusting items recognised
in the current and comparative period can be found in note A4.
Acquisition and disposal related items
Includes costs incurred in relation to the acquisition, and income for the
disposal of business operations, as the related costs and income reflect
significant changes to the Group's underlying business operations and trading
performance. Adjusted results do not exclude the related revenues or costs
that have been earned in relation to previous acquisitions, with the exception
of the amortisation of intangibles, such as brands, that would not have been
recognised prior to their acquisition. Where practically possible amounts are
restated in comparative periods to reflect where a business operation has
subsequently been disposed.
Strategic change programmes
Primarily relate to costs incurred for the execution and delivery of a change
in strategic direction, such as; severance and other direct employee costs
incurred following the announcement of detailed formal restructuring plans as
they are considered one-off; property rationalisation programmes where a
business decision is made to rebase the store estate as this is considered
both one-off in nature and to cause a significant change to the underlying
business operations; and implementation costs for strategic change
delivery projects that are considered one-off in nature. Such costs incurred
do not reflect the Group's underlying trading performance. Results are
therefore adjusted to exclude such items in order to aid comparability between
periods.
Regulatory costs
The Group includes material costs related to data incidents and regulatory
challenge within adjusting items so far as on the basis of internal or
external legal advice, it has been determined that it is more than possible
that a material outflow will be required to settle the obligation (legal or
constructive) and subsequently recognised a provision in accordance with IAS
37.
Glossary and Definitions continued
Alternative performance measures ('APMs') continued
Adjusting items continued
Impairment losses and onerous contracts
In order to aid comparability, costs incurred for material non-cash
impairments (or reversals of previously recognised impairments) and onerous
contracts are included within adjusting items where they have a significant
impact on amounts presented in either the statutory income statement or
statutory cash flow statement in any set of annual Group financial statements.
When considering the threshold, management will consider whether the gross
impairment charge and gross reversal of previously recognised impairment in
any one reportable operating segment is above the material threshold for that
financial period.
While the recognition of such is considered to be one-off in nature, the
unavoidable costs for those contracts considered onerous is continuously
reviewed and therefore based on readily available information at the reporting
date as well as managements historical experience of similar transactions. As
a result, future cash outflows and total charges to the income statement may
fluctuate in future periods. If these changes are material they will be
recognised in adjusting items.
Other items
Other items include those items that are non-operating and one-off in nature
that are material enough to distort the underlying results of the business but
do not fall into the categories disclosed above. Such items include the
settlement of legal cases and other contractual disputes where the
corresponding income, or costs, would be considered to distort users
understanding of trading performance during the period.
Net interest income/(costs)
Included within adjusting interest income/(costs) are the finance
income/(costs) of businesses to be exited, previously disposed operations, net
pension interest costs on the defined benefit pension scheme within the UK and
other exceptional items considered so one-off or material that they distort
underlying finance costs of the Group (including legacy tax cases). As
disclosed above, the disposal of businesses represents a significant change to
the underlying business operations, as such, the related interest
income/(costs) are removed from adjusted results to assist users'
understanding of the trading business.
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 period 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, and given the defined benefit section of the scheme having closed to
future accrual on 30 April 2010, the accounting effect of this is excluded
from adjusted results.
Tax
Included within taxation is the tax impact on those items defined above as
adjusting. The exclusion from adjusted results ensures that users, and
management, can assess the overall performance of the Groups underlying
operations.
Where the Group is cooperating with tax authorities in relation to legacy tax
cases and is applying tax treatments to changes in underlying business
operations as a result of acquisition, divestiture or closure of operations,
the respective costs will also be included within adjusting items. Management
considers it appropriate to divert from IFRS measures in such circumstance as
the one-off charges related to prior periods could distort users understanding
of the Group's ongoing operational performance.
The Group also includes the movement of un-recognised deferred tax assets
relating to unused tax losses and other deductible temporary differences
within adjusting items. Management considers that the exclusion from adjusted
results aids users in the determination of current period performance as the
recognition and derecognition of deferred tax is impacted by management's
forecast of future performance and the ability to utilise unused tax losses
and other deductible temporary differences.
Definitions, purpose and reconciliations
In line with the Guidelines on Alternative Performance Measures issued by ESMA
we have provided additional information on the APMs used by the Group below,
including full reconciliations back to the closest equivalent statutory
measure.
Glossary and Definitions continued
Alternative performance measures ('APMs') continued
Adjusting items continued
EBIT/EBITDA
In the key highlights and Performance review we reference financial metrics
such as EBIT and EBITDA. We would like to draw to the user's attention that
these are shown to aid comparison of our adjusted measures to the closest IFRS
measure. We acknowledge that the terminology of EBIT and EBITDA are not IFRS
defined labels but are compiled directly from the IFRS measures of profit
without making any adjustments for adjusting items explained above. These
measures are: profit for the period before deducting interest and tax, termed
as EBIT; and profit for the period before deducting interest, tax,
depreciation and amortisation, termed as EBITDA. These metrics are further
explained and reconciled within notes A1 and A2 below.
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 period in order to provide appropriate period-on-period movement
measures without the impact of foreign exchange movements.
Like-for-like ('LFL') % change
LFL revenue is calculated based on adjusted store and online revenue
(including order & collect, online in-store and ShopLive UK) using
constant exchange rates consistent with the currency neutral percentage change
measure detailed above. New stores are included where they have been open for
a full financial period both at the beginning and end of the financial period.
Revenue from franchise stores are excluded and closed stores are excluded for
any period of closure during either period. Customer support agreement,
insurance and wholesale revenues along with revenue from other non-retail
businesses are excluded from LFL calculations. We consider that LFL revenue
represents a useful measure of the trading performance of our underlying and
ongoing store and online portfolio.
Glossary and Definitions continued
A1 Reconciliation from statutory profit before interest and tax to adjusted
EBIT and adjusted PBT (continuing operations)
Adjusted EBIT and adjusted PBT are measures of profitability that are adjusted
from total IFRS measures to remove adjusting items, the nature of which are
disclosed above. A description of costs included within adjusting items during
the period and comparative periods is further disclosed in 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.
The below reconciles profit before tax and profit before interest and tax,
which are considered to be the closest equivalent IFRS measures, to adjusted
EBIT and adjusted PBT.
Period ended 27 April 2024
Acquisition Impairment losses and onerous contracts
/ disposal related items Strategic change programmes £m Regulatory income Other
Total profit £m £m £m £m Interest Adjusted
£m £m profit
£m
UK & Ireland 88 11 11 17 13 2 - 142
Nordics 29 12 5 15 - - - 61
EBIT from continuing operations 117 23 16 32 13 2 - 203
Finance income 4 - - - - - - 4
Finance costs (93) - - - - - 4 (89)
Profit before tax from continuing operations 28 23 16 32 13 2 4 118
(Restated)* Period ended 29 April 2023
Acquisition Impairment losses and onerous contracts
Total profit/ (loss) / disposal related items Strategic change programmes £m Regulatory income
£m £m £m £m Interest Adjusted
Other £m profit
£m (restated)*
£m
UK & Ireland (353) 11 8 511 (7) - - 170
Nordics (11) 12 18 7 - - - 26
EBIT from continuing operations (364) 23 26 518 (7) - - 196
Finance income 2 - - - - - - 2
Finance costs (100) - - - - - 9 (91)
(Loss)/profit before tax from continuing operations (462) 23 26 518 (7) - 9 107
* The prior period has been restated to exclude discontinued operations
A2 Reconciliation from statutory profit before interest and tax to EBITDA
(continuing operations)
EBITDA represents earnings before interest, tax, depreciation and
amortisation. It provides a useful measure of profitability for users by
adjusting for the volatility of depreciation and amortisation expense which,
due to variable useful lives and timing of capital investment, could distort
the underlying profit generated from the Group in relative periods.
The below reconciles profit before interest and tax, which are considered to
be the closest equivalent IFRS measures, to EBITDA.
(Restated)* Period ended
Period ended 29 April
27 April 2023
2024 £m
£m
Profit/(loss) before interest and tax from continuing operations 117 (364)
Depreciation 219 225
Amortisation 80 83
EBITDA 416 (56)
* The prior period has been restated to exclude discontinued operations
Glossary and Definitions continued
A3 Reconciliation from adjusted EBIT to adjusted EBITDA and adjusted EBITDAR
(continuing operations)
Adjusted EBITDA represents earnings before interest, tax, depreciation and
amortisation. This measure also excludes adjusting items, the nature of which
are disclosed above and with further detail in note A4. It provides a useful
measure of profitability for users by adjusting for the items noted in A1
above as well as the volatility of depreciation and amortisation expense
which, due to variable useful lives and timing of capital investment, could
distort the underlying profit generated from the Group in relative periods.
The depreciation adjusted within adjusted EBITDA includes right-of-use asset
depreciation on leased assets under IFRS 16. As some lease rental expenses are
not depreciation linked to right-of-use assets due to being short-term, low
value or variable, a similar measure of adjusted EBITDAR is provided. Adjusted
EBITDAR provides a measure of profitability based on the above adjusted EBITDA
definition as well as deducting rental expenses not linked to right-of-use
assets. The purpose of this measure is aligned to the adjusted EBITDA purpose
above, with the addition of excluding the full cost base of leases which can
vary from period to period, for example when leases are short-term whilst
negotiations are ongoing regarding lease renewals.
The below reconciles adjusted EBIT to adjusted EBITDA and adjusted EBITDAR.
The closest equivalent IFRS measures are considered to be profit before
interest and tax, the reconciliation of such from adjusted EBIT can be found
in note A1.
(Restated)* Period ended
Period ended 29 April
27 April 2023
2024 £m
£m
Adjusted EBIT 203 196
Depreciation 219 225
Amortisation 57 60
Adjusted EBITDA 479 481
Leasing costs in EBITDA 4 10
Adjusted EBITDAR 483 491
* The prior period has been restated to exclude discontinued operations
A4 Further information on the adjusting items between IFRS measures to
adjusted profit measures noted above (continuing operations)
Period ended
Period ended 29 April
27 April 2023
Note 2024 (restated)*
£m £m
Included in profit before interest and tax (continuing operations):
Acquisition / disposal related items (i) 23 23
Strategic change programmes (ii) 16 26
Impairment losses and onerous contracts (iii) 32 518
Regulatory income (iv) 13 (7)
Other (v) 2 -
86 560
Included in net finance costs (continuing operations):
Net non-cash finance costs on defined benefit pension schemes (vi) 11 7
Other interest (vii) (7) 2
Total impact on profit before tax (continuing operations) 90 569
Tax on other adjusting items (viii) (30) 5
Total impact on profit after tax 60 574
* The prior period has been restated to exclude discontinued operations
(i) Acquisition/disposal related items
A charge of £23m (2022/23: £23m) relates primarily to amortisation of
acquisition intangibles arising on the Dixons Retail Merger.
Glossary and Definitions continued
A4 Further information on the adjusting items between IFRS measures to
adjusted profit measures noted above (continuing operations) continued
(ii) Strategic change programmes
During the period, costs of £16m have been incurred as the Group continues to
deliver the long-term strategic plan. The costs incurred relate to the
following strategic change programmes:
• £12m (2022/23: £10m) of one-off implementation costs related to
transferring service centre operations to a third party;
• £4m (2022/23: £17m) of additional restructuring costs in relation to
the restructure of the Nordics central operations and retail business as
announced in the prior period.
In addition, in the period ended 29 April 2023 restructuring costs of £3m
were recognised related to central operations and UK & Ireland retail
operations.
Property rationalisation
Included within strategic change programmes is a credit of £4m that primarily
relates to the release of lease liabilities and excess property provisions
following successful early exit negotiations on stores included within
previously announced rationalisation and closure programmes. Included in the
£4m credit is a £2m impairment charge against right-of-use assets for
non-trading properties in the UK. The number of periods impacted by the
property programme is determined by the remaining lease duration for closed
stores where they cannot be exited early. Amounts recongised in the current
period in relation to property programmes have been net £nil.
(iii) Impairment losses and onerous contracts
Following the announcement in the period of the strategic decision to
restructure elements of the Nordics segment in the prior period, fixed asset
impairment charges of £15m (2022/23: £7m) were recognised over assets held
in the Nordics component of the Group. This includes £16m of impairments of
inefficient intangible software assets with a view to achieving long-term
efficiencies with alternative assets. This is partially offset by a £1m net
credit from reversals of right-of-use asset impairments following some
additional store closures and some planned closures from the prior period not
executed.
During the period the Group also recognised £10m of impairments over
intangible software assets in the UK & Ireland segment that became
obsolete due to system replacements that took place in the year. In addition,
during the period the Group undertook a strategic review of the IT licensing
portfolio which resulted in £1m of intangible impairments and a provision for
onerous contracts of £6m in relation to unavoidable future costs of licensing
agreements.
During the period ended 29 April 2023, a non-cash impairment charge of £511m
was recognised over the goodwill recognised in the UK & Ireland operating
segment. No impairment charge over goodwill has been recognised in the period
ending 27 April 2024, as described in note 8 to the consolidated statements.
(iv) Regulatory costs
During the current period the Group has provided for £13m of costs related to
historic regulatory matters.
In periods prior, the Group provided for redress related to the mis-selling of
Geek Squad mobile phone insurance policies following the FCA investigation for
periods preceding June 2015. During the period ended 29 April 2023, the Group
received confirmation that no further action would be taken for a large
proportion of claims and as a result, the Group reduced the provision in
relation to redress by a further £7m.
(v) Other
In the current period the group has recognised £2m of FX impact upon
translation of an exceptional underlying intra-group balance that has since
been capitalised. A further £2m has been recognised for professional fees
incurred in relation to open tax cases and other non-operating matters. These
costs are offset by £2m of income from intra-group balance adjustments, which
is offset in total statutory profit by a corresponding cost in discontinued
operations.
Glossary and Definitions continued
A4 Further information on the adjusting items between IFRS measures to
adjusted profit measures noted above (continuing operations) continued
(vi) 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 period to the net defined
benefit obligation.
(vii) Other interest
The Group continues to cooperate with HMRC in relation to open tax cases
arising from pre-merger legacy transactions in the Carphone Warehouse Group.
The Group has risk assessed that certain of the cases have a probable chance
of resulting in cash outflows to HMRC that are measured at £50m as at 27
April 2024 (comprising the amount of tax payable and interest up to 27 April
2024) (2022/23: £59m). During the period, interest of £7m was recorded in
relation to these cases which arose from the downward remeasurement of the
risks based on their most recent based on their recent weighted average
probability of occurring.
(viii) Tax on other adjusting items
The effective tax rate on adjusting items is 34%. The rate is higher than the
UK statutory rate of 25% predominantly due to the downward remeasurement of
the provisions for uncertain tax positions relating to the legacy Carphone
Warehouse Group tax cases referred to at (vii) above.
A5 Reconciliation from statutory net finance costs to adjusted net finance
costs (continuing operations)
Adjusted net finance costs exclude certain adjusting finance cost items from
total finance costs. The adjusting items include net pension interest costs
and interest charged on Uncertain Tax Positions (UTP). Further information on
these items being removed from our adjusted earnings measures is included
within the definitions above.
The below provides a reconciliation from net finance costs, which is
considered to be the closest IFRS measure, to adjusted net finance costs.
(Restated)* Period ended
Period ended 29 April
27 April 2023
2024 £m
£m
Total net finance costs (89) (98)
Net interest on defined benefit pension obligations 11 7
Other interest (7) 2
Adjusted total net finance costs (85) (89)
* The prior period has been restated to exclude discontinued operations
Glossary and Definitions continued
A6 Adjusted tax expense (continuing operations)
a) Tax expense
The corporation tax charge comprises:
(Restated*)
Period ended 27 April 2024 Period ended 29 April 2023
Adjusting Adjusting
Adjusted items Statutory Adjusted items Statutory
£m £m £m £m £m £m
Current tax
UK corporation tax at 25% (2022/23: 19.5%) 16 (9) 7 14 - 14
Overseas tax 6 (1) 5 7 (1) 6
22 (10) 12 21 (1) 20
Adjustments made in respect of prior periods:
UK corporation tax - (4) (4) - (9) (9)
Overseas tax (1) - (1) 1 2 3
(1) (4) (5) 1 (7) (6)
Total current tax 21 (14) 7 22 (8) 14
Deferred tax
UK corporation tax 10 (12) (2) 18 9 27
Overseas tax - (4) (4) (14) (2) (16)
10 (16) (6) 4 7 11
Adjustments made in respect of prior periods:
UK corporation tax - - - - (14) (14)
Overseas tax - - - (1) 20 19
- - - (1) 6 5
Total deferred tax 10 (16) (6) 3 13 16
Total tax charge 31 (30) 1 25 5 30
* The prior period has been restated to exclude discontinued operations
b) Reconciliation of standard to actual (effective) tax rate
The principal differences between the total tax charge shown above and the
amount calculated by applying the standard rate of UK corporation tax to
profit/(loss) before taxation are as follows:
(Restated*)
Period ended 27 April 2024 Period ended 29 April 2023
Adjusting Adjusting
Adjusted items Statutory Adjusted items Statutory
£m £m £m £m £m £m
Profit/(loss) before taxation 118 (90) 28 107 (569) (462)
Tax at UK statutory rate of 25% (2022/23: 19.5%) 30 (23) 7 21 (111) (90)
Items attracting no tax relief or liability((i)) 2 - 2 5 100 105
Movement in unprovided deferred tax((ii)) - (4) (4) (2) 19 17
Effect of change in statutory tax rate - - - 4 (1) 3
Differences in effective overseas tax rates (1) 1 - (1) (1) (2)
Increase in provisions - - - - - -
Other tax adjustments 1 - 1 (2) - (2)
Adjustments in respect of prior periods((iii)) (1) (4) (5) - (1) (1)
Total tax charge 31 (30) 1 25 5 30
* The prior period has been restated to exclude discontinued operations
The effective tax rate on adjusted earnings for the period ended 27 April 2024
is 27% (2022/23: 23%). The effective tax rate on adjusting items is 34%
(2022/23: (1)%). The future effective tax rate is likely to be impacted by the
geographical mix of profits and the Group's ability to take advantage of
currently un-recognised deferred tax assets.
(i) Items attracting no tax relief or liability relate mainly to
non-deductible expenditure, including non-qualifying depreciation and share
based payments.
(ii) Deferred tax assets relating to tax losses and other short-term
temporary differences in the UK business remain recognised due to the
macroeconomic uncertainty built into the Group's business plans.
(iii) The provisions for uncertain tax positions relating to the legacy
Carphone Warehouse tax cases were remeasured during the period.
A7 Adjusted earnings per share (continuing operations)
Earnings per share ('EPS') measures are adjusted in order to show an adjusted
EPS figure, which reflects the adjusted earnings per share of the Group. We
consider the adjusted EPS to provide a useful measure of the ongoing earnings
of the underlying Group.
The below table shows a reconciliation of statutory basic and diluted EPS to
adjusted basic and diluted EPS as these are considered to be the closest IFRS
equivalents.
(Restated)* Period ended
Period ended 29 April
27 April 2023
2024 £m
£m
Profit after tax for the period (continuing operations)
Total 27 (492)
Adjustments 60 574
Adjusted profit after tax (continuing operations) 87 82
Million Million
Weighted average number of shares
Average shares in issue 1,133 1,133
Less average holding by Group EBT and Treasury shares held by Company (27) (29)
For basic earnings per share 1,106 1,104
Dilutive effect of share options and other incentive schemes 22 20
For diluted earnings per share 1,128 1,124
Pence Pence
Basic earnings per share
Total 2.4 (44.6)
Adjustments 5.5 52.0
Adjusted basic earnings per share (continuing operations) 7.9 7.4
Diluted earnings per share
Total 2.4 (44.6)
Adjustments 5.3 51.9
Adjusted diluted earnings per share (continuing operations) 7.7 7.3
* The prior period has been restated to exclude discontinued operations
Basic and diluted EPS are based on the profit for the period attributable to
equity shareholders. Adjusted EPS is presented in order to show the underlying
performance of the Group. Adjustments used to determine adjusted earnings are
described further in note A4.
A8 Reconciliations of cash generated from operations to free cash flow
(continuing operations)
Operating cash flow comprises cash generated from/(utilised by) operations,
adjusting items (the nature of which are disclosed above), and after
repayments of lease liabilities (excluding non-trading stores) and movements
in working capital presented within the Performance review. The measure aims
to provide users a clear understanding of cash generated from the operations
of the Group.
Sustainable free cash flow comprises cash generated from/(utilised by)
operations, but before movements in working capital, and after capital
expenditure, capital repayments of lease liabilities, net cash interest paid,
and income tax paid. Free cash flow comprises all items contained within
sustainable free cash flow but after movements in working capital. Sustainable
free cash flow and free cash flow are considered to be useful for users as
they represent available cash resources after operational cash outflows and
capital investment to generate future economic inflows. We consider it useful
to present both measures to draw users' attention to the impact of movements
in working capital on free cash flow.
Glossary and Definitions continued
A8 Reconciliations of cash generated from operations to free cash flow
(continuing operations) continued
The below provides a reconciliation of cash generated from operations, which
is considered the closest equivalent IFRS measure, to operating cash flow,
sustainable free cash flow and free cash flow:
Reconciliation of cash inflow from operations to free cash flow
(Restated)* Period ended
Period ended 29 April
27 April 2023
2024 £m
£m
Cash generated from continuing operations 419 342
Capital repayment of leases cost and interest (255) (264)
Less adjusting items to cash flow 48 40
Less movements in working capital presented within the Performance review 34 127
(note A10)
Other - (1)
Operating cash flow 246 244
Capital expenditure (48) (103)
Add back adjusting items to cash flow (48) (40)
Taxation (7) (40)
Cash interest paid (27) (26)
Sustainable free cash flow 116 35
Add back movements in working capital presented within the Performance review (34) (127)
(note A10)
Free cash flow 82 (92)
* The prior period has been restated to exclude discontinued operations
Reconciliation of adjusted EBIT to free cash flow and sustainable free cash
flow
(Restated)*
Period ended Period ended
27 April 29 April
2024 2023
£m £m
Adjusted EBIT (note A1) 203 196
Depreciation and amortisation (note A3) 276 285
Working capital presented within the Performance review (note A10) (34) (127)
Capital expenditure (48) (103)
Taxation (7) (40)
Interest (27) (26)
Repayment of leases** (243) (251)
Other non-cash items in EBIT*** 10 14
Free cash flow before adjusting items to cash flow 130 (52)
Adjusting items to cash flow (48) (40)
Free cash flow 82 (92)
Less working capital presented within the Performance review (note A10) 34 127
Sustainable free cash flow 116 35
* The prior period has been restated to exclude discontinued
operations
** Repayment of leases excludes the impact of non-trading leases which
are presented within adjusting items to cash flow.
*** Other non-cash items in EBIT, as disclosed within the Performance
review, comprise share-based payments, profit / loss on disposal of fixed
assets, impairments and other non-cash items.
A9 Reconciliation from liabilities arising from financing activities to total
indebtedness and net cash
Total indebtedness is a new measure used for the first time in the prior
period and represents period end net cash, pension deficit, lease liabilities
and lease receivables, less any restricted cash. The purpose of this is to
evaluate the liquidity of the Group with the inclusion of all interest-bearing
liabilities.
Net cash comprises cash and cash equivalents and short-term deposits, less
loans and other borrowings. Lease liabilities are not included within net
cash. We consider that this provides a useful alternative measure of the
indebtedness of the Group and is used within our banking covenants as part of
the leverage ratio.
Glossary and Definitions continued
A9 Reconciliation from liabilities arising from financing activities to total
indebtedness and net cash continued
The below provides a reconciliation of total liabilities from financing
activities, which is considered the closest equivalent IFRS measure, to total
indebtedness and net cash.
27 April 29 April
2024 2023
£m £m
Loans and other borrowings - (178)
Lease liabilities* (1,003) (1,233)
Total liabilities from financing activities (note 6c) (1,003) (1,411)
Cash and cash equivalents less restricted cash 89 67
Overdrafts (29) (16)
Lease receivables* 4 5
Pension liability (171) (249)
Total indebtedness (1,110) (1,604)
Restricted cash 36 30
Add back pension liability 171 249
Add back lease liabilities 1,003 1,233
Less lease receivables (4) (5)
Net cash 96 (97)
* Net lease liabilities within the Performance review relates to lease
liabilities less lease receivables.
Within the Performance review management also refer to average net cash/(debt)
and total average indebtedness. Average net cash/(debt) and total average
indebtedness comprises the same items as included in net cash and total
indebtedness as defined above, however the net cash element is calculated as
the average between April - April for the full period to align to the Group's
Remuneration Committee calculation and as reported internally.
A10 Reconciliation of statutory working capital to working capital presented
within the Performance review
Within the Performance review a reconciliation of the adjusted EBIT to free
cash flow is provided. Within this, the working capital balance of £(34)m
(2022/23: £(127)m) differs to the statutory working capital balance of
£(29)m (2022/23: £(136)m) as cash flows on adjusting items are separately
disclosed.
Working capital presented within the Performance review is a measure of
working capital that is adjusted from total IFRS measures to remove the
working capital on adjusting items, the nature of which are disclosed above. A
description of costs included within adjusting items during the period and
comparative periods is further disclosed in 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. A
reconciliation of the disclosed working capital balance is as follows:
(Restated)* Period ended
Period ended 29 April
27 April 2023
2024 £m
£m
Movements in working capital (note 6b) (33) (136)
Adjusting items provisions (1) 10
Facility arrangement fees - (1)
Working capital presented within the Performance review (34) (127)
*The prior period has been restated to exclude discontinued operations
Glossary and Definitions continued
A11 Summary of working capital presented within the Performance review
Within the Performance review a summary balance sheet is provided which
includes a working capital balance of £(163)m (2022/23: £(230)m). The below
table provides a breakdown of how the summary working capital balance ties
through to the statutory balance sheet.
27 April 29 April
2024 2023
£m £m
Non-current assets
Trade and other receivables 101 148
Current assets
Inventory 1,034 1,151
Trade and other receivables 616 631
Derivative assets 13 23
Current liabilities
Trade and other payables (1,809) (2,067)
Derivative liabilities (4) (13)
Non-current liabilities
Trade and other payables (114) (103)
Working capital presented within the Performance review (163) (230)
A12 Restatement of the Group's Performance review
Within the Performance review a summary Group balance sheet is provided which
includes a comparative column for April 2023 that excludes balances as at this
date that were held by Dixons South East Europe A.E.V.E. Whilst under IFRS
requirements the prior period balance sheet is not restated for discontinued
operations, this additional comparator has been included to aid comparability
between periods.
Glossary and Definitions continued
The following definitions apply throughout this Annual Report and Accounts
unless the context otherwise requires:
Acquisition intangibles Acquired intangible assets such as customer bases, brands and other intangible
assets acquired through a business combination capitalised separately from
goodwill.
B2B Business to business
Board The Board of Directors of the Company
Carphone, The Company or Group prior to the Merger on 6 August 2014
Carphone Warehouse or Carphone Group
CGU Cash-generating unit
CODM Chief Operating Decision Maker
Company or the Company Currys plc (incorporated in England & Wales under the Act, with registered
number 07105905), whose registered office is at 1 Portal Way, London W3 6RS
Credit adoption Sales on Credit as a proportion of total sales
Currys plc 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
ESG Environmental, social and governance
GfK Growth from Knowledge
HMRC His Majesty's Revenue and Customs
IFRS International Financial Reporting Standards as adopted by the UK
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
Net zero Net zero emissions includes our Scope 1, 2 and 3 emissions as reported in the
Sustainable business section of the Strategic Report. In 2020, we collaborated
with The British Retail Consortium and other major retailers on the
development of a Climate Action Roadmap to decarbonise the retail industry and
its supply chains. The plan aims to bring the retail industry and its supply
chains to net zero by 2040. Our commitment to net zero meets a number of the
criteria of the SBTi Corporate Net-Zero Standard but is not fully aligned or
validated against this standard. We will develop and publish a robust net zero
emissions roadmap for the Group which will provide detail on carbon abatement
for key emissions sources and neutralisation plans of any source of residual
emissions that remain unfeasible to remove.
NPS Net Promoter Score, a rating used by the Group to measure customers'
likelihood to recommend its operations
Online Online sales, Online market share, and Online share of business relate to all
sales where the journey is completed via the website or app. This includes
online home delivered, order & collect, Online in-store and ShopLive UK
Online in-store Sales that are generated through in-store tablets for product that is not
stocked in the store
Order & collect Sales where the sale is made via the website or app and collected in store
Peak/post-Peak Peak refers to the ten-week trading period ended on 6 January 2024 as reported
in the Group's Christmas Trading statement on 18 January 2024. Post-Peak
refers to the trading period from 7 January 2024 to the Group's period end on
27 April 2024.
RCF Revolving credit facility
Sharesave or SAYE Save as you earn share scheme
ShopLive UK 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
Store Store sales, Store market share, and Store share of business relate to all
sales where the journey is completed in store. This excludes online home
delivered, order & collect, Online in-store and ShopLive UK
TSR Total shareholder return
WAEP Weighted average exercise price
Responsibility Statement
The 2023/24 Annual Report and Accounts which will be issued in July 2024
contains a responsibility statement in compliance with DTR 4.1.12 of the
Listing, Prospectus and Disclosure Rules, which sets out that as at the date
of approval of the Annual Report and Accounts on 26 June 2024, the directors
confirm to the best of their knowledge:
· the financial statements, prepared in accordance with the relevant
financial reporting framework, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company and the
undertakings included in the consolidation taken as a whole;
· the Strategic Report includes a fair review of the development and
performance of the business and the position of the Company and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face; and
· the Annual Report and Accounts, taken as a whole, are fair, balanced and
understandable and provide the information necessary for shareholders to
assess the Group and the Company's performance, business model and strategy.
At the date of this statement, the directors are:
Alex Baldock, Group Chief Executive
Bruce Marsh, Group Chief Financial Officer
Ian Dyson, Chair of the Board
Octavia Morley, Senior Independent Director
Eileen Burbidge, Magdalena Gerger, Fiona McBain, Steve Johnson, Gerry Murphy,
Adam Walker each an independent non-executive director.
The financial statements were approved by the directors on 26 June 2024 and
signed on their behalf by:
Alex
Baldock
Bruce Marsh
Group Chief
Executive
Group Chief Financial Officer
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