23rd Jun 2010 07:00
23 June 2010
Statement of Results for the 12 months ended 30 April 2010
Highlights
·; The Group delivered results in line with its strategic objectives and guidance:
o Increased gross margin by 30 basis points while overall remaining ahead of our markets
o Significant increase in web generated sales
o Good progress at the Developing businesses
o Improved profitability at Darty France and Comet
·; 3.4% increase in Group revenue to £5,124.1 million (2009: £4,954.1 million), an increase of 0.4% in constant currency¹ and decrease of 1.5% on a like for like basis.
·; 28.1% increase in Group retail profit² to £98.6 million from £77.0 million last year, an increase of 23.4% in constant currency¹.
·; 17.8% increase in adjusted3 Group profit before tax to £81.9 million (2009: £69.5 million)
·; 55.6% increase in adjusted EPS to 9.8 pence (2009: 6.3 pence)
·; Strong free cash flow4 of £147.4 million with net cash at the year end of £79.3 million (30 April 2009: £7.5 million)
·; The Board is recommending a final dividend of 4.15 pence per share, bringing the total dividend to 5.9 pence per share, an increase of 18% on last year's 5.0 pence per share.
Financial Summary
|
|
2009/10 |
2008/09 |
Change % |
|
Total Sales |
£5,124.1 m |
£4,954.1m |
3.4 |
|
Retail Profit |
£98.6 m |
£77.0 m |
28.1 |
|
Adjusted PBT |
£81.9 m |
£69.5 m |
17.8 |
|
Profit before tax |
£69.6 m |
£(81.8) m |
- |
|
Adjusted EPS |
9.8 p |
6.3 p |
55.6 |
|
Basic EPS |
7.7 p |
(21.1) p |
- |
|
Dividend |
5.9p |
5.0p |
18.0 |
Thierry Falque-Pierrotin, Chief Executive, commented:
"I am pleased with the progress we have made this year in setting up strong foundations for the future as well as showing delivery against our strategic targets. Overall we remained ahead of our markets, significantly improved our profitability, successfully grew our web sales and substantially improved the results of Darty Box and the Developing businesses.
"While we have started the year in line with our expectations, we anticipate our major markets remaining challenging for the rest of the current financial year. We remain focussed on delivering our strategic plan - further rolling out our specialist business model and improving profitability across the Group. In addition, we will maintain our track record of strong cash generation while increasing investment in the businesses."
David Newlands, Chairman, commented
"The Group continues to demonstrate its resilience to difficult market conditions and I am pleased that our earnings growth and continued strong cash generation have enabled us to recommend an increase in the total dividend for the year of 18 per cent to 5.9 pence per share."
1 Constant exchange rate of £1 = Euro 1.1297 (2008/09: 1.1827)
2 Retail profit represents total operating profit before the share of joint venture and associates' interest and taxation, valuation gains and losses on options to acquire minority interests, exceptional costs, profit on disposal of business operations and amortisation and impairment of acquisition related intangible assets.
3 Excludes the share of joint venture and associates' interest and taxation, the effects of valuation gains and losses on options to acquire minority interests, profit on disposal of business operations, exceptional costs, amortisation and impairment of acquisition related intangible assets and exceptional finance costs.
4 Free cash flow defined as cash generated from operations less net capital expenditure and investments.
ENDS
There will be a presentation to analysts and institutions at 09.00 today followed by a strategic update at 10.15am when we present our progress on the strategic outlook set out at our Half Year results in December 2009. A reminder of the content of this outlook can be found in the Group overview section of this document.
Live audio webcasts of the events are available via our website www.kesaelectricals.com, and recorded for access later in the day.
Kesa Electricals will issue an Interim Management Statement on 16 September 2010 for the first quarter trading period.
Enquiries
Press:
Kesa Electricals plc
Annabel Donaldson UK +44 (0) 20 7269 1400
Vinciane Beurlet France +33 (0) 1 43 18 52 00
FinsburyCharles Watenphul +44 (0) 20 7251 3801
Analysts: Kesa Electricals plc
Simon Ward +44 (0) 20 7269 1400
Certain statements made in this announcement are forward looking statements. 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 results in forward looking statements. Unless otherwise required by applicable laws, regulations or accounting standards, Kesa Electricals plc does not undertake any obligation to update or revise any forward looking statements, whether as a result of new information, future developments or otherwise.
GROUP OVERVIEW
Results as reported in sterling
|
|
Revenue for 12 months ended 30/04/10 £m |
Revenue for 12 months ended 30/04/09 £m |
Change % |
|
Retail profit for 12 months ended 30/04/10 £m |
Retail profit for 12 months ended 30/04/09 £m |
Change % |
|
Darty France |
2,471.0 |
2,299.9 |
7.4 |
|
118.4 |
103.9 |
14.0 |
|
Comet |
1,650.2 |
1,659.6 |
(0.6) |
|
11.5 |
10.1 |
13.9 |
|
Other established* |
685.2 |
686.3 |
(0.2) |
|
14.4 |
20.0 |
(28.0) |
|
Developing** |
317.7 |
308.3 |
3.0 |
|
(29.1) |
(43.2) |
|
|
Central |
- |
- |
- |
|
(16.6) |
(13.8) |
|
|
Total |
5,124.1 |
4,954.1 |
3.4 |
|
98.6 |
77.0 |
28.1 |
Results as reported in local currency
|
|
Revenue for 12 months ended 30/04/10 m |
Revenue for 12 months ended 30/04/09 m |
Change % |
|
Retail profit for 12 months ended 30/04/10 m |
Retail profit for 12 months ended 30/04/09 m |
Change % |
|
Darty France |
€2,791.6 |
€2,718.0 |
2.7 |
|
€133.3 |
€121.6 |
9.6 |
|
Comet |
£1,650.2 |
£1,659.6 |
(0.6) |
|
£11.5 |
£10.1 |
13.9 |
|
Other established* |
€774.4 |
€812.2 |
(4.7) |
|
€16.1 |
€23.3 |
(30.9) |
|
Developing** |
€359.0 |
€364.7 |
(1.6) |
|
€(33.1) |
€(51.1) |
|
*Includes BCC, Vanden Borre and Datart
** Includes Darty Switzerland, Darty Italy, Darty Turkey and Menaje del Hogar. Darty Switzerland was sold on 6th July 2009 for which revenue and retail loss of £5.0 million and £1.3 million respectively are included (2008/09: revenue of £27.1 million and retail loss of £5.5 million).
Financial review
Group revenue was £5,124.1 million, an increase of 3.4 per cent on a reported basis and 0.4 per cent in constant currency, compared with the same period last year. On a like for like basis revenue decreased by 1.5 per cent. Web generated sales increased by 23 per cent and now represent 9.1 per cent of total product sales.
Group retail profit increased by 28.1 per cent to £98.6 million from £77.0 million last year, an increase of 23.4 per cent in constant currency, representing a 0.3 percentage point improvement in retail profit margin to 1.9 per cent. This improvement was primarily due to increased profits at Darty France and a reduction in the losses at the Developing businesses.
Reported operating profit of £83.5 million included net exceptional costs of £8.8 million comprising an exceptional profit on disposal of Darty Switzerland of £4.5 million offset by exceptional costs across the Group of £13.3 million. These largely related to the completion of our restructuring programme in Spain. In addition, there was a charge of £4.8 million related to an increase in the fair value of the minority interest option in Darty Turkey.
The net interest cost was £16.7 million (2009: £7.5 million) comprising net interest on financing of £10.8 million (2009: £3.7 million) plus IAS 19 notional pension interest of £5.9 million (2009: £3.8 million). The increased net interest on financing reflected the impact of increased margins in the September 2008 revolving credit facility and reduced deposit rates on cash balances. Exceptional net finance income of £2.8 million represents movements in the fair value, and profits on disposal, of investments held in cash and cash equivalents as part of the UK extended warranty scheme, in accordance with IAS 39.
Adjusted profit before tax was £81.9 million (2009: £69.5 million) and reported profit before tax and after interest was £69.6 million (2009: loss of £81.8 million).
The effective tax rate on profit before exceptional items and prior year adjustments, including the share of joint venture and associates' tax was 35.3 per cent (2009: 57.2 per cent).
Adjusted earnings per share were 9.8 pence (2009: 6.3 pence) and basic diluted earnings per share were 7.7 pence (2009: loss of 21.1 pence).
Cash generated from operations was £224.6 million (2009: £250.6 million) and net capital expenditure and investments was £77.2 million (2009: £131.3 million) generating free cash flow of £147.4 million (2009: £119.3 million). Closing net cash was £79.3 million compared to £7.5 million on 30 April 2009. Peak borrowing under the €500 million revolving credit facility was €180 million in November 2009. As at 30 April 2010, €60 million of this facility was drawn down.
The IAS19 net pension liability increased from £55.1 million to £74.1 million largely as a result of changes to the discount rates.
The Board is recommending a final dividend of 4.15 pence per share, bringing the total dividend to 5.9 pence per share. The ex dividend date will be 15 September 2010, the record date 17 September 2010 and the payment date will be 8 October 2010.
Trading Outlook
The year has started in line with the Group's expectations and is expected to remain challenging for the rest of the financial year. The Group will remain focussed on achieving its strategic plan - further rolling out its specialist business model and improving profitability. In addition, the Group will maintain its strong cash position whilst increasing investment in the businesses.
Strategic Outlook
In December 2009 the Group set out its strategic outlook and growth opportunities:
Focussed on European electrical retailing, the Group has developed a clear service-led business model supported by a portfolio of over 700 stores ranging in size between 800 and 2,000 square metres. The geographic coverage represents a good balance between market leading positions and developing businesses.
All this together with the Group's strong financial structure provides the foundations for future growth based on expanding cross channel web sales, developing our current store network and further differentiating our service offer.
The internet
Web penetration of electrical product sales is forecast to grow significantly over the next few years. The Group is focused on a cross channel approach that will leverage its existing assets; brand awareness, store networks and the service infrastructure and it is working to enhance the web specific elements of this strategy. This will drive incremental profitable web sales with the initial aim of achieving the same level of market share as we have in our retail stores.
Our store network
To maximise the cross channel approach we will continue to expand the geographic store networks with stores consistent in size to the current portfolio. These will continue to offer product ranges that meet customer needs with the web sites increasingly used to offer extended ranges. We intend to open around 25 stores per year, broadly half of which will be in the Developing Businesses. On an ongoing basis, refurbishment concepts and space allocations will be tested to improve sales densities and profitability.
Our services
The Group's differentiated service offer will continue to be developed, particularly around subscription based services for the newer technologies including Darty Box. The Developing businesses are building their service offers taking best practices from within the Group.
Leveraging the Group
We have identified a number of additional opportunities to leverage the scale and expertise of the Group sourcing and back office functions to the benefit of all our businesses.
As a result of these actions, over the next few years the Group expects to grow the retail profit margin of Darty France and profitability at Comet, and eliminate the losses in the Developing businesses by 2011/12. All this combined will significantly improve Group profitability.
DARTY FRANCE
|
|
Results for 12 months ended 30/04/10
£m |
Results for 12 months ended 30/04/09
£m |
Change
|
|
Results for 12 months ended 30/04/10
€m |
Results for 12 months ended 30/04/09
€m |
Change
|
|
Revenue |
2,471.0 |
2,299.9 |
7.4% |
|
2,791.6 |
2,718.0 |
2.7% |
|
Retail profit Margin % |
118.4 |
103.9 |
14.0% |
|
133.3 4.8 |
121.6 4.5 |
9.6% |
|
|
|
|
|
|
|
|
|
|
No of stores |
223 |
221 |
+2 |
|
|
|
|
|
Sales space (000s sq m) |
299.9 |
296.4 |
1.2% |
|
|
|
|
In France trading conditions stabilised during the year and Darty slightly outperformed a flat market with market share gains in white goods and multimedia. Total revenue grew by 2.7 per cent in local currency compared to the same period last year, and by 0.2 per cent on a like for like basis.
Gross margin was stable throughout the year and retail profit increased by 9.6 per cent to €133.3 million resulting in an improvement in retail profit margin to 4.8 per cent. Excluding Darty Box, Darty's retail profit margin was flat at 5.2 per cent and we now expect it to improve retail profitability. Free cash flow was €181 million.
Following further development of our online proposition the Darty web site delivered excellent growth increasing by 42.7 per cent to 8.1 per cent of total product sales.
During the period Darty France opened two new stores and relocated three. The successful kitchen offer was rolled out to a further nine stores, bringing the total to 21. Over the next year, two new stores are planned with 10 relocations / refurbishments and the kitchen offer will be introduced to at least a further six stores.
Following successful 'Back to School' and peak trading campaigns, 65,000 subscribers were added during the year bringing the total to 275,000. Overall for the period, very high speed cable subscriptions outweighed those for ADSL. With losses more than halved to €7.4 million we now anticipate the Darty Box breaking even this year.
COMET
|
|
Results for 12 months ended 30/04/10
£m |
Results for 12 months ended 30/04/09
£m |
Change
|
|
Revenue |
1,650.2 |
1,659.6 |
(0.6)% |
|
Retail profit Margin % |
11.5 0.7 |
10.1 0.6 |
13.9% |
|
|
|
|
|
|
No of stores |
248 |
250 |
-2 |
|
Sales space (000s sq m) |
275.6 |
276.2 |
(0.2)% |
Comet grew market share in what remained a tough environment for the sector, which is estimated to have declined by 2 per cent. Significant gains were made in large white goods. As a result total revenue was £1,650.2 million, a fall of 0.6 per cent compared to the same period last year and a fall of 1.4 per cent on a like for like basis.
With an easing of the gross margin pressure through the year and a continuing strong focus on costs, Comet's retail profit increased to £11.5 million from £10.1 million last year. This was helped by the merger of two regions and the completion of the restructuring programme with the closure of a regional distribution centre. Free cash flow was £22.0 million after funding its investment programme and pension contributions.
During the year, Comet continued the optimisation of its store portfolio with the opening of one new store and the closure of three stores. Following successful trials of a tailored refurbishment of three smaller stores, the programme was extended to a further four stores in the last quarter of the financial year. Under this programme, 40 further stores will be refurbished during 2010/11. Also during the current year three new stores and three relocations will be completed whilst nine stores will be closed.
In merchandising, new format laptop and digital camera tables were introduced to 40 stores with an immediate positive impact. They will be rolled out to a further 30 stores during the coming year.
Web generated sales grew by 8.9 per cent and now account for 13.6 per cent of total product sales. This reflects the continued development of Comet's online offer ahead of the launch of its new web platform before the next peak season. These included enhanced navigation, a Q&A facility and a dedicated mobile website.
OTHER ESTABLISHED BUSINESSES*
|
|
Results for 12 months ended 30/04/10
£m |
Results for 12 months ended 30/04/09
£m |
Change
|
|
Results for 12 months ended 30/04/10
€m |
Results for 12 months ended 30/04/09
€m |
Change
|
|
Revenue |
685.2 |
686.3 |
(0.2)% |
|
774.4 |
812.2 |
(4.7)% |
|
Retail profit Margin % |
14.4
|
20.0
|
(28.0)% |
|
16.1 2.1 |
23.3 2.9 |
(30.9)% |
|
|
|
|
|
|
|
|
|
|
No of stores |
150 |
145 |
+5 |
|
|
|
|
|
Sales space (000s sq m) |
167.2 |
162.4 |
3.0% |
|
|
|
|
*BCC, Vanden Borre and Datart
While Vanden Borre in Belgium strongly outperformed its market, BCC in Holland and Datart in the Czech Republic were impacted by very difficult trading conditions. As a result, total revenue fell by 4.7 per cent in local currency and 8.3 per cent on a like for like basis.
The segment delivered an improvement in gross margin over the year but due to the fall in revenue, retail profit was €16.1 million, compared to €23.3 million for the same period last year. Retail profit margin reduced to 2.1 per cent compared with 2.9 per cent last year. Free cash flow was €19.0 million.
The store development programme continued with the opening of four new stores and one relocation in Holland and one new store opening in Belgium. Overall a total of six new stores are planned for this year. In the Czech Republic Datart relocated its central warehouse during the first half of the year and in Belgium Vanden Borre relocated its head office and central warehouse.
With the help of a newly revamped web site at BCC, overall web generated sales continued to grow strongly throughout the year and increased by 33.8 per cent during the period and now represent nearly 6 per cent of total product sales.
DEVELOPING BUSINESSES**
|
|
Results for 12 months ended 30/04/10
£m |
Results for 12 months ended 30/04/09
£m |
Change
|
|
Results for 12 months ended 30/04/10
€m |
Results for 12 months ended 30/04/09
€m |
Change
|
|
Revenue |
317.7 |
308.3 |
3.0% |
|
359.0 |
364.7 |
(1.6)% |
|
Retail profit / (loss) Margin % |
(29.1) |
(43.2) |
|
|
(33.1)
(9.2) |
(51.1)
(14.0) |
|
|
|
|
|
|
|
|
|
|
|
No of stores |
84 |
98 |
-14 |
|
|
|
|
|
Sales space (000s sq m) |
100.2 |
128.0 |
(21.7)% |
|
|
|
|
**Includes Darty Switzerland, Darty Italy, Darty Turkey and Menaje del Hogar. Darty Switzerland was sold on 6th July 2009 for which revenue and retail loss of £5.0 million and £1.3 million respectively are included (2008/09: revenue of £27.1 million and retail loss of £5.5 million).
Total revenue for the Developing businesses, Darty Switzerland, Darty Italy, Darty Turkey and Menaje del Hogar, fell by 1.6 per cent, due to the impact of the Darty Switzerland sale and the planned closure of 20 stores at Menaje del Hogar. On a like for like basis sales grew by 2.6 per cent following a strong performance in the second half of the year, particularly in Spain, with share gains in all three markets.
Gross margin improved and overall losses reduced by 35 per cent to €33.1 million from €51.1 million in 2009, helped by good progress at Darty Italy and Darty Turkey, our restructuring plan at Menaje del Hogar and the sale of Darty Switzerland in July. Free cash outflow reduced by €13.0 million.
Both Darty Italy and Darty Turkey continued to build scale with both businesses finishing the year with 17 stores. We opened three new stores in Italy and six new stores in Turkey. In the coming year we plan to open a further eight stores in Italy and six stores in Turkey.
The restructuring programme at Menaje del Hogar to stabilise the business and reduce losses continued throughout the year. All the planned store closures for the year have been completed and we now have 50 stores in the network. 33 stores have been refurbished in line with the Darty concept with improved product ranges and better in-store merchandising and these stores delivered encouraging results. In addition, the management team continues to develop the service led concept and the rebranding programme to Darty is on schedule to be largely completed this financial year. During 2010/11, three new stores will open, three relocations will be completed and four stores will close.
KEY EVENTS
On 16th June 2009 the Group announced that it had entered into exclusive negotiations with Swiss electrical retailing chain FUST, regarding the sale of its Swiss operations. The sale was completed on 6th July 2009 for net proceeds of £10.7 million.
On 28th September 2009 the Group announced the appointment of Dominic Platt as Finance Director who joined as an Executive Director of the Board on 4th January 2010.
CHANGE OF REPORTING CURRENCY
For the 2010/11 financial year, the Group will change its reporting currency from sterling to euros. This will provide a better reflection of the underlying performance of the Group as nearly two thirds of total revenue and over 90 per cent of the retail profit are generated in euros. Dividends will be offered in either sterling or euros with reference to euro earnings. Proforma financials will be provided with the Q1 IMS on 16 September 2010. The first reporting in euros will be the half year results in December 2010.
Related Shares:
DRTY.L