20th Jun 2012 07:00
20 June 2012
Statement of Results for the 12 months ended 30 April 2012
Group Results
Markets throughout Europe have been exceptionally difficult, which is reflected in our overall results for the year:
Revenue for the Continuing Group1 declined by 2.0% to €4,025.7 million (2011: €4,108.5 million), a decline of 1.6% in constant currency2 and a decrease of 3.5% on a like-for-like basis Group retail profit3 of €70.1 million (2011: €117.3 million). Adjusted Group profit before tax4 of €59.0 million (2011: €102.4 million). Adjusted EPS of 6.2 cents (2011: 12.6 cents)Exceptional impairment and restructuring charges in the Continuing Group of €70.5 million and a loss from discontinued operations of €274.2 million, resulting in a total loss for the year of €313.9 million (2011: profit of €30.7 million)Net debt at year end of €126.5 million (2011: Net cash €121.0 million)The Board is proposing to rebase the dividend given challenging markets and the uncertain macro-economic outlook, and is recommending a final dividend of 1.25 cents per share, bringing the total dividend to 3.5 cents per share (2011: 7.0 cents)
Operational Highlights
Continued benefit from cross channel focus with 17% increase in web generated sales and overall market share gainsImproved profitability at all our Other established businesses reflecting the strength of the Darty conceptStrong focus on operational efficiencies across the Group, particularly at Darty France and, specific restructuring actions at Darty Italy and Darty SpainSignificant steps taken to restructure the Group with the disposal of Comet in the UK and new approach to telecoms for Darty FranceGroup to be renamed Darty plc to reflect in our name our iconic brand from 31 July
Financial Summary
€ millions | 2011/12 | 2010/11 |
Total revenue | 4,025.7 | 4,108.5 |
Retail profit | 70.1 | 117.3 |
Adjusted profit before tax | 59.0 | 102.4 |
(Loss)/Profit before tax | (17.0) | 85.6 |
(Loss)/Profit from continuing operations | (39.7) | 51.1 |
Loss from discontinued operations | (274.2) | (20.4) |
(Loss)/Profit for the year | (313.9) | 30.7 |
Adjusted earnings per share (cents) | 6.2 | 12.6 |
Basic (loss)/earnings per share (cents) | (7.2) | 9.9 |
Dividend (cents) | 3.5 | 7.0 |
Thierry Falque-Pierrotin, Chief Executive, commented:
"Markets throughout Europe were exceptionally difficult in 2011/12. As a result the Group took some major steps to realign its business portfolio, sharpen the implementation of the commercial policy, and reduce costs. We delivered an improvement in profitability at our Other Established businesses and are taking actions to improve performance at Darty France and Developing businesses.
"The market across Europe is expected to remain tough, but we will benefit from the strength of our service led positioning, cross channel approach and improving operational efficiency. This year we will keep on growing our profitable web sales; in addition we will increase our store network efficiency and reinforce our price positioning; supported by the strength of the brand in France and a new managing director we will put Darty France in a position to take profitable market share and grow its top line; adapt our approach in the Developing countries to eliminate the losses; and accelerate the Group operating synergies.
David Newlands, Chairman, commented:
"2011/12 was a difficult year for the Group as market conditions were tough. However the sale of Comet in the UK and the agreement for telecoms in France will significantly improve the Group's results and its financial strength.
"Nevertheless it is clear that market conditions have become more challenging across Europe and the macro-economic outlook remains uncertain. In these circumstances the Board has decided to rebase the dividend. The Board recommends a final dividend of 1.25 cents per share giving a full year dividend of 3.5 cents. The Board intends to resume a progressive dividend policy as soon as the results and cash position so justify.
"The Darty brand in France is an iconic brand built on the strength of its service to customers and we continue to roll out the strength of this concept across all our other markets and local brands. Following the disposal of Comet, the Board has decided to rename the Group as Darty to reflect in our name our iconic brand. "
1 Continuing Group consists of Darty France, Other established businesses and Developing businesses. In accordance with IFRS 5 Comet has been treated as a discontinued operation following its disposal on 3 February 2012.
2 Constant exchange rate of 1Euro = GBP 0.8581 (2011: 0.8507), Czech Kr 24.8029 (2011: 24.8246) and Turkish Lira 2.3987 (2011: 2.0320).
3 Retail profit represents total operating profit before the share of joint venture and associates' interest and taxation, movement in options and related charges over non-controlling interests, impairment of available for sale financial assets, exceptional costs and amortisation and impairment of acquisition related intangible assets.
4 Adjusted Group profit before tax excludes the effects of movement in options and related charges over non-controlling interests, impairment of available for sale financial assets, exceptional costs, amortisation and impairment of acquisition related intangible assets, exceptional finance costs and discontinued operations.
There will be a presentation to analysts and institutions at 09.00 today at The Ground Floor Conference Centre, UBS, 1 Finsbury Avenue, London, EC2M 2PP.
A live audio webcast of the event will be available via our website www.kesaelectricals.com, and recorded for access later in the day.
Kesa Electricals expects to issue an Interim Management Statement on 13 September 2012 for the first quarter trading period.
Enquiries
Analysts:Kesa Electricals plc
Simon Ward +44 (0) 20 7269 1400
Press:
Kesa Electricals plc
Simon Ward UK +44 (0) 20 7269 1400
Vinciane Beurlet France +33 (0) 1 43 18 52 00
FinsburyRollo Head UK +44 (0) 20 7251 3801
Jenny Davey
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
Revenue
| 12 months ended 30/04/12 €m | 12 months ended 30/04/11 €m | Change
| Constant currency change | Like-for-like change |
Darty France | 2,798.9 | 2,921.1 | (4.2)% | (4.2)% | (5.8)% |
Other established* | 848.0 | 810.4 | 4.6% | 4.7% | 3.7% |
Developing** | 370.5 | 377.0 | (1.7)% | 2.8% | (3.3)% |
Central | 8.3 | - | - | - | - |
Continuing Group | 4,025.7 | 4,108.5 | (2.0)% | (1.6)% | (3.5)% |
Retail profit/(loss)
| 12 months ended 30/04/12 €m | 12 months ended 30/04/11 €m | Change
| Constant currency change |
Darty France | 106.8 | 149.2 | (28.4)% | (28.4)% |
Other established* | 19.6 | 15.5 | 26.5% | 26.6% |
Developing** | (41.1) | (30.8) | (33.4)% | (38.4)% |
Central | (15.2) | (16.6) | 8.4% | 7.9% |
Continuing Group | 70.1 | 117.3 | (40.2)% | (40.8)% |
* BCC, Vanden Borre and Datart
** Darty Italy, Darty Turkey and Darty Spain
Financial review
Revenue and operating profit
Revenue for the Continuing Group was €4,025.7 million, a decline of 2.0 per cent on a reported basis and 1.6 per cent in constant currency, compared with the same period last year. On a like-for-like basis revenue decreased by 3.5 per cent. This performance reflected a difficult start to the year against the strong World Cup comparatives in the prior year, a very weak Vision market which was further compounded by the benefits of digital switch over last year and generally weak underlying market conditions. In contrast, White goods and Multimedia saw positive growth.
The strategic focus on web sales continued to deliver with double digit growth at all divisions and overall growth of 17 per cent to represent 10.5 per cent of total product sales.
Overall gross margin was down 80 basis points reflecting pressure from declining markets, particularly at Darty France and the Developing businesses, and price adjustments in store to strengthen our price competitiveness against web players.
Group retail profit for the period was €70.1 million compared to €117.3 million in the prior year. This reduction was due to a weaker French market that saw pressure on both Darty France's revenue and gross margin that operational efficiencies were insufficient to off-set and a deteriorating market in Italy, partly off-set by improvement in profitability at all three of our Other established businesses.
Reported operating loss was €5.9 million (2011: profit of €105.3 million). This reflects Group retail profit, a credit relating to options and related charges over non-controlling interests of €2.1 million (2011: Nil), an impairment of €6.5 million (2011: Nil) relating to the Group's holding in Go Sport S.A. due to a prolonged reduction in market value and exceptional costs of €70.5 million (2011: €11.0 million).
Exceptional costs
In France we have implemented plans to improve efficiencies in stores, after sales service and home delivery as well as between the business and Group head office function. Charges relating to thisreorganisation totalled €7.8 million of which €7.2 million related to Darty France. In addition certain costs and fees totalling €6.3 million have been incurred as a result of preparing for and implementing plans to dispose of Darty Telecom.
In Italy and Spain exceptional charges of €9.6 million and €2.6 million respectively have been taken principally relating to the closure of four stores in Italy in the year, and a further five closures in both Italy and Spain planned for the new financial year. In addition, assets were impaired totalling €26.3 million in Italy and €17.9 million in Spain, primarily driven by lower projected cash flows within business plans resulting from adverse changes in the economic environment. Of these charges totaling €56.4 million, €10.8 million were incurred in the first half of the financial year.
The cash cost related to these exceptional charges is expected to be €21 million, of which €7 million was incurred in the year and €11 million expected in the new financial year.
Finance costs
The net finance cost was €11.1 million (2011: €14.9 million), comprising finance costs of €12.0 million (2011: €11.6 million) and IAS 19 notional pension interest of €2.2 million (2011: €3.8 million), partly off-set by finance income of €3.1 million (2011: €0.5 million) principally from foreign exchange gains . Net finance cost for 2012/13 is expected to be around €14 million.
Profit before tax
Adjusted profit before tax was €59.0 million (2011: €102.4 million) and reported loss before tax was €17.0 million (2011: profit of €85.6 million).
Taxation
The effective tax rate on adjusted profit before exceptional items, including the share of joint venture and associates' tax was 47.1 per cent (2011: 36.7 per cent). The increase in tax rate was due to the change in geographic mix of profits with no tax credit for the increased losses at the Developing businesses.
Loss for the year
Losses for the year from Continuing Operations were €39.7 million (2011: profit €51.1 million). After losses for the year from Discontinued Operations of €274.2 million (2011: €20.4 million), total losses for the year were €313.9 million (2011: profit €30.7 million).
Discontinued operations losses for Comet comprised an operating loss of €20.1 million (2011: loss €10.3 million); a loss on disposal of €90.3 million reflecting a loss on disposal of €58.0 million plus €32.3 million foreign exchange recycled to the Income Statement; and the €117.1 million booked in the first half of the year in respect of impairment of intangibles and property, plant and equipment and restructuring programmes. The discontinued tax charge was €46.7m, of which €42.5m related to the impairment of the UK deferred tax asset in the first half of the year.
Earnings per share
Adjusted earnings per share for the Continuing Group were 6.2 cents (2011: 12.6 cents) and basic diluted losses per share were 7.2 cents (2011: earnings 9.9 cents) due to the exceptional charges. Total losses per share were 59.2 cents (2011: earnings 6.0 cents).
Net Liabilities
Largely as a result of the Comet disposal, we have reported net liabilities at 30 April 2012 of €117.0 million. Under our accounting policies, freehold property is carried at cost. Our freehold property portfolio in France, representing in the main around one third of the store portfolio, has a carrying value of approximately €140 million, compared with a market valuation of approximately €350 million. This valuation is further supported by gains arising from a small number of property disposals in the last year as we continued our active management of the portfolio. In addition, following the disposal of Comet, our off-balance sheet operating lease commitments have reduced from €1,256.0 million to €326.9 million.
Net debt
Total cash outflow was €253.5 million which with exchange and other movements of €6.0 million resulted in closing net debt of €126.5 million compared to €121.0 million net cash on 30 April 2011.
Average draw down in the year of the €455 million revolving credit was €230 million (2011: €120 million). As at 30 April 2012, €220 million of the facility was drawn down (2011: €60 million). The €455 million revolving facility matures in December 2015.
Cash flow
Of the €253.5 million total cash outflow, €174.5 million related to the disposal of Comet composed of free cash outflow to disposal of €31.2 million and €143.3 million net cash outflow arising on disposal which included the £50 million investment and pledged funds for the UK extended warranty scheme that were transferred to Comet along with the related liabilities.
The remaining cash outflow from Continuing Operations was €79.0 million. Cash generated from continuing operations was €104.4 million reflecting the lower operating profit, €10.9 million related to restructuring programmes, and €11.8 million UK pension contributions. After net capital expenditure and investments of €84.1 million, free cash flow was €20.3 million. Capital expenditure for 2012/13 is expected to be approximately €70 million reflecting the disposal of Comet and the new telecoms agreement at Darty France. Cash tax paid increased to €54.4 million (2011: €31.5 million) as a result of phasing of payments under the French tax system where payments are based on prior year profits; the overpayment for 2012 will be recovered in the first half of the new financial year.
Retirement benefit obligations
The IAS19 net pension liability fell from €71.9 million to €69.6 million. The liability is split €40.0 million for the UK (2011: €45.9 million) and €29.6 million for France (2011: €26.0 million). The UK scheme was retained by Kesa on disposal of Comet. It was agreed with the trustees to increase the annual deficit recovery payments to £10.0 million per annum from £6.1 million retrospectively to the date of the last triennial valuation date of 31 March 2010, so reducing the deficit recovery plan period from March 2018 to March 2015.
Dividend
The Board is recommending a final dividend of 1.25 cents per share, bringing the total dividend to 3.5 cents per share (2011: 7.0 cents). The ex-dividend date will be 12 September 2012, the record date 14 September 2012 and the payment date will be 5 October 2012. The Board intends to resume a progressive dividend policy as soon as the results and cash position so justify.
Group Strategy
This year we have taken significant steps to restructure the Group. Firstly, we exited from the UK market through the sale of Comet. This removed the ongoing negative impact of the business on the financial position of the Group and the uncertainty of achieving an acceptable level of profitability at Comet over the long term given the specific competitive nature of the UK market. It also removed over €900 million of operating lease liabilities related to the UK stores. Secondly, we negotiated a new approach in telecoms in France in a market which is becoming highly competitive. The deal we announced with Bouygues Telecom to sell a majority share in Darty Telecom will enable us both to receive valuable future revenue streams from the business and reduce our capital investment.
The Darty brand is an iconic brand built on the strength of its service to customers and we continue to roll out the strength of this concept across all our other markets and local brands. Following the disposal of Comet, we have decided to rename the Group as Darty to reflect in our name our iconic brand.
Our short term priorities are to:
·; Build on the strength and success of our cross channel approach
We have shown that we are able to generate profitable web sales whilst growing significantly faster than the market. Supported by the existing strong brand awareness and infrastructure, we are able to deliver web profitability higher than stores. We still see substantial web growth opportunities in the newer technologies such as Multimedia and Portable Devices where our penetration is currently below market levels. Further improvements continue to be made to the web offer with extended ranges, payment and delivery options. A common web platform is being introduced progressively to our businesses outside France, with wider access to Darty France's product range and supply chain being put in place, initially for Italy and Spain which will provide an extended product range to consumers in those countries.
In parallel, our store network will continue to be remodelled. Firstly our mid size stores allow us to build a competitive store price positioning against web players and we are developing differential ranges to reduce direct price comparison. As we narrow the gap to web players the higher store cost to serve is off-set by higher service and accessories penetration. Secondly we are enhancing the customer store experience through better merchandising and product demonstration, improved staff training and 100% product availability. Finally we are improving our store contribution and network efficiency though improved space allocation, staff productivity improvements and closure of underperforming stores.
·; Ensure Darty France takes profitable market share and grows its top line
In a declining Vision market, focus will be on the Home Appliances and Multimedia product categories with greater space allocation and new merchandising. The web offer will continue to be enhanced and services margin grown through the new telecom agreement with Bouygues and launch of new value added, paid for options in home delivery and repair. At the same time the cost to serve is being reduced through reorganisation of store back offices and multi tasking; merger of after sales and home delivery sites; and more active store management with closure or relocation of underperforming stores.
·; Evolve our approach at the Developing businesses to strengthen our local positions and eliminate losses
Our Developing businesses' markets are strategically attractive. They are large, only now starting to consolidate, with low but growing internet penetration and with clear space for our service led, specialist concept. Sharper execution of commercial policy is required in all three countries through product and margin management. Further underperforming stores are to be closed in Italy and Spain, and a new common web platform is being introduced together with wider and deeper access to Darty France's product ranges and supply chain.
·; Keep on increasing the Group operating synergies
The reorganisation and streamlining of processes between Head Office, Sourcing and Darty France, betterutilisationof Group warehouses, particularly between France and neighbouring countries, and the development of a common web platform will all improve efficiency in delivering our concept to customers and reducing our overall cost to serve.
Outlook
The market across Europe is expected to remain tough, but we will benefit from the strength of our service led positioning, cross channel approach and improving operational efficiency. This year we will keep on growing our profitable web sales; in addition we will increase our store network efficiency and reinforce our price positioning; supported by the strength of the brand in France and a new management we will put Darty France in a position to take profitable market share and grow its top line; adapt our approach in the Developing countries to eliminate the losses; and accelerate the Group operating synergies.
BUSINESS REVIEW
Darty France
| 12 months ended 30/04/12 €m | 12 months ended 30/04/11 €m | Change
|
Revenue | 2,798.9 | 2,921.1 | (4.2)% |
Retail profit Margin % | 106.8 3.8 | 149.2 5.1 | (28.4)% |
Store numbers | 229 | 224 | 5 |
Sales space (000s sqm) | 313.6 | 302.9 | 3.5% |
After strong market outperformance in the prior year supported by the World Cup and digital switch over, particularly in the Paris region, Darty France performed in line with a weak market estimated to be down over 4 per cent. Growth in White goods and Multimedia were insufficient to off-set a significant decline in Vision sales of over 20 per cent. Total revenue fell by 4.2 per cent compared to the same period last year, and by 5.8 per cent on a like-for-like basis.
The Darty website continued to deliver strong growth, with over 100 million visits and improved conversion rates; web generated sales increased by 15 per cent to account for 12 per cent of total product sales. Enhancements were made to the website with web exclusives representing nearly 50 per cent of the range, a dedicated kitchens area, new offers such as a dedicated photo section in partnership with Photobox, the launch of a mobile App towards the end of the year and improved delivery service with the addition of 4,000 collection points through Kiala, part of the UPS network.
Reflecting the competitive market conditions and price matching web players to defend store footfall and sales, gross margin was down around 60 basis points. This, together with the fall in revenue, led to a decline in retail profit to €106.8 million compared to €149.2 million in the prior year.
Actions have been, and continue to be, taken to reduce costs, which were down over 2 per cent in the year. Programmes are adapting back office staff in store and introducing greater multi-tasking; merging home delivery and after sales service centres; and rationalising the store network. Overall the number of full time equivalent staff (FTEs) reduced by around 750 compared to the previous year end, with no adverse impact on customer satisfaction. Further store reorganisation and merger of home delivery and after sales service centres are planned for this year. Additional efficiencies will be made in home delivery with one-man deliveries, route optimisation and the development of premium paid for slots. These actions are expected to at least mitigate cost inflationary pressures.
Improving the customer offer and store contribution, Darty opened five new stores, refurbished/extended six and relocated five during the period. The reshaping of the portfolio will continue this year with the opening of four new locations alongside a specific focus on underperforming stores which will result in some store closures. In addition within the stores, space will be reallocated from Vision to Multimedia with improved merchandising alongside more limited rebalancing from large to small home appliances. The very successful kitchen showroom was introduced to a further 11 stores during the year. A total of 40 stores now have the offer and a further 11 will be rolled out in the coming year, targeting around 6 per cent of the kitchen market.
Darty Box finished the year with 310,000 subscribers in fixed line and 40,000 mobile subscribers following the launch of a quadruple play offer (fixed and mobile telephony, internet and TV) in the second half of the year. The market, however, became increasingly competitive towards the end of the year. Darty France has subsequently entered into a new agreement with Bouygues Telecom based on the strength of Darty's customer service and distribution network with the quality of Bouygues's mobile and fixed line offer. Under the new agreement Darty France will receive revenue streams for a range of customer and management services it will provide to the existing and future subscriber base and the revenue streams taken together with associated costs and reduced capital expenditure are expected to generate a retail profit and cash flow in excess of the current operation.
Other established businesses*
| 12 months ended 30/04/12 €m | 12 months ended 30/04/11 €m | Change
| Constant currency change |
Revenue | 848.0 | 810.4 | 4.6% | 4.7% |
Retail profit Margin % | 19.6 2.3 | 15.5 1.9 | 26.5% | 26.4% |
Store numbers | 158 | 153 | 5 | |
Sales space (000s sqm) | 170.5 | 165.6 | 3.0% |
* BCC, Vanden Borre and Datart
At the Other established businesses, BCC, Vanden Borre and Datart, despite a challenging first quarter total revenue increased by 4.6 per cent to €848.0 million, an increase of 4.7 per cent in constant currency and a 3.7 per cent on a like-for-like basis.
Web-generated sales showed consistently strong growth, increasing by 21 per cent during the period to account for 10 per cent of total product sales.
The benefits of the Darty concept continued to be demonstrated. Vanden Borre again delivered growth in revenue and profit in a slightly positive market. BCC saw positive sales and gross margin improvement with significant share gains in the core categories of White goods and Vision and was around break-even in a slightly negative market. Datart saw an improvement in the second half of the year following its alignment of prices towards web players and returned to profitability.
Overall gross margin was flat and retail profit for the period increased over 26 per cent to €19.6 million compared to €15.5 million in the prior year.
In the year six new stores were opened - three in the Netherlands; two in the Czech Republic; and one in Belgium where two refurbishments and one closure were also completed. Overall a further four new stores are planned for this year, plus two relocations and four extensions/refurbishments.
The momentum of these businesses will be built on this year with the strengthening of ranges, gaining the benefits of a new web platform and further service improvements including the introduction of Multimedia support packages and enhanced delivery options.
Developing businesses**
| 12 months ended 30/04/12 €m | 12 months ended 30/04/11 €m | Change
| Constant currency change |
Revenue | 370.5 | 377.0 | (1.7)% | 2.8% |
Retail loss Margin % | (41.1) (11.1) | (30.8) (8.2) | (33.4)% | (38.4)% |
Store numbers | 98 | 98 | - | |
Sales space (000s sqm) | 104.6 | 105.0 | (0.3)% |
** Darty Italy, Darty Turkey and Darty Spain.
Total revenue for the Developing businesses, Darty Italy, Darty Turkey and Darty Spain, increased by 2.8 per cent in constant currency and fell 1.7 per cent on a reported basis to €370.5 million. On a like-for-like basis sales fell by 3.3 per cent, predominantly due to the deteriorating market conditions experienced in Italy.
Web-generated sales increased very strongly, by over 160 per cent from a small base, as we increasingly focus on growing this channel. Web-generated sales accounted for over 2 per cent of total product sales.
Darty Turkey delivered a solid sales performance, ahead of a positive market estimated to be up over 20 per cent. As it rolled out the Darty concept, Darty Spain outperformed its market albeit estimated to be down 15 per cent. After a difficult first half, in the second half of the year Darty Italy outperformed an increasingly difficult market estimated to be down 11 per cent, but saw sharply contrasting performances across its store portfolio.
Gross margin was impacted by the tough market conditions and competitor stock clearance in Spain and Italy. As a result gross margin was down 230 basis points and the retail loss increased to €41.1 million from €30.8 million in the prior year. Darty Turkey and Darty Spain saw a small reduction in their losses, but this was outweighed by significantly increased losses at Darty Italy in a market that became extremely promotion-led as it declined.
In the period Darty Turkey opened eight new stores and closed one. Darty Spain and Darty Italy closed five and four stores, respectively, and opened one new store each. A further five closures in both Italy and Spain are planned for this year with three openings in Spain and five in Turkey.
In addition to closing lower revenue stores, actions continue to be taken this year to reduce losses. A sharper implementation of commercial policy will be supported by wider and deeper access to Darty France product ranges for Italy and Spain which will also support web growth from a new, common platform. Costs will continue to be reduced via rent renegotiations and efficiencies both in store and central overheads.
KEY EVENTS
On 9 November 2011 the Group announced that it had entered into an agreement with Hailey Holdings Ltd and Hailey Acquisitions Limited, entities advised by OpCapita LLP, to sell to them Comet Group plc, its subsidiaries and Triptych Insurance N.V. for an aggregate consideration of £2. In addition, there was an investment by the Group of £50 million into Hailey 2 LP (the shareholder of the Purchasers). The Group has retained the liability for the Comet Defined Benefit Pension Scheme. The disposal completed on 3 February 2012.
On 3 May 2012 the Group announced that it had entered into a new commercial agreement with Bouygues Telecom. Under the new agreement, Darty will receive revenue streams based on the existing and future subscriber base and for the range of customer and management services that it will provide. These revenue streams, taken together with associated costs and reduced capital investment, are expected to generate a retail profit and cash flow in excess of the current Darty Telecom performance. Bouygues will also pay €40 million, subject to the usual working capital and related adjustments, for 99.9 per cent of Darty Telecom. The deal is expected to complete in the first half of the new financial year and it is intended to reinvest the proceeds in the Group.
Group income statement | ||||||
for the year ended 30 April 2012 | ||||||
2012 | 2011 | |||||
Note
| €m
| €m Restated(c) | ||||
Revenue | 2 | 4,025.7 | 4,108.5 | |||
Group operating (loss)/profit | 2 | (11.7) | 99.8 | |||
Share of post tax profit in joint venture and associates | 5.8 | 5.5 | ||||
Total operating (loss)/profit | (5.9) | 105.3 | ||||
Analysed as: | ||||||
Retail profit (a) | 3 | 70.1 | 117.3 | |||
Share of joint venture and associates' interest and taxation | (0.9) | (0.8) | ||||
Movement in options and related charges over non-controlling interests | 2 | 2.1 | - | |||
Impairment of available for sale financial assets | (6.5) | - | ||||
Exceptional costs | 10 | (70.5) | (11.0) | |||
Amortisation and impairment of acquisition related intangible assets | (0.2) | (0.2) | ||||
Total operating (loss)/ profit | 2 | (5.9) | 105.3 | |||
Finance costs | 4 | (14.2) | (15.4) | |||
Finance income | 5 | 3.1 | 0.5 | |||
Exceptional finance costs | 9 | - | (4.8) | |||
(Loss)/profit before income tax | (17.0) | 85.6 | ||||
Taxation | 6 | (22.7) | (34.5) | |||
(Loss)/profit for the year from continuing operations | (39.7) | 51.1 | ||||
Loss for the year from discontinued operations | 9 | (274.2) | (20.4) | |||
(Loss)/Profit for the year | (313.9) | 30.7 | ||||
(Loss)/ profit attributable to: | ||||||
- Equity shareholders | (312.2) | 31.8 | ||||
- Non-controlling Interests | (1.7) | (1.1) | ||||
(313.9) | 30.7 | |||||
Earnings/(losses) per share - basic and diluted (cents) | ||||||
Continuing operations | (7.2) | 9.9 | ||||
Discontinued operations | (52.0) | (3.9) | ||||
Total (losses)/ earnings per share | 8 | (59.2) | 6.0 | |||
Notes | ||||||
a) Retail profit represents total operating profit before the share of joint venture and associates' interest and taxation, movement in options and related charges over non-controlling interests, impairment of available for sale investments, exceptional costs and amortisation and impairment of acquisition related intangible assets. | ||||||
b) The notes on pages 21 to 37 form part of this financial information. | ||||||
c) Restated following the sale of Comet, now classified as discontinued operations. | ||||||
Group statement of comprehensive income | ||||
for the year ended 30 April 2012 | ||||
2012 | 2011 | |||
Note
| €m
| €m Restated (a) | ||
(Loss)/ profit for the financial year - continuing operations | 3 | (39.7) | 51.1 | |
Loss for the financial year - discontinued operations | 3 | (274.2) | (20.4) | |
Other comprehensive income/(expense) | ||||
Exchange differences | 0.2 | (2.0) | ||
Exceptional taxation | 10 | (10.3) | - | |
Actuarial losses on retirement benefit obligations | (3.8) | (0.1) | ||
Fair value losses on available for sale financial assets | (8.1) | (0.8) | ||
Impairment of available for sale financial assets | 6.5 | - | ||
Fair value gains/(losses) on cash flow hedges | 1.3 | (2.6) | ||
Tax on other comprehensive income | (0.3) | (1.9) | ||
Foreign exchange recycled to income statement on disposal of foreign operations | 32.3 | - | ||
Total comprehensive(expense)/ income for the year | (296.1) | 23.3 | ||
- Equity shareholders | (294.6) | 23.5 | ||
- Non-controlling Interests | (1.5) | (0.2) | ||
Total comprehensive (expense)/ income for the year | (296.1) | 23.3 | ||
a) Restated following the sale of Comet, now classified as discontinued operations.
Group statement of changes in equity | ||||||||
for the year ended 30 April 2012 | ||||||||
Share capital | Demerger and other reserves | Translation reserve | Available for sale investments reserve | Retained earnings | Total Shareholders'equity | Non controlling interests | Total equity | |
€m | €m | €m | €m | €m | €m | €m | €m | |
At 1 May 2011 | 158.9 | 970.7 | (13.3) | 0.7 | (895.6) | 221.4 | (5.3) | 216.1 |
Loss for the year - continuing operations | - | - | - | - | (38.0) | (38.0) | (1.7) | (39.7) |
Loss for the year - discontinued operations | - | - | - | - | (274.2) | (274.2) | - | (274.2) |
Other comprehensive income/(expense): | ||||||||
Exchange differences | - | - | - | - | - | - | 0.2 | 0.2 |
Exceptional taxation (note 10) | - | - | - | - | (10.3) | (10.3) | - | (10.3) |
Actuarial losses on retirement benefit obligations | - | - | - | - | (3.8) | (3.8) | - | (3.8) |
Fair value losses on available for sale financial assets | - | - | - | (8.1) | - | (8.1) | - | (8.1) |
Impairment of available for sale financial assets - | - | - | 6.5 | - | 6.5 | - | 6.5 | |
Exchange differences on available for sale financial assets | - | - | (0.9) | 0.9 | - | - | - | - |
Fair value losses on cash flow hedges | - | 1.3 | - | - | - | 1.3 | - | 1.3 |
Tax on other comprehensive income | - | (0.4) | - | - | 0.1 | (0.3) | - | (0.3) |
Foreign exchange recycled to income statement on disposal of foreign operations | - | - | 32.3 | - | - | 32.3 | - | 32.3 |
Total comprehensive income/(expense) for the year | - | 0.9 | 31.4 | (0.7) | (326.2) | (294.6) | (1.5) | (296.1) |
Transactions with owners: | ||||||||
Dividends | - | - | - | - | (37.0) | (37.0) | - | (37.0) |
At 30 April 2012 | 158.9 | 971.6 | 18.1 | - | (1,258.8) | (110.2) | (6.8) | (117.0) |
Group statement of changes in equity (continued) | ||||||||
for the year ended 30 April 2012 | ||||||||
Available for | Total | |||||||
Demerger | sale | Total | Non- | equity | ||||
Share | and other | Translation | investments | Retained | Shareholders’ | Controlling | Restated | |
capital | reserves | reserve | reserve | earnings | equity | Interests | (a) | |
€m | €m | €m | €m | €m | €m | €m | €m | |
At 1 May 2010 | 152.0 | 971.9 | (2.9) | 1.5 | (884.5) | 238.0 | (5.1) | 232.9 |
Profit for the year - continuing operations | - | - | - | - | 52.2 | 52.2 | (1.1) | 51.1 |
Loss for the year - discontinued operations | - | - | - | - | (20.4) | (20.4) | - | (20.4) |
Other comprehensive income/(expense): | ||||||||
Exchange differences | 7.5 | - | (10.4) | - | - | (2.9) | 0.9 | (2.0) |
Transfer to income statement on disposal of foreign operations | - | - | - | - | - | - | - | - |
Actuarial losses on retirement benefit obligations | - | - | - | - | (0.1) | (0.1) | - | (0.1) |
Fair value losses on available for sale financial assets | - | - | - | (0.8) | - | (0.8) | - | (0.8) |
Fair value on gains on cash flow hedges | - | (2.6) | - | - | - | (2.6) | - | (2.6) |
Tax on other comprehensive income | - | 0.8 | - | - | (2.7) | (1.9) | - | (1.9) |
Total comprehensive income/(expense) for the year | 7.5 | (1.8) | (10.4) | (0.8) | 29.0 | 23.5 | (0.2) | 23.3 |
Transactions with owners: | ||||||||
Dividends | - | - | - | - | (36.6) | (36.6) | - | (36.6) |
Capital Reduction | (0.6) | 0.6 | - | - | - | - | - | - |
Employee share schemes | - | - | - | - | 0.8 | 0.8 | - | 0.8 |
Investments in ESOP shares | - | - | - | - | (0.2) | (0.2) | - | (0.2) |
Purchase of own shares | - | - | - | - | (4.1) | (4.1) | - | (4.1) |
At 30 April 2011 | 158.9 | 970.7 | (13.3) | 0.7 | (895.6) | 221.4 | (5.3) | 216.1 |
a) Restated following the sale of Comet, now classified as discontinued operations. | ||||||||||
The demerger reserve represents a reserve created on demerger and is non-distributable. Other reserves comprise a reserve arising from the first time adoption of IAS 39 in February 2006, a redenomination reserve created upon the redenomination of ordinary shares in September 2010 and the hedging reserve comprising the fair value movements on forward foreign exchange contracts. | ||||||||||
Group balance sheet | |||||
As at 30 April 2012 | |||||
2012 | 2011 | ||||
Note | €m | €m | |||
Assets | |||||
Non-current assets | |||||
Intangible assets | 87.2 | 125.2 | |||
Property, plant and equipment | 421.8 | 565.2 | |||
Investments | 22.6 | 20.9 | |||
Available for sale financial assets | - | 8.1 | |||
Other receivables | 17.3 | 18.6 | |||
Deferred income tax assets | 2.3 | 52.8 | |||
Total non-current assets | 551.2 | 790.8 | |||
Current assets | |||||
Inventories | 526.9 | 782.8 | |||
Trade and other receivables | 189.5 | 292.8 | |||
Income tax receivable | 22.1 | 2.2 | |||
Other investments | - | 4.1 | |||
Cash and cash equivalents | 99.4 | 177.6 | |||
Assets of disposal group held for sale | 60.3 | - | |||
Total current assets | 898.2 | 1,259.5 | |||
Total assets | 1,449.4 | 2,050.3 | |||
Liabilities | |||||
Current liabilities | |||||
Borrowings | (6.6) | (2.3) | |||
Income tax liabilities | (3.5) | (10.6) | |||
Trade and other payables | (905.3) | (1,222.3) | |||
Derivative financial instruments | (0.3) | (1.6) | |||
Provisions | (4.3) | (5.6) | |||
Liabilities of disposal group held for sale | (34.9) | - | |||
Total current liabilities | (954.9) | (1,242.4) | |||
Non-current liabilities | |||||
Borrowings | (217.3) | (56.1) | |||
Other payables | (271.6) | (396.5) | |||
Deferred income tax liabilities | (53.0) | (58.0) | |||
Retirement benefits | 13 | (69.6) | (71.9) | ||
Provisions | - | (9.3) | |||
Total non-current liabilities | (611.5) | (591.8) | |||
Total liabilities | (1,566.4) | (1,834.2) | |||
Net (liabilities)/ assets | (117.0) | 216.1 | |||
Group balance sheet (continued) | |||||
As at 30 April 2012 | |||||
2012 | 2011 | ||||
Note | €m | €m | |||
Equity attributable to owners of the parent | |||||
Share capital | 158.9 | 158.9 | |||
Other reserves | 989.7 | 958.1 | |||
Retained earnings | (1,258.8) | (895.6) | |||
Total shareholders' funds | (110.2) | 221.4 | |||
Non-controlling interests | (6.8) | (5.3) | |||
Total equity | (117.0) | 216.1 | |||
Notes | |||||
a) The notes on pages 21 to 37 form part of this financial information. | |||||
Approved by the Board of Directors on 20 June 2012 and signed on its behalf by: | |||||
Thierry Falque-Pierrotin | Dominic Platt | ||||
Director | Director | ||||
Company registration number: 4232413 | |||||
Group cash flow statement | ||||
for the year ended 30 April 2012 | ||||
2012 | 2011 | |||
Note | €m | €m | ||
Cash flows from operating activities | ||||
Cash generated from operations | 11 | 83.8 | 242.5 | |
Interest paid | (12.5) | (14.5) | ||
Tax paid | (54.4) | (31.5) | ||
Net cash flows from operating activities | 16.9 | 196.5 | ||
Cash flows from investing activities | ||||
Sale of subsidiary, including cash disposed | 9 | (138.7) | - | |
Purchase of property, plant and equipment | (82.7) | (93.5) | ||
Proceeds from sale of property, plant and equipment | 16.8 | 3.7 | ||
Purchase of intangible assets | (33.2) | (40.4) | ||
Cash inflow from other current investments | 4.1 | 7.8 | ||
Interest received | 0.3 | 1.7 | ||
Dividends received from associates/joint ventures | 4.1 | 6.0 | ||
Net cash used in investing activities | (229.3) | (114.7) | ||
Cash flows from financing activities | ||||
Net increase/(decrease) in borrowings | 165.4 | (1.3) | ||
Proceeds from borrowings | - | 130.0 | ||
Repayments of borrowings | - | (130.0) | ||
Purchase of own shares | - | (4.1) | ||
Dividends paid to shareholders | 7 | (37.0) | (36.6) | |
Net cash used in financing activities | 128.4 | (42.0) | ||
Net cash (outflow)/ inflow from operating, investing and financing activities | 12 | (84.0) | 39.8 | |
Effects of exchange rate changes | 12 | 7.2 | (1.4) | |
Net (decrease)/ increase in cash, cash equivalents and bank overdrafts | (76.8) | 38.4 | ||
Cash, cash equivalents and bank overdrafts at start of year | 12 | 175.3 | 136.9 | |
Cash, cash equivalents and bank overdrafts at end of year | 98.5 | 175.3 | ||
Notes | ||||
a) The notes on pages 21 to 37 form part of this financial information. | ||||
1 Accounting policies
The preliminary results for the year ended 30 April 2012 have been extracted from audited accounts which have not yet been delivered to the Registrar of Companies. They have been prepared on the basis of the accounting policies set out in the Group's 2011 Financial Statements, all of which have been applied consistently throughout the year and the preceding year. The statutory accounts of the Company for the year ended 30 April 2011, on which the auditors have given an unqualified opinion, have been filed with the Registrar of Companies. The financial information set out in this Preliminary Announcement does not constitute statutory accounts for the year ended 30 April 2012 or year ended 30 April 2011 within the meaning of sections 434-436 of the Companies Act 2006. The financial information for the year ended 30 April 2012 is derived from the statutory accounts for that period. The report of the auditors on the statutory accounts for the year ended 30 April 2012 was unqualified and did not contain a statement under Section 498 of the Companies Act 2006 | ||||
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRS IC) interpretations as adopted by the European Union (EU) and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention as modified by the revaluation of certain financial instruments and retirement benefits.
| ||||
Principal rates of exchange | ||||
GBP |
Czech Kr |
Turkish Lira | ||
Average rate - year ended 30 April 2012 | 0.8581 | 24.8029 | 2.3987 | |
Closing rate - 30 April 2012 | 0.8150 | 24.9830 | 2.3338 | |
Average rate - year ended 30 April 2011 |
0.8507 |
24.8246 |
2.0320 | |
Closing rate - 30 April 2011 | 0.8861 | 24.1040 | 2.2515 | |
Average rate - year ended 30 April 2010 |
0.8839 |
25.9036 |
2.1337 | |
Closing rate - 30 April 2010 | 0.8708 | 25.6340 | 1.9811 | |
2 Continuing Group operating profit | |||||
2012 | 2011 | ||||
€m | €m | ||||
Analysis by function: | |||||
Revenue | 4,025.7 | 4,108.5 | |||
Cost of sales | (2,688.2) | (2,711.1) | |||
Distribution costs | (186.8) | (183.2) | |||
Selling expenses | (892.4) | (904.2) | |||
Administrative expenses | (195.2) | (199.3) | |||
Other income | 0.3 | 0.3 | |||
Movement in options and related charges over non-controlling interests | 2.1 | - | |||
Impairment of available for sale financial assets | (6.5) | - | |||
Exceptional costs | (70.5) | (11.0) | |||
Amortisation and impairment of acquisition related intangible assets | (0.2) | (0.2) | |||
Group operating (loss)/profit | (11.7) | 99.8 | |||
Share of post tax profit in joint venture and associates | 5.8 | 5.5 | |||
Total operating (loss)/ profit | (5.9) | 105.3 | |||
Net property, plant and equipment disposal gains were €6.8m for the year ended 30 April 2012 (year ended 30 April 2011: €6.0m loss). Group total revenue includes revenue from services in the year to 30 April 2012 of €376.6m (year to 30 April 2011: €366.7m). Such revenues predominantly comprise those relating to customer support agreements, delivery and installation, product repairs, product support and subscription based services such as Darty Box. | |||||
3 Segmental analysis | ||||||||||||||||||
The Group bases its internal reporting systems on certain reportable segments. These segments are used by the chief operating decision maker, identified as the Chief Executive, for assessing performance and allocating resources. | ||||||||||||||||||
The reportable segments, all of which derive their revenue primarily from the retail of electrical goods, are as follows: | ||||||||||||||||||
- Darty France | ||||||||||||||||||
- Other established businesses (BCC, Vanden Borre, Datart) | ||||||||||||||||||
- Developing businesses (Darty Spain, Darty Italy and Darty Turkey) | ||||||||||||||||||
Comet was classified as a discontinued operation on 9 November 2011, following the announcement of the Group entering into an agreement with Hailey Holdings Ltd. and Hailey Acquisitions Limited (entities advised by OpCapita LLP) to sell them Comet Group plc, its subsidiaries and Triptych Insurance N.V. | ||||||||||||||||||
The aggregation within the Other established businesses and Developing businesses segments is consistent with the core principle of IFRS 8 as the businesses comprising these segments have similar economic characteristics. Sales between segments are carried out at arm’s length. There is no material difference between revenue by origin and destination. | ||||||||||||||||||
2012 | ||||||||||||||||||
Darty France | Other established businesses | Developingbusinesses | Unallocated | Continuing Group | Discontinued operations | Group | ||||||||||||
€m | €m | €m | €m | €m | €m | €m | ||||||||||||
Revenue | 2,798.9 | 848.0 | 370.5 | 8.3 | 4,025.7 | 1,227.6 | 5,253.3 | |||||||||||
Retail profit/(loss) | 106.8 | 19.6 | (41.1) | (15.2) | 70.1 | (20.1) | 50.0 | |||||||||||
Share of joint venture and associates' interest and taxation | (0.9) | - | - | - | (0.9) | - | (0.9) | |||||||||||
Movement in options and related charges over non-controlling interests | - | - | - | 2.1 | 2.1 | - | 2.1 | |||||||||||
Impairment of available for sale financial assets | (6.5) | - | - | - | (6.5) | - | (6.5) | |||||||||||
Exceptional costs | (13.5) | - | (56.4) | (0.6) | (70.5) | (117.1) | (187.6) | |||||||||||
Amortisation and impairment of acquisition related intangible assets | - | - | (0.2) | - | (0.2) | - | (0.2) | |||||||||||
Operating profit/(loss) | 85.9 | 19.6 | (97.7) | (13.7) | (5.9) | (137.2) | (143.1) | |||||||||||
Finance costs | (14.2) | - | (14.2) | |||||||||||||||
Finance income | 3.1 | - | 3.1 | |||||||||||||||
Finance costs - net | (11.1) | - | (11.1) | |||||||||||||||
Profit/(loss) before income tax | (17.0) | (137.2) | (154.2) | |||||||||||||||
Income tax expense | (22.7) | (46.7) | (69.4) | |||||||||||||||
Post-tax loss on disposal | - | (90.3) | (90.3) | |||||||||||||||
Loss for the year | (39.7) | (274.2) | (313.9) | |||||||||||||||
The share of operating profits of the joint venture and associates included within the retail profit for Darty France is €6.7m. The share of post tax profits of the joint venture and associates included within the operating profit of Darty France is €5.8m. | ||||||||||||||||||
3 Segmental analysis (continued) |
| ||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||
Darty France | Other established businesses | Developing businesses | Unallocated | Continuing Group | Discontinued operations | Group | |||||||||||||||||||||||
€m | €m | €m | €m | €m | €m | €m | |||||||||||||||||||||||
| |||||||||||||||||||||||||||||
| Segmental total assets | 958.3 | 242.2 | 109.8 | 139.1 | 1,449.4 | - | 1,449.4 | |||||||||||||||||||||
| |||||||||||||||||||||||||||||
| Segmental liabilities | (923.4) | (160.2) | (83.7) | (399.1) | (1,566.4) | - | (1,566.4) | |||||||||||||||||||||
| |||||||||||||||||||||||||||||
| Segmental depreciation and amortisation | (69.1) | (16.7) | (10.3) | (1.5) | (97.6) | (21.0) | (118.6) | |||||||||||||||||||||
| |||||||||||||||||||||||||||||
| Segmental capital expenditure | 76.1 | 11.9 | 10.7 | 1.7 | 100.4 | 15.5 | 115.9 | |||||||||||||||||||||
| |||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||
Investment in equity accounted joint venture and associates of €22.6m are included within the segment assets of Darty France. |
| ||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||
Segment assets include available for sale and equity accounted investments, property, plant and equipment, goodwill, intangible assets, stocks, debtors, other current assets and cash that is not held centrally. Unallocated assets include centrally held cash and other liquid assets and financial assets, as well as interest and tax related prepaid expenses and accrued income. |
| ||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||
Segment liabilities include operating liabilities such as accounts payable, overdrafts that are not held centrally, prepaid income, accrued expenses and provisions, excluding those relating to interest and taxes that are held centrally. Unallocated liabilities include loan and finance lease liabilities as well as interest and tax related prepaid income, accrued expenses and provisions. |
| ||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||
2011 |
| ||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||
| France | Other established businesses | Developing businesses | Unallocated | Continuing Group | Discontinued operations | Group | ||||||||||||||||||||||
| €m | €m | €m | €m | €m | €m | €m | ||||||||||||||||||||||
| Revenue | 2,921.1 | 810.4 | 377.0 | - | 4,108.5 | 1,808.8 | 5,917.3 | |||||||||||||||||||||
| Retail profit/(loss) | 149.2 | 15.5 | (30.8) | (16.6) | 117.3 | (10.3) | 107.0 | |||||||||||||||||||||
| Share of joint venture and associates' interest and taxation | (0.8) | - | - | - | (0.8) | - | (0.8) | |||||||||||||||||||||
| Amortisation and impairment of acquisition related intangible assets | - | - | (0.2) | - | (0.2) | - | (0.2) | |||||||||||||||||||||
| Exceptional costs | - | (2.8) | (8.2) | - | (11.0) | (19.9) | (30.9) | |||||||||||||||||||||
| Operating profit/(loss) | 148.4 | 12.7 | (39.2) | (16.6) | 105.3 | (30.2) | 75.1 | |||||||||||||||||||||
| |||||||||||||||||||||||||||||
| Finance costs | (15.4) | (0.2) | (15.6) | |||||||||||||||||||||||||
| Finance income | 0.5 | 1.3 | 1.8 | |||||||||||||||||||||||||
| Exceptional finance income | (4.8) | 4.2 | (0.6) | |||||||||||||||||||||||||
| Finance costs - net | (19.7) | 5.3 | (14.4) | |||||||||||||||||||||||||
| |||||||||||||||||||||||||||||
| Profit/(loss) before income tax | 85.6 | (24.9) | 60.7 | |||||||||||||||||||||||||
| Income tax expense | (34.5) | 4.5 | (30.0) | |||||||||||||||||||||||||
| Profit/(loss) for the year | 51.1 | (20.4) | 30.7 | |||||||||||||||||||||||||
| |||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||
The share of operating profits of the joint venture and associates included within the retail profit for Darty France is €6.3m. The share of post tax profits of the joint venture and associates included within the operating profit of Darty France is €5.5m.
|
3 Segmental analysis (continued) |
| |||||||||||
| ||||||||||||
Other established businesses |
| |||||||||||
Darty France | Developing businesses | Unallocated | Continuing Group | Discontinued operations | Group |
| ||||||
€m | €m | €m | €m | €m | €m | €m |
| |||||
| ||||||||||||
Segmental total assets | 980.3 | 247.5 | 163.9 | 194.8 | 1,586.5 | 463.8 | 2,050.3 |
| ||||
| ||||||||||||
Segmental liabilities | (941.8) | (166.9) | (89.6) | (203.4) | (1,401.7) | (432.5) | (1,834.2) |
| ||||
| ||||||||||||
Segmental depreciation and amortisation | (68.0) | (17.0) | (8.9) | (1.2) | (95.1) | (31.1) | (126.2) |
| ||||
| ||||||||||||
Segmental capital expenditure | 61.3 | 9.4 | 24.3 | 2.8 | 97.8 | 36.1 | 133.9 |
| ||||
| ||||||||||||
Investment in equity accounted joint venture and associates of €20.9m are included within the segment assets of Darty France. |
| |||||||||||
| ||||||||||||
4 Continuing Group finance costs | |||||
2012 | 2011 | ||||
€m | €m | ||||
Interest payable on bank borrowings | 8.9 | 5.9 | |||
Loan commitment fees and the amortisation of loan arrangement fees | 3.1 | 5.7 | |||
Net interest on pension schemes | 2.2 | 3.8 | |||
Finance costs before exceptional finance costs | 14.2 | 15.4 | |||
Exceptional finance costs | - | 4.8 | |||
In the prior year, exceptional finance costs of €4.8m related to prepaid facility fees that were written off when a new borrowing facility was entered into during the year. These costs were treated as exceptional by virtue of their size and nature. | |||||
5 Continuing Group finance income | ||||||
2012 | 2011 | |||||
€m | €m | |||||
Bank and other interest receivable | 0.3 | 0.5 | ||||
Foreign exchange gains | 2.8 | - | ||||
Finance Income | 3.1 | 0.5 | ||||
Foreign exchange gains and losses arise on the retranslation of short term deposits denominated in a currency other than the operation's functional currency. | ||||||
6 Continuing Group income tax expense | ||||||
2012 | 2011 | |||||
€m | €m | |||||
Analysis of charge in year | ||||||
UK corporation tax | ||||||
Current tax on profits for the year | - | (3.3) | ||||
Adjustment in respect of prior years | (1.1) | (0.2) | ||||
(1.1) | (3.5) | |||||
Foreign tax | ||||||
Current tax on profits for the year | 28.2 | 42.6 | ||||
Adjustment in respect of prior years | 1.5 | - | ||||
29.7 | 42.6 | |||||
Deferred tax | ||||||
Origination and reversal of temporary differences | (7.1) | (4.8) | ||||
Change in tax rate | 2.2 | 0.1 | ||||
Adjustment in respect of prior years | (1.0) | 0.1 | ||||
(5.9) | (4.6) | |||||
Total income tax expense | 22.7 | 34.5 | ||||
Tax on items charged to equity: | ||||||
Exceptional tax (see note 10) | 10.3 | - | ||||
Deferred income tax credit on share schemes | (0.1) | - | ||||
Deferred income tax charge/ (credit) on cash flow hedges in reserves | 0.4 | (0.8) | ||||
Deferred income tax charge on actuarial gains/(losses) on retirement benefit obligations | - | 6.9 | ||||
Corporate income tax (credit) on actuarial gains/(losses) on retirement benefit obligations | - | (4.2) | ||||
Total tax on items charged to equity | 10.6 | 1.9 | ||||
Factors affecting tax charge for the year | ||||||
The standard rate of Corporation Tax in the UK changed from 26% to 24% with effect from 1 April 2012. | ||||||
The tax for the year is higher (2011: higher) than the standard rate of corporation tax. | ||||||
The differences are explained below: | ||||||
(Loss)/profit on ordinary activities before income tax | (17.0) | 85.6 | ||||
(Loss)/profit on ordinary activities multiplied by rate of corporation tax in | ||||||
the UK of 26% (2011: 28%) | (4.4) | 24.0 | ||||
Effects of: | ||||||
Adjustments in respect of foreign tax rates | 4.5 | 7.0 | ||||
Adjustments in respect of joint ventures and associates | (0.7) | (0.6) | ||||
Expenses not deductible for tax purposes | - | 2.6 | ||||
Other permanent differences | (11.9) | (7.2) | ||||
Exceptional items not deductible for tax purposes | 9.6 | 0.4 | ||||
Losses not recognised as deferred tax asset (unrelieved tax losses) | 24.0 | 7.7 | ||||
Change in corporation tax rates | 2.2 | 0.1 | ||||
Adjustments to tax in respect of prior years | (0.6) | - | ||||
Impact of changes in foreign exchange rates | - | 0.5 | ||||
Total income tax expense | 22.7 | 34.5 | ||||
Losses not recognised as a deferred tax asset for the current year principally include tax losses arising in Darty Italy, Darty Spain and UK head office companies and Darty Spain only for the previous year. | ||||||
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6 Continuing Group income tax expense (continued) | |||||
2012 | 2011 | ||||
€m | €m | ||||
(Loss)/profit before tax per Group income statement | (17.0) | 85.6 | |||
Share of joint venture and associates taxation | 0.9 | 0.8 | |||
Adjusted (loss)/profit before tax | (16.1) | 86.4 | |||
Non-retail profit items including exceptional finance costs | 75.1 | 16.0 | |||
Adjusted profit before tax on continuing operations | 59.0 | 102.4 | |||
Income tax expense per Group income statement | 22.7 | 34.5 | |||
Share of joint venture and associates taxation | 0.9 | 0.8 | |||
Adjusted income tax expense | 23.6 | 35.3 | |||
Tax on non retail profit items including exceptional finance costs | 4.2 | 2.3 | |||
Adjusted income tax expense on continuing operations | 27.8 | 37.6 | |||
Adjusted effective tax rate | 47.1% | 36.7% | |||
A reduction in the main rate of UK corporation tax to 24% from 1 April 2012 was substantively enacted in March 2012. Further 1% decreases in the tax rate are expected to be enacted in future Finance Bills until the tax rate reduces to 22% by 1 April 2014. These further changes had not been substantively enacted at the balance sheet date and, therefore, are not included in these financial statements. | |||||
The effect of the changes announced in the Finance Act 2011 and Finance Act 2012 will have no impact on the Group's deferred tax liability in the current year or in future years. This is due to Management's expectation that future UK taxable profits are unlikely, with a consequence that there are no deferred tax assets/liabilities recognised in the UK tax group at the balance sheet date. | |||||
7 Dividends | |||||
2012 | 2011 | ||||
€m | €m | ||||
Final paid 2011: 4.75 cents (2010: 4.15 pence) per share | 25.0 | 25.1 | |||
Interim paid | 12.0 | 11.5 | |||
37.0 | 36.6 | ||||
The retained loss for the year to 30 April 2012 amounts to €313.9m (30 April 2011: profit €30.7m). An interim dividend of 2.25 cents was paid to the ordinary shareholders of the Company on 1 April 2012. In addition the Board will also recommend, at the forthcoming Annual General Meeting, the payment of a final dividend of 1.25 cents (which will total €6.6m), payable on 5 October 2012 in relation to the year ending 30 April 2012.The final dividend, once approved, will be paid to those persons on the Register of Members at the close of business on 14 September 2012. | |||||
8 Earnings/(losses) per share | ||||||
Basic earnings per share is calculated by dividing the earnings attributable to shareholders by 526.9m shares (30 April 2011, 527.9m), being the weighted average number of ordinary shares in issue. | ||||||
There is no difference between diluted and basic earnings per share. Supplementary adjusted earnings per share figures are presented. These exclude the effects of movement in options and related charges over non-controlling interests, impairment of available for sale investments, exceptional costs, amortisation and impairment of acquisition related intangible assets, exceptional finance costs, tax effects of exceptional items and discontinued operations. | ||||||
2012 | 2011 | |||||
Per share | Per share | |||||
Earnings | amount | Earnings | amount | |||
€m | cents | €m | cents | |||
Basic (losses)/earnings per share | ||||||
Earnings attributable to ordinary shareholders | (312.2) | (59.2) | 31.8 | 6.0 | ||
Adjustments | ||||||
Movement in options and related charges over non-controlling interests | (2.1) | (0.4) | - | - | ||
Impairment of available for sale financial assets | 6.5 | 1.2 | - | - | ||
Exceptional costs | 70.5 | 13.4 | 11.0 | 2.1 | ||
Amortisation and impairment of acquisition related intangible assets | 0.2 | - | 0.2 | - | ||
Exceptional finance costs | - | - | 4.8 | 0.9 | ||
Tax effect of exceptional items | (4.2) | (0.8) | (2.3) | (0.3) | ||
Discontinued operations | 274.2 | 52.0 | 20.4 | 3.9 | ||
Total adjusted earnings per share on continuing operations | 32.9 | 6.2 | 65.9 | 12.6 | ||
Basic (losses)/earnings per share | ||||||
Continuing operations | (38.0) | (7.2) | 52.2 | 9.9 | ||
Discontinued operations | (274.2) | (52.0) | (20.4) | (3.9) | ||
Total (losses)/earnings per share | (312.2) | (59.2) | 31.8 | 6.0 | ||
9 Discontinued operations | ||||||
The Group announced on 9 November 2011 that it had entered into an agreement to sell Comet Group plc, its subsidiaries and Triptych Insurance N.V. (together, the "Comet Group" or "Comet") to Hailey Holdings Ltd and Hailey Acquisitions Limited, entities advised by OpCapita LLP. On 3 February 2012 the sale of the Comet Group was completed, based on an effective date of 31 January 2012. | ||||||
The business sold comprised the Comet segment as reported in previous annual reports and accounts, with the exception that the Group retained the liability for the Comet Defined Benefit Pension Scheme. In accordance with IFRS 5 the business has been treated as a discontinued operation. The results of Comet have been excluded from the results of the Continuing Group. The Comet loss after tax of €183.9m, together with the net loss on disposal of €90.3m has been included in the financial statements as loss for the year from discontinued operations. | ||||||
The Comet Group was sold for an aggregate of £2, subject to certain adjustments relating to cash, inter-company debt, working capital and exceptional costs in Comet on completion. In addition, there was a £50.0m (€60.2m) investment by Kesa into Hailey 2 LP (the shareholder of the Purchasers) which has been fully impaired. | ||||||
€m | ||||||
Cash consideration | 0.0 | |||||
Kesa investment into new Comet holding structure | (60.2) | |||||
Adjustments for net debt and working capital normalisation | (27.3) | |||||
Pension payments falling due in respect of the scheme paid on behalf of Comet, in advance of the disposal | (7.0) | |||||
Net cash consideration | (94.5) | |||||
Add: Net liabilities disposed | 46.3 | |||||
Transaction costs and other | (9.8) | |||||
Loss on disposal before the effects of foreign exchange recycling | (58.0) | |||||
Foreign exchange recycled to the income statement on disposal | (32.3) | |||||
Post-tax loss on disposal | (90.3) | |||||
€m | ||||||
Net cash outflow arising on disposal: | ||||||
Net cash consideration | (94.5) | |||||
Cash to settle intercompany debt | 51.0 | |||||
Cash and cash equivalents disposed | (95.2) | |||||
Cash flows from sale of subsidiary, including cash disposed | (138.7) | |||||
Transaction costs settled with cash at the balance sheet date | (4.6) | |||||
Net cash outflow arising on disposal | (143.3) | |||||
Results from discontinued operations | ||||||
The results from discontinued operations which have been included in the consolidated income statement, are derived below. | ||||||
2012 | 2011 | |||||
€m | €m | |||||
Revenue | 1,227.6 | 1,808.8 | ||||
Cost of sales | (894.3) | (1,320.5) | ||||
Distribution costs | (72.9) | (95.5) | ||||
Selling expenses | (251.7) | (356.6) | ||||
Administrative expenses | (34.6) | (54.7) | ||||
Other income | 5.8 | 8.2 | ||||
Exceptional costs | (117.1) | (19.9) | ||||
Operating loss | (137.2) | (30.2) | ||||
Finance costs | - | (0.2) | ||||
Finance income | - | 1.3 | ||||
Exceptional finance income | - | 4.2 | ||||
Loss before income tax | (137.2) | (24.9) | ||||
Taxation relating to performance of business | (46.7) | 4.5 | ||||
Loss after taxation relating to performance of business | (183.9) | (20.4) | ||||
Post-tax loss on disposal | (90.3) | - | ||||
Total loss for the year from discontinued operations | (274.2) | (20.4) | ||||
Staff costs included in results from discontinued operations were €145.7m (2011; €192.6m).
| ||||||
9 Discontinued operations (continued) | ||||||
Cash flows from discontinued operations | ||||||
2012 | 2011 | |||||
€m | €m | |||||
Operating activities | (16.0) | (13.9) | ||||
Investing activities | (15.0) | (24.1) | ||||
Financing activities | (0.2) | (1.3) | ||||
Total Cash flows | (31.2) | (39.3) | ||||
Cashflows from investing activities relate to interest received and capital expenditure. Cash flows from financing activities comprise dividends paid to shareholders and minority interests, proceeds and repayment of long term borrowings and finance lease principal payments. | ||||||
10 Exceptional items | ||||
2012 | 2011 | |||
€m | €m | |||
Exceptional costs: | ||||
Darty France | ||||
Exceptional costs | (13.5) | - | ||
(13.5) | 0.0 | |||
Developing businesses | ||||
Impairment of intangible assets | (8.4) | - | ||
Impairment of property, plant and equipment | (35.8) | - | ||
Other exceptional costs | (12.2) | (8.2) | ||
(56.4) | (8.2) | |||
Other established businesses | ||||
Exceptional costs | - | (2.8) | ||
- | (2.8) | |||
Unallocated | ||||
Exceptional costs | (0.6) | - | ||
(0.6) | 0.0 | |||
Exceptional costs in operating loss | (70.5) | (11.0) | ||
Exceptional finance costs | - | (4.8) | ||
Tax effect of exceptional items | 4.2 | 2.3 | ||
Exceptional loss for the period | (66.3) | (13.5) | ||
In France we have implemented plans to reduce and streamline costs in store operations, after sales service, home delivery as well as across business and group head office functions. Costs relating to the reorganisation total €7.2m in Darty France and €0.6m in Kesa Head Office. Certain costs and fees (totalling €6.3m) have been incurred as a result of preparing for and implementing plans to dispose of Darty Telecom. | ||||
In accordance with IAS 36, "Impairment of Assets", store impairment reviews have been undertaken by Darty Spain and Darty Italy. Given the performance and economic uncertainty, based on the value in use calculations, Darty Spain's property, plant and equipment assets have been impaired by €13.8m and Darty Italy's assets have been impaired by €22.0m. Darty Spain's intangible assets have been impaired by €4.1m and Darty Italy's intangible assets have been impaired by €4.3m. Additionally, restructuring costs have been incurred and provisions made in Darty Italy (€9.6m) and Darty Spain (€2.6m). | ||||
Deferred income tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit can be realised through future taxable profits. Management have concluded that future UK taxable profits are unlikely and have therefore written off the UK deferred income tax asset. The deferred tax asset of €10.3m on the net pension liability has been written off through the Group statement of comprehensive income, as it was originally recognised in this way. | ||||
In the year ended 30 April 2011 the Continuing Group worked on reducing the cost to serve in all businesses. In the Netherlands and Spain it implemented these plans via restructuring programmes which started in the second half of the year and resulted in exceptional costs totalling €11.0m. | ||||
The cash outflow on exceptional items during the year (for the Continuing Group) was €10.9m (30 April 2011: €2.0m).
| ||||
11 Cash flow from operating activities | |||||
2012 | 2011 | ||||
€m | €m | ||||
(Loss)/profit after tax | (39.7) | 51.1 | |||
Adjustments for: | |||||
Income tax | 23.6 | 35.3 | |||
Interest income | (3.1) | (0.5) | |||
Interest expense | 14.2 | 20.2 | |||
Share of results of joint venture before interest and taxation | (3.7) | (4.6) | |||
Share of results of associates before interest and taxation | (3.0) | (1.7) | |||
Continuing group operating (loss)/profit | (11.7) | 99.8 | |||
Discontinued operations operating loss | (137.2) | (30.2) | |||
Post-tax loss on disposal | (90.3) | - | |||
Depreciation and amortisation | 118.6 | 126.2 | |||
Net impairment of intangibles and property, plant and equipment | 153.2 | 2.8 | |||
(Profit)/loss on disposal of property, plant and equipment and intangible assets including write-offs | (7.7) | 5.4 | |||
Decrease in inventories | 13.9 | 9.3 | |||
Increase in trade and other receivables | (11.7) | (30.5) | |||
Increase in payables | 56.7 | 59.7 | |||
Net cash inflow from operating activities | 83.8 | 242.5 | |||
Tax includes joint venture and associates' tax of €0.9m (2011: €0.8m). | |||||
12 Reconciliation of net cash flow to movement in net debt | ||||||
2012 | Cash flow | Exchange and other movements | 2011 | |||
€m | €m | €m | €m | |||
Cash at bank and in hand | 95.8 | (30.2) | 4.2 | 121.8 | ||
Overdrafts | (0.9) | 1.4 | - | (2.3) | ||
Short-term deposits and investments | 3.6 | (55.2) | 3.0 | 55.8 | ||
98.5 | (84.0) | 7.2 | 175.3 | |||
Borrowings falling due within one year | (5.8) | (5.8) | - | - | ||
Borrowings falling due after one year | (217.3) | (159.6) | (1.6) | (56.1) | ||
Finance leases | (1.9) | - | 0.4 | (2.3) | ||
(225.0) | (165.4) | (1.2) | (58.4) | |||
Other current investments | - | (4.1) | - | 4.1 | ||
Total | (126.5) | (253.5) | 6.0 | 121.0 | ||
2011 | Cash flow | Exchange and other movements | 2010 | |||
€m | €m | €m | €m | |||
Cash at bank and in hand | 121.8 | 40.9 | (1.4) | 82.3 | ||
Overdrafts | (2.3) | 8.4 | 0.1 | (10.8) | ||
Short-term deposits and investments | 55.8 | (9.5) | (0.1) | 65.4 | ||
175.3 | 39.8 | (1.4) | 136.9 | |||
Borrowings falling due within one year | - | - | - | - | ||
Borrowings falling due after one year | (56.1) | - | (2.0) | (54.1) | ||
Finance leases | (2.3) | 1.3 | - | (3.6) | ||
(58.4) | 1.3 | (2.0) | (57.7) | |||
Other current investments | 4.1 | (7.8) | - | 11.9 | ||
Total | 121.0 | 33.3 | (3.4) | 91.1 | ||
| 13 Retirement benefits | ||||||||||||||||||||||
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The Group operates retirement benefit arrangements most notably in the UK and France. In the UK, the Group operates a defined benefit pension scheme ("The Comet Pension Scheme") with assets held in a separate trustee administered fund. The Scheme was closed to new entrants on 1 April 2004 and future service accrual was ceased on 30 September 2007, with affected employees eligible to become members of the Group defined contribution scheme. Following the disposal of Comet, Kesa Electricals plc assumed the liabilities associated with the Comet Pension Scheme. Comet ceased to be the participating employer from the date of completion, 3 February 2012 with all member benefits, including any link to future salary increases, ceasing from this date. |
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The scheme is valued by a qualified actuary every 3 years and a deficit recovery plan agreed with the Trustees based on an agreed schedule of contributions. The March 2010 triennial valuation was agreed with the trustees in June 2011 resulting in annual payments of £6.1m per annum aiming to make good the £49m deficit by March 2018. As part of the scheme transfer from Comet to Kesa, it was agreed with the trustees to increase the annual deficit recovery payments to £10.0m per annum (retrospectively from the last triennial valuation at 31 March 2010) so reducing the recovery plan period to March 2015. Additional payments were made to facilitate this of £3.5m in February 2012 and £3.65m in May 2012. As a result, company contributions to be paid in 2012/13 total £13.65m. |
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In France, post-retirement benefits are primarily provided by the state system though the Group has supplementary funded pension plans in place for certain senior executives. At 30 April 2012, given funding to date of €11.6m, these pension plans had a surplus of €0.7m. The Group has no further mortality risk post retirement. |
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In addition, the Group is required to pay lump sum retirement indemnities to employees when they retire from service. The entitlement on retirement is secured through the purchase of an annuity from an insurance company tariff under terms prescribed by legislation. No pre-funding is legally required, though at 30 April 2012 €8.5m of funding has been set aside for retirement indemnity plans. |
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2012 | 2011 | ||||||||
UK | France | Group | UK | France | Group | ||||
€m | €m | €m | €m | €m | €m | ||||
Present value of defined benefit obligations | 396.9 | 51.9 | 448.8 | 331.5 | 47.6 | 379.1 | |||
Fair value of plan assets | (356.9) | (20.1) | (377.0) | (285.6) | (19.5) | (305.1) | |||
Unrecognised prior service costs | - | (2.2) | (2.2) | - | (2.1) | (2.1) | |||
Net liability recognised in the balance sheet | 40.0 | 29.6 | 69.6 | 45.9 | 26.0 | 71.9 | |||
Related Shares:
DRTY.L