24th Jun 2008 07:00
24 June 2008
Statement of Results for the Fifteen Months ended 30 April 2008
Financial Highlights
15 months to 30 April 2008 as reported (compared with 12 months to 31 January 2007 excluding BUT)*
Group revenue was £5,356.6 million (2007: £3,905.2 million)
Group operating profit was £141.0 million (2007: £143.9 million)
Earnings per share were 15.8 pence (2007: 17.0 pence)
The sale of BUT was completed on 31 March 2008
Net cash as at 30 April 2008 was £46.5 million (30 April 2007: net debt of £228.5 million; 31 January 2007: net debt of £75.4 million)
The Board is recommending a final dividend of 3.6 pence a share, bringing the total dividend for the 15 month period to 17.9 pence a share
12 months to 30 April 2008 (proforma)**
Group revenue increased by 14.0% to £4,513.1 million (2007: £3,959.6 million), by 10.1% in constant currency1 and by 3.1% on a like for like basis
Earnings per share from continuing operations were 15.6 pence (2007: 16.2 pence)
*In order to improve internal planning processes, the Group has moved its financial year end to 30 April. These are the first accounts prepared to this new reporting date and are accordingly for the 15 months to 30 April 2008. **Proforma information for the 12 months to 30 April 2007 and 12 months to 30 April 2008 has been provided.
1 Constant exchange rate of £1 = €1.3967
2 Retail profit is defined as total operating profit before the share of joint venture and associates' interest and taxation, the Demerger Award Plan charge, valuation gains / losses on options to acquire minority interests and amortisation and impairment of acquisition related intangibles. The comparative amounts have been restated to include the gains and losses on the disposal of property, plant and equipment.
Jean-Noel Labroue, Chief Executive, commented:
"The Group delivered solid revenue and profit growth in overall positive market conditions, although these weakened over the last six months of the period. Sales continued to be helped by customer demand for new technologies and the negative mix effect on margin eased.
"We are seeing a continuing decline in consumer confidence and we anticipate further difficult trading conditions ahead. Consequently, more than ever, our priorities are to focus on maintaining product margin and improving productivity while reinforcing our strong service proposition and continuing to invest in the existing businesses and new markets to secure our longer term growth."
David Newlands, Chairman, commented:
"These results represent a pleasing performance from all our businesses in deteriorating market conditions.
"The Group has again demonstrated its strong cash generative nature, allowing us to continue with our important investments to secure our future success and enabling us to recommend a final dividend of 3.6 pence per share, bringing the total dividend for the full 15 month period to 17.9 pence.
"As stated to shareholders in the EGM circular for the disposal of BUT, the Board will remain flexible as to the timing and amount of share re-purchases. We will keep this under review and believe that there are benefits to the Group maintaining a strong balance sheet in light of current market conditions and with a view to taking advantage of potentially attractive future investment opportunities."
ENDS
Enquiries
Analysts:
Kesa Electricals plc
Simon Ward +44 (0) 20 7269 1400
Press:
Kesa Electricals plc
Annabel Donaldson +44 (0) 20 7269 1400
Finsbury
Ryan O'Keeffe +44 (0) 20 7251 3801
Euro RSCG
Benjamin Perret +33 (0) 1 58 47 95 39
There will be a presentation to analysts and institutions at 09.30 today and a live audio webcast of the event is available via our website www.kesaelectricals.com.
This announcement is also available on our website.
On 10 September 2008, we will hold our AGM and issue the first quarter interim management statement.
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
KESA Electricals is a specialist electrical retailer. It employs more than 24,000 people and trades in 12 countries. KESA Electricals is a member of the FTSE 250. Its ordinary shares are listed with the UK Listing Authority and trade on the market for listed securities on the London Stock Exchange under the symbol KESA.L. It is also listed on the Premier Marche of the Paris Stock Exchange. For further information, please visit the company's website, as above.
OPERATING AND FINANCIAL REVIEW
|
Group income statement |
15 months ended 30 April 2008 £m |
12 months ended 31 Jan 2007 £m |
12 months* ended 30 April 2008 £m |
12 months* ended 30 April 2007 £m |
|
|
Revenue |
5,356.6 |
3,905.2 |
4,513.1 |
3,959.6 |
|
|
Retail profit Share of joint venture and associates interest and taxation Fair value gain/(losses) on options over shares in group undertakings Amortisation and impairment of acquisition related intangible assets Demerger award plan charge |
143.2 (0.6) (0.6) (1.0) - |
144.7 (0.3) - - (0.5) |
141.3 (0.6) (0.6) (1.0) - |
137.0 (0.4) - - - |
|
|
Total operating profit |
141.0 |
143.9 |
139.1 |
136.6 |
|
|
Finance costs (net) Profit before income tax Total taxation Profit for the financial period from continuing operations Profit/(loss) for the financial period from discontinued operations |
(13.1) 127.9 (45.0) 82.9 36.7 |
(10.9) 133.0 (43.2) 89.8 19.6 |
(10.3) 128.8 (46.4) 82.4 32.2 |
(10.1) 126.5 (40.5) 86.0 20.8 |
|
|
Profit for the financial period |
119.6 |
109.4 |
114.6 |
106.8 |
|
|
Earnings per share - basic and diluted (pence) Continuing operations Discontinued operations |
15.8 6.9 |
17.0 3.7 |
15.6 6.1 |
16.2 4.0 |
|
|
Total |
22.7 |
20.7 |
21.7 |
20.2 |
|
Segmental analysis - Continuing Group |
15 months ended 30 April 2008 £m |
12 months ended 31 Jan 2007 £m |
12 months* ended 30 April 2008 £m |
12 months* ended 30 April 2007 £m |
|
|
Revenue Darty Comet Other |
2,371.0 2,086.7 898.9 |
1,733.9 1,676.5 494.8 |
1,988.8 1,741.6 782.7 |
1,752.4 1,692.8 514.4 |
|
|
Total |
5,356.6 |
3,905.2 |
4,513.1 |
3,959.6 |
|
|
Retail profit Darty Comet Other Central costs |
121.9 40.4 (4.3) (14.8) |
114.1 46.1 (2.4) (13.1) |
111.5 43.0 (0.8) (12.4) |
108.5 42.6 (0.2) (13.9) |
|
|
Total |
143.2 |
144.7 |
141.3 |
137.0 |
|
|
Profit for the financial period |
82.9 |
89.8 |
82.4 |
86.0 |
|
Cash Flow Summary - Total Group |
15 months ended 30 April 2008 £m |
12 months ended 31 Jan 2007 £m |
12 months* ended 30 April 2008 £m |
12 months* ended 30 April 2007 £m |
|
|
Cash generated from operations Interest and tax paid |
186.4 (87.3) |
307.9 (53.4) |
291.9 (70.3) |
244.6 (44.1) |
|
|
Net cash flow from operating activities |
99.1 |
254.5 |
221.6 |
200.5 |
|
|
Net capital expenditure and investments Dividends paid Other |
128.2 (72.2) (33.2) |
(111.6) (66.6) 14.6 |
159.6 (72.2) (34.0) |
(114.3) (66.6) 16.2 |
|
|
Movement in net debt |
121.9 |
90.9 |
275.0 |
35.8 |
*Proforma
GROUP OVERVIEW
For the 12 months to 30 April 2008
To facilitate understanding of the main business trends, the following analysis and narrative covers the 12 month periods to 30 April 2008 and 30 April 2007 for the continuing business.
Proforma results as reported in sterling
|
|
Revenue for 12 months ended
30 April
2008
|
Revenue for 12 months ended
30 April
2007
|
Change
|
|
Retail profit
for 12 months ended
30 April
2008
|
Retail profit for 12 months ended
30 April
2007
|
Change
|
|
|
£m
|
£m
|
|
|
£m
|
£m
|
|
|
Darty
|
1,988.8
|
1,752.4
|
13.5%
|
|
111.5
|
108.5
|
2.8%
|
|
Comet
|
1,741.6
|
1,692.8
|
2.9%
|
|
43.0
|
42.6
|
0.9%
|
|
Other*
|
782.7
|
514.4
|
52.2%
|
|
(0.8)
|
(0.2)
|
-
|
|
Central
|
-
|
-
|
-
|
|
(12.4)
|
(13.9)
|
-
|
|
Total
|
4,513.1
|
3,959.6
|
14.0%
|
|
141.3
|
137.0
|
3.1%
|
Proforma results as reported in local currency
|
|
Revenue for 12 months ended
30April
2008
|
Revenue for
12 months ended
30April
2007
|
Change
|
|
Retail profit for 12 months ended
30April
2008
|
Retail profit for
12 months ended
30April
2007
|
Change
|
|
|
m
|
m
|
|
|
m
|
m
|
|
|
Darty
|
€2,777.3
|
€2,591.9
|
7.2%
|
|
€156.5
|
€160.7
|
(2.6)%
|
|
Comet
|
£1,741.6
|
£1,692.8
|
2.9%
|
|
£43.0
|
£42.6
|
0.9%
|
|
Other*
|
€1,085.5
|
€761.4
|
42.6%
|
|
€(0.9)
|
€(0.2)
|
-
|
*Includes BCC, Vanden Borre, Datart, Darty Italy, Darty Switzerland, Darty Turkey and Menaje Del Hogar from 17 September 2007.
Financial Highlights
The reported results in sterling were impacted by the strengthening of the Euro, particularly in the second six months of the period. The average rates for the 12 months were 1.4014 (2007: 1.4779).
Group revenue was £4,513.1 million for the 12 months, up 14.0 per cent on last year (10.1 per cent in constant currency) and up 3.1 per cent on a like for like basis.
Group retail profit was £141.3 million, up 3.1 per cent on last year after £36.6 million of start up losses for Darty Box and new businesses.
The net interest charge was £10.3 million, £10.1 million last year, reflecting the acquisition of Menaje del Hogar and Euro debt. Profit after interest and before tax was £128.8 million compared to £126.5 million last year.
Cash generated from operations was £291.9 million, up from £244.6 million last year, again reflecting good working capital management.
Net capital expenditure and investments inflow was £159.6 million, compared with an outflow of £114.3 million in 2007, as a result of accelerated investment in the businesses and the acquisition of Menaje del Hogar, together with the sale of BUT.
Earnings per share increased by 7.4 per cent to 21.7 pence (2007: 20.2 pence). Continuing Group earnings per share was 15.6 pence (2007: 16.2 pence).
The Board has recommended a final dividend of 3.6 pence, making a total of 17.9 pence for the full 15 month period. The ex dividend date will be 10 September 2008, the record date 12 September 2008 and payment date 10 October 2008.
Trading Highlights
The overall market conditions were positive against tough comparatives but weakened during the second half of the period. Group revenue was again driven by the high demand for new technologies whilst sales of large white goods slowed down during the second half. Overall the negative mix effect on margin eased.
In France, revenue at Darty grew by 7.2 per cent in local currency, up 4.2 per cent on a like for like basis. Before taking into account the €43.2 million revenue and €22.0 million losses for Darty Box, revenue grew by 5.8 per cent and retail profit grew by 1.8 per cent.
Comet's revenue was up by 2.9 per cent, up 0.3 per cent on a like for like basis, and retail profit grew by 0.9 per cent.
Web generated sales at Darty and Comet grew by 42 per cent and 30 per cent respectively reflecting the growing demand for 'click and collect' and demonstrating the success of our multi-channel strategy.
Total revenue at our other businesses, BCC, Vanden Borre, Datart, Darty Italy, Darty Switzerland, Darty Turkey and Menaje del Hogar, grew by 42.6 per cent in local currency, up 7.8 per cent on a like for like basis. Retail profit grew by 39.0 per cent to €28.1 million for the established businesses while overall losses for our new businesses in Italy, Switzerland, Turkey and Spain were €29.0 million.
Outlook
The decline in consumer confidence is continuing and we anticipate further difficult trading conditions ahead. Consequently, more than ever our priorities are to focus on maintaining product margin, and improving productivity while reinforcing our strong service proposition and continuing with our planned investments in the existing businesses and new markets to secure our longer term growth.
DARTY FRANCE
|
|
Results for
12 months
ended
30 April
2008*
£m
|
Results for
12 months
ended
30 April
2007*
£m
|
Change
|
|
Results for 12 months ended
30 April
2008*
€m
|
Results for
12 months ended
30 April
2007*
€m
|
Change
|
|
Revenue
|
1,988.8
|
1,752.4
|
13.5%
|
|
2,777.3
|
2,591.9
|
7.2%
|
|
Retail profit
|
111.5
|
108.5
|
2.8%
|
|
156.5
|
160.7
|
(2.6)%
|
|
|
|
|
|
|
|
|
|
|
No of stores
|
214
|
211
|
+3
|
|
|
|
|
|
Sales space
(000s sq m)
|
282.7
|
276.7
|
2.2%
|
|
|
|
|
*Proforma
Darty's total revenue increased by 7.2 per cent in local currency compared to the same period last year, up 4.2 per cent on a like for like basis. Sales continued to be driven by the high demand for new technologies and, as previously stated, the negative mix effect on margin eased.
Retail profit was €156.5 million, a decrease of 2.6 per cent on the previous 12 months.
Before taking into account the €43.2 million revenue (2007: €7.4 million) and €22.0 million losses (2007: €14.7 million) for Darty Box, revenue grew by 5.8 per cent and retail profit grew by 1.8 per cent.
Darty continued to build on its strong customer proposition. The new kitchen range has been successfully trialled in three stores and will be rolled out to a further 10 stores over the next 12 months. Demand for "paid for" services continued to grow and 3.7 million 'Darty Cards' have been issued to date. We anticipate having issued a total of five million by the end of the April 2009.
'Click and Collect' was launched in June 2007 and has helped web generated sales increase by 42 per cent.
The back office efficiency plan to centralise the accounting systems was completed.
As at the end of the period we had a total of 140,000 subscribers to Darty Box. Independent research consistently demonstrates that the quality of the product and associated services meet the high standard that Darty customers demand. This gave us the confidence to enhance the offer with the launch of single play, video on demand and, more recently, a WiFi box and we now anticipate acquiring a further 100,000 subscribers by the end of April 2009.
We continue to improve the store portfolio. During the period, Darty completed three new store openings, two relocations and seven refurbishments/ extensions. Over the next year, a further eight new stores, ten relocations and four refurbishments/extensions will be completed.
COMET
|
Results for 12 months ended 30 April 2008* £m |
Results for 12 months ended 30 April 2007* £m |
Change |
|
|
Revenue |
1,741.6 |
1,692.8 |
2.9% |
|
Retail profit |
43.0 |
42.6 |
0.9% |
|
No of stores |
251 |
249 |
+2 |
|
Sales space (000s sq m) |
268.5 |
259.8 |
3.3% |
*Proforma
Comet delivered total revenue of £1,741.6 million, up 2.9 per cent on the same period last year and up 0.3 per cent on a like for like basis. Sales were helped by the continued strong demand for flat screen televisions and laptops, while sales of white goods weakened over the period.
Comet also increased retail profit, up 0.9 per cent to £43.0 million over the same period last year.
Comet's consistent execution of its re-positioning programme to a more specialist service offering progressed further. 'Comet on Call', providing expert PC and laptop support for the home and small business customers, has been available from all stores nationwide since June 2007. Our home delivery offer has improved and we now provide a greater choice of delivery time options, including next day. In addition, our e-learning curriculum for all store colleagues has been extended to 55 different courses.
The 'Living Room' area trialled in four stores to date has proved successful and a further 13 will be introduced over the next year.
Stores in the new mezzanine format continued to out-perform our expectations. 23 stores in this format are now trading with up to a further 16 planned for the coming 12 months.
Web generated sales grew by 30 per cent and was again helped by the increasing high demand for 'click and collect'.
OTHER BUSINESSES
|
|
Results for 12 months ended
30 April
2008*
£m
|
Results for
12 months ended
30 April
2007*
£m
|
Change
|
|
Results for
12 months ended
30 April
2008*
€m
|
Results for 12 months ended
30 April
2007*
€m
|
Change
|
|
Revenue
|
782.7
|
514.4
|
52.2%
|
|
1,085.5
|
761.4
|
42.6%
|
|
Retail profit /(loss)
|
(0.8)
|
(0.2)
|
-
|
|
(0.9)
|
(0.2)
|
-
|
|
|
|
|
|
|
|
|
|
|
No of stores
|
227
|
145
|
+82
|
|
|
|
|
|
Sales space
(000s sq m)
|
274.1
|
169.3
|
61.9%
|
|
|
|
|
*Proforma
Total revenue for BCC, Vanden Borre, Datart, Darty Italy, Darty Switzerland, Darty Turkey and Menaje del Hogar grew by 42.6 per cent in local currency, up 7.8 per cent on a like for like basis, helped by particularly good performances at our established businesses BCC, Vanden Borre and Datart.
Retail profit for these three businesses increased by 39.0 per cent to €28.1 million from €20.2 million for the same period last year. Overall losses for our new businesses in Italy, Switzerland, Turkey, and Spain were €29.0 million (2007: €20.4 million).
The continued strong performance of our established businesses demonstrates the success of our business model in consolidating markets. All three businesses significantly increased sales and profits. During the period, seven new stores were opened and nine refurbishments/extensions were completed. Over the next 12 months we will make similar improvements to the portfolio. Nine new stores will be opened and nine refurbishments/ extensions will be completed.
In Italy we saw a positive like for like performance and the gross margin has improved. Over the last 12 months we opened two new stores in the Milan area bringing the total number of stores to 13. Over the next 12 months we will open at least four new stores.
In Switzerland, two new stores were opened bringing the total to five and here we are also seeing a positive like for like performance and gross margin improvement.
In Turkey we now have six stores open in Istanbul and we continue to enjoy very positive customer response. We will accelerate the store opening programme with a further seven new stores in the next year, including stores in Ankara and Izmir.
The acquisition of Menaje Del Hogar was completed on 17 September 2007 and from this date to the period end the retail loss was €2.3 million. Spain is currently experiencing particularly tough market conditions and we expect these to continue this year. We will focus on our integration programme to improve productivity, cost and stock rationalisation, new ranges, merchandising and group sourcing, and store improvements. During the next 12 months we will complete at least 10 refurbishments and open four new stores.
FINANCIAL REVIEW
Revenue and operating profit
15 months ended 30 April 2008
Revenue for the 15 months to 30 April 2008 was £5,356.6 million and £3,905.2 million for the 12 months to 31 January 2007. Operating profit for the 15 months to 30 April 2008 was £141.0 million and £143.9 million for the 12 months to 31 January 2007.
12 months ended 30 April 2008
Revenue for the 12 months to 30 April 2008 was £4,513.1 (2007: £3,959.6 million) and operating profit was £139.1 million (2007: £136.6 million).
3 months ended 30 April 2008
Revenue for the 3 months to April 2008 increased by 23.6 per cent to £1,042.2 million (2007: £843.5 million). Operating loss for the 3 months to April 2008 was £4.7 million (2007: profit of £1.9 million).
Currency translation
Currency translation increased Group revenue by 3.5 per cent and retail profit by 3.6 per cent for the year to 30 April 2008. 57.5 per cent of the Group's revenue and 83.4 per cent of the Group's retail profit were denominated in euros.
Financing income and expense
Net interest costs for the 15 months for the continuing Group were £13.1 million (12 months to 31 January 2007: £10.9 million). A further net amount of £1.8 million (12 months to 31 January 2007: £1.5 million) was interest paid externally by the BUT group and is accordingly included within the profit on discontinued activities.
For the 12 months to 30 April 2008 the net interest costs of the continuing group were £10.3 million (April 2007: £10.1 million). The increase was due to higher borrowings for the majority of the year due to the acquisition of Menaje del Hogar and lower investment income, together with the translation effect of £1.5 million on the interest charges primarily paid in euro offset by gains on the close out of interest rate swaps. The proceeds from the sale of BUT were received on 31 March and were used to reduce group borrowings. As a consequence, the existing interest swaps were no longer required and were closed out generating a gain of £2.9 million which is included in the finance costs line.
Taxation
For the 15 months to 30 April 2008, the tax charge included within the Group income statement is £45.0 million (12 months to 31 January 2007: £43.2 million). This excluded a charge of £0.6 million (12 months to 31 January 2007: £0.3 million) in respect of its joint venture and associates, which is included within operating profit in accordance with IFRS. Including the charge for the joint venture and associates, the tax charge is £45.6 million (12 months to 31 January 2007: £43.5 million) and the effective tax rate would be 35.5 per cent (12 months to 31 January 2007: 32.6 per cent). Further details are set out in Note 7.
On the same basis for the 12 months to 30 April 2008, the tax charge was £47.0 million (2007: £40.9 million) and the effective rate was 36.3 per cent (2007: 32.2 per cent).
Discontinued operations
On 31 March 2008 the sale of the Group's French furniture and electrical retailing business BUT was completed. In accordance with IFRS 5 the business has been treated as a discontinued operation. The sales and profits of BUT have been excluded from the results of the continuing group and the profits after tax of the business together with the net gain on disposal of £1.1 million have been included in the accounts as profits from discontinued operations.
The operating profit of BUT for the 14 months to 31 March 2008 was £53.0 million (12 months to 31 January 2007: £33.9 million). Sales and profits of the business for the comparable periods to 31 January improved 9.1 per cent and 30.5 per cent respectively as a result of the repositioning strategy. Operating profit for the two months to 31 March 2008 was £8.6 million.
BUT was sold for a total enterprise value of £440.0 million (€550.0 million) adjusted for movements in working capital between the date of signing and completion and the net cash in the business on closing. The agreement of the final net cash consideration is in the process of being concluded with the Purchasers in accordance with the terms of the Sale and Purchase Agreement.
Earnings per share
Basic and diluted earnings per share were 15.6 pence for continuing operations in the 12 months to 30 April 2008 compared with 16.2 pence for the same period last year.
Dividends
The Board has declared interim dividends totalling 14.3 pence per share and is recommending a final dividend of 3.6 pence per share, payable on 10 October 2008 if approved by shareholders. Total dividends for the 15 months to 30 April 2008, will be 17.9 pence per share (12 months to 30 April 2008: 14.4 pence per share; 12 months to 31 January 2007: 13.3 pence per share).
Financial position
Shareholders' funds increased by £34.0 million from £366.2 million to £400.2 million due to profit in the financial year and favourable movements from the translation into sterling of overseas assets denominated in euros.
Intangible fixed assets reduced by £12.6 million due to the disposal of BUT offset by the acquisition of Menaje del Hogar in Spain. Tangible fixed assets declined principally due to the sale of BUT.
Pensions
The IAS 19 disclosures show a net deficit for all the continuing Group's defined benefit pension schemes at 30 April 2008 of £75.9 million (31 January 2007: £83.9 million) before taking account of any deferred tax asset. The deficit reduced due to the movement in the discounted value of the schemes' liabilities resulting from the increase in corporate bond yields in the UK.
In accordance with IAS19 the total pension deficit is included as a liability in retirement benefits on the face of the Group's balance sheet. The corresponding deferred tax asset is recorded in non-current 'deferred tax assets'.
Cash Flow
Net cashflow from operating activities for the 15 months was £99.1 million and £254.5 million for the 12 months to 31 January 2007.
Net cashflow from operating activities for the 12 months to 30 April 2008 was £221.6 million (2007: £200.5 million), an increase of £21.1 million from good working capital management across the Group.
Capital expenditure
Net capital expenditure and investments for the 12 months to 30 April 2008 was an inflow of £159.6 million (2007: £114.3 million outflow). Excluding all acquisitions and disposals, expenditure increased as a result of an acceleration in the mezzanine store programme at Comet and store refurbishment at Darty together with the investment in assets relating to Darty Box.
Net Debt
Net cash at 30 April 2008 was £46.5 million (30 April 2007: net debt of £228.5 million; 31 January 2007: net debt of £75.4 million). The improvement in the debt position results from the sale proceeds from BUT reduced by the seasonal increase in working capital, capital expenditure and the purchase of Menaje del Hogar in September 2007.
Related Shares:
DRTY.L