Statement of Results for the twelve months ended 30 April 2015

Thursday 18 June 2015
Statement of Results for the twelve months ended 30 April 2015
Delivering our strategic plan – "Nouvelle Confiance"
 Investment in our growth initiatives:
o 39 franchise stores opened in the year delivering strong sales uplifts;
o Over 22 per cent increase in web generated sales in France following the acquisition of
Mistergooddeal.com, bringing web penetration to over 17 per cent of product sales;
o Expanded the kitchen offer into 16 further stores increasing the total to 71 stores; and
o Built on an improved performance at BCC with the acquisition of 18 profitable stores to
become the leading multi-channel retailer in the Netherlands.
 Market outperformance in both France and the Netherlands.
 Completed the elimination of losses in our non-core markets with the sale of our shareholding in
Datart in the Czech Republic and Slovakia.
Financial summary for the 12 months ended 30 April 2015
 Group revenue up 3.2 per cent to €3,512.1 million (2014: €3,404.4 million). Like-for-like sales
down 1.6 per cent, against strong comparatives and challenging market conditions.
 Operating profit increased to €60.3 million (2014: €53.4 million) with a reduction in exceptional
charges as we conclude our restructuring, more than off-setting a decline in retail profit.
 Profit for the year of €13.8 million (2014 loss: €6.6 million). Basic earnings per share of 2.7
cents (2014 loss per share: 0.6 cents).
 Cash generated from operations was €60.7 million (2014: €18.4 million). Net cash outflow
including discontinued operations of €36.5 million (2014: €39.5 million). Net debt at the end of
the period of €223.8 million (2014: €185.2 million).
 The Board is recommending a final dividend of 2.625 cents per share (2014: 2.625 cents)
bringing the total dividend for the year to 3.5 cents per share (2014: 3.5 cents).


Group retail profit1 €74.9 million (2014: €85.5 million), impacted by negative like-for-like sales
and gross margin pressure, partially off-set by cost savings and the investments in
Mistergooddeal.com and the expansion of the kitchen offer.
Adjusted2 Group profit before tax of €51.3 million (2014: €72.1 million), reflecting increased
finance costs following the refinancing. Adjusted earnings per share of 5.8 cents (2014: 6.5
cents).
Chairman Alan Parker commented:
“In difficult market conditions we have delivered on our Nouvelle Confiance strategic plan. We have
completed the elimination of our non-core businesses, continued to make market share gains and
reached our target of €50 million cost savings ahead of schedule. We have also identified and started
to implement our new growth initiatives.
“We still have more to do to ensure growth in shareholder value in the medium term but we have a
strong platform for the future. Given the progress we have made I am pleased that the Board is
recommending a final dividend of 2.625 cents cent per share, giving an unchanged total dividend of 3.5
cents per share.”
1
Chief Executive Régis Schultz added:
“The last year has seen us deliver on Nouvelle Confiance, positioning us well to build further on our
multi-channel market leading services offer. Across the Group we delivered on new initiatives,
particularly in France, where we have introduced same day delivery and after-sales service offers, updated our web site, launched ‘Le Bouton’, a 24-hour connected service device, digitalised our stores
and recently developed a new connected store card. In addition, we acquired 18 profitable stores in
the Netherlands making us the leading multi-channel retailer in that market. Our activities led to market
share gains in France and the Netherlands.
“We also continued to invest in our growth initiatives in France and over the year we opened 39
franchise stores, increased our web generated sales by over 22 per cent with the help of sales from
Mistergooddeal.com and extended our kitchen offer to a further 16 stores, bringing it to a total of 71
stores.
"Whilst we have started to see signs of improvement in consumer confidence, the product cycle will
continue to have an impact on our markets which are expected to remain challenging. We are focussed
on building on what we have achieved through Nouvelle Confiance by investing in our customer
proposition, reducing the cost base and delivering improved profitability.”
1
Retail profit represents total operating profit before the share of joint venture and associates’ interest and taxation, the movement in options
and related charges over non-controlling interests, gain on disposal of available for sale investments, legacy UK retirement benefit scheme
expenses, exceptional items and amortisation and impairment of acquisition related intangible assets.
2
Excludes the share of joint venture and associates’ interest and taxation, the movement in options and related charges over non-controlling
interests, gain on disposal of available for sale investments, legacy UK retirement benefit scheme expenses, exceptional items, net interest on
pension schemes and amortisation and impairment of acquisition related intangible assets.
There will be a presentation to analysts and institutions at 09:00 today at UBS, 1 Finsbury Avenue,
London, EC2M 2PP. A live video webcast of the event will be available via our website
www.dartygroup.com, and recorded for access later in the day.
Darty plc will issue an Interim Management Statement on 10 September 2015 for the first quarter
trading period of 1 May 2015 to 31 July 2015.
Enquiries
Analysts:
Darty plc
Simon Ward
+44 (0) 20 7269 1400
Press:
UK - RLM Finsbury
Rollo Head / Jenny Davey
+44 (0) 20 7251 3801
France - Le Public Système
Ségolène de Saint Martin
+33 1 41 34 23 31 / +33 6 16 40 90 73
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, Darty 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.
2
Chief Executive’s report
In December 2012, we launched our "Nouvelle Confiance" strategic plan, the principal components of
which were to:
 eliminate losses at our non-core businesses and refocus on core markets;
 create value from our market leadership and efficiency savings; and
 identify future growth opportunities.
Following our exit from our businesses in the UK, Italy, Spain and Turkey, we completed the elimination
of losses in our non-core markets with the disposal of our majority shareholding in Datart in the Czech
Republic and Slovakia in August 2014. We are now totally focussed on our core businesses in France,
Belgium and the Netherlands.
In February 2015, our business in the Netherlands, BCC, completed the acquisition of 18 profitable
stores from HiM Retail, strengthening its market position. The stores geographically complement the
current portfolio and bring the total number of BCC stores to 75, making it the leading multi-channel
electrical retailer in the market. Most stores have now been rebranded to BCC and are showing on
average a 15 per cent sales uplift.
The ‘4Ds’
In order to create value from our market leadership, drive greater efficiency and reduce costs in 2013,
we also developed a four-point plan (the '4Ds'), focusing on our principal business in France, to:
1. Drive trading by delivering on our promise to customers;
2. Digitalise Darty by further enhancing our multi-channel offer and leading websites;
3. Develop our brand by improving our product and market-leading service offerings as well as
expanding our customer base; and
4. Deliver cost efficiency by implementing cost savings.
1. Drive trading
During the period we launched a number of events to drive trading. A successful World Cup campaign
helped deliver strong vision sales during May and June and the July Sale received a positive response
from customers. The “Back to school” campaign held from late August through September delivered
sales below expectations due to limited stock and the January Sale was impacted by events in Paris at
the beginning of the month. We supported these campaigns by weekly monitoring of our in-store and
on-line prices to confirm our competitiveness. On a 'service included' basis we continue to compare
very favourably against all store based retailers and all pure web players and we have recovered our
number one position in the TNS Sofres survey. In addition, during the year we celebrated 40 years of
‘Contrat du Confiance’, our price, choice and service promise to our customers, and we took the
opportunity to simplify and modernise the Contrat providing us with a unique marketing platform.
As part of the Darty service offer, delivery, installation and after sales service have historically been
included for free with the majority of product purchases. A premium ‘paid for’ delivery is now available
for specific two hour time slots from 7am to 9am, and between 5pm and 9pm and ‘Chronopost’ next
day delivery is available for non-bulky items if ordered before 1pm. In March we enhanced the service
offer with ‘paid for’ same day delivery for large appliances in the Paris and Lyon regions, if ordered
before 4pm and delivered by 9pm, and in Paris same day after sales service intervention if contacted
by 4pm. As a result we have regained the leading position in home delivery and extended our lead
against all our competitors for after sales service (source: TNS Survey).
After the end of the financial year we launched a new store card, “Carte de credit connectée”, with the
objective of providing customers with greater value beyond purely a financing solution. For a €15
annual fee, which is subsequently refunded in Darty vouchers, customers receive a Visa debit/credit
card which is also a loyalty card. Every time a customer uses the card to complete three transactions
worth over €50 each at Darty they will be given a €10 gift card. Additional benefits include free
3
subscription to “Le Bouton”, our new 24/7 after-sales service initiative launched last year, special offers
on products, VIP shopping evenings and access to flexible financing offers and free credit.
2. Digitalise Darty
As a successful multi-channel retailer, we continue to develop a seamless approach between our web
sites and stores. During the period we continued the programme of digitalising the store network which
includes free wi-fi, equipping sales staff with tablets to demonstrate products and provide price and
availability and large display screens. By the end of the financial year we had digitalised 64 stores
including two franchises, with over 1200 tablets being utilised by staff, and we installed over 340
screens across 30 stores. Throughout the year we saw an improvement in the level of sales made
utilising a tablet, reaching 14 per cent of store sales at the end of the period, with the best stores
approaching 40 per cent. We plan to digitalise a further 60 stores during 2015/16.
Visits to Darty.com grew over 22 per cent for the year to over 160 million and towards the end of the
period the web site was refreshed to improve its look, feel and content, making it more modern, clear
and user friendly.
During the year we saw significant increases in penetration of our “click and collect” service, where
customers can reserve on line and collect an hour later from their chosen store, or from a click and
collect locker in certain high traffic stores. Penetration of click and collect increased by 540 basis points
to 20 per cent of web sales, with penetration reaching 30 per cent in the peak trading month of
December compared to just over 20 per cent the prior year.
3. Develop our brand
Building on Darty’s long heritage for service and its famous ‘Contrat de Confiance’, a new initiative, “Le
Bouton”, was launched nationwide in October. By pushing a dedicated wireless 'button' or via a mobile
app, customers can make direct contact with Darty’s market leading after sales service support, 24
hours a day, seven days a week. We aim for a service assistant to call the customer back within two
minutes to assess and solve the problem either over the phone or by a subsequent home visit. The
service is available for all electrical products but for those not originally bought from Darty or out of
warranty there is a charge for any repairs required. The service is available for a small monthly
subscription of €3/month, or €8/month including multimedia products, plus €25 for the wireless button.
Over 35,000 buttons had been issued by the end of the year, including six, 12 or 24 month
subscriptions bundled with extended warranty purchases. Our intention is to fully integrate the button
into the extended warranty offer.
As market leader in France we continue to receive support from leading manufacturers in gaining
access to exclusive products, with particular emphasis on being 'first to market' for new products.
During the year this was evidenced by significant sales of large screen OLED and Ultra HD/4K
televisions, particularly ahead of the football World Cup in May and June. Increasingly connected
products and dedicated areas in-store and on-line are being introduced into our customer offer for both
the home and health, such as connected security, lighting, thermostats and fitness trackers.
In recognition of the recent progress we have made with the brand, our net promoter score increased
over the second half of the year. We also won a number of awards during the year including one from
LSA for our ‘Click & Collect’ service, the ‘Nuit des Rois’ digital marketing award for ‘Le Bouton’ and the
‘IREF Satisfactions Clients’ award for the electricals sector. In addition, we have seen improving
colleague engagement through our annual staff opinion survey.
4
4. Deliver cost efficiency
Throughout the Group, we had targeted annual gross cost savings over three years of €50 million per
annum by 2015/16, through delivering a more efficient operating model, continuing to adapt our cost
structure and leveraging synergies between our operating companies. To accelerate the achievement
of the savings by 2014/15, a social plan was implemented in France last year and proceeded as
planned. €30 million of benefits were achieved over the prior two years with the final benefit of €20
million achieved in full this financial year. Total Group underlying costs excluding the
Mistergooddeal.com acquisition were down €27 million, over two per cent, despite incremental costs
related to our increased store activity. While this major programme has now been completed, we
continue to work on all opportunities to improve cost efficiency in the business, with a particular focus in
France in 2015/16 on the after sales service infrastructure and increasing ‘Click and Collect’
penetration to further reduce home delivery costs.
We also continue to manage our freehold property to ensure maximum value to the Group. Following
over €45 million of total proceeds from disposals in the prior two years, €13.9 million was delivered this
financial year, with a similar amount expected in 2015/16.
5
Growth initiatives
As previously announced, in 2013 we identified and introduced initiatives to help secure our future
growth, including:
 expanding the Darty portfolio into smaller catchment areas with the opening of franchise stores;
 extending our low price/pay-as-you-go services offer through the Mistergooddeal.com channel;
and
 a programme to increase the number of stores in France with the kitchen offer.
Franchise stores
Darty is the market leader in France with 70 per cent of consumers within a 30 minute drive time of a
store. The remaining 30 per cent of consumers represent an opportunity to further exploit the existing
infrastructure of our multi-channel offer. Typically these consumers will reside in smaller catchment
areas, usually below 100,000 inhabitants, where it is uneconomic to open a typical Darty store. To
address these smaller catchment areas we established a franchise operation last financial year.
The independent owner invests to refurbish their own store to a Darty store, consistent in terms of both
branding and offer with the rest of the store portfolio. We charge the franchisee for the supply of
product ranges and provision of home delivery and after sales services. A franchise fee is also charged
for use of the brand and marketing support.
At the end of the financial year we had opened 43 stores including four overseas. Performance has
been encouraging with significant sales uplifts and a net promoter score above the Darty average. We
expect to open around 25 additional stores in 2015/16, bringing the total to around 70 stores.
Mistergooddeal.com
To increase Darty’s share of the fast growing market for an entry price offer, we acquired
Mistergooddeal.com towards the end of the last financial year. Mistergooddeal.com is a leading French
electricals website, predominantly in white goods at the entry price end of the market, with no service
included.
We have retained the brand name and are extending the product offer with the introduction of own label
brands. Darty’s existing service infrastructure is now being used to offer Mistergooddeal.com
customers additional services on a pay-as-you-go basis, with home delivery being offered from October
2014 and all suitable Darty stores can now be used as customer collection points.
Initial trading was weaker than expected due to very competitive activity in the entry price end of the
market. With a new management team in place from October 2014 we deepened and accelerated the
integration of the business into the main Darty operation to help speed up and deliver further cost
savings. The head office was integrated in January 2015 followed by the IT and warehousing in April
2015. A new look web site was launched at the end of the year, on Darty’s IT platform. We are also
making changes to the product offer, exiting non-core categories such as furniture and extending small
domestic appliance and vision ranges. The retail loss for 2014/15 was €7.7 million but with the actions
being taken commercially and particularly on the cost base, we expect to approach breakeven for
2015/16.
Kitchens
Our kitchens business in France is an example of our ability to continually develop the Darty brand
further, and move into a new, related product area, build a relevant market position and drive
profitability. The kitchen market has solid fundamentals with the fitted kitchen equipment rate in France
being only 62 per cent compared to a European average of around 80 per cent, and a growing
electricals built-in market. At the same time, competitors are consolidating and, as Darty builds scale,
consumer recognition of our kitchens offer is consistently improving year on year.
6
As a result of increasing the density of merchandising in other product categories, we are now able to
install the kitchen offer in smaller stores in the portfolio. We now have 71 stores with the offer
generating over €80 million of revenue. Commercial initiatives during the year included interest free
credit offers as well as a partnership with house builder, Bouygues Immobilier, for customers to select a
Darty kitchen to be installed in their new property.
Given the acceleration of openings in the year, the time to reach maturity and pre-opening costs
incurred ahead of recognition of the initial customer orders, a loss was made in 2014/15 of around €4
million. At the end of the period a new catalogue was launched in print and on-line, featuring 32
different kitchen models, supported by a TV campaign from early May. With a further 13 stores planned
to have the offer in 2015/16, together with changes to the management team and infrastructure and
planned productivity improvements we expect to move to profitability in the current financial year.
Outlook
Whilst we have started to see signs of improvement in consumer confidence, the product cycle will
continue to have an impact on our markets which are expected to remain challenging. We are focussed
on building on what we have achieved through Nouvelle Confiance by investing in our customer
proposition, reducing the cost base and delivering improved profitability through our growth initiatives.
7
GROUP OVERVIEW
Results
Revenue
France*
Belgium and the Netherlands
Total
Retail profit/(loss)
12 months
ended
30 April 2015
€m
12 months Change
ended
30 April 2014
€m
2,813.5
698.6
3,512.1
2,717.7
686.7
3,404.4
12 months
ended
30 April 2015
12 months
ended
30 April 2014
3.5%
1.7%
3.2%
Like-for-like
(2.0)%
(0.3)%
(1.6)%
restated**
France*
Belgium and the Netherlands
Central
Total
€m
€m
70.0
14.8
(9.9)
74.9
87.2
9.3
(11.0)
85.5
*including Mistergooddeal.com
**restated following the CVAE reclassification from operating profit to taxation
Financial review
Revenue and retail profit
Group revenue at €3,512.1 million, was up 3.2 per cent including Mistergooddeal.com and the
franchise stores. On a like-for-like basis Group revenue was down 1.6 per cent, with slower second
and third quarters against much stronger comparatives from the prior year (quarterly revenue
performance is provided as an appendix to this statement). In terms of product categories we saw
continued strong growth in communications and progression in white goods. The rate of decline in
vision slowed significantly, with growth in May and June reflecting a successful football World Cup
campaign with strong sales of new technologies (OLED and Ultra HD) and large screen sizes. We saw
a significant fall in multimedia due to declining volumes and average selling prices for Tablets and a
poor Digital Camera market.
Our web-generated sales continued to grow and including Mistergooddeal.com were up over 22 per
cent, now representing over 16 per cent of total product sales in the year. Our Click and collect service
proved increasingly popular with customers and represented over 24 per cent of all web sales.
Underlying gross margin declined by around 80 basis points for the period with the benefit from an
improving product mix insufficient to off-set ongoing product category margin pressure in challenging
and promotional market conditions. After taking into account the business mix effect of the lower
margin Mistergooddeal.com and franchise operations, total gross margin was down 150 basis points.
Underlying costs, excluding Mistergoodeal.com, were down €27 million, over two per cent, reflecting
the benefits of our cost savings programme in France. Total costs including Mistergooddeal.com were
broadly flat.
Group retail profit was €74.9 million compared to €85.5 million for the same period last year, including
losses of €7.7 million from Mistergooddeal.com (2014: Retail loss €0.9m), an improvement in Belgium
and the Netherlands from €9.3 million to €14.8 million and a reduction in head office costs from €11.0
million to €9.9 million.
8
Exceptional items
Exceptional items totalled €13.7 million (2014: €29.4 million). €14.5 million related to property charges
and impairment costs in France, mainly as a result of a programme to improve store portfolio
performance. €7.1 million related to reorganisation costs associated with integrating
Mistergooddeal.com into the Darty business (€4.8 million) and other reorganisation costs mainly
relating to the transfer of some head office functions from London to Paris (€2.3 million). In addition,
there was a €7.9 million exceptional gain (€6.4 million in France and €1.5 million in Belgium and the
Netherlands) arising following the review of absorption of distribution costs into the carrying value of
inventory.
Operating profit
Reported operating profit was €60.3 million (2014: €53.4 million) with reduced exceptional charges offsetting a decline in retail profit.
Net finance costs
The net finance costs were €23.6 million (2014: €13.4 million) excluding IAS 19 pension interest of €3.8
million (2014: €2.6 million). The net finance cost increase reflects the full year impact of the refinancing
of the Group in February 2014.
Adjusted profit before tax
The adjusted profit before tax was €51.3 million (2014: €72.1 million).
Taxation
The effective tax rate for the continuing group on adjusted profit before exceptional items, including the
share of joint venture and associates’ tax was 23.2 per cent (2014: 44.4 per cent) and including the
CVAE reclassification of €10.7 million (2014: €11.1 million) from operating profit to taxation was 39.3
per cent (2014: 52.6 per cent). The decrease in tax rate from 2014 is due primarily to lower French
group profits which being taxed at a higher rate than the group tax rate has a beneficial impact on the
group tax rate. This impact is partially offset by an improved performance in the Netherlands where tax
credits are not currently recognised on losses.
The company has received a demand from the French Tax Authority, claiming up to €15.3 million in
unpaid taxes and penalties relating to the group’s holding company structure. Extensive professional
advice has been obtained and the company believes it has a very strong defence and much of the
claim is without merit. A provision has been made based on our best estimate of the expected
outcome.
Based on a total charge of €18.7 million (2014: €27.4 million) the total tax rate is 55.3 per cent (2014:
71.7 per cent) on unadjusted profits, reflecting that tax relief is not recognised on all exceptional and
other non-retail profit items. The effective tax rate for the Continuing Group on adjusted profit before
exceptional items, including the share of joint venture and associates’ tax is expected to be mid 30s per
cent in 2015/16 including the CVAE charge of around €11 million.
Profit for the period
The profit for the period from continuing operations increased to €15.1 million (2014: €10.8 million).
Loss for the period from discontinued operations reduced to €1.3 million (2014: loss €17.4 million).
Total profit for the period increased to €13.8 million (2014: loss €6.6 million).
Earnings per share
Adjusted earnings per share, excluding the IAS 19 net interest on pension schemes, was 5.8 cents
(2014: 6.5 cents). Continuing basic and diluted earnings per share was 2.9 cents (2014: 2.1 cents).
Cash flow
Cash generated from operations was €60.7 million (2014: €18.4 million) principally as a result of a
reduction in cash outflows related to discontinued operations. Net capital expenditure was €36.8 million
(2014: €32.2 million), reflecting lower proceeds from property disposals of €13.9 million (2014: €29.7
million). Proceeds from the sale of operations relating to the sale of Darty Turkey and Datart was €10.1
9
million. Cash costs of acquisitions mainly for stores at BCC in the Netherlands was €9.8 million. Interest
paid was €22.9 million (2014: €21.4 million) and tax paid was €21.2 million (2014: €9.9 million)
reflecting phasing of payments in France. The dividend payment remained unchanged at 3.5 cents per
share, but the strengthening of sterling against the euro for shareholders electing a sterling dividend
payment increased the cash payment to €18.4 million (2014: €18.0 million).
Net cash outflow from continuing operations was €30.9 million (2014: net cash inflow €18.0 million). Net
cash outflow from the discontinued operations was €5.6 million (2014: €57.5 million). Total net cash
outflow was €36.5 million (2014: €39.5 million).
Net debt
Closing net debt was €223.8 million compared to €185.2 million on 30 April 2014. As at 30 April 2015
€57 million was drawn under the Group’s committed facilities (30 April 2014: €20 million) in addition to
the Group’s €250 million Bond.
Retirement benefit obligations
The IAS 19 net pension liability was €103.4 million (2014: €104.6 million), split €38.2 million (2014:
€60.1 million) in the UK and €65.2 million (2014: €44.5 million) in France. The movement in the UK net
liability benefitted from the performance of the assets outstripping liabilities. The deficit of the UK
scheme in sterling was £27.9 million. The increase in the net liability in the French schemes mainly
reflects a fall in corporate bond yields. The cash cost of the UK scheme was €12.9 million and the
French schemes was €0.9 million.
Balance sheet
Following the disposal and closure of discontinued operations from 2012 onwards including Comet,
Darty Italy, Darty Spain and Darty Turkey and exceptional items from recent restructuring, we have
reported net liabilities. At 30 April 2015 net liabilities totalled €323.9 million (2014: €316.9 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 €102
million, compared with a market valuation of approximately €350 million. In addition we carry no
internally generated goodwill for our market leading brands.
Dividends
The Board is recommending an unchanged final dividend of 2.625 cents per share. The final dividend
date will be 22 October 2015, the record date will be 23 October 2015 and the payment date will be 13
November 2015.
Financial presentation
Datart has been reclassified as a discontinued operation following the signature of a sale and purchase
agreement with SEW-1001 a.s. to sell the Group’s 60 per cent shareholding on 22 July 2014. The prior
year comparatives have been restated accordingly.
Two accounting treatments are possible for the business tax, CVAE (Cotisation sur la Valeur Ajoutée
des Entreprises) – either as an operating expense or as income tax. In line with the treatment adopted
by listed French retail peers the decision has been taken to reclassify from an operational expense in
the retail profit of the France reported segment, to income tax. CVAE was €10.7 million for the year
ended 30 April 2015 (2014: €11.1 million). This reclassification has negligible impact on earnings.
In addition, having reviewed possible treatments under IAS19 Revised, retirement benefit scheme
expenses of €1.3 million (2014: €1.4 million) relating to the legacy UK pension scheme have been
reclassified from finance costs to operating profit in line with most common practice. These costs have
been reclassified as an operating cost, outside of retail profit, as they relate to Comet, a discontinued
business.
10
BUSINESS REVIEW
France
Revenue
Excl. Mistergooddeal.com
12 months
ended
30 April 2015
€m
12 months
ended
30 April 2014
restated*
€m
2,813.5
2,717.7
2,736.6
2,710.2
Retail profit
70.0
87.2
Margin
2.5%
3.2%
Excl. Mistergooddeal.com
77.7
88.1
Stores
222
224
Franchise stores
43**
4
*restated following the CVAE reclassification from operating profit to taxation
**39 in France, 4 overseas
Total revenue was up 3.5 per cent including Mistergooddeal.com and the franchise business and the
Darty brand again outperformed the market for the year. Like-for-like sales fell 2.0 per cent reflecting
strong comparatives from the prior year (like-for-like sales up 2.8 per cent), particularly in the second
and third quarters. We saw continued strong growth in communications and white goods was also
positive. The rate of decline in vision slowed significantly, with growth in May and June reflecting a
successful football World Cup campaign with strong sales of new technologies (OLED and Ultra HD)
and large screen sizes. We saw a fall in multimedia due to declining volumes and average selling
prices for Tablets and a poor Digital Camera market.
Overall web-generated sales continued to grow, albeit in a slower market, to over 15 per cent of total
product sales, and to over 17 per cent including Mistergooddeal.com. Click and collect at Darty.com
was increasingly popular with customers, rising over 40 per cent to 20 per cent of web sales.
Underlying gross margin was down around 90 basis points reflecting competitive market conditions not
fully off-set by an improving product mix. Overall gross margin for France was down around 180 basis
points after taking account of the lower margin franchise and Mistergooddeal.com operations which
had an impact on gross margin of 70 and 20 basis points respectively.
Underlying total costs (excluding Mistergooddeal.com) reduced by €25 million, three per cent,
reflecting the benefit of the cost programme implemented last year. Total costs were broadly flat.
Retail profit was €70.0 million compared to €87.2 million in the prior year. This included €7.7 million
(2014: €0.9 million) retail loss for Mistergooddeal.com, a loss of around €4 million for the kitchen
business and a break-even performance from the franchise operation.
During the period five stores were opened, six closed, five relocated, three extended and three
rightsized or refurbished. We also opened 39 franchise stores and added the kitchen offer to 16
additional stores. Plans for 2015/16 are for six relocations, five refurbishments and four rightsizings.
We expect to open around 25 more franchise stores and introduce the kitchen offer to a further 13
stores.
For more detail on the initiatives implemented at Darty, please refer to the '4Ds' on pages 3 to 5 of this document.
11
Belgium and the Netherlands
Revenue
12 months
ended
30 April 2015
€m
12 months
ended
30 April 2014
€m
698.6
686.7
Retail profit
14.8
9.3
Margin
2.1%
1.4%
Stores
135
117
At Vanden Borre in Belgium and BCC in the Netherlands overall revenue was up 1.7 per cent, and
down 0.3 per cent on a like-for-like basis. Web-generated sales continued to grow strongly, up over 20
per cent, to over 13 per cent of total product sales, with click and collect sales up 10 per cent to over
27 per cent of web sales.
With a new local management team in place, BCC saw a continued improvement in performance, first
seen at the end of last year. We saw positive like-for-like sales in store and particularly on the web,
market share gains in all major product categories and an improved gross margin. The acquisition of
18 profitable stores from a competitor completed in February, with the majority of stores converted to
BCC by the year end. The acquired stores accounted for €8.0 million revenue in 2014/15 and are
expected to contribute around €45 million revenue in 2015/16.
Earlier in the period Vanden Borre focused trading on margin in a more promotional market with
inevitably some impact on revenue against a strong performance last year. The like-for-like sales trend
improved in the second half of the year and web sales saw strong growth following the introduction of
‘next’ and ‘same day’ delivery.
Overall gross margin saw a small improvement of 20 basis points, with total costs flat. Retail profit
significantly improved to €14.8 million compared to €9.3 million in the prior year with a strong reduction
in losses at BCC, even after incurring some acquired stores integration costs, and further growth in
profits at Vanden Borre.
Excluding the acquired stores there was one store closure at BCC and one new store opening at
Vanden Borre. For 2015/16 we plan to close one store at BCC and open one at Vanden Borre.
12
BOARD CHANGES
Directorate change
On 18 July 2014 Darty announced that it would be transferring a number of the central support
functions based in London to Paris as it further consolidates its head office function. Dominic Platt also
informed the Board of his intention to step down as Finance Director. Following completion of the
2014/15 financial year, Dominic steps down as director of the Group today and will leave the Group on
30 June.
On 18 November 2014 Darty announced that it had recruited Albin Jacquemont as its new Finance
Director. Albin joined the Group in March 2015 and joins the Board today (18 June 2015).
Eric Knight resigned as a Non-Executive Director on 11 September 2014.
13
APPENDIX - QUARTERLY REVENUE PERFORMANCE (UNAUDITED)
Total revenue change 2014/15
France
Belgium and the Netherlands
Total
Q1
7.1%
1.7%
5.9%
Q2
1.1%
1.9%
1.2%
HY
4.0%
1.8%
3.5%
Q3
3.4%
(1.6)%
2.4%
Q1
2.0%
0.7%
1.7%
Q2
(5.2)%
0.8%
(3.9)%
HY
(1.7)%
0.8%
(1.2)%
Q3
(3.0)%
(2.3)%
(2.9)%
Q2
4.4%
0.4%
3.6%
HY
(0.5)%
(0.5)%
(0.5)%
Q3
3.6%
0.1%
2.9%
Q2
5.8%
(0.4)%
4.5%
HY
2.7%
(1.0)%
1.9%
Q3
4.9%
(1.3)%
3.6%
Q4
2.8%
6.4%
3.5%
H2
3.2%
1.7%
2.8%
FY
3.5%
1.7%
3.2%
Q4
(0.7)%
0.0%
(0.5)%
H2
(2.2)%
(1.3)%
(2.0)%
FY
(2.0)%
(0.3)%
(1.6)%
Like-for-like 2014/15
France
Belgium and the Netherlands
Total
Total revenue change 2013/14
France
Belgium and the Netherlands
Total
Q1
(5.2)%
(1.4)%
(4.4)%
Q4
0.8%
(0.2)%
0.6%
H2
2.5%
0.0%
2.0%
FY
1.1%
(0.3)%
0.8%
Like-for-like 2013/14
France
Belgium and the Netherlands
Total
Q1
(0.4)%
(1.5)%
(0.7)%
14
Q4
(0.2)%
(1.4)%
(0.5)%
H2
2.9%
(1.4)%
2.0%
FY
2.8%
(1.2)%
1.9%
Group income statement
for the year ended 30 April 2015
2
2
3,512.1
58.9
1.4
60.3
2014
€m
restated b)
3,404.4
51.0
2.4
53.4
3
74.9
(0.9)
1.4
(1.3)
(13.7)
(0.1)
60.3
85.5
(0.8)
(3.2)
2.7
(1.4)
(29.4)
53.4
(27.4)
(16.0)
32.9
37.4
Note
Revenue
Group operating profit
Share of post tax profit in joint venture and associates
Total operating profit
Analysed as:
Retail profit a)
Share of joint venture and associates' interest and taxation
Movement in options and related charges over non-controlling interests
Gain on disposal of available for sale investments
Legacy UK retirement benefit scheme expenses
Exceptional items
Amortisation and impairment of acquisition related intangible assets
Total operating profit
Finance costs
2
9
4
Profit before income tax
2015
€m
Taxation
5
(17.8)
(26.6)
Profit for the year from continuing operations
Loss for the year from discontinued operations
8
15.1
(1.3)
10.8
(17.4)
Profit/(loss) for the year
13.8
(6.6)
Profit/(loss) attributable to:
- Owners of the parent
- Non-controlling interests
14.2
(0.4)
(3.4)
(3.2)
13.8
(6.6)
Earnings/(losses) per share - basic and diluted (cents)
Continuing operations
Discontinued operations
Total earnings/(losses) per share
7
2.9
(0.2)
2.1
(2.7)
2.7
(0.6)
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, gain on disposal of available for sale investments, legacy UK retirement
benefit scheme expenses, exceptional items and amortisation and impairment of acquisition related intangible assets.
b) Restated following the sale of Datart, now classified as discontinued operations, the CVAE reclassification from operating profit to taxation
(note 5) and the legacy UK retirement benefit scheme expenses reclassification from finance costs to operating profit (note 4).
c) The notes on pages 20 to 33 form part of these financial statements.
15
Group statement of comprehensive income
for the year ended 30 April 2015
2015
€m
2014
€m
restated a)
15.1
(1.3)
10.8
(17.4)
(0.2)
6.7
6.5
(25.3)
(1.1)
(26.4)
(6.4)
0.3
(0.1)
(6.2)
(2.3)
(0.3)
0.1
(2.5)
Other comprehensive income/(expense) for the year
0.3
(28.9)
Total comprehensive income/(expense) for the year
14.1
(35.5)
Attributable to:
- Owners of the parent
- Non-controlling Interests
14.8
(0.7)
(34.5)
(1.0)
Total comprehensive income/(expense) for the year
14.1
(35.5)
Note
Profit for the financial year - continuing operations
Loss for the financial year – discontinued operations
3
Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss:
Remeasurements of post employment benefit obligations
Tax on other comprehensive income/(expense)
Items that may be reclassified subsequently to profit or loss:
Exchange differences
Fair value gains/(losses) on cash flow hedges
Tax on other comprehensive income/(expense)
a) Restated following the sale of Datart, now classified as discontinued operations, and the CVAE reclassification from operating profit to
taxation (note 5).
b) The notes on pages 20 to 33 form part of these financial statements.
16
Group statement of changes in equity
for the year ended 30 April 2015
Share
capital
€m
158.9
Demerger and
other reserves
€m
971.6
Translation
reserve
€m
14.2
Accumulated
losses
€m
(1,452.0)
Total
shareholders’
deficit
€m
(307.3)
Profit for the period from continuing operations
-
-
-
15.0
Loss for the period from discontinued operations
-
-
-
(0.8)
Other comprehensive income/(expense):
Items that will not be reclassified to profit or loss:
Remeasurements of post employment benefit obligations
Tax on other comprehensive income
-
-
-
Items that may be reclassified subsequently to profit or loss:
Exchange differences
Fair value gains/(losses) on cash flow hedges
Tax on other comprehensive i nc om e/ (expense)
-
-
-
0.3
(0.1)
Total comprehensive income/(expense) for the period
-
Transactions with owners:
Dividends (note 6)
Employee share schemes
Sale of company with non-controlling interest
Re-purchase of non-controlling interest
Non – controlling
interests
€m
(9.6)
Total
deficit
€m
(316.9)
15.0
0.1
15.1
(0.8)
(0.5)
(1.3)
(0.2)
6.7
(0.2)
6.7
-
(0.2)
6.7
(6.1)
-
6.5
-
6.5
(6.1)
0.3
(0.1)
(0.3)
-
6.5
(6.4)
0.3
(0.1)
0.2
0.2
(6.1)
(6.1)
20.7
(5.9)
14.8
(0.3)
(0.7)
(6.2)
14.1
-
-
-
(18.4)
0.4
(2.8)
(9.6)
(18.4)
0.4
(2.8)
(9.6)
(0.6)
0.3
9.6
(19.0)
0.4
(2.5)
-
158.9
971.8
8.1
(1,461.7)
(322.9)
(1.0)
(323.9)
Share
capital
€m
Demerger and
other reserves
€m
Translation
reserve
€m
Total deficit
restated a)
€m
971.8
971.8
18.7
18.7
Total
shareholders’
deficit
€m
restated a)
(251.9)
(1.0)
(252.9)
Non – controlling
interests
€m
158.9
158.9
Accumulated
losses
€m
restated a)
(1,401.3)
(1.0)
(1,402.3)
(10.9)
(10.9)
(262.8)
(1.0)
(263.8)
-
-
-
10.8
(14.2)
10.8
(14.2)
(3.2)
10.8
(17.4)
-
-
-
(25.3)
(1.1)
(26.4)
(25.3)
(1.1)
(26.4)
-
(25.3)
(1.1)
(26.4)
Items that may be reclassified subsequently to profit or loss:
Exchange differences
Fair value losses on cash flow hedges
Tax on other comprehensive i nc om e/ (expense)
-
(0.3)
0.1
(0.2)
(4.5)
-(4.5)
-
(4.5)
(0.3)
0.1
(4.7)
(2.2)
2.2
(2.3)
(0.3)
0.1
(2.5)
Total comprehensive income/(expense) for the period
-
(0.2)
(4.5)
(29.8)
(34.5)
(1.0)
(35.5)
158.9
971.6
14.2
(18.0)
0.4
(2.3)
(1,452.0)
(18.0)
0.4
(2.3)
(307.3)
2.3
(9.6)
(18.0)
0.4
(316.9)
At 1 May 2014
At 30 April 2015
At 1 May 2013
Prior year adjustment in respect of CVAE reclassification (note 5)
At 1 May 2013 restated
Profit for the period from continuing operations
Loss for the period from discontinued operations
Other comprehensive income/(expense):
Items that will not be reclassified to profit or loss:
Remeasurements of post employment benefit obligations
Tax on other comprehensive income/(expense)
Transactions with owners:
Dividends (note 6)
Employee share schemes
Re-purchase of non-controlling interest
At 30 April 2014
a) Restated following the sale of Datart, now classified as discontinued operations, and the CVAE reclassification from operating profit to taxation
(note 5).
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.
17
Group balance sheet
As at 30 April 2015
2015
€m
2014
€m
restated a)
2013
€m
restated a)
a)
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Investments
Available for sale financial assets
Other receivables
Deferred income tax assets
Total non-current assets
68.6
321.2
15.1
1.0
9.7
415.6
64.3
343.9
15.3
11.2
0.3
435.0
62.8
369.0
23.9
15.3
1.4
472.4
Current assets
Inventories
Trade and other receivables
Income tax receivable
Cash and cash equivalents
Total current assets
456.8
218.3
9.6
86.9
771.6
474.2
221.5
4.2
75.5
775.4
477.9
197.2
15.4
68.0
758.5
Total assets
1,187.2
1,210.4
1,230.9
Liabilities
Current liabilities
Borrowings
Income tax liabilities
Trade and other payables
Derivative financial instruments
Provisions
Total current liabilities
(11.1)
(15.9)
(837.0)
(1.8)
(865.8)
(1.5)
(11.4)
(887.4)
(0.3)
(3.7)
(904.3)
(0.3)
(7.5)
(884.0)
(14.6)
(906.4)
Non-current liabilities
Borrowings
Other payables
Deferred income tax liabilities
Retirement benefits
Provisions
Total non-current liabilities
(297.7)
(223.0)
(20.4)
(103.4)
(0.8)
(645.3)
(259.2)
(227.1)
(30.7)
(104.6)
(1.4)
(623.0)
(218.3)
(241.8)
(42.8)
(84.8)
(0.6)
(588.3)
(1,511.1)
(1,527.3)
(1,494.7)
(323.9)
(316.9)
(263.8)
158.9
979.9
(1,461.7)
(322.9)
(1.0)
158.9
985.8
(1,452.0)
(307.3)
(9.6)
158.9
990.5
(1,402.3)
(252.9)
(10.9)
(323.9)
(316.9)
(263.8)
Note
12
Total liabilities
Net liabilities
Equity attributable to owners of the parent
Share capital
Other reserves
Accumulated losses
Total shareholders' deficit
Non-controlling interests
Total equity
a) Restated following the CVAE reclassification from operating profit to taxation (note 5).
b) The notes on pages 20 to 33 form part of these financial statements.
The financial statements on pages 15 to 33 were authorised for issue and approved by the Board of Directors on 17 June
2015 and signed on its behalf by
Régis Schultz
Director
Dominic Platt
Director
18
Group cash flow statement
for the year ended 30 April 2015
Note
Cash flows from operating activities
Cash generated from operations
Interest paid
Tax paid
Net cash from/(used) in operating activities
10
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired
Sale of discontinued operations, including cash and overdrafts disposed
Sale of business operation, including cash and overdrafts disposed
Sale of available for sale investments
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchase of intangible assets
Dividends received from associates/joint ventures
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayments of borrowings
Dividends paid to shareholders
Dividends paid to non-controlling interests
Net cash from financing activities
8
6
Net increase in cash, cash equivalents and bank overdrafts
2015
€m
2014
€m
restated a)
60.7
(22.9)
(21.2)
16.6
18.4
(21.4)
(9.9)
(12.9)
(9.8)
10.1
1.4
(40.2)
13.9
(10.5)
1.0
(34.1)
5.4
2.6
1.9
2.7
(48.5)
29.7
(13.4)
11.0
(8.6)
49.8
(18.4)
(0.6)
30.8
390.0
(340.0)
(18.0)
32.0
13.3
10.5
Cash, cash equivalents and bank overdrafts at start of year
11
74.0
67.7
Effects of exchange rate changes
11
(0.6)
(4.2)
86.7
74.0
Cash, cash equivalents and bank overdrafts at end of year
a)
b)
Restated following the CVAE reclassification from operating profit to taxation (note 5) and the legacy UK retirement benefit scheme
expenses reclassification from finance costs to operating profit (note 4).
The notes on pages 20 to 33 form part of these financial statements.
19
Notes to the financial statements
1. Accounting policies
The preliminary results for the year ended 30 April 2015 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 2015 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 2014, 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 2015 or year ended 30 April 2014 within the meaning of
sections 434-436 of the Companies Act 2006. The financial information for the year ended 30 April 2015 is derived from the statutory accounts for that
period. The report of the auditors on the statutory accounts for the year ended 30 April 2015 was unqualified and did not contain a statement under
Section 498 of the Companies Act 2006.
Basis of preparation
These consolidated financial statements have been prepared in accordance with EU endorsed International Financial Reporting Standards (IFRS)
and interpretations issued by the IFRS Interpretations Committee (IFRS IC) 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 foreign currency swaps, forward foreign currency contracts, available-for-sale financial assets, financial assets and financial
liabilities (including derivative instruments) at fair value through profit or loss and also on a going concern basis.
Use of adjusted measures
Darty plc believes that retail profit, adjusted profit before tax, EBITDA and adjusted earnings per share provide additional useful information on
underlying trends and business performance to shareholders. Each is defined below:
Retail profit represents total operating profit before the share of joint venture and associate's interest and taxation, movement in options
and related charges over non-controlling interests, gain on disposal of available for sale investments, legacy UK retirement benefit
scheme expenses, exceptional items and amortisation and impairment of acquisition related intangible assets.
EBITDA represents earnings before interest, taxation, depreciation and amortisation and profit/(loss) on disposal of property, plant and
equipment and intangible assets including write-offs.
Adjusted profit before tax represents retail profit less finance costs excluding net the IAS19 interest on pension schemes.
Adjusted earnings per share exclude the effects of discontinued operations, movement in options and related charges over noncontrolling interests, gain on disposal of available for sale investments, legacy UK retirement benefit scheme expenses, exceptional
items, amortisation and impairment of acquisition related intangible assets, net interest on pension schemes and tax effects of
exceptional and other non-retail profit items. A reconciliation of adjusted earnings per share to basic earnings per share is provided in
note 7, 'Earnings per share'.
A reconciliation from retail profit to GAAP measurement of profit is provided in the Group Income Statement. A reconciliation from EBITDA to
GAAP measurement of profit is provided in note 3, ‘Segmental analysis’.
These measures are used by the Group for internal performance analysis and incentive compensation arrangements for employees.
These terms are not defined by IFRS and may therefore not be comparable with similarly titled profit measures reported by other companies. They
are not intended to be a substitute for, or superior to, GAAP measurements of profit.
Principal rates of exchange
Average rate - year ended 30 April 2015
Closing rate - 30 April 2015
Average rate - year ended 30 April 2014
Closing rate - 30 April 2014
Average rate - year ended 30 April 2013
Closing rate - 30 April 2013
GBP
0.7771
0.7312
0.8414
0.8219
0.8177
0.8477
Czech Kr
27.5794
27.4630
26.5792
27.4550
25.3412
25.7865
20
Turkish Lira
2.8347
2.9995
2.7506
2.9295
2.3139
2.3604
2. Continuing Group operating profit
2015
€m
2014
€m
(restated)
3,512.1
(2,397.2)
(179.9)
(731.7)
(133.8)
3.1
1.4
(1.3)
(13.7)
(0.1)
3,404.4
(2,275.0)
(162.4)
(738.0)
(151.2)
4.5
(3.2)
2.7
(1.4)
(29.4)
-
Group operating profit
58.9
51.0
Share of post tax profit in joint venture and associates
Total operating profit
1.4
60.3
2.4
53.4
Analysis by function:
Revenue
Cost of sales
Distribution costs
Selling expenses
Administrative expenses
Other income
Movement in options and related charges over non-controlling interests
Gain on disposal of available for sale investments
Legacy UK retirement benefit scheme expenses
Exceptional items
Amortisation and impairment of acquisition related intangible assets
Group total revenue includes revenue from services in the year ended 30 April 2015 of €244.9m (2014: €237.6m). Such revenues predominantly
comprise those relating to customer support agreements, delivery and installation, product repairs and product support. This figure also includes
royalties received totalling €6.0m (2014: €9.7m).
Other income is from the sub-leasing of property.
The gain on disposal of available for sale investments arose from the sale of Go Sport S.A. €1.4m (2014: €2.7m) was received during the current
year, when the purchaser of these Go Sport shares completed a takeover of the rest of the company for a higher price, which triggered additional
proceeds of €1.4m for the Group under the share sale contract.
Restated following the sale of Datart, now classified as discontinued operations, the CVAE reclassification from operating profit to taxation (note
5) and the legacy UK retirement benefit scheme expenses reclassification from finance costs to operating costs (note 4).
21
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:
-
France (Darty and Mistergooddeal)
Belgium & the Netherlands (Vanden Borre and BCC)
Datart was classified as a discontinued operation on 22 July 2014 following the signature of a sale and purchase agreement with SEW1001 a.s., a company based in the Czech Republic. Its results have been excluded from the Continuing Group.
Darty Spain was classified as a discontinued operation on 30 June 2013, following the closure of its stores, and its results have been
excluded from the Continuing Group.
Darty Turkey was classified as a discontinued operation on 22 January 2014, following the signature of a sale and purchase agreement
with Bimeks A.S., an electrical retailer in Turkey. Its results have been excluded from the Continuing Group.
Sales between segments are carried out at arm’s length. There is no material difference between revenue by origin and destination.
2015
France
€m
Revenue
EBITDA*
Depreciation and amortisation
Profit on disposal of property, plant and equipment and intangible assets including write-offs
Retail profit/(loss)
Share of joint venture and associates' interest and taxation
Gain on disposal of available for sale investments
Legacy UK retirement benefit scheme expenses
Exceptional items
Amortisation and impairment of acquisition related intangible assets
Operating profit/(loss)
2,813.5
107.7
(44.5)
6.8
70.0
(0.9)
1.4
(13.7)
56.8
Belgium & the
Netherlands Unallocated
€m
€m
698.6
20.9
(6.1)
14.8
1.5
(0.1)
16.2
(9.8)
(0.1)
(9.9)
(1.3)
(1.5)
(12.7)
Continuing
Group
€m
3,512.1
118.8
(50.7)
6.8
74.9
(0.9)
1.4
(1.3)
(13.7)
(0.1)
60.3
Finance costs
Finance costs - net
(27.4)
(27.4)
Profit before income tax
Income tax expense
32.9
(17.8)
Profit for the year
15.1
* EBITDA is defined as retail profit before depreciation and amortisation and profit/(loss) on disposal of property, plant and equipment and
intangible assets including write-offs.
The share of operating profits of the joint venture and associates included within the retail profit for France is €2.3m. The share of post tax profits
of the joint venture and associates included within the operating profit of France is €0.9m.
EBITDA includes reversals of impairment totalling €0.4m all of which are in the France segment.
France
€m
Belgium & the
Netherlands Unallocated
€m
€m
Continuing
Group
€m
914.8
197.5
89.0
1,201.3
(975.2)
(136.4)
(413.1)
(1,524.7)
Segmental capital expenditure
39.4
18.1
0.3
57.8
Segmental property lease rental costs
66.2
23.3
0.4
89.9
Segmental total assets
Segmental liabilities
Investments in equity accounted joint venture and associates of €15.1m are included within the segment assets of France.
Segment assets include available for sale and equity accounted investments, property, plant and equipment, goodwill, intangible assets,
inventories, receivables, 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.
22
3. Segmental analysis (continued)
2014 restated a)
Revenue
EBITDA*
Depreciation and amortisation
Profit on disposal of property, plant and equipment and intangible assets including write-offs
Retail profit/(loss)
Share of joint venture and associates' interest and taxation
Movement in options and related charges over non-controlling interests
Gain on disposal of available for sale investments
Legacy UK retirement benefit scheme expenses
Exceptional loss on disposal of property, plant and equipment including write-offs
Exceptional items
Operating profit/(loss)
France
€m
Belgium & the
Netherlands
€m
Unallocated
€m
Continuing
Group
€m
2,717,7
123.7
(44.8)
8.3
87.2
(0.8)
2.7
(3.6)
(22.4)
63.1
686.7
14.5
(5.3)
0.1
9.3
(3.1)
6.2
(9.4)
(1.4)
(0.2)
(11.0)
(3.2)
(1.4)
(0.3)
(15.9)
3,404.4
128.8
(51.5)
8.2
85.5
(0.8)
(3.2)
2.7
(1.4)
(3.6)
(25.8)
53.4
Finance costs
Finance costs - net
(16.0)
(16.0)
Profit before income tax
Income tax expense
37.4
(26.6)
Profit for the year
10.8
The share of operating profits of the joint venture and associates included within the retail profit for France is €3.2m. The share of post tax profits
of the joint venture and associates included within the operating profit of France is €2.4m.
* EBITDA is defined as retail profit before depreciation and amortisation and profit/(loss) on disposal of property, plant and equipment and
intangible assets including write-offs.
EBITDA is net of impairment charges including reversals totalling €3.3m all of which are in the France segment.
France
€m
Segmental total assets
Belgium & the
Netherlands Unallocated
€m
€m
Continuing
Group
€m
937.5
167.7
69.1
1,174.3
(956.0)
(122.5)
(420.5)
(1,499.0)
Segmental capital expenditure
49.8
8.7
-
58.5
Segmental property lease rental costs
61.6
24.2
3.0
88.8
Segmental liabilities
Investments in equity accounted joint venture and associates of €15.3m are included within the segment assets of France.
Segment assets include available for sale and equity accounted investments, property, plant and equipment, goodwill, intangible assets,
inventories, receivables, 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.
a) Restated following the sale of Datart, now classified as discontinued operations, and the CVAE reclassification from operating profit to taxation
(note 5) and the legacy UK retirement benefit scheme expenses reclassification from finance costs to operating costs (note 4).
23
4. Continuing Group finance costs
2015
€m
20.0
4.5
2014
€m
(restated)
10.6
2.5
Net interest on pension schemes
3.8
2.6
Foreign exchange (gains)/losses
(0.9)
0.3
Finance costs
27.4
16.0
Interest payable on borrowings
Loan commitment fees and the amortisation of loan and bond arrangement fees
Foreign exchange gains and losses arise on the retranslation of short term deposits and loans denominated in a currency other than the
operation's functional currency.
Following the implementation of IAS19 Revised, the Group has reclassified the administration costs associated with the legacy UK
pension scheme as an operating cost. This is to bring the Group into line with how others are reporting such costs and is being treated as
a prior year adjustment. As a result, finance costs in 2014 have reduced by €1.4m. These costs have been reclassified as an operating
cost outside of retail profit as they relate to Comet, a discontinued business.
24
5. Continuing Group Income tax expense
2015
Analysis of charge in year
UK corporation tax
Adjustment in respect of prior years
Foreign tax
Current tax on profits for the year
CVAE
Adjustment in respect of prior years
Deferred tax
Origination and reversal of temporary differences
Change in tax rate
Adjustment in respect of prior years
Total income tax expense
Tax on items charged to equity:
Deferred income tax charge/(credit) on cash flow hedges in reserves
Deferred income tax (credit)/charge on actuarial gains/(losses) on retirement benefit
obligations
Total tax on items (credited)/charged to equity
€m
2014
(restated)
€m
0.9
0.9
0.2
0.2
7.0
10.7
2.4
20.1
23.6
11.1
(0.2)
34.5
(3.8)
0.6
(3.2)
17.8
(8.6)
(0.2)
0.7
(8.1)
26.6
0.1
(6.7)
(0.1)
1.1
(6.6)
1.0
Factors affecting tax charge for the year
The tax for the year is higher (2014: higher) than the standard rate of corporation tax. The differences are explained below:
Profit on ordinary activities before income tax
Profit on ordinary activities multiplied by rate of corporation tax in the UK of 21%
(2014: 23%)
Effects of:
Adjustments in respect of foreign tax rates
Adjustments in respect of joint venture and associates
Expenses not taxable
CVAE
Other permanent differences
Exceptional items not deductible/(taxable)
Losses not recognised as deferred tax asset (unrelieved tax losses)
Change in corporation tax rates
Adjustments to tax in respect of prior years
Total income tax expense
32.9
37.4
6.9
8.6
2.0
(0.7)
(6.9)
6.7
(2.4)
(0.5)
8.8
3.9
17.8
6.7
(0.6)
(0.2)
6.6
(5.8)
(0.2)
11.0
(0.2)
0.7
26.6
Losses not recognised as a deferred tax asset for the current year principally include tax losses arising in BCC, France and UK Head office
companies (2014: BCC and UK Head Office companies).
Profit before tax per Group income statement
Share of joint venture and associates taxation
Adjusted profit before tax
Non-retail profit items
Adjusted profit before tax on continuing operations
Income tax expense per Group income statement
Share of joint venture and associates' taxation
Adjusted income tax expense
Tax on non retail profit items
Adjusted income tax expense on continuing operations
Adjusted effective tax rate
32.9
0.9
33.8
17.5
51.3
37.4
0.8
38.2
33.9
72.1
17.8
0.9
18.7
1.4
20.1
39.3%
26.6
0.8
27.4
10.5
37.9
52.6%
Non-retail profit items is the sum of total operating profit less retail profit excluding share of joint venture and associates' taxation plus net
interest on pensions.
The standard rate of corporation tax in the UK changed from 21% to 20% with effect from 1 April 2015. Although the effective tax rate is
20.98% the company's profits for this accounting period are taxed at 21% as the difference between rates is not considered material, at less
than €0.1m difference to adjustments in respect of foreign tax rates.
25
5. Continuing Group Income tax expense (continued)
The effect of the changes announced in the Finance Act 2013 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.
Management have assessed the potential tax risks, which takes into account ongoing tax audits underway around the Group, and have made
provision accordingly. The Company has received a demand from the French Tax Authority, claiming up to €15.3 million in unpaid taxes and
penalties relating to the Group’s holding company structure. Extensive professional advice has been obtained and the Company believes it has a
very strong defence and much of the claim is without merit. A provision has been made based on our best estimate of the expected outcome.
In order to be consistent with other French retailers, the Group has reclassified the French business tax – la cotisation sur la valeur ajoutee des
enterprises (“CVAE”) – as an income tax rather than as previously classified as an operating cost. This change has resulted in in a prior year
adjustment resulting in a €1.0m increase in opening net liabilities at May 2013 due to an increase in non-current deferred tax liabilities. The impacts
on the income statement and net liabilities since the change are summarised in the table below:
Impact of the change in CVAE charge accounting policy
2015
2014
€m
€m
Profit before tax per Group income statement
Share of joint venture and associates taxation
Adjusted profit before tax
11.1
Non-retail profit items10.7
(10.6)
(10.8)
Adjusted profit before tax on continuing operations
(0.1)
0.3
Income tax expense per Group income statement
Share of joint venture and
3.6 associates' taxation
3.1
Adjusted income tax (3.6)
expense
(3.1)
Tax on non retail profit
items
(0.6)
(0.7)
Adjusted income tax expense on continuing operations
Impact on operating profit
Impact on taxation
Impact on profit for the year from continuing operations
Impact on trade and other payables
Impact on income tax liabilities
Impact on deferred income liabilities
(0.6)
Adjusted effective tax rate
Impact on net liabilities
26
(0.7)
6. Dividends
Final paid 2014: 2.625 cents (2013: 2.625 cents) per share
Interim paid 2015: 0.875 cents (2014: 0.875 cents) per share
2015
€m
2014
€m
14.0
13.4
4.4
4.6
18.4
18.0
An interim dividend of 0.875 cents was paid to the ordinary shareholders of the Company on 1 April 2015. In addition the Board will also
recommend, at the forthcoming Annual General Meeting, the payment of a final dividend of 2.625 cents, payable on 13 November 2015
in relation to the year ending 30 April 2015.
The final dividend, once approved, will be paid to those persons on the Register of Members at the close of business on 22 October
2015.
27
7. Earnings/(losses) per share
Basic earnings/(losses) per share is calculated by dividing the profits/(losses) attributable to shareholders by 527.5m shares (30 April
2014, 527.5m), being the weighted average number of ordinary shares in issue.
There is no difference between diluted and basic losses per share because all incentive schemes are share awards and there are no
dilutive share options. Supplementary adjusted earnings per share figures are presented. These exclude the effects of discontinued
operations, movement in options and related charges over non-controlling interests, gain on disposal of available for sale investments,
legacy UK retirement benefit scheme expenses, exceptional items, amortisation and impairment of acquisition related intangible
assets, net interest on pension schemes and tax effects of exceptional and other non-retail profit items.
2015
Basic earnings/(losses) per share
Earnings/(losses) attributable to owners of the parent
Discontinued operations attributable to owners of the parent
Continuing operations attributable to owners of the parent
Adjustments
Movement in options and related charges over non-controlling interests
Gain on disposal of available for sale investments
Legacy UK retirement benefit scheme expenses
Exceptional items
Amortisation and impairment of acquisition related intangible assets
Net interest on pension schemes
Tax effect of exceptional and other non- retail profit items
Adjusted earnings per share
2014
(restated)
(Losses)/
earnings
Per share
amount
(Losses)/
earnings
Per share
amount
€m
cents
€m
cents
14.2
0.8
15.0
2.7
0.2
2.9
(3.4)
14.2
10.8
(0.6)
2.7
2.1
-
(0.3)
0.2
2.6
0.7
(0.3)
5.8
3.2
(2.7)
1.4
29.4
2.6
(10.5)
34.2
(0.5)
0.3
5.5
0.5
(2.0)
6.5
(1.4)
1.3
13.7
0.1
3.8
(1.4)
31.1
0.6
Restated following the sale of Datart, now classified as discontinued operations, the CVAE reclassification from operating profit to taxation (note 5) and the legacy UK
retirement benefit scheme expenses reclassification from finance costs to operating costs (note 4).
28
8. Discontinued operations
Datart was classified as a discontinued operation on 22 July 2014, following the signature of a sale and purchase agreement with SEW1001 a.s., a company based in the Czech Republic. Its results have been excluded from the Continuing Group.
For the year ended
30 April 2015
€m
5.0
(3.8)
1.2
Total consideration
Less: Net assets disposed
Profit on disposal
Cash flows from Datart
Operating activities
Investing activities
Cash flows relating to performance of business
Net cash consideration during the period, including cash and overdrafts disposed
Total cash flow
For the year ended
30 April 2015
For the year ended
30 April 2014
€m
2.1
(0.4)
1.7
1.0
2.7
€m
4.4
(1.5)
2.9
2.9
Operations classified as discontinued in prior years.
Darty Italy was classified as a discontinued operation on 1 March 2013, following the sale of the Group’s Italian operations, and its results
have been excluded from the Continuing Group.
Darty Spain was classified as a discontinued operation on 30 June 2013, following the closure of its stores, and its results have been
excluded from the Continuing Group.
Darty Turkey was classified as a discontinued operation on 22 January 2014, following the signature of a sale and purchase agreement
with Bimeks A.S., an electrical retailer in Turkey. Its results have been excluded from the Continuing Group
The results from Datart, Darty Italy, Darty Spain and Darty Turkey, classified as discontinued operations in the consolidated income
statement, are stated below.
For the year ended
30 April 2015
€m
36.7
(27.0)
(1.3)
(8.6)
(2.6)
0.2
0.1
(2.5)
(2.5)
1.2
(1.3)
Revenue
Cost of sales
Distribution costs
Selling expenses
Administrative expenses
Exceptional items
Finance costs
Finance income
Loss before income tax
Taxation relating to performance of business
Loss after taxation relating to performance of business
Net profit on disposal
Total loss for the period from discontinued operations
For the year ended
30 April 2014
restated
€m
30 April 2014
276.6
(215.8)
(8.4)
(55.5)
(12.6)
(4.6)
(0.8)
0.1
(21.0)
(21.0)
3.6
(17.4)
Exceptional items relate to the remeasurement of assets of discontinued operations.
Cash flows from Datart, Darty Italy, Darty Spain and Darty Turkey
For the year ended
30 April 2015
Operating activities
Investing activities
Cash flows relating to performance of business
Net cash consideration during the period, including cash and overdrafts disposed
Total cash flow
29
€m
(15.3)
(0.4)
(15.7)
10.1
(5.6)
For the year ended
30 April 2014
restated
€m
(56.9)
(3.2)
(60.1)
2.6
(57.5)
9. Exceptional Items
France
Impairment of intangible assets
Impairment of property, plant and equipment
Restructuring costs
Exceptional gain from revised estimate of inventory stock carrying value
2015
€m
2014
€m
(restated)
(0.4)
(11.2)
(8.5)
6.4
(13.7)
(26.0)
(26.0)
1.5
1.5
(3.1)
(3.1)
(1.5)
(1.5)
(0.3)
(0.3)
(13.7)
(29.4)
1.4
10.5
(12.3)
(18.9)
Belgium and the Netherlands
Restructuring costs
Exceptional gain from revised estimate of inventory stock carrying value
Unallocated
Restructuring costs
Exceptional items in operating loss
Tax relating to exceptional and other non-retail profit items
Exceptional loss for the period
Exceptional items total €13.7m (pre-tax) which arise due to the following:
- €14.5m of property related charges and impairment costs in France, mainly as a result of a programme to improve store portfolio performance;
comprising €0.2m of intangible asset impairment, €11.2m of property, plant and equipment impairment and €3.1m of property related charges
included within restructuring costs.
- €4.6m of reorganisation costs in France associated with integrating Mistergooddeal into the Darty business along with €0.2m of acquisition
related goodwill being written off.
- €2.1m of restructuring costs (€1.9m in the unallocated segment and €0.2m in France) relating to the transfer of some head office functions from
London to Paris
- €0.2m of HR related cost adjustments to prior period reorganisation costs (€0.6m in France less €0.4m unallocated credit);
- A €7.9m exceptional gain (€6.4m in France and €1.5m in Belgium and the Netherlands) arising on the revised IAS2 estimation of distribution
costs in the carrying value of inventory to take into account non-storage warehouse and logistics costs.
The revised inventory carrying value estimate is of a costs of sales nature and all other exceptional items are of an administrative expenses
nature.
There is a tax credit relating to exceptional and other non-retail profit items of €1.4m.
The cash outflow on exceptional items for the Continuing Group during the year was €12.7m (2014: €23.4m).
30
10. Cash flow from operating activities
2015
€m
Profit before income tax from continuing operations
32.9
2014
€m
restated
37.4
Adjustments for:
Interest expense
Share of post tax profit in joint venture and associates
Continuing group operating profit
27.4
(1.4)
58.9
16.0
(2.4)
51.0
Discontinued operations operating loss
Depreciation and amortisation
Net impairment of intangibles and property, plant and equipment
Profit on disposal of property, plant and equipment and intangible assets including write-offs
Gain on disposal of available for sale investments
Increase in inventories
Increase in trade and other receivables
Decrease in payables
Net cash inflow from operating activities
(2.6)
51.4
11.2
(6.9)
(1.4)
(6.4)
(8.4)
(35.1)
60.7
(21.0)
54.7
3.3
(3.6)
(2.7)
(1.9)
(15.6)
(45.8)
18.4
Net cash flow from operating activities can be summarised as follows:
Continuing operations
Discontinued operations
Net cash inflow from operating activities
76.0
(15.3)
60.7
75.3
(56.9)
18.4
Restated following the sale of Datart, now classified as discontinued operations, and the CVAE reclassification from operating profit to taxation
to
taxation.
(note
5) and the legacy UK retirement benefit scheme expenses reclassification from finance costs to operating costs (note 4).
Net cash inflow from operating activities as reported at 30 April 2014
Impact of the change in CVAE charge accounting policy
Impact of the legacy UK retirement benefit scheme expenses reclassification from finance costs to operating costs
Net cash inflow from operating activities restated
31
8.3
11.5
(1.4)
18.4
11. Reconciliation of net cash flow to movement in net debt
Cash at bank and in hand
Overdrafts
Borrowings falling due within one year
Borrowings falling due after one year
Finance leases
Total
Cash at bank and in hand
Overdrafts
Short-term deposits and investments
Borrowings falling due within one year
Borrowings falling due after one year
Total
2015
€m
Cash flow
€m
Exchange and
other
movements
€m
86.9
(0.2)
86.7
12.0
1.3
13.3
(0.6)
(0.6)
75.5
(1.5)
74.0
(10.9)
(297.7)
(1.9)
(10.9)
(37.0)
(1.9)
(1.5)
-
(259.2)
-
(310.5)
(49.8)
(1.5)
(259.2)
(223.8)
(36.5)
(2.1)
(185.2)
2014
€m
75.5
(1.5)
74.0
Cash flow
floe flow
€m
28.8
(1.2)
(17.1)
10.5
Exchange and
other
movements
€m
(3.5)
(0.7)
(4.2)
2013
€m
50.2
(0.3)
17.8
67.7
(259.2)
(50.0)
9.1
(218.3)
(259.2)
(50.0)
9.1
(218.3)
(185.2)
(39.5)
4.9
(150.6)
32
2014
€m
12. Retirement benefits
Summary of Group retirement benefits and funding arrangements
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.
Following the disposal of Comet on 3 February 2012, Darty plc became sponsoring employer and accordingly assumed all the liabilities
associated with the Comet Pension Scheme. All member benefits, including any link to future salary increases, ceased from that date.
The UK scheme is valued by a qualified actuary every 3 years and a deficit recovery plan confirmed with the Trustees based on an agreed
schedule of contributions. The March 2013 triennial valuation was agreed with the trustees in March 2014 resulting in fixed annual payments
of £10.0m per annum aiming to make good the £73m deficit by May 2019. Company contributions to be paid in 2015/16 total £10.0 million
(2014/15: £10.0 million). The next triennial valuation is in March 2016.
The UK scheme provides benefits for members in the form of a guaranteed level of pension payable for life. The level of benefits provided
depends on the members' length of service and salary at 3 February 2012. The trustees are required to act on behalf of the Scheme's
stakeholders in accordance with UK legislation and play a role in the long-term investment and funding strategy. In the UK scheme, pensions in
payment are generally increased in line with inflation.
There is a risk to the company that adverse experience (asset volatility, longevity or inflation) could lead to a requirement for the company to
make additional contributions to cover any deficit increase that arises. A description of Pension scheme liabilities risks and mitigation measures
is set out in the Principal Risks section of the Annual Report.
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 2015, these pension plans had a deficit of €7.3m. The Group has no further mortality risk post
retirement. This scheme is no longer open to new entrants with existing liabilities being paid as they fall due. At 30 April 2015, there were 6
members remaining in the scheme with liabilities estimated at €7.3m. 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 under terms prescribed by legislation. No pre-funding is legally required, though at 30 April 2015 €16.9m of funding has been set aside
for retirement indemnity plans set against estimated IAS19 liabilities of €74.8m, leading to a net deficit of €57.9m.
Net liability
The amounts recognised in the balance sheet are determined as follows:
2015
Present value of defined benefit obligations
Fair value of plan assets
Net liability recognised in the balance sheet
2014
UK
France
Group
UK
France
Group
€m
€m
€m
€m
€m
€m
625.0
82.1
707.1
478.2
62.5
540.7
(586.8)
(16.9)
(603.7)
(418.1)
(18.0)
(436.1)
38.2
65.2
60.1
44.5
104.6
33
103.4 6
0
.