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RNS Number : 4416Z
Darty PLC
11 December 2014
 



Thursday 11 December 2014

 

Statement of Results for the six months ended 31 October 2014

 

Revenue growth of 3.5 per cent as we accelerate our strategic plans

 

 

Significant progress on our Strategic Plan - 'Nouvelle Confiance'

·    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.

·    Market share gains in both France and the Netherlands.

·    Building on an improved performance at BCC, proposed acquisition of 18 profitable stores from HiM Retail in the Netherlands, scheduled to be completed by February 2015.

·    Successful implementation of our growth initiatives:

22 franchise stores opened in the period with strong sales uplift; 50 expected to be trading by the end of the year;

Over 25 per cent increase in web generated sales in Fance following acquisition of Mistergooddeal.com, bringing web penetration to 18 per cent of product sales. Plans in place to improve profitability;

Expanded the successful kitchen offer into 16 further stores to a total of 71 stores.

     

 

Financial Summary for the six months ended 31 October 20141

·    Group revenue up 3.5 per cent to €1,644.4 million (2014: €1,588.4 million).  Group like-for-like sales down 1.2 per cent against strong comparatives in the second quarter and more challenging market conditions.

·    Operating profit increased to €9.3 million (2014: loss €1.0 million) with a reduction in exceptional charges as we conclude our restructuring, more than offsetting a decline in retail profit. 

·    Group retail profit2 of €13.9 million, reflecting the acquisition of Mistergooddeal.com to grow our web business and the in year phasing of our property and promotional activity (2014: retail profit €22.6 million).

·    Adjusted3 Group profit before tax of €1.7 million, reflecting increased finance costs following the refinancing. Reported loss before tax of €5.5 million (2014: loss €8.6 million).

·    Net cash outflow including discontinued operations of €99.5 million (2014: outflow €101.7 million) with net debt at the end of the period of €287.2 million (2014: net debt €253.4 million).

·    The Board has declared an unchanged interim dividend of 0.875 cents per share, to be paid on 1 April 2015.

 

 

 

Chief Executive Régis Schultz, commented:

 

"We are now fully focussed on our core businesses in France, Belgium and the Netherlands following the sale of our interest in Datart in the Czech Republic and Slovakia.  The proposed acquisition in the Netherlands will enable us to strengthen our position and accelerate the return to profitability in this market.

 

"Our growth initiatives in France are ahead of schedule.  The franchise operation is rolling out faster than we first anticipated, the kitchen offer is already in over 70 stores and our web generated sales have increased by over 25 per cent following the acquisition of Mistergooddeal.com.

 

"We are gaining market share in France and the Netherlands.  The increase in our operating profit reflects the end of our restructuring plans in our core markets and the acceleration of our growth initiatives.

 

"We remain cautious about the market environment in the short term but we are well placed and prepared to maximise our performance in the important peak period and remain focussed on improving productivity in the cost base. Looking to the medium term, we are in a strong position with the further development of our growth initiatives."

 

 

1 Excluding results of discontinued operations except where stated otherwise.

2 Retail profit/(loss) represents total operating profit/(loss) before the share of joint venture and associates' interest and taxation, the movement in options and related charges over non-controlling interests, gain available for sale financial assets and exceptional items.

3 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 financial assets, exceptional items and net interest on pension schemes.

 

 

There will be a presentation to analysts and institutions at 08:30 today at UBS, 1 Finsbury Avenue, London, EC2M 2PP. A live video and audio 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 12 February 2015 for the third quarter trading period of 1 November 2014 to 31 January 2015.

 

Enquiries

 

Analysts:

 

 

 

Darty plc

 

 

Simon Ward


+44 (0) 20 7269 1400

 

 

 

Press:

 

 




UK

RLM Finsbury

 

 

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.

 

NOUVELLE CONFIANCE UPDATE

 

In December 2012, following an in-depth internal review of our business, we launched our "Nouvelle Confiance" strategic plan, the principal components of which were to:

·     identify and eliminate losses at our non-core businesses and refocus on core markets;

·     create value from our market leadership and efficiency savings;

·     develop future growth opportunities.

 

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 and we are now totally focussed on our core businesses in France, Belgium and the Netherlands.

 

In November 2014, our business in the Netherlands, BCC, announced the proposed acquisition of up to 18 profitable stores from HiM Retail, strengthening its market position.  All the stores complement the current portfolio and will bring the total number of BCC stores to nearly 80 and make it the leading multi-channel electrical retailer in the market. The acquisition is expected to be completed by February 2015.

 

 

The '4Ds'

 

In order to create value from our market leadership, drive greater efficiency and reduce costs, we developed a four-point plan ('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 Darty held a number of events to drive trading. A successful World Cup campaign helped deliver strong vision sales during May and June and the Summer Sale in July received another positive response from customers. A "Back to school" campaign was run from late August through September with €20-€50 gift cards issued against certain purchases and, towards the end of the period, an evolved "Darty Days" campaign was held for selected kitchen appliances with bundled deals and gift cards. As a result, further market share gains were achieved, footfall was stable and store conversion rate improved. 

 

We monitor our in-store and on-line prices on a weekly basis to confirm our competitiveness. On a 'service included' basis we continue to compare very favourably against all store based retailers and almost all web pure players.

 

2.   Digitalise Darty

 

As a successful multi-channel retailer, we continue to develop a seamless approach between web 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. In addition to the 14 stores completed last year a further 46 stores were digitalised in the first half of this year, including one franchise store, with a total of over 100 stores expected to be completed by the end of the financial year.

 

We have launched a market place offering where selected complementary products are now available direct from third party suppliers.   

 

During the period we saw significant increases in penetration of our "click and collect" service, for which we won another award from LSA, and the number of website visits to Darty.com.

 

3.   Develop our brand

 

This year we are proud to celebrate 40 years of the "Contrat de Confiance", Darty's price, choice and service promises to its customers. The Contrat de Confiance has very strong consumer awareness (78 per cent) and even stronger association with Darty (90 per cent), but far fewer consumers (26 per cent) are aware of its content. The Contrat has now been simplified and modernised, while continuing to highlight Darty's unique offer and competitive advantages.

 

Building on Darty's long heritage for service, 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 home visit.  The service is available for all electrical products but for those not originally bought from Darty or out of warranty there is be 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. The button is proving popular for a number of customers taking an extended warranty on purchasing a product.

 

During last year we introduced the first dedicated service desks, 'Atelier Darty', for in store repair and assistance for all multimedia products, into 15 stores.  These have helped strengthen Darty's service image while also driving footfall and providing the opportunity to offer additional services and accessories. Customer response to such immediate problem solution has been very favourable.

 

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 period this was evidenced by significant sales of large screen OLED and Ultra HD/4K televisions, particularly ahead of the football World Cup. Increasingly connected products are being introduced into the offer for both the home and health, such as connected security, lighting and thermostats and fitness trackers.

 

4.   Deliver cost efficiency

 

Throughout the Group, we had targeted annual gross cost savings over three years of €50 million per annum by 2014/15, from delivering a more efficient operating model, continuing to adapt our cost structure and leveraging synergies between our operating companies. To accelerate the achievement of savings 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 expected to be achieved in full this financial year. In the first half of the year underlying costs (excluding the Mistergooddeal.com acquisition) were down two per cent, €10 million 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.

 

There is also scope to improve our balance sheet efficiency. We continue to manage our freehold property to ensure maximum value to the Group. Following over €45 million of total proceeds in the prior two years we expect around €10 million this financial year, all to be achieved in the second half of the year.

 

 

Growth initiatives

 

As previously announced, we have 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 double 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. Darty charges 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.

 

Four stores were opened at the end of the prior financial year and a further 19 stores were opened in the first half of this year as well as three overseas stores in Martinique, Guadeloupe and Guiana. Initial performance has been very encouraging with significant sales uplifts for all stores and excellent customer satisfaction feedback.

 

We now expect our opening programme to be ahead of schedule at the end of the financial year when a total of around 50 stores will be opened.  We remain on track to have around 100 to 150 stores by the end of 2016/17 with retail contribution in line with the core business.

 

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, which generated around €120 million revenue per annum, predominantly in white goods at the price entry 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 and over 150 Darty stores can now be used as customer collection points, already representing over a quarter of all collections.

 

Initial trading has been weaker than expected due to very competitive activity in the entry price end of the market.  With a new management team in place, we have 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 will be integrated in January 2015 and the IT and warehousing in April 2015. The retail loss for 2014/15 is expected to be around €9 million but with the actions being taken commercially and on the cost base, we expect to move towards break even for 2015/16.

 

Kitchens

 

Our kitchens business in France is an example of our ability to 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 while the electricals built-in market has grown in France from €1.4 billion in 2005 to €1.75 billion in 2013.  At the same time competitors are consolidating and as Darty builds scale consumer recognition of our kitchens offer is consistently improving year on year.

 

At the end of the last financial year the kitchen offer was in 55 stores, generating over €80 million of revenue and had already taken around five per cent of the installed kitchen market in France and helped generate additional sales of high-end white goods. 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 and this will be extended to a further six stores by the end of the financial year, ahead of our original plan. Commercial initiatives during the period included an interest free credit offer during September and October as well as a partnership with house builder, Bouygues Immobilier for customers to select a Darty kitchen to be installed in their new property.

 

We remain on track for our medium term target for the offer to be in around 120 stores and the offer will be in all catchments of over 200,000 inhabitants.

 

Outlook

 

We remain cautious about the market environment in the short term but we are well placed and prepared to maximise our performance in the important peak period and remain focussed on improving productivity in the cost base.

 

We will continue to focus on our '4Ds' programme in the medium term and the further development of our growth initiatives puts us in a strong position for the future.


 

GROUP OVERVIEW

 

Results

 

Revenue

 

6 months

ended

31 October 2014

€m

 6 months

ended

31 October 2013

€m

Like-for-like

 

 

 

Change

 






France

1,316.8

1,266.6

(1.7)%

4.0%

Belgium and the Netherlands

327.6

321.8

0.8%

1.8%

Continuing Group

1,644.4

1,588.4

(1.2)%

3.5%

 

Retail profit

 

6 months

ended

31 October 2014

€m

 6 months

ended

31 October 2013

€m




France*

15.3

26.9

Belgium and the Netherlands

3.3

1.1

Central

(4.7)

(5.4)

Continuing Group

13.9

22.6

*including Mistergooddeal.com in 2014

 

 

 

Financial review

 

Revenue and retail profit

Group revenue at €1,644.4 million, was up 3.5 per cent including Mistergooddeal.com and the franchise stores.  On a like-for-like basis Group revenue was down 1.2 per cent, with a slower second quarter against much stronger comparatives from the prior year (quarterly revenue performance is provided as an appendix to this statement). We saw strong sales in Vision in May and June reflecting a successful football World Cup campaign and further growth in Communication. White Goods were stable, not benefitting to the same extent as last year from weather related purchases of refrigeration and air conditioning products. We saw a decline in Multimedia due to slowing volume growth and declining 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 23 per cent, now representing over 16 per cent of total product sales.

 

Underlying gross margin declined by around 50 basis points for the period.  This reflected ongoing product category margin pressure in challenging and promotional market conditions. Total gross margin was down 140 basis points due to Mistergooddeal.com and the franchise business which each represented around a further 40 basis points dilutive impact.

 

Underlying costs, excluding Mistergoodeal.com, were down €10 million, two per cent, reflecting the benefits of our cost savings programme in France which offset increased pre-opening costs related to our store and kitchen programmes. Total costs including Mistergooddeal.com were broadly flat. 

 

Group retail profit fell to €13.9 million compared to €22.6 million for the same period last year, including €4.8 million losses from Mistergooddeal.com, phasing of store and promotional activity in France, an overall improvement in Belgium and the Netherlands and a reduction in head office costs from €5.4 million to €4.7 million.

 


 

Exceptional items

Exceptional items of €4.1 million (2014: €24.9 million) were incurred as a result of the integration of Mistergooddeal.com and relate primarily to staff reorganisation costs.

 

Operating profit

Operating profit increased to €9.3 million (2014: loss €1.0 million) principally as a result of reduced exceptional charges of €4.1 million (2014: €24.9 million).

 

Net finance costs

The net finance costs were €12.2 million (2014: €5.5 million) excluding IAS 19 pension interest of €2.6 million (2014: €2.1 million). The net finance cost increase reflects the refinancing of the Group in February 2014.

 

Adjusted profit before tax

The adjusted profit before tax was €1.7 million (2014: €17.1 million).

 

Taxation

The tax credit for the first half is accrued using the expected full year 2014/15 effective tax rate of 30 per cent, on adjusted profit, net of tax credits arising on exceptional items and interest on pensions for the Continuing Group.  The full year tax rate is based on currently enacted legislation.

 

Profit for the period

The loss for the period from continuing operations reduced to €3.7 million (2014: loss €9.0 million).  Loss for the period from discontinued operations reduced to €1.0 million (2014: loss €10.8 million).  Total loss for the period reduced to €4.7 million (2014: loss €19.8 million).

 

Earnings per share

Adjusted earnings per share, excluding the IAS 19 net interest on pension schemes, was 0.2 cents (2014: 1.8 cents).  Continuing basic and diluted losses per share was 0.7 cents (2014: continuing losses per share 1.7 cents).

 

Cash flow

Free cash outflow4 was €69.6 million (2014: €95.2 million outflow).  Cash generated from operations was an outflow of €52.6 million (2014: €81.3 million). Net capital expenditure was €25.2 million (2014: €19.8 million).  Proceeds from the sale of operations relating to the sale of our Turkish business and Datart was €8.6 million (2014: €5.9 million). Interest paid was €11.3 million (2014: €5.4 million) reflecting the refinancing completed in February 2014.  Tax paid was €4.0 million (2014: cash tax received €11.8 million).  The final dividend payment remained unchanged at 2.625 cents per share, but the strengthening of sterling against the euro for shareholders electing a sterling dividend payment increased the cash payment to €14.0 million (2014: €13.4 million).  Net cash outflow was €99.5 million (2014: €101.7 million).  

 

Net debt

Closing net debt was €287.2 million (31 October 2013: €253.4 million) compared to €185.2 million on 30 April 2014.  As at 31 October 2014 €100 million of the Group's €225 million revolving credit facility was drawn down (31 October 2013: €300 million under the previous €455 million revolving credit facility) in addition to the Group's €250 million High Yield Bond.

 

Retirement benefit obligations

The IAS 19 net pension liability decreased from €104.6 million at the year end to €101.7 million (31 October 2013: €100.3 million), split €48.9 million (31 October 2013: €54.3 million) in the UK and €52.8 million (31 October 2013: €46.0 million) in France.  The movement in the UK net liability since 31 October 2013 reflects higher than expected asset returns and contributions made by the Group, partially offset by a fall in corporate bond yields and adverse exchange rate movements on translation to euros.  The increase in the net liability in the French schemes mainly reflects a fall in corporate bond yields. 

 

Dividends

The Board has declared an unchanged dividend of 0.875 cents per share. The ex-dividend date will be 5 March 2015, the record date will be 6 March 2015 and the payment date will be 1 April 2015.

 

Discontinued operations

Datart has been reclassified as a discontinued operation following the completed agreement to sell the Group's 60 per cent shareholding on 7 August 2014. The prior year comparatives have been restated accordingly.

 

4 Free cash flow defined as cash generated from operations and net sale of business operations and subsidiary and net capital expenditure.



 

 

BUSINESS REVIEW

 

France

 

 

 

6 months

ended

31 October 2014

€m

 

 6 months

ended

31 October 2013

€m

Revenue

 

1,316.8

1,266.6

Excl. Mistergooddeal.com

1,273.4

1,266.6

Retail profit

Margin

 

15.3

1.2%

26.9

2.1%

Excl. Mistergooddeal.com

20.1

26.9




No of stores

227

226

 

Total revenue was up 4.0 per cent including Mistergooddeal.com and the franchise business and the Darty brand again outperformed the market for the period. Like-for-like sales fell 1.7 per cent after a positive first quarter against far stronger comparatives of nearly six per cent from the prior year in the second quarter. We saw strong sales in Vision, due to a successful World Cup campaign, and further growth in Communication.  Sales of White goods were stable, with large white goods not benefitting from weather related purchases to the same extent as last year.  We saw a decline in Multimedia sales due to slowing volume growth and decline in average selling price for Tablets and a poor Digital Camera market.

 

Overall web-generated sales continued to grow, albeit in a slower market, to 15 per cent of total product sales, and to nearly 18 per cent including Mistergooddeal.com.

 

Underlying gross margin was down around 70 basis points, in the range of our expectations, excluding the dilutive impact from Mistergooddeal.com and the franchise business, reflecting competitive market conditions. Overall gross margin for France was down 180 basis points.

 

Underlying total costs (excluding Mistergooddeal.com) reduced by €9 million, over two per cent, reflecting the benefit of the cost programme implemented last year. Total costs were up one per cent.

 

Retail profit was €15.3 million compared to €26.9 million in the prior year. This included €4.8 million (2014: €nil) retail loss for Mistergooddeal.com, the adverse impact of the timing of Darty Days promotions and property activity and a break-even performance from the franchise operation.  

 

During the period four stores were opened, one closed, three relocated and one extended and we added 16 new kitchen ranges to our stores.

 

For additional detail of the initiatives implemented in France, please refer to the '4Ds' section on pages 3 to 4 of this announcement.

Belgium and the Netherlands

 

 

 

6 months

ended

31 October 2014

€m

 

 6 months

ended

31 October 2013

€m

Revenue

327.6

 

321.8

 

Retail profit

Margin

3.3

1.0%

1.1

0.3%




No of stores

117

117

 

 

At Vanden Borre in Belgium and BCC in the Netherlands overall revenue was up 1.8 per cent, and up 0.8 per cent on a like-for-like basis. Web-generated sales continued to grow, up over 13 per cent, to nearly 12 per cent of total product sales.

 

With a new management team in place, BCC saw a continued improvement in performance, first seen at the end of last year with positive like-for-like sales, market share gains in all major product categories and a stable gross margin.

 

Vanden Borre focused trading on margin in a more promotional market and saw a strong improvement in margin, with inevitably some impact on revenue against a strong performance last year.  During the period the business further enhanced its leading service proposition with the launch of a Multimedia Service Pack.

 

Overall for the period gross margin was flat with an improvement at Vanden Borre off setting growth in the lower margin BCC business.  Total costs were also flat. Retail profit improved to €3.3 million compared to €1.1 million in the prior year with a strong reduction in losses at BCC partially offset by a small reduction in profits at Vanden Borre.

 

There were no changes to the store portfolios of either business during the period.



 

 

KEY EVENTS

 

Directorate change

 

On 18 July Darty announced that it will be transferring a number of the central support functions based in London to Paris over the coming year as it further consolidates its head office function.  Dominic Platt also informed the Board of his intention to step down as Finance Director but agreed to continue in his role until the September 2015 AGM at the latest.

 

Sale of shareholding in Datart

 

On 8 August Darty announced that it had completed an agreement to sell its 60 per cent shareholding in Datart International SA to SEW 1001 a.s. in a deal valued at €5 million.  This completed the Group's elimination of losses in its non-core markets.

 

Board change

 

Eric Knight resigned as a Non-Executive Director on 11 September.

 

POST BALANCE SHEET EVENTS

 

New Finance Director appointed

 

On 18 November Darty announced that it has recruited Albin Jacquemont as its new Finance Director, who will be based in France.

 

Albin joins from Carrefour, the French food retailer, where he has been Chief Financial Officer for Carrefour France since November 2011. Since joining Carrefour in 1998 Albin has held a number of senior roles including Group Controller and Consolidation Director and Chief Financial Officer of Carrefour Poland. Prior to Carrefour he held a number of finance positions at Lyonnaise des Eaux, who he joined from auditors Arthur Andersen.

 

Albin is expected to join Darty in early 2015 and will join the Board. Dominic Platt will remain as Finance Director until the announcement of the Full Year Results in June 2015 to enable him to oversee the transition of various finance roles to France, when Albin will replace him as Finance Director.

 

Proposed acquisition of stores from HiM Retail in the Netherlands

 

On 18 November, BCC announced the proposed acquisition of up to 18 profitable stores from HiM Retail, strengthening its market position.  All the stores complement the current portfolio and will bring the total number of BCC stores to nearly 80 and make it the leading multi-channel electrical retailer in the market.

 

The proposed acquisition has been submitted to both BCC's and HiM Retail's Works Councils for approval and is expected to be completed by February 2015.

 

NON- GAAP FINANCIAL MEASURES 

 

The Group has prepared its consolidated financial statements under International Financial Reporting Standards for the 6 months ended 31 October 2014. The basis of preparation is outlined in Note 1 to the Financial Information on page 26. The Group has identified certain measures that it believes provide additional useful information on the underlying performance of the Group. These measures are applied consistently but as they are not defined under GAAP they may not be directly comparable with other companies' adjusted measures. The non-GAAP measures, and their definitions, are outlined in Note 1 to the Financial Information on page 26.

 

PRINCIPAL RISKS AND GOING CONCERN 

The risks to achieving the objectives for the remainder of the financial year remain those more fully set out on pages 21 and 22 of the 2013/14 Annual report and as updated as an appendix to this statement.

 

The Group meets its day-to-day working capital requirements through its bank facilities. The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current facilities. After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group therefore continues to adopt the going concern basis in preparing its condensed consolidated interim financial statements.

 

FORWARD LOOKING STATEMENTS

 

Certain statements in this half-yearly report are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. The Company and Group undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

 

STATEMENT OF DIRECTORS' RESPONSIBILITIES

 

The Directors confirm that these condensed consolidated interim financial statements have been prepared in accordance with IAS 34 as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

 

·     an indication of important events that have occurred during the first six months and their impact on the condensed consolidated interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

·     material related-party transactions in the first six months and any material changes in the related-party transactions described in the last Annual Report.

 

The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

 

The Directors of Darty plc are listed in the Darty plc Annual Report for 2013/2014, with the exception of the following changes in the period: Eric Knight resigned as a Director on 11 September 2014. A list of current directors is maintained on the Darty plc website: www.Dartygroup.com.

 

APPENDIX - QUARTERLY REVENUE PERFORMANCE

 

Total revenue change

 


Q1

Q2

HY

France

7.1%

1.1%

4.0%

Belgium and the Netherlands

1.7%

1.9%

1.8%

Total

5.9%

1.2%

3.5%

 

 

Like-for-like

 


Q1

Q2

HY

France

2.0%

(5.2)%

(1.7)%

Belgium and the Netherlands

0.7%

0.8%

0.8%

Total

1.7%

(3.9)%

(1.2)%

 



 

 

APPENDIX - PRINCIPAL RISKS 

 

The taking of risk is an inherent part of doing business and the skill in business is to manage risk effectively. The Board and senior management have invested time to identify and assess the key risks facing the business and actively manages those risks. Risk management is performed from both a top-down and a bottom-up perspective, ensuring that strategic and operational risks are appropriately addressed.

 

The principal risks and uncertainties to delivering our strategy are set out below together with an illustration of what actions are being taken to mitigate the effect of those risks on the business and its customers.

 

Risk

Actions taken

Actions to be taken

 

Legislative and regulatory risks

The Group's operations are subject to extensive regulatory requirements, particularly in relation to its buying and selling products and after-sales services, its advertising, marketing and sales practices, its employment and pensions policies and planning and environmental issues. Changes in laws and regulations and their enforcement may adversely impact the Group's operations in terms of costs, changes to business practices, and restrictions on activities. The Group's businesses may also be adversely affected by changes in tax laws.

 

 

Potential changes to legislation and regulatory requirements are monitored with the help of external advisers, and the business model and processes have been adapted to seek to minimise the impact of these changes.

 

Have sought to ensure governmental and regulatory bodies understand the impact of proposed legislation on both the business and its customers.

 

We have also implemented packages for our customers, providing them with a wider range of services, not only repair services but also assistance in usage such as our Pack Serenity multimedia assistance service and 'Le Bouton'.

 

 

Briefing sessions for key executives on the

likely impact of legislative and regulatory

change so there is sufficient time to develop

action plans to mitigate any adverse effects.

 

 

 

Continue to ensure legislators and regulators

are aware of the potential impact of their

policies.

 

 

Further development of additional service packages

for our customers.

 

 

 

Economic environment

The economic environment can influence the level of consumer expenditure on electrical goods in a number of ways. It can also affect the level of promotional activity in the market, which impacts prices and margins. Other economic factors that may adversely affect sales include interest rates, government economic policy and levels of personal debt.

 

Deteriorating market conditions could adversely impact profitability and cash generation, and delay the delivery of growth in our core businesses.

 

 

 

The implementation of the '4Ds' strategy has improved store footfall. Launched initiatives such as Darty Days, "Les Immediats" and Digital stores to improve trading.

Offset some of the adverse effects by trading across a number of categories, as well as by further introducing new channels such as franchising.

Acquired Mistergooddeal.com to help address the increased demand for lower quartile products.

By taking corporate action, the losses incurred in Italy, Spain, Turkey and the Czech Republic and Slovakia have been eliminated. Losses in the Netherlands have been reduced.

We have completed a refinancing of the Group's debt facilities to secure long-term funding to support our future growth plans.

 

 

 

Continued rollout of the '4Ds' strategy.

 

Review of the store portfolio with a view to

relocating poorly located stores.

 

 

Continued rollout of the franchising

initiative.

 

 

 

 

Further integration of Mistergooddeal.com into Darty France.

 

 

Seek solutions to ensure all businesses are

profitable.

 

Organisational and business change

There are a large number of initiatives across the Group following implementation of the strategic review that could disrupt the business. The implementation of all of the initiatives may be delayed or hindered by a complex regulatory environment, social unrest and project management issues.

 

 

Implemented improved change and project management processes.

 

 

Ongoing dialogue with employees and unions.

 

 

Programme to coach staff in PM skills to be implemented. Undertake an improvement in prioritising initiatives.

 

Improved internal communications.

 

Information technology

A number of IT projects are planned to replace large legacy applications built for individual operating companies. If not properly planned and implemented, there could be significant interruption to the business and additional costs could arise.

 

The reliance on IT systems means the business can be severely adversely impacted if they fail.

 

The increased use of online payments and credit card payments has increased the risk of the loss of personal data.

 

 

 

 

IT Project Committee established.

 

Plan put in place to prioritise removal of old applications.

 

Tested recovery plans across our business.

 

 

Reviewed robustness of current protections for customer personal data.

 

 

 

Enhance change management to prepare

staff and processes for organisation and

systems changes.

 

 

Plans to improve emergency and

disaster recovery plans.

 

 

Continued monitoring and where necessary,

altering systems and protections to meet

changing threats.

 

Profit margins

The level of profit margin in electrical retailing is significantly less than that of many other retailers and is largely determined by the market, consumer demand, manufacturer supply, competition and government regulations.

 

 

Protected margins, as far as possible, through buying arrangements and by maintaining an efficient sourcing operation.

 

Cost structures have been actively managed in order to mitigate the impact of product margin erosion.

 

 

 

Continued development of additional OEM,

exclusive and licensed products.

 

Take legal action where necessary.

 

Cost mitigation plans will continue to be implemented.

 

 

Reputational risks

The Group's success is dependent, in part, upon the strength of the Group's brands and their reputation. The Group operates in an industry where integrity, customer trust and confidence are important and any adverse publicity concerning corporate behaviour, policies and strategies could damage that customer trust and damage the Group's reputation and brands.

 

 

 

A number of internal controls and processes have been put in place to try and limit the number and harmful effect of such incidents.

 

 

Regular reviews of the likely threats to

reputation, together with monitoring of

the media, including social media.

 

Pension scheme liabilities

Following the sale of Comet, the UK defined benefit scheme for Comet employees was retained by the Group. There is a smaller defined benefit scheme in France for senior Darty employees. Both schemes are currently in deficit. These deficits are volatile as a result of changes in the assumptions regarding life expectancy, discount rates (based on gilt yields and company covenant), inflation and future salary increases, risks regarding the value of investments and the returns derived from such investments. Adverse movements in these assumptions could increase the deficit, increasing the funding requirement to the schemes from the Group.

 

 

 

A number of deficit mitigation measures have been undertaken, and will be taken in the future, to reduce both the size of the deficit and its volatility.

 

New triennial valuation agreed in the UK.

 

 

Continue to examine strategies and additional opportunities to mitigate the deficit.

 

 

 

 

INDEPENDENT REVIEW REPORT TO DARTY PLC ON THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

Our conclusion

 

We have reviewed the condensed consolidated interim financial statements, defined below, in the Statement of results of Darty plc for the six months ended 31 October 2014. Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

This conclusion is to be read in the context of what we say in the remainder of this report.

 

What we have reviewed

 

The condensed consolidated interim financial statements, which are prepared by Darty plc, comprise:

 

·     the Group balance sheet as at 31 October 2014;

·     the Group income statement and Group statement of comprehensive income for the period then ended;

·     the Group statement of changes in equity for the period then ended;

·     the Group statement of cash flows for the period then ended; and

·     the explanatory notes to the condensed consolidated interim financial statements.

 

As disclosed in note 1, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

 

The condensed consolidated interim financial statements included in the Statements of results have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

What a review of condensed consolidated financial statements involves

 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

 

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

We have read the other information contained in the Statement of results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated interim financial statements.

 

 

 

 

Responsibilities for the condensed consolidated interim financial statements and the review

 

Our responsibilities and those of the directors

 

The Statement of results, including the condensed consolidated interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Statement of results in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

Our responsibility is to express to the company a conclusion on the condensed consolidated interim financial statements in the Statement of results based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure and Transparency Rules of the Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

 

 

 

 

PricewaterhouseCoopers LLP

Chartered Accountants

10 December 2014

London


 

DARTY PLC












Group income statement (unaudited)






Six months ended 31 October 2014






 

 




Six months

ended

 31 October

2014

Six months ended

 31 October

2013

Year ended

30 April 2014

(audited)

restated c)








restated b)




Note

€m

€m

€m







Revenue


3,4

1,644.4

1,588.4

3,404.4







Group operating profit/(loss)


3

8.8

(2.6)

41.3

Share of post  tax profit in joint venture and associates


3

0.5

1.6

2.4

Total operating profit/(loss)



9.3

(1.0)

43.7







Analysed as:






Retail profit (a)


4

13.9

22.6

74.4

Share of joint venture and associates' interest and taxation


4

(0.5)

(0.4)

(0.8)

Movement in options and related charges over non-controlling interests


3,4

-

(1.0)

(3.2)

Gain on disposal of available for sale investments


3,4

-

2.7

2.7

Exceptional items


9

(4.1)

(24.9)

(29.4)

Total operating profit/(loss)



9.3

(1.0)

43.7







Finance costs



(14.8)

(7.6)

(17.4)

(Loss)/profit before income tax



(5.5)

(8.6)

26.3







Taxation



1.8

(0.4)

(15.8)







(Loss)/profit for the financial period from continuing operations



(3.7)

(9.0)

10.5

Loss for the financial period from discontinued operations


8

(1.0)

(10.8)

(17.4)

Loss for the financial period



(4.7)

(19.8)

(6.9)

 

Loss attributable to:






- Owners of the parent



(4.2)

(17.5)

(3.7)

- Non - controlling interests



(0.5)

(2.3)

(3.2)




(4.7)

(19.8)

(6.9)







Earnings/(losses) per share - basic and diluted (cents)












Continuing operations



(0.7)

(1.7)

2.0

Discontinued operations



(0.1)

(1.6)

(2.7)

Total losses per share


 7

(0.8)

(3.3)

(0.7)

 

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 and exceptional items.

b) Restated following the sale of Datart and the Turkish operations, now classified as discontinued operations.

c) Restated following the sale of Datart, now classified as discontinued operations.   

 


The notes on pages 26 to 47 form part of this financial information.





 

 

 

DARTY PLC














Group statement of comprehensive income (unaudited)







Six months ended 31 October 2014







 





Six months

ended

31 October

2014

Six months

ended

 31 October

2013

restated a)

Year ended

30 April 2014

(audited)

restated b)








Note

€m

€m

€m








(Loss)/profit for the financial period - continuing operations



4

(3.7)

(9.0)

10.5

Loss for the financial period - discontinued operations




(1.0)

(10.8)

(17.4)





(4.7)

(19.8)

(6.9)








Other comprehensive income/(expense)







Items that will not be reclassified to profit or loss:







Remeasurements of post employment benefit obligations




2.6

(17.0)

(25.3)

Tax on other comprehensive income/(expense)




2.5

(0.7)

(1.1)





5.1

(17.7)

(26.4)

 








Items that may be reclassified subsequently to profit or loss:







Exchange differences




(2.6)

0.3

(2.3)

Fair value gains/ (losses) on cash flow hedges




1.3

(0.3)

(0.3)

Tax on other comprehensive income/(expense)




(0.4)

0.1

0.1





(1.7) 

0.1

(2.5)








Other comprehensive income/ (expense) for the period




3.4

(17.6)

(28.9)








Total comprehensive income/(expense) for the period




(1.3)

(37.4)

(35.8)








Attributable to:







- Owners of the parent




(0.6)

(36.5)

(34.8)

- Non-controlling Interests




(0.7)

(0.9)

(1.0)








Total comprehensive expense for the period




(1.3)

(37.4)

(35.8)

 

a) Restated following the sale of Datart and the Turkish operations, now classified as discontinued operations.

b) Restated following the sale of Datart, now classified as discontinued operations.







 

The notes on pages 26 to 47 form part of this financial information.







 

 



 

 

DARTY PLC














Group statement of changes in equity (unaudited)







Six months ended 31 October 2014







 


Share

capital

Demergerand other

reserves             

Translation

reserve

Accumulated deficit

Total

shareholders'

equity

Non-controlling interests

Total

equity

restated a)

 


€m

€m

€m

€m

€m

€m

€m

 

At 1 May 2014

158.9

971.6

14.2

(1,451.3)

(306.6)

(9.6)

(316.2)

 









 

Loss for the period - continuing operations

 -

 -

 -

(3.7)

(3.7)

-

(3.7)

 

Loss for the period - discontinued operations

-

-

-

(0.5)

(0.5)

(0.5)

(1.0)

 









 

Other comprehensive income/(expense):








 

Items that will not be reclassified to profit or loss:








 

Remeasurements of post employment benefit obligations

-

-

-

2.6

2.6

-

2.6

 

Tax on other comprehensive income/(expense)

-

-

-

2.5

2.5

-

2.5

 


-

-

-

5.1

5.1

-

5.1

 

Items that may be reclassified subsequently to profit or loss:








 

Exchange differences

 -

 -

(2.4)

 -

(2.4)

(0.2)

(2.6)

 

Fair value gains/(losses) on cash flow hedges

 -

1.3

 -

-

1.3

 -

1.3

 

Tax on other comprehensive income/(expense)

 -

(0.4)

 -

 -

(0.4)

 -

(0.4)

 


-

0.9

(2.4)

-

(1.5)

(0.2)

(1.7)

 

Total comprehensive income/( expense) for the period 

-

0.9

(2.4)

0.9

(0.6)

(0.7)

(1.3)

 

Transactions with owners:








Dividends (note 6)

 -

 -

 -

(14.0)

(14.0)

(0.6)

(14.6)

 

Employee share schemes

 -

 -

 -

0.3

0.3

 -

0.3

 

Sale of company with non-controlling interest

-

-

-

(2.8)

(2.8)

0.3

(2.5)

 

Re-purchase of non-controlling interest

-

-

-

(9.6)

(9.6)

9.6

-

 









 

At 31 October 2014

158.9

972.5

11.8

(1,476.5)

(333.3)

(1.0)

(334.3)

 

 



 

 

DARTY PLC














Group statement of changes in equity (unaudited)







Six months ended 31 October 2014







 


Share capital

  Demerger and other reserves

Translation reserve

Accumulated deficit

Total shareholders' equity

Non- controlling interests

Total equity

restated a)


€m

€m

€m

€m

€m

€m

€m









At 1 May 2013

158.9

971.8

18.7

(1,401.3)

(251.9)

(10.9)

(262.8)









Loss for the period - continuing operations (a)

 -

 -

 -

(9.0)

(9.0)

-

(9.0)

Loss for the period - discontinued operations (a)

 -

 -

 -

(8.5)

(8.5)

 (2.3)

(10.8)









Other comprehensive income/(expense):








Items that will not be reclassified to profit or loss:








Remeasurements of post employment benefit obligations

-

-

-

(17.0)

(17.0)

-

(17.0)

Tax on other comprehensive income/(expense)

-

-

-

(0.7)

(0.7)

-

(0.7)


-

-

-

(17.7)

(17.7)

-

(17.7)

Items that may be reclassified subsequently to profit or loss:








Exchange differences

 -

 -

(1.1)

 -

(1.1)

1.4

0.3

Fair value losses on cash flow hedges

 -

(0.3)

 -

-

(0.3)

 -

(0.3)

Tax on other comprehensive income/(expense)

 -

0.1

 -

 -

0.1

 -

0.1


-

(0.2)

(1.1)

-

(1.3)

1.4

0.1

Total comprehensive expense for the period

-

(0.2)

(1.1)

(35.2)

(36.5)

(0.9)

(37.4)









Transactions with owners:








Dividends (note 6)

 -

 -

 -

(13.4)

(13.4)

-

(13.4)

Employee share schemes

 -

 -

 -

0.3

0.3

-

0.3









At 31 October 2013

158.9

971.6

17.6

(1,449.6)

(301.5)

(11.8)

(313.3)

 

a) Restated following the sale of Datart and the Turkish operations, now classified as discontinued operations.

 

The demerger reserve represents a reserve created on demerger and is non-distributable. Other reserves comprise a reserve arising from the first time adoption of IAS 39 in February 2006, a redenomination reserve created upon the redenomination of ordinary shares in September 2010 and the hedging reserve comprising the fair value movements on forward foreign exchange contracts.











 

 

DARTY PLC


Group balance sheet (unaudited)

31 October 2014

 




31 October 2014

31 October

2013

 

30 April 2014 (audited)

 



Note

€m

€m

€m

 

Assets






 

Non-current assets






 

Intangible assets


10

61.4

61.2

64.3

 

Property, plant and equipment


11

338.0

357.5

343.9

 

Available for sale financial assets


2

1.0

-

-

 

Investments



15.8

25.1

15.3

 

Other receivables



10.8

13.3

11.2

 

Deferred income tax assets



-

0.4

0.3

 

Total non-current assets



427.0

457.5

435.0

 







 

Current assets






 

Inventories



503.7

538.1

474.2

 

Trade and other receivables



254.0

217.4

221.5

 

Income tax receivable



9.4

0.6

4.2

 

Derivative financial instruments


2

1.1

-

-

 

Cash and cash equivalents


12

52.9

47.8

75.5

 

Total current assets



821.1

803.9

775.4

 







 

Total assets



1,248.1

1,261.4

1,210.4

 







 

Liabilities






 

Current liabilities






 

Borrowings



(0.2)

(2.4)

(1.5)

 

Income tax liabilities



(1.5)

(2.8)

(8.3)

 

Trade and other payables



(879.2)

(894.8)

(890.5)

 

Derivative financial instruments



-

(0.3)

(0.3)

 

Provisions



(1.9)

(3.9)

(3.7)

 

Total current liabilities



(882.8)

(904.2)

(904.3)

 







 

Non-current liabilities






 

Borrowings


15

(339.9)

(298.8)

(259.2)

 

Other payables



(222.9)

(229.2)

(227.1)

 

Deferred income tax liabilities



(33.3)

(40.0)

(30.0)

 

Retirement benefits


17

(101.7)

(100.3)

(104.6)

 

Provisions



(1.8)

(2.2)

(1.4)

 

Total non-current liabilities



(699.6)

(670.5)

(622.3)

 







 

Total liabilities



(1,582.4)

(1,574.7)

(1,526.6)

 







 

Net liabilities



(334.3)

(313.3)

(316.2)

 

 

 

DARTY PLC 

 






Group balance sheet (unaudited) continued

 






 




31 October

2014

 

31 October

2013

 

30 April

2014

(audited)









 Note

 €m

 €m

€m 

Equity attributable to owners of the parent






Share capital


13

158.9

158.9

158.9

Other reserves



984.3

989.2

985.8

Accumulated deficit



(1,476.5)

(1,449.6)

(1,451.3)







Total shareholders' deficit



(333.3)

(301.5)

(306.6)







Non - controlling interests



(1.0)

(11.8)

(9.6)







Total equity



(334.3)

(313.3)

(316.2)

 

 







 

The notes on pages 26 to 47 form part of this financial information. 

 

 

 

Approved by the Board of Directors on 10 December 2014 and signed on its behalf by:

 

 

 







 







 







 







 

Régis Schultz

Dominic Platt





 

Director

Director





 







 

 

 

 

DARTY PLC

 

Group statement of cash flows (unaudited)





Six months ended 31 October 2014





 



Six months ended

31 October 2014

 

Six months ended

31 October 2013

 

Year ended

30 April 2014

(audited)


Note

€m

€m

€m

Cash flows from operating activities





Cash (used in)/generated from operations

14

(52.6)

(81.3)

8.3

Interest paid


(11.3)

(5.4)

(22.8)

Tax (paid)/received


(4.0)

11.8

1.6

Net cash flows used in operating activities


(67.9)

(74.9)

(12.9)

Cash flows from investing activities





Acquisition of subsidiaries, net of cash acquired


(0.4)

-

5.4

Sale of discontinued operations, including cash and overdrafts disposed


8.6

1.3

2.6

Sale of business operation, including cash and overdrafts disposed


-

1.9

1.9

Sale of available for sale investments


-

2.7

2.7

Purchase of property, plant and equipment


(19.8)

(17.5)

(48.5)

Proceeds from sale of property, plant and equipment


-

3.9

29.7

Purchase of intangible assets


(5.4)

(6.2)

(13.4)

Interest received


-

0.1

-

Dividends received from associates/joint ventures


-

0.4

11.0

Net cash used in investing activities


(17.0)

(13.4)

(8.6)

Cash flows from financing activities





Net increase/(decrease) in borrowings

15

80.0

80.0

-

Proceeds from borrowings


-

-

390.0

Repayments from borrowings


-

-

(340.0)

Dividends paid to shareholders

6

(14.0)

(13.4)

(18.0)

Dividends paid to non-controlling interests


(0.6)

-

-

Net cash from financing activities


65.4

66.6

32.0

Net (decrease)/increase in cash, cash equivalents and bank overdrafts

 15

(19.5)

(21.7)

10.5

Cash, cash equivalents and bank overdrafts at start of period

15

74.0

67.7

67.7

Effects of exchange rate changes

15

(1.8)

(0.6)

(4.2)






Cash, cash equivalents and bank overdrafts at end of period

12

52.7

45.4

74.0

 






 The notes on pages 26 to 47 form part of this financial information.




 

 

DARTY PLC






Six months ended 31 October 2014












Notes to the financial statements












1  Accounting policies (unaudited)












Basis of preparation







The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied in the periods presented, unless otherwise stated.

 

The financial information set out on pages 19 to 47 comprises the condensed consolidated financial information of Darty plc for the six months ended 31 October 2014. The Interim report is unaudited, but has been reviewed by the auditors whose report is set out on pages 17 and 18.  It does not constitute statutory financial statements within the meaning of Section 434 of the Companies Act 2006. The comparative figures for the year ended 30 April 2014 are derived from the statutory accounts filed with the Registrar of Companies. The audit report on the Annual Report 2013/14 was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006.

 

The interim condensed consolidated financial statements comprise the Company and its subsidiary undertakings (together referred to as the "Group") and the Group's interests in associated undertakings and joint ventures.

 

The interim report has been prepared in accordance with Disclosure and Transparency Rules of the Financial Services Authority and with International Accounting Standard 34, "Interim Financial Reporting" (IAS 34) as adopted by the European Union. The annual financial statements of the Group are prepared in accordance with IFRS as adopted by the European Union. The condensed set of financial statements included in this interim report have been prepared, except as described below, in accordance with the accounting policies set out in the 2013/14 Annual report approved on 18 June 2014, and should be read in conjunction with those consolidated financial statements.

 

In accordance with IFRS 5, prior year income statement comparatives have been restated so as to report Turkey and Datart as discontinued operations.

 

The tax charge for the first half is accrued using the expected full year 2014/15 effective tax rate of 30 per cent, on Adjusted Profit, net of tax credits arising on exceptional items and interest on pensions for the Continuing Group.  The full year tax rate is based on currently enacted legislation.

 

Effect of new standards







The accounting policies adopted are consistent with those of the previous financial year.  Other amendments to IFRS effective for the financial period ending 31 October 2014 are not expected to have a material impact on the group.







Exceptional items

The Group defines exceptional items as those non-recurring items which by their nature or size would distort the comparability of the Group's result from year to year.  Exceptional costs mainly relate to costs associated with a material restructuring i.e. termination payments, onerous lease charges, asset impairments and other write offs.

 

Assets held for sale and discontinued operations




Assets and businesses are classified as held for sale, and stated at the lower of carrying amount and fair value less costs to sell, if their carrying amount will be recovered or settled principally through a sale transaction rather than through continuing use. A discontinued operation is a component of the Group's business that represents a separate major line of business that has been disposed of, has been abandoned or meets the criteria to be classified as held for sale.







Use of adjusted measures







Darty plc believes that retail profit, adjusted profit before tax, earnings before interest, taxation, depreciation and amortisation ('EBITDA') and adjusted earnings per share provide additional useful information on underlying trends and business performance to shareholders.  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, profit on disposal of business operations and exceptional items. Adjusted profit before tax represents retail profit less finance costs excluding net interest on pension schemes.

 

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 4.  A reconciliation of adjusted earnings per share to basic earnings per share is provided in note 7, 'Earnings per share'.  These measures are used by the Group for internal performance analysis and incentive compensation arrangements for employees.  The terms retail profit and EBITDA 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.


 

 

DARTY PLC

Six months ended 31 October 2014

 

1  Accounting policies (unaudited) continued

 

Principal rates of exchange

 

 


GBP

Czech Kr

Turkish Lira

Average rate - six months to 31 October 2014

Closing rate - 31 October 2014

0.7983

0.7830

27.5595

27.7905

2.8682

2.7855

Average rate - six months to 31 October 2013

Closing rate  - 31 October 2013

0.8520

0.8471

25.8022

25.7555

2.5705

2.7117

Average rate - year ended 30 April 2014

Closing rate - 30 April 2014

0.8414

0.8219

26.5792

27.4550

2.7506

2.9295

 

 

 

DARTY PLC

Six months ended 31 October 2014

2  Financial risk management (unaudited)

 Fair value estimation

 

Financial instrumentsare measured in the balance sheet at fair value, this requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:

 

- Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).

- Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).

- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

 

The fair value of financial instrumentstraded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis. The quoted market price used for financial assets held by the group is the currentbid price. These instruments are included in level 1.  

 

The fair value of financial instrumentsthat are not traded in an active market (for example, over the counter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

 

As announced on 7 August 2014, during the period the Group completed an agreement to sell its 60 per cent shareholding in Datart International in a deal valued at €5m.  Of the total consideration, €1m was given as shares in SEW-1001 a.s., a company based in the Czech Republic.  These have been classified as level 2 financial instruments because the Group holds a put option over these shares, valuing them at €1m.  The carrying value therefore approximates the fair value.

 

If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

 

Specific valuation techniques used to value financial instrumentsinclude:

- Quoted market prices or dealer quotes for similar instruments,

- The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date, with the resulting value discounted back to present value, and

- Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.

 

The following table presents the Group's assets and liabilities that are measured at fair value at 31 October 2014.

 

 Six months ended 31 October 2014


Level 1

Level 2

Level 3

Total



€m

€m

€m

€m

 

Available for sale financial assets






-Equity securities


-

1.0

-

1.0

Forward foreign currency contracts - cash flow hedges


-

1.1

-

1.1







Total assets


-

2.1

-

2.1

 

 

 Six months ended 31 October 2013


Level 1

Level 2

Level 3

Total



€m

€m

€m

€m







Forward foreign currency contracts - cash flow hedges


-

(0.3)

-

(0.3)







Total liabilities


-

(0.3)

-

(0.3)

 



 

 

DARTY PLC





Six months ended 31 October 2014










3  Group operating profit (unaudited)





 








Six months

 ended 31

 October 2014

 

 

Six months

ended 31

 October 2013

restated

 

Year ended

30 April 2014

(audited)

restated

 



€m

€m

€m






Analysis by function:










Revenue


1,644.4

1,588.4

3,404.4

Cost of sales


(1,111.8)

(1,051.7)

(2,275.0)

Distribution costs


(81.6)

(80.4)

(163.4)

Selling expenses


(362.1)

(360.5)

(746.1)

Administrative expenses


(77.7)

(77.8)

(153.2)

Other income


1.7

2.6

4.5

Movement in options and related charges over non-controlling interests


-

(1.0)

(3.2)

Gain on disposal of available for sale investments


 -

2.7

2.7

Exceptional items


(4.1)

(24.9)

(29.4)

Group operating profit/(loss)


8.8

(2.6)

41.3






Share of post tax profit in joint venture and associates


0.5

1.6

2.4

Total operating profit/(loss)


9.3

(1.0)

43.7

 











Group total revenue includes revenue from services of €120.8m (31 October 2013: €118.5m, 30 April 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 €3.0m (31 October 2013: €3.0m, 30 April 2014: €9.7m).

 

The gain on disposal of available for sale investments in the prior period arose from the sale of Go Sport S.A. (note 2).

 


 

 

DARTY PLC

Six months ended 31 October 2014

 










4  Segmental analysis (unaudited)




















The Group bases its internal reporting systems on certain reportable segments. These segments are also used as the basis for 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 and the Netherlands (Vanden Borre and BCC)

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, an electrical retailer in Turkey.  Its results have been excluded from the Continuing Group.

 

Datart was classified as a discontinued operation on 22 July 2014, following the signature of a sale and purchase agreement with SEW-1001a.s.  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.

 

 

 

 

Six months ended 31 October 2014







 



Belgium and the


Continuing


 France

Netherlands

Unallocated

Group


€m

€m

€m

€m






Revenue

1,316.8

327.6

-

1,644.4

EBITDA*

37.8

6.2

(4.6)

39.4

Depreciation and amortisation

(22.4)

(2.9)

(0.1)

(25.4)

Profit/(loss) on disposal of property, plant and equipment and intangible assets including write-offs

(0.1)

-

-

(0.1)

Retail profit/(loss)

15.3

3.3

(4.7)

13.9

Share of joint venture and associates' interest and taxation

(0.5)

-

-

(0.5)

Exceptional items

(4.1)

-

-

(4.1)

Operating profit/(loss)

10.7

3.3

(4.7)

9.3

Finance costs




(14.8)

Finance costs - net

 




(14.8)

 

Loss before income tax

 

 

 

(5.5)

Income tax credit




1.8

Loss for the period




(3.7)

 

The share of operating profits of the joint venture and associates included within the retail profit of France is €1.0m. The share of post tax profits of the joint venture and associates included within the operating profit for France is €0.5m.

 

* 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 totalling €0.3m, all of which are within the France segment.

 

 

DARTY PLC

Six months ended 31 October 2014

 

4  Segmental analysis (unaudited) continued

 

 

               

               

Belgium and the


Continuing


France

Netherlands

Unallocated

Group


€m

€m

€m

€m


Segmental total assets

1,022.5

190.5

31.5

1,244.5

Segmental liabilities

(999.5)

(131.0)

(448.0)

(1,578.5)

Segmental capital expenditure

21.1

3.6

-

24.7

Segmental property lease rental

32.4

11.4

2.0

45.8

 

Investments in equity accounted joint ventures and associates of €15.8m are included within the segment assets of France.

 

 

Six months ended 31 October 2013 (restated)





 



Belgium and the


Continuing



France

Netherlands

Unallocated

Group



€m

€m

€m

€m








Revenue

1,266.6

321.8

-

1,588.4


EBITDA*

48.8

3.8

(4.6)

48.0


Depreciation and amortisation

(24.2)

(2.7)

(0.8)

(27.7)


Profit/(loss) on disposal of property, plant and equipment and intangible assets including write-offs

2.3

-

-

2.3


Retail profit/(loss)

26.9

1.1

(5.4)

22.6


Share of joint venture and associates' interest and taxation

(0.4)

-

-

(0.4)


Movements in options and related charges over non - controlling interests

 -

 -

(1.0)

(1.0)


Gain on disposal of available for sale investments

2.7

-

-

2.7


Exceptional loss on disposal of property, plant and equipment

(0.5)

-

-

(0.5)


Exceptional items

(20.9)

(2.4)

(1.1)

(24.4)


Operating profit/(loss)

7.8

(1.3)

(7.5)

(1.0)


Finance costs 




(7.6)


Finance costs - net




(7.6)


Loss before income tax




     (8.6)


Income tax expense




(0.4)


Loss for the period




(9.0)


 

 



Belgium and the


Continuing

 


France

Netherlands

Unallocated

Group

 


€m

€m

€m

€m

 






 

Segmental total assets

925.7

173.3

76.6

1,175.6

 

Segmental liabilities

(889.1)

(126.3)

(478.2)

(1,493.6)

 

Segmental capital expenditure

18.4

2.5

-

20.9

 

Segmental property lease rental

30.2

12.0

2.0

44.2

 






 

Investments in equity accounted joint ventures and associates of €25.1m are included within the segment assets of France.


 

 

Year ended 30 April 2014 (audited) (restated)

 



Belgium and the th


Continuing


 France

    Netherlands

Unallocated

Group


€m

€m

€m

€m






Revenue

2,717.7

686.7

-

3,404.4

EBITDA*

112.6

14.5

(9.4)

117.7

Depreciation and amortisation

(44.8)

(5.3)

(1.4)

(51.5)

Profit/(loss) on disposal of property, plant and

equipment and intangible assets including write-offs

8.3

0.1

(0.2)

8.2

Retail profit/(loss)

76.1

9.3

(11.0)

74.4

Share of joint venture and associates' interest and taxation

(0.8)

-

-

(0.8)

Movement in options and related charges over non - controlling interests

 -

 -

(3.2)

(3.2)

Gain on disposal of available for sale investments

2.7

-

-

2.7

Exceptional loss on disposal of property, plant and equipment

(3.6)

-

-

(3.6)

Exceptional items

(22.4)

(3.1)

(0.3)

(25.8)

Operating profit/(loss)

52.0

6.2

(14.5)

43.7

Finance costs




(17.4)

Finance costs - net




(17.4)

Profit before income tax




26.3

Income tax expense




(15.8)

Profit for the year




10.5

 






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 for 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 totalling €3.0m all of which are within the France segment.

 

 



Belgium and the


 

Continuing


France

Netherlands

Unallocated

Group


€m

€m

€m

€m






Segmental total assets

937.5

167.7

69.1

1,174.3

Segmental liabilities

(956.0)

(122.5)

(420.5)

(1,499.0)

Segmental capital expenditure

49.8

8.7

-

58.5

Segmental property lease rental

61.6

24.2

3.0

88.8

 

Investments in equity 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, stocks, debtors, other current assets and cash that is not held centrally. Unallocated assets include centrally held cash and other liquid assets and financial assets, as well as interest and tax related prepaid expenses and accrued income.

 

Segment liabilities include operating liabilities such as accounts payable, overdrafts that are not held centrally, prepaid income, accrued expenses and provisions, excluding those relating to interest and taxes that are held centrally.  Unallocated liabilities include loan liabilities as well as interest and tax related prepaid income, accrued expenses and provisions.

 

DARTY PLC

Six months ended 31 October 2014

 

5  Results for the period (unaudited)


The revenue from sales of electrical products plus associated services is subject to some seasonal fluctuations, with peak demand around the Christmas, New Year and January sales periods in the third quarter of the financial year. The total revenue for the continuing group for the six months to October 2014 represented 48 per cent (six months to October 2013: 47 per cent) of the total continuing group annual revenue in the 12 months of the previous financial year.

 

 

DARTY PLC

Six months ended 31 October 2014


6  Dividends (unaudited)



 

  


Six months ended

31 October 2014

 

Six months ended

31 October 2013

 

Year ended

30 April 2014

(audited)

  


€m

€m

€m

  





  





Final paid 2014: 2.625 cents (2013: 2.625 cents) per share


14.0

13.4

13.4

  





Interim paid 2013: 0.875 cents per share


-

 -

4.6

  







14.0

13.4

18.0

 







The Directors have declared an interim dividend of 0.875 cents per share (2013: 0.875 cents per share), which will absorb an estimated €4.6m of shareholders' funds. The ex dividend date will be 5 March 2015, the record date 6 March 2015 and the payment date 1 April 2015.

 

  

 

DARTY PLC








Six months ended 31 October 2014
















7  Earnings per share (unaudited)








 









Basic earnings per share is calculated by dividing the earnings attributable to shareholders by 527.5m shares (31 October 2013: 527.6m and 30 April 2014:  527.5m), being the weighted average number of ordinary shares in issue.

There is no difference between diluted and basic earnings per share. Supplementary adjusted earnings per share figures are presented. These exclude the effects of movement in options and related charges over non-controlling interests, gain on disposal of available for sale investments, exceptional items,  net interest on pension schemes and tax effect of exceptional items and discontinued operations.

 











Six months ended

31 October 2014 

 Six months ended

31 October 2013

restated

Year ended

30 April 2014

(audited) 

restated

 



 (Losses)/

Per share

 (Losses)/

Per share

 (Losses)/

Per share



Earnings

amount

Earnings

amount

Earnings

amount



€m

cents

€m

cents

€m

cents









Basic losses per share








Loss attributable to ordinary shareholders


(4.2)

(0.8)

(17.5)

(3.3)

(3.7)

(0.7)

Discontinued operations attributable to the owners of the parent


0.5

0.1

8.5

1.6

14.2

2.7

 

Continuing operations attributable to owners of the parent

 

 (3.7)

(0.7)

(9.0)

(1.7)

10.5

2.0









Adjustments








Movement in options and related charges over non-controlling interests


-

-

1.0

0.2

3.2

0.6

Gain on disposal of available for sale investments


-

-

(2.7)

(0.5)

(2.7)

(0.5)

Exceptional items

4.1

0.8

24.9

4.7

29.4

5.5

Net interest on pension schemes

2.6

0.5

2.1

0.4

4.0

0.8

Tax effect of adjustments


(1.8)

(0.4)

(7.0)

(1.3)

(10.5)

(2.0)

Adjusted earnings per share


1.2

0.2

9.3

1.8

33.9

6.4









 

 

DARTY PLC

Six months ended 31 October 2014


8  Discontinued operations (unaudited)

 

Datart was classified as a discontinued operation on 22 July 2014, following the signature of the sale and purchase agreement with SEW-1001 a.s., a company based in the Czech Republic.  Its results have been excluded from the Continuing Group.

 



Six months

ended

31 October 2014





€m

Total consideration


5.0

Less: Net assets disposed


(3.8)

Profit on disposal


1.2 

 

Cash flows from Datart



Six months

ended

31 October 2014

Six months

ended

31 October 2013

 

Year ended

30 April 2014 (audited)

 





€m

€m

€m

Operating activities


2.1

6.5

4.4

Investing activities


(0.4)

(1.1)

(1.5)

Financing activities


-

-

-

Cash flows relating to performance of business


1.7

5.4

2.9

Net cash consideration during the period, including cash and overdrafts disposed


(0.1)

-

-

Total cash flow


1.6

5.4

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, an electrical retailer in Turkey.  Its results have been excluded from the Continuing Group.

  

DARTY PLC

Six months ended 31 October 2014


8  Discontinued operations (unaudited) continued

 

The results from Datart, Darty Italy, Darty Spain and Darty Turkey, classified as discontinued operations in the consolidated income statement,are stated below.

 

 



Six months

ended

31 October 2014

Six months

ended

31 October 2013

restated

 

Year ended

30 April 2014 (audited)

restated

 





€m

€m

€m

Revenue


36.7

141.4

276.6

Cost of sales


(27.0)

(112.1)

(215.8)

Distribution costs


(1.3)

(4.7)

(8.4)

Selling expenses


(8.6)

(31.1)

(55.5)

Administrative expenses


(2.1)

(7.4)

(12.6)

Exceptional items


-

3.4

(4.6)

Finance costs


-

(0.4)

(0.8)

Finance income


0.1

0.1

0.1

Loss before income tax


(2.2)

(10.8)

(21.0)

Taxation relating to performance of business


-

-

-

Loss after taxation relating to performance of business


(2.2)

(10.8)

(21.0)

Net profit on disposal


1.2

-

3.6

Total loss for the period from discontinued operations


(1.0)

(10.8)

(17.4)

 

 

Cash flows from Datart, Darty Italy, Darty Spain and Darty Turkey



Six months

ended

31 October 2014

Six months

ended

31 October 2013

 

Year ended

30 April 2014 (audited)

 





€m

€m

€m

Operating activities


(5.8)

(40.1)

(56.9)

Investing activities


(0.3)

(2.8)

(3.2)

Financing activities


-

-

-

Cash flows relating to performance of business


(6.1)

(42.9)

(60.1)

Net cash consideration during the period, including cash and overdrafts disposed


8.6

1.3

2.6

Total Cash Flow


2.5

(41.6)

(57.5)

 

  





  

DARTY PLC

Six months ended 31 October 2014










9  Exceptional Items (unaudited)










 Continuing group





 



Six months

ended

31 October 2014

Six months

ended

31 October 2013

restated

Year ended

30 April 2014 (audited)

restated





€m

€m

€m






Exceptional items:










France





Impairment of intangible assets


(0.2)

-

-

Restructuring costs


(3.9)

(21.4)

(26.0)



(4.1)

(21.4)

(26.0)

Belgium and the Netherlands





Restructuring costs


-

(2.4)

(3.1)



-

(2.4)

(3.1)






Unallocated





Exceptional items


-

(1.1)

(0.3)



-

(1.1)

(0.3)






Exceptional items in operating profit/(loss)


(4.1)

(24.9)

(29.4)






Tax effect of exceptional items


1.6

7.0

10.5






Exceptional loss for the period


(2.5)

(17.9)

(18.9)






 

Exceptional restructuring costs in France relate to Mistergooddeal, arising from its planned integration into the Darty business.

 

The total (pre-tax) exceptional costs of €4.1m are all included within Administrative expenses.

 

The cash outflow on exceptional items during the period (for the Continuing Group) was €8.4m (April 2014: €23.4m, October 2013 €6.4m).

 

In the prior year the social plan and reorganisation in France resulted in total costs of €22.5m, (€21.4m France, €1.1m Unallocated).  In addition,

BCC implemented a reorganisation plan of their stores, distribution and head office structure, (€2.4m).



 

 

DARTY PLC






Six months ended 31 October 2014












10  Intangible Assets (unaudited)












 









Goodwill

Software

Other intangibles

Total



€m

€m

€m

€m

Opening net book value at 1 May 2014


19.0

33.7

11.6

64.3

Adjustment to fair value of Mistergooddeal assets acquired


0.2

(0.7)

-

(0.5)

Additions


 -

5.4

-

5.4

Disposals


-

(1.3)

-

(1.3)

Impairment


(0.2)

-

(0.1)

(0.3)

Amortisation and other movements


 -

(6.2)

-

(6.2)

Closing net book value at 31 October 2014


19.0

30.9

11.5

61.4

 



Goodwill

Software

Other intangibles

Total



€m

€m

€m

€m

Opening net book value at 1 May 2013


20.2

31.0

11.6

62.8

Additions


 -

5.8

0.4

6.2

Disposals


(1.0)

 -

-

(1.0)

Impairment


-

(1.5)

-

(1.5)

Amortisation and other movements


 -

(5.1)

(0.2)

(5.3)

Closing net book value at 31 October 2013


19.2

30.2

11.8

61.2

 







Goodwill is allocated to cash-generating units and tested annually for impairment based on value in use. Goodwill is tested more frequently if there are indications that it might be impaired.

  

 

DARTY PLC



Six months ended 31 October 2014






11  Property, plant and equipment (unaudited)



 



€m




Opening net book value at 1 May 2014


343.9

Adjustments to fair value of Mistergooddeal assets acquired


(1.3)

Additions


19.8

Disposals


(4.5)

Impairment


(0.1)

Depreciation and other movements


(19.8)




Closing net book value at 31 October 2014


338.0

 

During the six month period the group acquired €19.8m of property, plant and equipment. Of these additions, €16.7m relates to fixtures, fittings and equipment and €3.1m to land and buildings.

During the six month period the group disposed of €4.5m of property, plant and equipment. Of these disposals, €0.1m relates to fixtures, fittings and equipment and €4.4m to Datart assets disposed.

 



€m

 

 




Opening net book value at 1 May 2013


369.0

 

Additions


17.5

 

Disposals


(3.4)

 

Impairment


(1.6)

 

Depreciation and other movements


(24.0)

 




 

Closing net book value at 31 October 2013


357.5

 

 




Impairment

 

Asset impairment reviews are carried out whenever events or changes in circumstances indicate that an impairment may have occurred.

 

 

Capital Commitments










31 October 2014

31 October 2013



€m

€m





Contracts placed for future capital expenditure not provided for:




- intangible assets


-

0.1

- property, plant and equipment


7.3

4.9





Total


7.3

5.0



 

 

DARTY PLC





Six months ended 31 October 2014










12  Cash and cash equivalents (unaudited)

















31 October 2014

 

31 October 2013

 

30 April 2014

(audited)



€m

€m

€m











Cash at bank and in hand


52.9

47.4

75.5

Short-term bank deposits and investments


-

0.4

-






Total


52.9

47.8

75.5

 

For the purpose of the consolidated cash flow statement, cash, cash equivalents and bank overdrafts comprise the following:

 








31 October 2014

 

31 October 2013

 

30 April 2014

(audited)



€m

€m

€m






Cash at bank and in hand


52.9

47.4

75.5

Bank overdrafts


(0.2)

(2.4)

(1.5)

Short-term bank deposits and investments


-

0.4

-






Total cash, cash equivalents and bank overdrafts


52.7

45.4

74.0

 







Of the cash and cash equivalents and short-term bank deposits and investments €nil (31 October 2013:  €0.4m, 30 April 2014: €nil) is pledged to support local bank facilities for some Group companies. 

  

DARTY PLC 

Six months ended 31 October 2014

 







13  Share capital (unaudited)














At 31 October 2014, 31 October 2013 and 30 April 2014

 






 






Number

 

31 October

2014

 






m

€m

 

 








Issued and fully paid







 

Ordinary shares of 30 cents each





529.6

158.9

 















 

 

DARTY PLC






Six months ended 31 October 2014












14  Cash flow from operating activities (unaudited)












 




Six months ended

31 October 2014

 

Six months ended

31 October 2013

restated

Year ended

30 April 2014

(audited)

restated




€m

€m

€m













(Loss)/Profit before income tax from continuing operations



(5.5)

(8.6)

26.3

Adjustments for:






Interest income



-

-

-

Interest expense



14.8

7.6

17.4

Share of post tax profit in joint venture and associates



(0.5)

(1.6)

(2.4)

Continuing group operating profit/(loss)



8.8

(2.6)

41.3

Discontinued operations operating loss



(2.3)

(10.5)

(21.0)

Profit on disposal of subsidiary



     1.2

-

3.6

Depreciation and amortisation

26.1

29.3

54.7

Net impairment of intangibles and property, plant and equipment



 0.3

3.1

3.3

Loss/(profit) on disposal of property, plant and equipment and intangible assets including write-offs



0.1

(1.8)

(3.6)

Profit on disposal of business operation



-

-

-

Gain on disposal of available for sale investments



-

(2.7)

-

Net profit on disposal of subsidiary



-

-

(3.6)

(Increase)/decrease in inventories



(55.7)

(64.3)

(1.9)

(Increase)/decrease in trade and other receivables



(44.2)

(22.7)

(15.6)

Increase/(decrease) in payables



13.1

(9.1)

(48.9)







Net cash (outflow)/inflow from operating activities



(52.6)

(81.3)

8.3







Net cash flow from operating activities can be summarised as follows:






Continuing operations



(46.8)

(41.2)

65.2

Discontinued operations



(5.8)

(40.1)

(56.9)

Net cash (outflow)/inflow from operating activities



(52.6)

(81.3)

8.3





















  

DARTY PLC




Six months ended 31 October 2014










15  Reconciliation of net cash flow to movement in net debt (unaudited) 

 

 




 



At 31 October 2014

 

€m

Cash flow

 

€m

Exchange and other

movements

€m

At 1 May 2014

 

€m

 







 

Cash at bank and in hand


52.9

(20.8)

(1.8)

75.5

 

Overdrafts


(0.2)

1.3

-

(1.5)

 

Short-term deposits and investments


-

-

 -

-

 



52.7

(19.5)

(1.8)

74.0

 







 

Borrowings falling due after one year


(339.9)

(80.0)

(0.7)

(259.2)

 



(339.9)

(80.0)

(0.7)

(259.2)

 







 

Total


(287.2)

(99.5)

(2.5)

(185.2)

 

 







 

 

DARTY PLC





Six months ended 31 October 2014










16  Related party transactions (unaudited)










Transactions carried out with related parties in the normal course of business are summarised below. 







Joint venture and associates





 









Six months ended

31 October 2014

Six months ended

31 October 2013




€m

€m











Dividends receivable



-

0.4

Value of products sold by the Group where an associate has provided credit facilities



85.8

84.4

Commission received from joint venture



-

0.5

Amounts recoverable from joint venture and associates



1.5

1.5

 

The associated undertakings provide credit facilities to customers on product sales.











Key management personnel





 









Six months ended

31 October 2014

Six months ended

31 October 2013




€m

€m











Rent payments



1.0

0.8

Other payments for services



0.7

-

 







Other payments for services provided by related parties principally comprise administrative, accounting, information technology and human resources services.

 

All transactions are at arm's length and balances are unsecured.

  

 

DARTY PLC









Six months ended 31 October 2014


















17  Retirement benefits (unaudited)


















The Group operates retirement benefit arrangements most notably in the UK and France. In the UK, the Group maintains a defined benefit pension scheme ("The Comet Pension Scheme") with assets held in a separate trustee administered fund. The Scheme was closed to new entrants on 1 April 2004 and future service accrual was ceased on 30 September 2007, with affected employees eligible to become members of the Group defined contribution scheme. Following the disposal of Comet, Darty plc assumed the liabilities associated with the Comet Pension Scheme. Comet ceased to be the participating employer from the date of completion, 3 February 2012, with all member benefits, including any link to future salary increases, ceasing to accrue from this date.










In France, the main pension benefits are provided through the state system.  The Group is also required to pay lump sums (retirement indemnities) to employees when they retire from service.  In addition, the Group provides a supplementary funded, defined benefit plan (Supplementary Pension Plan) for certain senior executives.










The amounts recognised in the balance sheet are determined as follows:










 












31 October 2014


31 October 2013












UK 

France 

Group


UK 

France 

Group



€m

€m

€m


€m

€m

€m










Present value of defined benefit obligation


530.5

69.3

599.8


453.4

63.7

517.1

Fair value of plan assets


(481.6)

(16.5)

(498.1)


(399.1)

(17.7)

(416.8)










Net liability recognised in the balance sheet


48.9

52.8

101.7


54.3

46.0

100.3

 

The movement in the UK net liability since 31 October 2013 results principally from significantly higher than expected asset returns and contributions made by the Group, partially offset by a fall in corporate bond yields. The increase in the net liability in the France schemes mainly reflects a fall in corporate bond yields. The fall in corporate bond yields was larger in the Eurozone than in the UK.

  

 

DARTY PLC

Six months ended 31 October 2014

 

18  Business combinations

 

On 31 March 2014, the Group through its subsidiary Etablissements Darty et Fils (France) acquired 100 per cent of the share capital of Mistergooddeal, one of France's leading online electrical retailers.

 

In accordance with IFRS 3 Revised  "Business Combinations", goodwill on the acquisition of Mistergooddeal, provisionally determined in the 30 April 2014 Annual Report, has been adjusted. The adjustments were made to account for amendments to the fair values of assets and liabilities acquired in March 2014.

 

The following table summarises the consideration paid for Mistergooddeal and the adjusted fair value of assets acquired and liabilities assumed at the acquisition date.

 

 

Consideration as at 31 October 2014

€m



Cash as reported at 30 April 2014

2.0

Working capital adjustments arising at acquisition date

(0.1)

Total consideration as at 31 October 2014

1.9

 

Recognised amounts of identified assets acquired and liabilities assumed

Total fair value acquired as reported at

30 April 2014

€m

Fair value adjustments during the period

 

€m

Total fair value acquired restated as at

31 October 2014

€m

Cash and cash equivalents

5.4

-

5.4

Property, plant and equipment (note 11)

1.3

(1.3)

-

Software (included in intangibles) (note 10)

0.7

(0.7)

-

Inventories

9.5

-

9.5

Trade and other receivables

5.9

-

5.9

Deferred tax

3.9

0.2

4.1

Trade and other payables

(24.7)

1.5

(23.2)

Total identifiable net assets

2.0

(0.3)

1.7





Goodwill

-

0.2

0.2





Total

2.0

(0.1)

1.9

 

The carrying value of Mistergooddeal's goodwill is impaired and an exceptional pre-tax charge of €0.2m has been recognised.

 

19  Events after the reporting period

 

On 18 November, BCC announced the proposed acquisition of up to 18 profitable stores from HiM Retail, strengthening its market position.  All the stores complement the current portfolio and will bring the total number of BCC stores to nearly 80 and make it the leading multi-channel electrical retailer in the market.

 

The proposed acquisition has been submitted to both BCC's and HiM Retail's Works Councils for approval and is expected to be completed by February 2015.



 

SHAREHOLDER INFORMATION   

Registrar and transfer office

All enquiries relating to shareholdings should be addressed to the Company's Registrar, as follows:

By Mail:            Computershare Investor Services PLC,

The Pavilions,

Bridgwater Road,

Bristol BS99 6ZZ

 

By phone: +44 (0)870 707 1102

 

By e-mail: web.queries@computershare.co.uk

 

Please indicate that you are a shareholder of Darty plc.

Investor Centre

Investor Centre is a free, secure share management website provided by our Registrars.  This service allows you to view your share portfolio and see the latest market prices of your shares, check your dividend payment and tax information, change your address, update payment instructions and receive your shareholder communications online.  To take advantage of this service, please log in at www.investorcentre.co.uk and enter your Shareholder Reference Number and Company Code.  The information can be found on your last dividend voucher or share certificate. 

Dividend mandates

If you wish dividends to be paid directly into your bank account through the BACSTEL-IP (Bankers' Automated Clearing Services) system, you should contact our Registrars for a Dividend Mandate Form or apply online at www.investorcentre.co.uk.

Electronic shareholder communications

 

We have entered into an arrangement with our Registrars whereby shareholders are able to elect to receive shareholder communications from the Company electronically, rather than in paper format via the postal system.

 

We actively encourage shareholders to register now for our electronic communications service through the eTree campaign run by our Registrars in conjunction with The Woodland Trust.  When you register for electronic communications, a tree will be planted on your behalf with the Woodland Trust's "Tree For All" scheme in a UK area selected for reforestation.  The service enables you to save paper, contributing to a greener countryside and reducing harmful carbon dioxide emissions which impact climate change.

 

In order to receive shareholder communications such as notices of shareholder meetings and annual report and accounts electronically rather than by post, you should register your details via the Investor Centre/information and services page of the Darty plc website www.dartygroup.com.  You can also register for electronic communications via www.etreeuk.com/darty.



 

 

Share dealing service

 

We offer an internet and telephone share dealing service for shareholders (in certain jurisdictions) in conjunction with Computershare, our Registrars.

 

Internet dealing:

·     The fee is 1.0 per cent, subject to a minimum charge of £15.00. Stamp duty at 0.5 per cent is payable on purchases.

·     Up to 90 day limit orders available on shares.

·     Service is available to place orders out of market hours.

·     Log onto www.computershare.com/dealing/uk.

 

Telephone dealing:

·     Commission is 1 per cent, subject to a minimum charge of £15.00. Stamp duty at 0.5 per cent is payable on purchases.

·     The share price at which you deal will be confirmed to you whilst you are still on the telephone.

·     Service is available from 8.00am to 4.30pm Monday to Friday excluding bank holidays.

·     Call +44 (0)870 703 0084

 

No forms will need to be completed in advance and the settlement period is ten business days after your trade has been dealt in the market, for both internet and telephone share dealing.  Further information and copies of the terms and conditions of both these services can be obtained by calling +44 (0)870 703 0119.

 

Gifting shares to your family or to charity 

 

To transfer shares to another member of your family as a gift, please ask the Registrars for a Gift Transfer Form.  If you only have a small number of shares whose value makes it uneconomic to sell them, you may wish to consider donating them to ShareGift, the share donation charity (registered charity number 1052686).  The relevant share transfer form may be obtained from the Registrars.  Further information about the scheme is available from the ShareGift Internet Site www.ShareGift.org.

 

 

 

FINANCIAL CALENDAR

 

Q3 Interim Management Statement                       12 February 2015

 

Full Year Announcement                                         18 June 2015

 

REGISTERED OFFICE

 

Darty plc

22-24 Ely Place

London EC1N 6TE

+44(0) 20 7269 1400

 

A Company registered in England, Company Number 0423413

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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