Dixons Carphone : 2018/19 Preliminary Results

Preliminary resultsfor the 12 months to 27th April 2019

FY19 financial results in line with our plan

• Gained market share in Electricals in all territories

• Group FY like-for-like revenue⁽³⁾ up 1%; UK & Ireland electricals like-for-like revenue⁽³⁾ up 1%; International like-for-like revenue⁽³⁾ up 4%; UK & Ireland mobile like-for-like revenue⁽³⁾ down 4%

• Statutory revenue down 1% to £10,433 million

• Group headline PBT⁽¹⁾ of £298 million (2017/18: £382 million):

• Statutory loss before tax of £259 million (2017/18: profit of £289 million), including non-headline charges of £557 million (2017/18: £93 million), primarily non-cash impairments relating to the changing UK mobile market, as outlined in December interim results, mainly goodwill⁽⁴⁾

• Free cash flow⁽⁵⁾ of £153 million (2017/18: £172 million). Operating cash flow of £286 million (2017/18: £312 million)

• Net debt⁽⁶⁾ of £265 million (2017/18: £249 million)

• Final dividend of 4.50p proposed (2017/18: 7.75p), full year dividend at 6.75p (2017/18: 11.25p)

Alex Baldock, Group Chief Executive, said:

'The past year has seen us keep our promises to investors, delivering around £300 million of headline profit, resilient free cash flow, and continued growth in sales and market share in UK & Ireland electricals and International. And we've taken the first big strides in our transformation.

But we know we have it in us to be a much more valuable business. That will take time. In December, we set out a clear strategy to help everyone enjoy amazing technology, and early progress is promising.

In UK & Ireland electricals, we expect growing sales and headline profits this year and beyond. We've made significant gains in Credit and Online - both big profitable growth opportunities for us. Early steps towards an easier customer experience have seen satisfaction scores start to rise. And we've laid important foundations for Services to make our customer relationships stickier and more valuable.

The same focus on Credit, Online and Services will ensure our strong International business continues its trajectory of growing sales and market share, while further improving profitability.

In UK mobile, the market is changing in the way we described in December, but doing so faster. So, we're moving faster to respond: we've renegotiated all our legacy network contracts, we're developing our new customer offer, and are accelerating the integration of Mobile and Electricals into one business. This means taking more pain in the coming year, when Mobile will make a significant loss. But accelerating our transformation provides certainty that this year is the trough, as during next year the legacy contractual constraints on our Mobile business lift, and the integration cost benefits build. We expect Mobile will at least break even within two years, and beyond that, equipped with a stronger and unconstrained offer, we will of course aim to do better. In any case, cash generation from Mobile will be strong.

Overall, with investment in our transformation underpinning UK & Ireland electricals and International growth in sales and headline profits, and accelerating the changes in Mobile, we're confident to bring forward our long-term ambitions. We still commit to over £1 billion of Group free cash flow over the five year plan, but also to accelerate our £200 million cost reduction promise by two years, and our promise of at least 3.5% Group EBIT margins by a year.

I want to thank my tens of thousands of colleagues at Dixons Carphone for their unrelenting hard work. This business matters, not just to us, but to the millions of people whose lives we can improve through the power of amazing technology. So it's with a sense of responsibility that we commit to transforming Dixons Carphone into a world class business for colleagues, customers and shareholders. We believe we will.'

5 year transformation plan: earlier forecast delivery of Group cost savings and margin

• Group headline EBIT margin improvement to at least 3.5% by FY23, a year earlier than originally planned

• Underpinned by £200 million of identified gross cost savings, delivered two years earlier by FY22, with more thereafter

• Combination of transformation benefits and Mobile improvement to drive headline PBT to over £300 million by FY22

• Nordics to benefit from adoption of Group strategy in Services, Credit and Online, taking margins to at least 3.5%

• On track for over £1 billion of cumulative free cash flow over the plan, including working capital improvements of over £500 million, mostly from Mobile debtor

FY20 Group financial guidance^(7),(9),(10)

• Sales and profit to grow in Electricals in both UK & Ireland and International

• UK mobile: significantly loss making this year; improving materially in following two years by accelerating transformation

• Headline PBT expected to be around £210 million, with growth thereafter as transformation benefits feed through

• Capex of circa £275 million, in line with overall transformation capex guidance; peak year of transformation investment

• Exceptional cash costs expected of circa £80 million

• Net debt broadly flat year on year given strong cash flow from working capital improvements

• Full year dividend expected to be flat year on year reflecting confidence in both cash flow and future profit growth

Headline results

			Headline revenue(1)				Headline profit / (loss)(1)
		2018/19	2017/18	Reported	Local currency(2)	Like-for- like (3)	2018/19	2017/18
	Notes	£m	£m	% change	% change	% change	£m	£m
UK & Ireland electricals	(4)	4,475	4,412	1%	1%	1%	180	231
UK & Ireland mobile	(4)	1,998	2,233	(11)%	(11)%	(4)%	9	43
UK & Ireland		6,473	6,645	(3)%	(3)%	-	189	274
Nordics		3,501	3,470	1%	4%	3%	112	106
Greece		459	410	12%	13%	13%	21	20
International		3,960	3,880	2%	5%	4%	133	126
Group		10,433	10,525	(1)%	-	1%	322	400
Net finance costs							(24)	(18)
Profit before tax							298	382
Tax							(62)	(79)
Profit after tax							236	303
Total non-headline items							(556)	(137)
Statutory (loss) / profit after tax							(320)	166
Headline basic EPS(1)							20.4p	26.2p

Revenue summary

		Peak 2018/19(8)				Post Peak 2018/19(8)				H2 2018/19
	Notes	Reported % change	Local currency(2) % change	Like-for- like (3) % change		Reported % change	Local currency(2) % change	Like-for- like (3) % change		Reported % change	Local currency(2) % change	Like-for- like (3) % change
UK & Ireland electricals	(4)	2%	2%	2%		(1)%	(1)%	-		1%	1%	1%
UK & Ireland mobile	(4)	(12)%	(12)%	(7)%		(16)%	(16)%	(8)%		(16)%	(16)%	(8)%
UK & Ireland		(2)%	(2)%	-		(7)%	(7)%	(3)%		(5)%	(5)%	(2)%
Nordics		2%	3%	3%		1%	4%	2%		1%	4%	3%
Greece		18%	18%	19%		8%	9%	10%		13%	14%	14%
International		4%	5%	5%		1%	5%	3%		2%	5%	4%
Group		-	-	1%		(3)%	(2)%	(1 )%		(2)%	(1)%	-

This release contains inside information

Investor and analyst webcast

There will be a conference call with presentation for investors and analysts at 9:00 am today. The presentation slides will be available via webcast (listen only) on our corporate website, www.dixonscarphone.com

For further information

Assad Malic	Group Corporate Affairs Director	[phone]
Amy Shields	Head of External Communications	[phone]
Tim Danaher, Nick Beswick	Brunswick Group	[phone]

About Dixons Carphone: Dixons Carphone plc is a leading multinational consumer electrical and mobile retailer and services company, employing over 42,000 people in nine countries. We Help Everyone Enjoy Amazing Technology, however they choose to shop with us. We are the market leader in the UK & Ireland, throughout the Nordics and in Greece. With a full range of services and support, we make it easy for our customers to discover, choose and enjoy the right technology for them, throughout the life of the product. Our core multichannel operations are supported by an impressive distribution network and sourcing office in Hong Kong and a state-of-the-art repair facility in Newark, UK. Our brands include Currys PC World and Carphone Warehouse in the UK & Ireland and iD Mobile in the UK; Elkjøp, Elgiganten and Gigantti in the Nordics; and Kotsovolos in Greece. Our Dixons Travel brand has a presence across several UK airports as well as in Dublin and Oslo, and our services are provided through Team Knowhow in the UK, Ireland and the Nordics.

Certain statements made in this announcement are forward-looking. 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 events or results referred to in these forward-looking statements. Unless otherwise required by applicable laws, regulations or accounting standards, we do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.Information contained on the Dixons Carphone plc website or the Twitter feed does not form part of this announcement and should not be relied on as such.

Notes.

(1) Headline results exclude amortisation of acquisition intangibles, significant reorganisation costs, significant impairments, businesses to be exited, property rationalisation costs, acquisition-related costs, net interest on defined benefit pension schemes and discontinued operations. Such excluded items are described as 'non-headline'. For further details see note 3 of the Financial Information.

(2) ‌Change in local currency revenue reflects total revenue on a constant currency and period basis as defined in the glossary on page 34.

(3) ‌Like-for-like revenue is defined in the glossary on page 34

(4) During the period, the reportable segments of the Group have been changed and comparatives restated accordingly. The restatement is detailed in note 2 to the Financial Information. As part of the strategic review, the Group has separated the previous UK & Ireland operating segment into the separate electricals and mobile operating segments. Given the challenges in the mobile market, and the corresponding change in the UK & Ireland mobile performance in the period, the Group has changed the information presented to the Board to provide greater clarity over the relative performance of the two UK & Ireland businesses and to support decisions related to the allocation of the Group's resources. This change has included the provision of separate financial information in respect of the UK & Ireland mobile and electricals segments. As a result of the change, the goodwill previously allocated to the UK & Ireland was separated into UK & Ireland electricals and UK & Ireland mobile and an impairment review was then performed over the new segments. This identified a material non-cash impairment charge of £225 million recorded over the goodwill of the UK & Ireland mobile segment, together with impairment of related assets of £122 million and additional onerous lease charges of £36 million recorded against individual stores.

(5) Free cash flow is defined in the glossary on page 36

(6) Net debt is defined in the glossary on page 36

(7) Dixons Carphone has in place substantial contingency plans to mitigate the operational disruption expected in the event of a 'hard Brexit'. However, all financial guidance is provided on the basis that there is no significant change in macroeconomic outlook

(8) Peak and Post Peak are defined in the glossary on page 38

(9) Group financial guidance is excluding any impact arising as a result of the adoption of IFRS 16

(10) Group financial guidance excludes any revaluation of mobile network debtor which may arise, up or down

First Big Strides in our Transformation

'We Help Everyone Enjoy Amazing Technology'

The strategy to deliver our vision as outlined in December focuses on our core, and on four things that matter most: two big profitable growth opportunities in Online and Credit, giving customers an easy experience and revitalising our Mobile business. We are delivering this through three enablers: Capable and Committed Colleagues; working in One Business with Stronger Infrastructure.

Earlier forecast delivery of cost savings and margin over 5 year transformation plan

We are making good early progress on our strategy. We've made significant improvements in Online and Credit and early steps towards an easier customer experience have seen satisfaction scores rise. We've done good work within Services, we're investing in our colleagues and we're on our way towards being genuinely One Business, and towards Stronger Infrastructure - all important for lower costs as well as for sustainable growth. In Mobile we are accelerating our transformation.

We are delivering this transformation in the right way for our customers. The protection of data is at the heart of our business and is an area where we've fallen short in the past but where we continue to increase investment. We must also remain focused on treating our customers fairly, as the FCA fine in March 2019 for historic mobile phone insurance mis-selling reminds us.

UK & Ireland electricals: making strong progress across our transformation

Online

This is a big, profitable opportunity for the Group and we are making good early progress, with online growth in UK & Ireland electricals up 9%, accounting for 28% of sales. We are outperforming the market and now taking market share both online and in stores.

We are making it easy for customers to find and buy what they want by increasing the online range by 5,000 products this year, an increase of over 60% year on year, and we are on track for 40,000, as promised, over the plan. We have made improvements in the online customer experience, are focusing on smartphone first and will launch a transactional app in FY20. We are also strengthening online margins through making it easier for customers to adopt credit and services online.

We're making more of online and stores working togetherat scale. Stores have to be exciting for customers to discover the right tech for them. This includes face-to-face advice, demos so customers can experience the tech for themselves and giving more space in stores to growth categories such as gaming, large screen TVs and home tech. We are putting slower-moving lines online and through the roll-out of our Store Mode tablets to all stores (5,500 tablets), we can now sell the whole online range in stores. Later this year we will also be able to complete transactions on the tablet as well.

We are making our biggest investment in stores in five yearswith the introduction of Experience Zones and the roll-out of Gaming Battlegrounds.

Credit

Credit is another big profitable growth opportunity across the Group; we have strong foundationsand we've made some good early progress in FY19. Credit adoption is now over 9% (+150bps year on year) and our number of credit customers is over 900,000, (+50% year on year). Credit sales are now £420 million, up over 20% year on year and we are on track for customer take up of credit to increase to 16% of UK & Ireland electricals revenue over the course of the plan.

With credit, customers can afford more and better technology and customer satisfaction is higher. Credit gives customers another reason to shop with us, they are stickier and more valuable with lifetime profit on credit customers three times that of other customers. Adoption of other services by credit customers is 45% higher.

We are going about credit in the right way as a responsible retailer; we now have 21,000 fully compliant credit trained colleagues. We have better capabilities and expertise in-house and better partnerships; in December we agreed a new relationship with BNP Paribas to give us breadth of offer and better economics, still without taking on credit or fraud risk. We are putting credit at the heart of what we do and our customer journeys and making better use of data, for example by building awareness through CRM.

Easy Customer Experience

We want to build a reputation as an easy and reliable place to shop and we are making good early progress such as in our supply chain on right first time delivery: up 2.5 percentage points versus last year and in our contact centres: where first time customer issue resolution is up 22%.

Services are important for all of our businesses and within this we have been working to make Protection a bigger, more sustainable part of our business. We know customers value product protection and we will be launching revamped products and selling processes this year, market-leading, customer-friendly products based on customer needs. With our scale, we can offer protection others can't.

Last year, profit contribution to UK & Ireland electricals stepped down as we focused on revamping our Protection offer and making it even better value. Early results from the revamp have been encouraging.

Core enablers

Capable and Committed Colleagues are our greatest advantage: in FY20, we are increasing the frontline training budget by four times and, following a successful trial of a new assisted selling model, 'Freedom within a Framework', we will be rolling this out across the estate, empowering employees to really focus on customer needs. We announced the launch of a colleague share ownership scheme in December which saw every permanent colleague with 12 months' service granted at least £1,000 worth of shares each over the next three years. By making every colleague a future shareholder we are energising our colleagues behind the vision and strategy in a way that will benefit customers and shareholders.

One Business: We have plans, including IT, Supply Chain and central costs, to deliver our £200 million of cost savings which we expect to achieve by FY22, two years ahead of plan.

Stronger Infrastructure: A big part of better infrastructure is better IT. We are underway with our plans to upgrade our infrastructure to enable our transformation which will allow us to meet our delivery promises and give us faster product set-up, lower cost to operate and standardised processes.

International: further potential to enhance growth and margins

Our International business will account for over half our profits in FY20 with strong continued top and bottom line gains and further progress in EBIT margins. It continues to grow its market leading positions, supported by a strong management team. Our International business will benefit from the new Group strategy with growth opportunities in B2B, Online, Credit, an easy customer experience and focused on two growth categories, smart home and kitchen. In June 2019, Erik Sønsterud took over the role of CEO International. Over the past two years as CFO International, Erik has overseen strong performance and led the development of our strategy for Nordics.

We believe that we can further enhance the marginin our International business, by making the most of Group synergies, and are now targeting Nordic EBIT margin of at least 3.5% over the plan (from 3.2% today), making them a still more valuable part of the Group.

UK mobile: accelerating transformation

In December, we identified the challenges we faced in a changing market. Since then these market trends are moving at pace so we are accelerating our transformation to respond.

As we have outlined before, the overall UK mobile market has seen a decline in total handset volumes as well as a change in mix as customers move away from 24 month postpay towards SIMO and more flexible credit-based contracts.

Given our lower share and margin in SIMO and current absence in the more flexible credit-based offers, these mix changes have impacted our share and profitability (which led to a non-cash impairment of UK mobile assets in FY19). This has been compounded by our legacy network contracts, where we could face large penalties for missing volume commitments, and a cost base that is inflexible and too high.

Last year, we successfully renegotiated all our legacy network contracts, resulting in lower volume commitments with better economics. We now have a better choice of connectivity to offer our customers, including a wider choice of networks, more SIMO products and better security of supply through our own MVNO, iD Mobile, where last year our subscriber base grew to over one million customers.

We are revamping our offer,reflecting how customers want to buy. We are developing our own credit bundles as well as intending to sell network credit bundles. We expect to have our offer in the market in FY20 and making a meaningful contribution in FY21, ahead of our initial plans. We will be ready with our new offers for when postpay volume commitments lift during FY21.

We are accelerating our transformation towards One Businessto deliver a lower and more flexible cost base. We are underway getting after cost benefits as we move to a single IT platform and earlier decommissioning of legacy systems. We expect to achieve our overall £200 million cost reduction two years early circa £100 million of it will benefit Mobile, which gives us good confidence in Mobile reaching at least break even in FY22.

Headline performance review

The performance review below refers, unless otherwise stated, to headline information for continuing businesses. The basis for the preparation of this information, including restatements due to businesses to be exited, discontinued operations and segmental classification, is described above. Statutory results are described on page 9.

Group

Group headline revenue decreased by 1% in Sterling terms to £10,433 million (2017/18: £10,525 million) and was flat on a local currency basis. Like-for-like revenue growth was 1%, reflecting strong performance in Greece (like-for-like growth of 13%) and the Nordic region (like-for-like growth of 3%). UK & Ireland electricals delivered 1% like-for-like growth whilst UK & Ireland mobile declined by 4%.

Headline EBIT decreased £78 million to £322 million, as higher headline EBIT in our International businesses was more than offset by lower headline EBIT in UK & Ireland electricals and UK & Ireland mobile.

UK & Ireland electricals

Headline revenue increased by 1% to £4,475 million (2017/18: £4,412 million), with full year like-for-like revenue growth of 1%. Overall market share increased and growth was predominantly driven by large screen TVs, gaming, small white goods and smart home and fitness products. Softer categories included imaging and audio. Our online business continued to grow strongly with revenue growth of 9% and, increasingly, customers took advantage of the ability to order online and collect in store.

Headline EBIT decreased by £51 million to £180 million (2017/18: £231 million). Gross margins were down 100bps, with the majority of this in the first half, negatively impacted by changes in channel mix which drove higher demand for delivery and installation, and lower services adoption rates as we reconfigured our service proposition. Year-on-year EBIT was impacted by prior year systems reconciliation releases (£16 million), prior year benefit from changes in the cost profile of customer support agreements (£4 million) and negative impact from the current year implementation of IFRS15 on revenue from customer support agreements (£5 million). In total these items accounted for £25 million of the year-on-year decline, of which £15 million occurred in the second half of the year. There were also benefits from the previously announced reorganisation, offset by higher depreciation from IT systems brought online during the year.

UK & Ireland mobile

Total headline revenue of £1,998 million was recognised in the year (2017/18: £2,233 million) which included £7 million of out of period revenue (2017/18: £3 million). Like-for-like revenue for the full year were down 4%. The like-for-like decrease reflected the decline in the 24 month postpay market during the period. Online continued to grow as share of business and our MVNO, iD Mobile, saw good growth, to reach a million customers. Overall revenue was impacted by store closures, network commissions income and lower Connected World Services activity.

Headline EBIT decreased by £34 million to £9 million (2017/18: £43 million) reflecting the decrease in sales. Overall gross margins were up 50bps year-on-year. Headline EBIT included negative revaluations of £32 million (2017/18: £30 million) due to changes in customer behaviour and legislative impacts on previously recognised transactions. In year network commissions income was impacted by the recent implementation of customer bill capping and provisions for future regulatory changes (£31 million). Current year EBIT included an £18 million depreciation benefit from asset impairments recognised in the first half, cost savings from store closures and benefits flowing from the previously announced reorganisation, whilst prior year EBIT included £9 million benefit from systems reconciliation releases which have not been repeated in the current year.

Nordics

The year saw a strong performance in the Nordics with 4% local currency revenue growth. Reported revenue was up 1% to £3,501 million (2017/18: £3,470 million), the difference from local currency due to the strengthening in the Pound.

Like-for-like revenue grew by 3%, and market share increased, with good growth in most categories particularly in telecoms, gaming and white goods, supported by strong online growth of 24%. Softer categories included computing and consumer electronics.

Gross margin improved c.10bps, coupled with improved distribution cost efficiencies following the previously announced investments in the Jönköping distribution centre, as well as efficiencies resulting from the consolidation of brands in Norway, with the rebranding of Lefdal.

As a result, Nordics headline EBIT improved by £6 million to £112 million (2017/18: £106 million).

Greece

Greece continued to grow strongly, with like-for-like revenue increasing 13%, local currency revenue increasing 13% and reported revenue increasing 12% to £459 million (2017/18: £410 million), with market share increasing across all categories. Gross margins remained stable, and reported EBIT increased to £21 million (2017/18: £20 million), reflecting continued investment in core operations to support future growth.

Net finance costs

Headline net finance costs were £24 million (2017/18: £18 million). The increase in net financing costs reflected higher usage of the revolving credit facility as the supplier funding working capital facility was used less. Finance income included within the net finance cost reduced by £3 million to £11 million due to the financing element of network income declining with total network income.

Tax

The headline effective tax rate for the full year was 21% (2017/18: 21%). The rate was higher than the UK statutory rate of 19% mainly due to higher statutory rates in the Nordics and certain non-deductible items mainly in the UK.

Cash and movement on net debt

Free Cash Flow

	2018/19 £million	2017/18 £million
Headline EBIT	322	400
Depreciation and amortisation	146	160
Working capital	24	(80)‌‌
Capital expenditure	(166)	(173)‌‌
Taxation	(45)	(63)‌‌
Interest	(30)	(25)‌‌
Other items	9	-
Free cash flow before exceptional items - continuing operations	260	219
Exceptional costs	(107)	(47)‌‌
Free Cash Flow	153	172

Free Cash Flow was an inflow of £153 million (2017/18: £172 million), a decrease of 11% for the reasons described below.

The Group experienced a working capital inflow of £24 million (2017/18: £80 million outflow), largely as a result of the unwind of the capitalised network debtor. This was partly offset by an increase in the UK & Ireland electricals inventory of £37 million including a buffer in case of 'hard Brexit', lower than planned sales at year end because of the unusually warm Easter weekend, favourable payment timings last year not repeated and adverse debtor timing this year end. Overall £30 million of this working capital movement will reverse in FY20.

Capital expenditure in the period was £166 million (2017/18: £173 million). The year-on-year decrease reflected a small pause whilst new strategy plans were completed. Investment will build in FY20 as the transformation accelerates.

Taxation paid in the year reduced from £63 million to £45 million due to overpayments in prior periods recovered in the year and the impact of reduced profitability.

The increase in interest paid was primarily as a result of higher usage on the revolving credit facility as explained above.

Exceptional costs primarily comprised of the cash costs associated with the transformation activities, the property rationalisation programme and the regulatory fine noted below within non-headline items.

A reconciliation of cash inflow from operations to free cash flow is presented in note 8c to the Financial Information.

Funding

	2018/19 £million	2017/18 £million
Free Cash Flow	153	172
Dividends	(116)	(130)‌‌
Acquisitions and disposals including discontinued operations	(1)	24‌‌
Special pension contributions	(46)	(46)‌‌
Other items	(6)	2
Movement in net debt	(16)	22‌‌
Opening net debt	(249)	(271)‌‌
Closing net debt	(265)	(249)‌‌

At 27 April 2019 the Group had net debt of £265 million, an increase of £16 million from £249 million in the prior year. Free Cash Flow was an inflow of £153 million (2017/18: £172 million) for the reasons described above.

Dividend cash outflows decreased from £130 million in the prior year to £116 million in current year reflecting a year-on-year decrease in FY 2018/19 interim dividend paid.

Net cash outlows of £1 million from acquisitions and disposals in the current year primarily related to deferred consideration paid for the historical acquisition of the Epoq kitchen business, consideration received for the sale of honeybee of £8 million, offset by £5 million of additional payments for honeybee related costs, £3 million payment for warranties in relation to previously disposed operations in Portugal. Prior year cash outflows related to cash received following the sale of the Group's Sprint joint venture and Spanish operations, net of the operating and investing cash flows associated with the now discontinued honeybee operations.The pension contributions reflected the agreed deficit reduction plan following the 2016 triennial valuation. Other items primarily related to foreign exchange movements on net debt.

The average net debt during the year was £439 million (2017/18: £405 million) up year-on-year because of the lower usage of the supplier funding working capital facility. The year end net debt balance was £265 million with the difference between this and the average net debt representing the seasonal funding requirements of the Group.

Statutory performance review

Income statement - continuing operations

	2018/19 £million	2017/18 £million
Revenue	10,433	10,531
EBIT	(223)	321
Net finance costs	(36)	(32)
(Loss) / profit before tax	(259)	289
Tax	(52)	(53)
(Loss) / profit after tax - continuing operations	(311)	236
(Loss) after tax - discontinued operations	(9)	(70)
(Loss) / profit after tax for the period	(320)	166
Basic (Loss) / Earnings per share	(27.6)p	14.4p
Diluted (Loss) / Earnings per share	(27.6)p	14.3p

Revenue decreased 1% to £10,433 million due to the reasons discussed earlier in this report.

Profit before interest and tax decreased from £321 million to a loss of £223 million in the current period, largely due to the reasons discussed above and the non-headline costs incurred as described later in this report.

Net finance costs were £4 million higher than the prior year at £36 million for those reasons described earlier in this report offset by a reduction in the net interest on defined benefit obligations as a result of the lower opening discount rates year-on-year.

The tax charge was flat year-on-year. There was a tax provision in the year of £46 million as outlined below, offset by additional tax credits due to the non-headline charges recorded.

Basic and diluted EPS both decreased year-on-year reflecting the loss after tax in the current year.

Non-headline items

Statutory loss before tax of £259 million (2017/18: £289 million profit)‌ includes non-headline charges of £557 million (2017/18: £93 million)‌‌. These charges are analysed below. Further details can be found in note 3 to the Financial Information.

	2018/19 £million	2017/18 £million
Acquisition and disposal related items	(23)‌‌	(29)‌‌‌‌
Strategic change programmes	(67)‌‌	(52)‌‌‌‌
Data Incident costs	(20)‌‌	-
Regulatory costs	(52)	-
Impairment losses and onerous leases	(383)	-‌‌
Share plan taxable benefits	-	2
Total non-headline items before interest and tax	(545)‌‌	(79)
Net pension interest	(12)‌‌	(14)‌‌‌‌
Total non-headline items before tax	(557)‌‌	(93)‌‌
Tax regulatory matters	(46)	-
Tax on other non-headline items	56	26
Profit / (loss)‌‌ after tax - discontinued operations	(9)‌‌	(70)‌‌
Total non-headline items	(556)‌‌	(137)‌‌‌‌

Acquisition and disposal related costs in the current year related to amortisation of acquisition intangibles and the release of contingent consideration for a previous acquisition. Prior year costs related to amortisation of acquisition intangibles, results of businesses to be exited and income received from previously disposed businesses.

Strategic change programmes relate to significant reorganisation, additional property rationalisation costs provided and costs to exit non-core businesses. Prior year costs included functional transformation costs and property rationalisation costs.

Data incident costs related to costs associated with the data incident announced on 13 June 2018, regulatory matters included an increase in pension liabilities as a result of Guaranteed Minimum Pension equalisation of £15 million, on-going employee related matters, £30 million FCA fine imposed following the conclusion of an investigation into historical Geek Squad mobile phone insurance selling process and other ongoing regulatory matters.

As part of the strategic review, the Group separated the previous operating segment in the UK & Ireland into the separate electricals and mobile operating segments. Given the challenges in the mobile market, and the corresponding change in the UK & Ireland mobile performance in the period, the Group changed the information presented to the Board to provide greater clarity over the relative performance of the two UK & Ireland businesses and to support decisions related to the allocation of the Group's resources. This change included the provision of separate financial information in respect of the UK & Ireland mobile and electricals segments. As a result of the change, the goodwill previously allocated to the UK & Ireland was separated into UK & Ireland electricals and UK & Ireland mobile and an impairment review was then performed over the new segments. This change, together with a deterioration in the forecast performance of the UK & Ireland mobile business identified a material non-cash impairment charge of £225 million to be recorded over the goodwill of the UK & Ireland mobile segment, together with impairment of related assets of £122 million and additional onerous lease charges of £36 million to be recorded against individual stores.

Net pension interest was £12 million (2017/18: £14 million) reflecting the charge incurred in relation to the Dixons Retail UK pension scheme. Further details on the pension scheme can be found in the Pensions section later in this performance review.

The tax credit of £10 million represented a tax credit on the above non-headline items of £56 million, offset by an additional tax provision of £46 million in relation to pre-merger legacy corporate transactions.

Discontinued operations

On 4 May 2018, the Group agreed to sell the honeybee operations through an asset sale, which was completed on 31 May 2018. These operations were classified as a disposal group held for sale in the year ended 28 April 2018. During year ended 27 April 2019, additional costs of £7 million have been recorded following the sale in relation to onerous contracts and compensation to previous employees. Other items in the current year relate to settlement of warranty provisions, provision for employee related matters in previously disposed businesses and tax credits relating to capital allowances.

Balance Sheet

	2018/19 £million	2017/18 £million
Goodwill	2,840	3,088
Other fixed assets	740	872
Working capital	(159)	(96)
Net debt (note 8b)	(265)	(249)
Tax, pension & other	(516)	(419)
	2,640	3,196

Goodwill and other fixed assets have decreased primarily due to the non-cash impairments described above.

Working capital has decreased in the year by £63 million as a result of the unwind of the capitalised network debtor and an increase in provisions in the period as a result of the non-headline charges described above mostly offset by a decrease in trade payables from a change in mix of supplier terms, timing of payments and an increase in inventory held at the year end.

Net debt has increased as described above.

Other net liabilities (tax, pension & other) have increased as a result of the increase in the IAS19 accounting pension deficit described below, and an increase in income tax payable as a result of a provision in relation to pre-merger legacy corporate transactions.

Cash flow statement

	2018/19 £million	2017/18 £million
EBIT - continuing operations	(223)	321
EBIT - discontinued operations	(14)	(83)
Depreciation and amortisation	174	204
Working capital	72	(92)
Impairments	347	-
Other operating items	(70)	(38)
Cash flows from operating activities	286	312
Acquisitions	(1)	(10)
Capital expenditure	(166)	(187)
Other investing cash flows	17	65
Cash flows from investing activities	(150)	(132)
Dividends paid	(116)	(130)
Other financing cash flows	(93)	(62)
Cash flows from financing activities	(209)	(192)
Decrease in cash and cash equivalents and bank overdrafts	(73)	(12)

The statutory EBIT decrease, dividend cash flows, capital expenditure and working capital inflows in the year are for those reasons previously outlined in this report.

Other operating items related to pension contributions and taxation cash outflows, offset by the reversal of non-cash share based payment charges included in EBIT.

Acquisition outflow of £1 million (2017/18: £10 million outflow) related to deferred consideration payments in the Nordics for the 'Epoq' kitchen business. Prior year acquisition cash outflows comprised £7 million of deferred consideration payments for the acquisitions of Simplifydigital of £5 million and the 'Epoq' kitchen business in the Nordics of £2 million together with £3 million of capital injected into the US joint venture with Sprint prior to disposal.

Other investing cash flows related to proceeds on disposal being consideration for a property sold in the previous period and the consideration received for the honeybee assets. Prior year inflow related to proceeds received following the disposal of the Group's Spanish operations and the disposal of the Sprint joint venture and additional consideration received in relation to prior period disposals.

Other financing cash outflows of £93 million related to interest and finance lease payments in the year and repayment of external borrowing. The increase in out flows from the prior year related to repayments of borrowings under the revolving credit facility and higher interest cost.

Comprehensive income / changes in equity

Total equity of the Group has decreased from £3,196 million to £2,640 million primarily reflecting the total statutory loss of £320 million, the loss on retranslation of overseas operations of £30 million and actuarial loss (net of taxation) relating to the defined benefit pension scheme of £107 million and the payment of dividends of £116 million.

Other matters

Pensions

The IAS 19 accounting deficit of the defined benefit section of the UK pension scheme of Dixons Retail amounted to £579 million at 27 April 2019 compared to £470 million at 28 April 2018. Contributions during the period under the terms of the deficit reduction plan amounted to £46 million (2017/18: £46 million), with future contributions under the current agreement with the Trustees of the fund, of £46 million per annum to be paid until 2028/29, with a further payment of £25 million in 2029/30. The deficit has increased during the year as a result of changes in market based financial assumptions, primarily the discount and inflation rates.

Dividends

The Board declared an interim dividend of 2.25p per share which was paid on 25 January 2019.

We are proposing a final dividend of 4.50p per share. The final dividend is subject to shareholder approval at the Company's forthcoming Annual General Meeting. The ex-dividend date is 5 September 2019, with a record date of 6 September 2019 and an intended final dividend payment date of 27 September 2019

2 Segmental analysis (continued)

					Year ended 28 April 2018
	UK & Ireland electricals £million	UK & Ireland mobile £million	Nordics £million	Greece £million	Eliminations £million	Total £million
Headline external revenue	4,412	2,233	3,470	410	-	10,525
Inter-segmental revenue	86	66	-	-	(152)‌‌‌‌	-
Total headline revenue	4,498	2,299	3,470	410	(152)‌‌‌‌	10,525
Headline EBIT	231	43	106	20	-	400

Reconciliation of headline profit to total profit before tax

			Headline profit / (loss) (restated)* £million	Acquisition / disposal related items £million		Strategic change programmes £million			Share plan taxable benefit compensation £million		Pension scheme interest £million		Total profit / (loss) £million
UK & Ireland electricals			231	(13)‌		(32)‌‌			2		-		188
UK & Ireland mobile			43	(13)‌		(6)‌‌			-		-		24
Nordics			106	(12)‌‌		(14)‌‌			-		-		80
Greece			20	9		-			-		-		29
EBIT			400	(29)‌‌		(52)‌‌			2		-		321
Finance income			14	-		-			-		-		14
Finance costs			(32)‌‌	-		-			-		(14)‌‌		(46)‌‌
Profit / (loss) before tax			382	(29)‌‌		(52)‌‌			2		(14)‌‌		289

Restatement of segmental information

As discussed above, during the period the Group's reportable segments have been changed, and comparatives have been restated accordingly. The below tables provide reconciliations for the headline revenue and headline EBIT for the year ended 28 April 2018. The relevant adjustment is the reconciliation of the UK & Ireland results between the UK & Ireland electricals and UK & Ireland mobile segments and the reallocation of central costs between the Groups reportable segments.

Year ended 28 April 2018

			Total headline revenue as previously reported £million	Reallocate UK & Ireland electricals revenue £million	Reallocate UK & Ireland mobile revenue £million	Total £million
UK & Ireland electricals			-	4,412	-	4,412
UK & Ireland mobile			-	-	2,233	2,233
UK & Ireland (as previously reported)			6,645	(4,412)‌‌	(2,233)‌‌	-
Nordics			3,470	-	-	3,470
Greece			410	-	-	410
Total headline revenue			10,525	-	-	10,525

2 Segmental analysis (continued)

		Total headline EBIT as previously reported £million	Reallocate UK & Ireland electricals £million	Reallocate UK & Ireland mobile £million	Reallocate central costs £million	Total £million
UK & Ireland electricals		-	233	-	(2)‌‌	231
UK & Ireland mobile		-	-	48	(5)‌‌	43
UK & Ireland (as previously reported)		281	(233)‌‌	(48)‌‌	-	-
Nordics		101	-	-	5	106
Greece		18	-	-	2	20
Total headline EBIT		400	-	-	-	400

The Group's disaggregated revenue recognised under 'Revenue from Contracts with Customers' in accordance with IFRS 15 relates to the following operating segments and revenue streams:

			Year ended 27 April 2019
	UK & Ireland electricals £million	UK & Ireland mobile £million	Nordics £million	Greece £million	Total £million
Sale of goods	4,085	474	3,161	437	8,157
Commission revenue	9	1,401	263	1	1,674
Support services revenue	275	-	25	14	314
Other services revenue	99	123	52	7	281
Other revenue	7	-	-	-	7
Total headline revenue	4,475	1,998	3,501	459	10,433

			Year ended 28 April 2018
	UK & Ireland electricals £million	UK & Ireland mobile £million	Nordics £million	Greece £million	Total £million
Sale of goods	4,005	532	3,135	391	8,063
Commission revenue	8	1,578	258	1	1,845
Support services revenue	285	-	24	12	321
Other services revenue	112	123	53	6	294
Other revenue	2	-	-	-	2
Total headline revenue	4,412	2,233	3,470	410	10,525

Revenue from support services relates predominantly to customer support agreements, while other services revenue comprises delivery and installation, product repairs and product support.

3 Non-headline items

	Note	Year ended 27 April 2019 £million	Year ended 28 April 2018 £million
Included in revenue:
Businesses to be exited	(i)	-	6
		-	6
Included in profit / (loss) before interest and tax:
Acquisition / disposal related items	(i)	(23)‌‌	(29)‌‌
Strategic change programmes	(ii)	(67)‌‌	(52)‌‌
Data incident costs	(iii)	(20)‌‌	-
Regulatory costs	(iv)	(52)‌‌	-
Impairment losses and onerous leases	(v)	(383)‌‌	-
Share plan taxable benefit compensation	(vi)	-	2
		(545)‌‌	(79)‌‌‌‌
Included in net finance costs:
Net non-cash finance costs on defined benefit pension schemes	(vii)	(12)	(14)
Total impact on profit / (loss) before tax		(557)	(93)
Tax on regulatory matters	(viii)	(46)‌‌	-
Tax on non-headline items	(ix)	56	26
Total impact on profit / (loss) after tax - continuing operations		(547)‌‌	(67)‌‌‌‌
Discontinued operations	9	(9)‌‌	(70)‌‌‌‌
Total impact on profit / (loss) after tax		(556)‌‌	(137)‌‌‌‌

(i) Acquisition / disposal related items

Amortisation of acquisition intangibles:

A charge of £28 million (28 April 2018: £32 million) relates to acquisition intangibles arising on the CPW Europe acquisition, the Dixons Retail merger and Simplify Digital acquisition.

Acquisition related:

Acquisition related income of £5 million primarily relates to the release of deferred consideration for a previous acquisition no longer payable given the strategic change of the business (28 April 2018: £2 million release).

Unieuro income:

In November 2013, the Group disposed of its Unieuro operations, but retained an investment of 14.96% in the operations. The investment was initially recognised at £nil based on the fair value of the retained interest. In March 2017, Unieuro undertook an IPO for 31.8% of its shareholdings, which reduced the Group's investment to 10.2% of the Unieuro operations.

In October 2017, IEH announced a corporate restructuring, whereby the Group obtained direct control of the investment of 7.18% of Unieuro, together with a receivable for previous dividends and the share sales. The amount realised as a result of the dividend and share sale of £10 million has been recycled to the income statement in the year ended 28 April 2018.

(i) Businesses to be exited:

Comprises the trading result of businesses to be exited where they do not meet the criteria under IFRS 5 'Non-Current Assets Held for Sale and Discontinued Operations', for separate disclosure as discontinued operations. In the prior period, this comprises the results of the iD mobile operations in the Republic of Ireland. There has been no profit or loss in relation to businesses to be exited in the current period (2017/18: £9 million).

(ii) Strategic change programmes:

During the current period, costs of £49 million have been incurred in relation to the strategic change programme, to set a clear long-term direction for the business which sharpens our focus on the core and that better joins up our offer to customers and our business behind the scenes. The costs incurred relate to the following:

- £11 million in relation to costs of implementing the strategy;

- £21 million cost in relation to restructuring and redundancy costs for central operations organisational design;

3 Non-headline items (continued)

£9 million in relation to the closure of non-core operations, relating to certain of our concession arrangements across the CurrysPCWorld, Carphone Warehouse and Dixons Travel brands and our energy switching business; and

- £8 million in relation to further rationalisation of our property estate, including the closure of Carphone Warehouse stores in the UK as announced on 4 May 2018.

Property rationalisation:

Additional costs of £18 million have been provided in relation to additional provisions for the remaining stores under the Currys PC World 3-in-1 and Carphone Warehouse programme announce in 2015/16, due to the challenges in the UK retail property market. In the prior year ended 28 April 2018, an additional charge of £29 million was recorded.

Merger and transformation costs:

There has been no profit or loss in relation to previous merger and transformation programmes in the current period. Transformation costs of £23 million in the prior year ended 28 April 2018 related to business restructuring in the Nordics of £14 million, together with UK business restructuring and functional transformation costs of £9 million primarily related to redundancy and consultancy fees.

(iii) Data incident costs:

During the period, costs associated with the data incident announced on 13 June 2018 of £20 million have been recorded. £14 million of these costs, related to investigation and remediation activities, were incurred during the year, with the remaining costs expected to be incurred within the next twelve months.

(iv) Regulatory costs:

A charge of £52 million has been recorded in relation to pension related costs, employee related costs and other regulatory matters in the current period. This includes:

- An additional pension related cost of £15 million. On 26 October 2018, the High Court issued a judgement in a claim to address the issues of unequal Guaranteed Minimum Pensions (GMPs) in the Lloyds Banking Group's defined benefit pension schemes (the 'Lloyds case'). This will potentially impact the DSG Retirement and Employee Security Scheme operating in the UK. The Group is working through the details of the ruling and assessing its impact on the liability valuation of the scheme. We currently estimate that this will increase the liability by £15 million, and therefore have recorded this as a past service cost in the current period. There are a number of uncertainties surrounding the change, including the method of calculation of the equalisation and any potential appeals against the ruling, therefore we consider that the amount is subject to further change, however currently represents our best estimate.

- Costs of £1 million have also been provided for in relation to redress for ongoing employee related matters for historical periods.

- £30 million FCA fine imposed following the conclusion of an investigation into historical Geek Squad mobile phone insurance selling processes.

(v) Impairment losses and onerous leases:

As part of the strategic review performed by the Group, and as discussed in note 2, the Group has separated the operating segments in the UK & Ireland into the separate electricals and mobile operating segments. As a result of the change, the goodwill previously allocated the UK & Ireland group of cash generating units ('CGUs') has been separated into the UK & Ireland electricals and UK & Ireland mobile CGUs. This allocation has been performed on a relative value basis on the value of the two operating segments. In separating the goodwill, an impairment review has been performed over both operating segments based on our future projections and cash flows, reflecting the conclusions of the Group's strategic review which has been undertaken since the year end. This change, together with a deterioration in the forecast performance of the UK & Ireland mobile business, identified a material non-cash impairment charge to be recorded over the goodwill of the UK & Ireland mobile segment, together with impairment of related assets and additional onerous lease charges to be recorded against individual stores. The breakdown of the impairment recorded in relation to the UK & Ireland mobile operating segment asset base was as follows:

- £225 million representing the goodwill associated with the UK & Ireland mobile operating segment

- £10 million of acquisition intangibles recognised during the previous acquisitions

- £75 million of intangible assets, primarily relating to capitalised software development costs

- £25 million of central property, plant and equipment

- £12 million of store assets

In addition, £36 million of onerous lease provisions for stores within the UK & Ireland mobile operating segment have been recognised.

(vi) Share plan taxable benefit compensation:

A provision of £11 million was recognised in 2016/17 in relation to taxable benefits arising to participants of the Share Plan, as discussed in the Remuneration Committee Chairman's statement on page 61 of the 2016/17 Annual Report. In 2017/18, the excess portion of the provision was released following the payment of compensation of the scheme.

3 Non-headline items (continued)

(vii) Net non-cash financing costs on defined benefit pension schemes:

The net interest charge on defined benefit pension schemes represents the non-cash remeasurement calculated by applying the corporate bond yield rates applicable on the last day of the previous financial year to the net defined benefit obligation. As a non-cash remeasurement cost which is unrepresentative of the actual investment gains or losses made or the liabilities paid and payable the accounting effect of this is excluded from headline earnings.

(viii) Tax regulatory matters:

As previously disclosed, the Group has been co-operating with HMRC in relation to the tax treatment arising due to pre-merger legacy corporate transactions. The Group maintains the tax treatment was appropriate, however, the likelihood of litigation, and therefore risk associated with this matter, has increased and therefore a provision has been recognised.

(ix) Taxation:

The effective tax rate on non-headline earnings and costs is 2%. Once the impact of the provision of £46 million is removed, the effective tax rate is 10%. The rate of relief is lower than the UK statutory rate of 19% predominantly due to non-deductible goodwill impairment and regulatory costs. For the year ended 28 April 2018, the effective tax rate on non-headline items was 28% due to a one-off credit in relation to the recognition of previously unrecognised deferred tax assets in Greece of £10 million.

4 Net finance costs

	Year ended 27 April 2019 £million	Year ended 28 April 2018 £million
Unwind of discounts on trade receivables	11	14
Finance income	11	14
Interest on bank overdrafts, loans and borrowings	(17)‌‌	(13)‌‌‌‌
Finance lease interest payable	(6)‌‌	(6)‌‌‌‌
Net interest on defined benefit pension obligations(i)	(12)‌‌	(14)‌‌‌‌
Unwind of discounts on liabilities	(4)‌‌	(6)‌‌‌‌
Amortisation of facility fees	(2)‌‌	(1)‌‌‌‌
Other interest expense	(6)‌‌	(6)‌‌‌‌
Finance costs	(47)‌‌	(46)‌‌‌‌
Total net finance costs	(36)‌‌	(32)‌‌‌‌
Headline total net finance costs	(24)‌‌	(18)‌‌‌‌

(i) Headline finance costs exclude net interest on defined benefit pension obligations (see note 3).

5 Tax

The effective tax rate on headline earnings of 21% (2017/18: 21%). Items attracting no tax relief or liability relate mainly to non-deductible depreciation in the UK business. The effective tax rate on non-headline earnings and costs is 2% (2017/18: 28%), further information is outlined in note 3. A further reduction in the UK corporation tax rate to 17% from 1 April 2020 has been substantively enacted by the balance sheet date and has been used in the recognition of deferred tax balances.

6 Earnings per share

		Year ended 27 April 2019 £million	Year ended 28 April 2018 £million
Headline earnings
Continuing operations		236	303
Total (loss) / earnings
Continuing operations		(311)‌‌	236
Discontinued operations		(9)‌‌	(70)
Total		(320)‌‌	166
		Million	Million
Weighted average number of shares
Average shares in issue		1,160	1,157
Less average holding by Group ESOT		(1)‌‌	(1)
For basic earnings per share		1,159	1,156
Dilutive effect of share options and other incentive schemes		9	4
For diluted earnings per share		1,168	1,160
		Pence	Pence
Basic earnings per share
Total (continuing and discontinued operations)		(27.6)‌‌	14.4
Adjustment in respect of discontinued operations		0.8	6.0
Continuing operations		(26.8)‌‌	20.4
Adjustments for non-headline - continuing operations (net of taxation)		47.2	5.8
Headline basic earnings per share		20.4	26.2
Diluted earnings per share
Total (continuing and discontinued operations)		(27.6)‌‌	14.3
Adjustment in respect of discontinued operations		0.8	6.0
Continuing operations		(26.8)‌‌	20.3
Adjustments for hon-headline - continuing operations (net of taxation)		47.0	5.8
Headline diluted earnings per share		20.2	26.1

Basic and diluted earnings per share are based on the profit for the period attributable to equity shareholders. Headline earnings per share is presented in order to show the underlying performance of the Group. Adjustments used to determine headline earnings are described further in note 3.

7 Equity dividends

	27 April 2019 £million	28 April 2018 £million
Amounts recognised as distributions to equity shareholders in the period - on ordinary shares of 0.1p each
Final dividend for the year ended 29 April 2017 of 7.75p per ordinary share	-	89
Interim dividend for the year ended 28 April 2018 of 3.50p per ordinary share	-	41
Final dividend for the year ended 28 April 2018 of 7.75p per ordinary share	90	-
Interim dividend for the year ended 27 April 2019 of 2.25p per ordinary share	26	-
	116	130

The following distribution is proposed but had not been effected at 27 April 2019 and is subject to shareholders' approval at the forthcoming Annual General Meeting:

	£million
Final dividend for the year ended 27 April 2019 of 4.50p per ordinary share	52

The payment of this dividend will not have any tax consequences for the Group.

8 Notes to the cash flow statement

a) Reconciliation of operating profit to net cash inflow from operating activities

	Year ended 27 April 2019 £million	Year ended 28 April 2018 £million
(Loss) / profit before interest and tax - continuing operations	(223)‌‌‌‌	321
Loss before interest and tax - discontinued operations	(14)‌‌‌‌	(83)‌‌‌‌
Depreciation and amortisation	174	204
Investment income	-	-
Share-based payment charge	21	14
Share of results of joint ventures	-	3
Profit / (loss) on disposal of subsidiary	-	(2)‌‌‌‌
Profit / (loss) on disposal of fixed assets	-	(1)‌‌‌‌
Impairments and other non-cash items (see note 3 (v))	347	56
Operating cash flows before movements in working capital	305	512
Movements in working capital:
Increase in inventory	(26)‌‌‌‌	(72)‌‌‌‌
Decrease / (increase) in receivables	226	(32)‌‌‌‌
(Decrease) / increase in payables	(182)‌‌‌‌	17
Increase / (decrease) in provisions	54	(5)‌‌‌‌‌
	72	(92)‌‌‌‌
Cash generated from operations	377	420

The presentation of the above reconciliation and statement of cash flows include both continuing and discontinued operations. Comparative amounts have been presented accordingly.

8 Notes to the cash flow statement (continued)

b) Analysis of net debt

			29 April 2018 £million	Cash flow £million	Other non-cash movements £million	Currency translation £million	27 April 2019 £million
Cash and cash equivalents			228	(97)‌‌‌‌	-	(6)‌‌‌‌	125
Bank Overdrafts			(43)‌‌‌‌	24	-	-	(19)‌‌‌‌
Cash and cash equivalents and bank overdrafts			185	(73)‌‌‌‌	-	(6)‌‌‌‌	106
Borrowings due within one year			(20)‌‌‌‌	20	-	-	-
Borrowings due after more than one year			(329)‌‌‌‌	41	-	-	(288)‌‌‌‌
Obligations under finance leases			(85)‌‌‌‌	8	(6)	-	(83)‌‌‌‌
			(434)‌‌‌‌	69	(6)	-	(371)‌‌‌‌
Net debt			(249)‌‌‌‌	(4)‌‌‌‌	(6)	(6)‌‌‌‌	(265)‌‌‌‌

			30 April 2017 £million	Cash flow £million	Other non-cash movements £million	Currency translation £million	28 April 2018 £million
Cash and cash equivalents			209	21	-	(2)‌‌‌‌	228
Bank Overdrafts			(10)‌‌‌‌	(33)‌‌‌‌	-	-	(43)‌‌‌‌
Cash and cash equivalents and bank overdrafts			199	(12)‌‌‌‌	-	(2)‌‌‌‌	185
Borrowings due within one year			-	(20)‌‌‌‌	-	-	(20)‌‌‌‌
Borrowings due after more than one year			(381)‌‌‌‌	52	-	-	(329)‌‌‌‌
Obligations under finance leases			(89)‌‌‌‌	10	(6)‌‌‌‌	-	(85)‌‌‌‌
			(470)‌‌‌‌	42	(6)‌‌‌‌	-	(434)‌‌‌‌
Net (debt) / funds			(271)‌‌‌‌	30	(6)‌‌‌‌	(2)‌‌‌‌	(249)‌‌‌‌

c) Reconciliation of cash inflow from operations to free cash flow

	Year ended 27 April 2019 £million	Year ended 28 April 2018 £million
Cash inflow from operations	377	420
Operating cash flows from discontinued operations*	8	11
Taxation	(45)‌‌‌‌	(63)‌‌‌‌
Interest, facility arrangement fees, dividends from investments and repayment of finance leases	(30)‌‌‌‌	(24)‌‌‌‌
Capital expenditure	(166)‌‌‌‌	(173)‌‌‌‌
Proceeds from disposal of fixed assets	9	2
Other movements	-	(1)‌‌‌‌
Free cash flow	153	172

* Operating cash flows from discontinued operations are removed in the above reconciliation as free cash flow is presented on a continuing basis.

9 Discontinued operations and assets held for sale

There have been no additional operations classified as discontinued during the year ended 27 April 2019. The following were classified as discontinued in the year ended 28 April 2018 and have continued to incur costs in the current financial year:

honeybee

On 4 May 2018, the Group agreed to sell the honeybee operations through an asset sale, which was completed on 31 May 2018. These operations were classified as a disposal group held for sale and presented separately in the balance sheet. An impairment of £55 million was recognised on classification to assets held for sale, representing the difference between the expected proceeds and

the book value of the related assets. The impairment, together with the trading loss recognised during the year of £21 million were classified as a discontinued operation in the year ended 28 April 2018.

For the year ended 27 April 2019, no profit or loss on disposal was recognised from the completion of the sale of the operations. Additional costs of £7 million have been recorded in relation to onerous contracts following the sale and compensation to previous employees.

A deferred tax credit of £4 million in relation to a prior year adjustment relating to accelerated capital allowances has been recognised.

Spain

On 29 September 2017, the Group completed the disposal of The Phone House Spain S.L.U., Connected World Services Europe S.L. and Smarthouse Spain S.A. which together represented the trading operations in Spain. A gain of £1 million arose on the disposal, being the difference between the proceeds of disposal and the carrying amount of the subsidiaries' net assets and attributable goodwill. The trading results of the operations up to the date of disposal were classified as discontinued.

For the year ended 27 April 2019, the £1 million tax credit is in relation to the reversal of previously held provisions for tax risks where statute of limitations have now lapsed.

Sprint

On 7 June 2017 agreement was reached to dispose of the Group's 50% interest in the Sprint Connect LLC joint venture to Sprint Corporation. Proceeds of $22 million (£17 million) were received and £nil gain or loss was recognised in relation to the disposal. The share of results of the operation to the date of disposal in the year ended 28 April 2018 were classified as discontinued (£3 million loss).

Other

As previously reported the sale of operations in Germany was completed on 5 May 2015, the Netherlands on 30 June 2015, Portugal on 31 August 2015 and Virgin Mobile France on 4 December 2014. Additional costs of £2 million have been recorded in settlement of warranties in Portugal and a £5 million provision has been recognised in the current year in relation to employee matters in previously disposed businesses.

9 Discontinued operations and assets held for sale

a) (Loss) / profit after tax - discontinued operations

					Year ended 27 April 2019
		honeybee £million	Spain £million	Sprint Joint Venture £million	Other £million	Total £million
Revenue		-	-	-	-	-
Expenses		(7)‌‌	-	-	(7)‌‌	(14)‌‌
(Loss) before tax		(7)‌‌	-	-	(7)‌‌	(14)‌‌
Income tax		4	1	-	-	5
		(3)‌‌	1	-	(7)‌‌	(9)‌‌

					Year ended 28 April 2018
		honeybee £million	Spain £million	Sprint Joint Venture £million	Other £million	Total £million
Revenue		3	144	-	-	147
Expenses		(24)‌‌‌‌	(144)‌‌‌‌	(6)‌‌‌‌	-‌	(174)‌‌
Impairment of assets		(55)‌‌	-	-	-	(55)‌‌
Share of results of joint venture		-	-	(‌‌3)‌‌	-	(3)‌‌‌‌
(Loss) before tax		(76)‌‌‌‌	-	(9)‌‌‌‌	-	(85)‌‌‌‌
Income tax		13	-	-	-	13
Profit on disposal		-	1	-	1	2
		(63)‌‌‌‌	1	(9)‌‌	1	(70)‌‌‌‌

b) Cash flows from discontinued operations

The net cash flows incurred by the discontinued operation during the year are as follows. These cash flows are included within the Consolidated cash flow statement:

					Year ended 27 April 2019
		honeybee £million	Spain £million	Sprint Joint Venture £million	Other £million	Total £million
Operating activities		(5)‌‌	-	-	(3)‌‌	(8)‌‌
Investing activites		8	-	-	-	8
		3	-	-	(3)‌‌	-

					Year ended 28 April 2018
		honeybee £million	Spain £million	Sprint Joint Venture £million	Other £million	Total £million
Operating activities		(7)‌‌‌‌	(3)‌‌	(2)‌‌	1	(11)‌‌
Investing activites		(12)‌‌‌‌	44	14	-	46
		(19)‌‌‌‌	41	12	1	35

9 Discontinued operations and assets held for sale (continued)

c) Assets and liabilities held for sale

The assets and liabilities held for sale relate to the honeybee operations. The major classes of assets and liabilities comprising the operations classified as held for sale are as follows:

	27 April 2019 £million	28 April 2018 £million
Intangible assets	-	8
Trade receivables	-	9
Total assets classified as held for sale	-	17
	-
Deferred income	-	(2)
Total liabilities classified as held for sale	-	(2)
	-
Net assets of disposal group	-	15

10 Related party transactions

Transactions between the Group's subsidiary undertakings, which are related parties, have been eliminated on consolidation and accordingly are not disclosed.

The Group had the following transactions and balances with its associates and joint venture:

	27 April 2019 £million	28 April 2018 £million
Revenue from sale of goods and services	13	11
Amounts owed to the Group	2	2

All transactions entered into with related parties were completed on an arm's length basis.