DC..L Regulatory News (DC.)

Audited Results for the 53 Weeks Ended 2 May 2020

Good progress on strategy, robust performance in Electricals despite Covid-19

· Group adjusted* profit before tax fell to £166m (2018/19: £339m) due to Mobile performance and Covid-19 closures

· Group statutory loss before tax of £140m (2018/19: loss of £259m) reflecting UK Mobile store closure costs

· UK & Ireland Electricals revenue +1% (LFL* +1%), adjusted EBIT £162m, -10% year on year (Statutory EBIT £119m)

o Market share gains online and in-store, totalling +0.7%

o Investment in customer offer offset by cost savings as planned; year-on-year profit decline due to Covid-19

o Online sales +22% including +166% in April

· International revenue +2% (LFL +4%), adjusted EBIT £136m, +8% year on year (currency neutral) (Statutory EBIT £135m)

o Nordics share growth +0.5%, Greece share growth +0.4%

o Nordics adjusted EBIT growth (currency neutral) averages +11% per annum over last three years

o Online sales +22% including +114% In April

· UK & Ireland Mobile revenue -20%, adjusted EBIT loss £104m, a £154m year on year decline (Statutory EBIT loss £282m)

o Constrained postpay offer drove sales decline on a legacy fixed cost base

o Sales worse than expected due to enforced 3-in-1 store closures and low sales transfer to online

· Strong progress on transformation priorities

o Omnichannel: Online in-store sales +64% pre Covid-19. 121 UK stores remodelled

o Credit: UK Credit sales up +27% year on year, active customers almost 1.2m*

o Services: Strong uptake of protection products in UK&I. Nordics customer club grew to over 3m members

o Mobile: UK small, standalone store closures a significant step towards elimination of losses

· Free cash flow* £109m (2018/19: £153m). Net debt* £284m (2018/19: £265m)

· Over £1bn of liquidity headroom at year-end provides security against downside risk and confidence to invest

*See page 41 for further information on our alternative performance measures (APMs) and glossary. This includes definitions, purpose, changes to the prior year, and reconciliation to the nearest IFRS measures. The basis of preparation of our IFRS measures is included on page 28.

Alex Baldock, Group Chief Executive

"The first ten months of the year was a story of delivering on our promises and accelerating the transformation of Dixons Carphone. We gained market share online as well as in stores, grew Credit and Services, drove big improvements in customer satisfaction, took difficult but essential decisions such as closing our UK standalone mobile stores, and were on track to meet financial expectations.

With Covid-19, our immediate priorities abruptly changed to keeping everyone safe, helping our customers and securing our future. Our colleagues have delivered on all three, and I thank every one of them for the skill and determination with which they've responded. I'm struck by the vital role that technology has played in helping millions of families through this crisis, and I'm proud of how our business has stepped up, online-only outside the Nordics, to provide that help. Since the year end, all our Electricals businesses have continued to grow sales. Where our stores have reopened we've performed well, while continuing to see strong online sales growth. That said, we expect a weakening of consumer spending later this year and are being cautious in our planning.

We've learned a lot during this crisis and will emerge a better business from it. We've pioneered new ways of shopping, empowered our colleagues to move faster, and seen how technology is set to play an ever-bigger role in everyone's lives. We're also more convinced than ever that Dixons Carphone has the right strategy for our customers, our colleagues and our shareholders in the years ahead."

Summary of Performance

Group adjusted PBT of £166m was around £44m below the guidance that we reiterated in January. We were on track to achieve that guidance before the impact of Covid-19.

In UK&I Electricals, adjusted EBIT declined -10% due to the impact of Covid-19, which was partially offset by operating cost reductions. As expected, our underlying gross margin was down reflecting the planned investment in the customer offer and accelerating channel shift but this impact was more than offset by cost savings. In International, adjusted EBIT grew +2% (+8% currency neutral) as strong underlying performance was offset by Covid-19 related store closures in Greece and the strengthening of sterling relative to the Nordic currencies. In UK&I Mobile, trading was worse than expected after the closure of all our small standalone shops due to the enforced closure of all our other UK stores and low sales transfer to the online business.

Our year end net debt increased slightly to £284m as working capital outflow caused by lower sales was offset by reducing capital expenditure and deferral of taxes and rent.

*See page 41 for further information on our alternative performance measures (APMs). This includes definitions, purpose, changes to the prior year, and reconciliation to the nearest IFRS measures. The Group's net debt APM does not have a direct IFRS equivalent measure. This has been reconciled back to the statutory balance sheet within the financial information.

Outlook & Financial Guidance

The Covid-19 pandemic has had a significant impact on the world, and the wide-ranging repercussions of the crisis will be felt for many years.  It could have a significant impact on consumer spending power across all our markets.

Against this backdrop, technology retailing is resilient. Customers need us, and we have strong foundations; across our operations we have competitive pricing, market leadership and strong supplier relationships that allow flexibility on our inventory intake.

Our extensive network of almost 940 stores and 11.5m sq.ft. of selling space across Europe and the thousands of expert colleagues in them are our most differentiating assets. Delivering a digital first, omnichannel experience requires these assets now as much as ever. Our low average lease lengths and standing as an anchor tenant at many locations give us flexibility to continue to optimise our estate.

This crisis has shown us more than ever that our Vision - We Help Everyone Enjoy Amazing Technology - is the right one. Our business and strategy have so far successfully navigated a stressful period. As we raise our gaze beyond the crisis, our big priorities around Omnichannel, Credit and Services remain. Customers need help now as ever to discover, choose, afford and enjoy tech, for life, especially if they're feeling the pinch of a recession.

We are closely monitoring the external forecasts and are prepared for a range of economic outcomes. Due to the high levels of uncertainty we are not issuing guidance on Electricals sales or profits for 2020/21.

We remain focused on keeping our colleagues safe, helping our customers and securing our cash position. We will make prudent investment decisions as our understanding of the current crisis and potential economic consequences evolves. We expect the following:

Group

· To maintain good liquidity having started the year with over £1bn of unutilised committed debt facilities

· Working capital to include outflow of c.£70m relating to government endorsed tax payment delays before the 2019/20 year end

· To pay 2020/21 annual pension contribution of £46m in monthly instalments. Annual contributions will rise to £78m from 2021/22

· Exceptional transformation cash costs to be c.£175m in 2020/21, mainly related to previously announced Mobile restructuring

UK & Ireland Mobile

· Mobile adjusted EBIT losses in 2020/21 to be slightly worse than 2019/20 due to impact of Covid-19 on trading and as a result reaching breakeven 6-12 months later than previously expected

· 2020/21 cashflow from Mobile to be slightly negative as operating losses and restructuring costs will be largely offset by net working capital unwind

· The previously guided £220m cash costs of restructuring and working capital inflow of £500m by 2023/24 remain unchanged but the higher trading losses will mean that the total positive cashflow from Mobile will be lower than the previous guidance of c.£200m and in the range of £125m-175m

Results presentation webcast

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

Next scheduled announcement

The Group is scheduled to publish its Interim results on Wednesday 16 December 2020.

For further information

Information on Dixons Carphone plc is available at www.dixonscarphone.com

Follow us on Twitter: @dixonscarphone

About Dixons Carphone

Dixons Carphone plc is a leading omnichannel retailer of technology products and services, operating through 939 stores and 16 websites in eight 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, employing 24,000 capable and committed colleagues in the UK & Ireland and 36,000 globally across the Group. Our full range of services and support makes it easy for our customers to discover, choose, afford and enjoy the right technology for them, throughout their lives. The Group's core operations are supported by an extensive distribution network, enabling delivery to stores and homes, a 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.

We Help Everyone Enjoy Amazing Technology

Choose, Afford, Enjoy. For Life

2019/20 Strategic Review

Omnichannel

Electricals saw online revenue growth of +11% in the 47 weeks to the end of March before it accelerated rapidly, growing at +149% over the following 5 weeks of the year. Even before Covid-19 we were taking share online across all our markets.

In the UK, we have continued to make it easier for customers to find and buy what they want through improved site speed and bigger range. We have added 2,000 SKUs this year without holding additional stock. Our omnichannel proposition improved again with online in-store[1] sales growing +64% pre-Covid-19[2] (+103% in 2H pre-Covid-19). The new Currys PC World app had been downloaded 0.5m times by the year-end and has delivered revenue growth ahead of our websites during lockdown.

We have also improved our delivery capabilities, including the roll-out of intelligent routing software that allows us to better plan and track delivery routes, resulting in a 20-point improvement in our delivery customer satisfaction scores. This capability has allowed us to fulfil the heightened volumes we have seen in this channel through lockdown.

Data is still a big focus for us, first ensuring our customer data is secure, and now looking at more ways to attract more customers and give existing customers an even more personalised experience. Early improvements in CRM have seen increases in email conversion and in customers returning to abandoned baskets which have driven a +85% increase in online sales attributed to customer targeting.

In International, we improved our Click and Collect propositions and rolled out our customer care centre chatbot. The onset of Covid-19 and store closures in Greece saw a significant acceleration in online sales and the omnichannel experience of the Group has allowed our Greek business to thrive under these conditions. In Nordics, online sales grew significantly even though our stores remained open and we were able to trade safely by implementing measures including a contactless payment solution, 'Drive-in Collect@store', special opening hours for at-risk groups and introducing ShopLive to allow customers to get video help from home.

Over the next year we will improve the omnichannel experience further, making it even easier for customers to find and buy what they want, including further extending our range, further sharpening our focus on price and improving availability. We will also improve customer experience through better search, recommendations and improving the app.

Omnichannel is not just about online. Our stores are exciting places of discovery where customers can see and interact with exciting technology, and where our expert colleagues can give face-to-face advice to enable customers to choose the best tech for them. We completed the remodelling of 121 large stores in the UK, slightly behind the target of 142 set at the start of the year, as 20 stores were due to be completed in March and April. In the International stores, we started to roll out our new POS system in stores during April, enhancing our ability to provide customers with a seamless omnichannel experience.

Our unique omnichannel strengths make it easier for customers to choose, afford and enjoy the right technology, however they want to shop. Customers value being able to access our wide range of products and services across both channels, and we can provide this at scale in a way our competitors cannot match. We start with strong foundations and have made good progress but there is a lot more to go for in this area. We will continue to build on our progress, as demonstrated by new innovations like ShopLive which is bringing face-to-face advice from our store colleagues to customers online. No one else can deliver this experience at scale.

Credit

Credit is the second big growth opportunity across the Group. Credit appeals to customers as technology is exciting but expensive, and credit makes the amazing technology customers want more affordable by allowing them to spread the cost. And customers are happy to have it, demonstrated by a +18%pts higher satisfaction score than for non-credit customers. We take our responsibility in providing access to credit seriously and we train our 25,000 frontline colleagues to sell responsibly and in compliance with all regulations. The credit risk sits with our lending partner, BNPP.

Credit is good for suppliers too as customers are more likely to trade up into higher value products. It is also good for us as Credit customers shop with us more frequently, spend more and have a significantly higher adoption rate of services than for non-credit customers. Our experience is that Credit customers have a lifetime value double that of cash customers.

Over the year, we built on the strong foundations established in 2018/19. Credit adoption is now over 11.2% (+240bps year on year) in the UK&I and the number of active credit customers is now almost 1.2m, +36% year on year. This resulted in +27% growth in Credit sales to over £530m. Credit adoption over the year was higher in-store than online but online progress closed the gap towards the end of the year.

At over 29% credit adoption, Greece is a leading example of the potential for credit. In Nordics, credit penetration lags the UK but we see equivalent opportunity and there was also progress with credit sales growing slightly year-on-year.

We are developing a new credit offer and a new IT platform to go with it. This will give us improved and easier customer journeys, more personalised offers, and improved acceptance rates providing a further tailwind to credit sales growth.

Credit is a big opportunity where we have strong foundations and significant headroom for growth.

Services

We are uniquely positioned to provide services to our customers to help them enjoy technology for life. The services we provide include set-up and connect, protect, maintain, repair, trade-in and upgrade. We can provide this range of services at scale in ways no competitor can match. In the UK&I we set up or installed over 1m products and repaired 1.3m products including 570,000 mobile phones and 360,000 white goods. We delivered 3.8m large products through our own two-person delivery network.

During the year we continued to improve our Services propositions with the introduction of a new set-up option (Computing Set-up & Personalise), In-store repairs (Tech Treatments) and Protection product (Care & Repair) which launched in January and gives customers even greater flexibility and transparency. Protection is a service that customers value highly, and this year saw a strong uptake of protection in the UK&I and we have almost 10m active agreements.

Even though around one-third of our UK&I Electricals sales have a paid-for service as part of the total proposition, we are only in the foothills of being able to join these propositions together for customers. We know that customers' tech needs will change through their life, and we want to help customers make the most of amazing technology - helping them stay in touch with loved ones, helping them keep fit and healthy, entertained and productive - at all stages of life.

A good example of where we can start to join together all of our Services is the Nordics "Customer Club". This was launched in Sweden in October 2016 and it successfully grew to over 1m members by December 2017. This year we took the decision to roll this out to Denmark, Finland and Norway and now have well over 3m members. During 2H 2019/20 these club members contributed one-third of our Nordics revenue, giving us a wealth of data that we can use to improve our proposition for both Club and non-Club customers.

Club customers benefit from a differentiated value proposition including permanent discounts on accessories, weekly and monthly exclusive deals, VIP shopping, extended returns polices and increasingly some great collaborations with streaming services. Our Club members show increased customer satisfaction, while purchasing more frequently and at better margin, generating a higher lifetime value for us.

Easy To Shop

None of the Services that we provide are worthwhile unless we give the customer a great experience. The significant improvements made to our customer journey drove a +11pts increase in our UK&I Electricals NPS. Our International businesses grew their already impressive "Happy or Not" scores.

There is much more we can do to improve the customer experience, and Covid-19 has shown us clearly where some pain points are. An example is our contact centre operations. Over the course of lockdown, the average number of calls received each week significantly increased while the number answered dropped as our contact centres were closed and colleagues were less efficient while working from home across multiple different technology platforms. We reacted quickly by improving home-working systems, setting up temporary call centres in Sweden and Norway and moving more than 300 UK store colleagues to contact centre roles and training and upskilling large numbers of them. We have reduced call volumes by improving digital solutions, increased the productivity and capacity of our call centres and moved a lot closer to meeting our internal targets.

Mobile

As we expected, our UK & Ireland Mobile performance was challenging as customers continue to change the way they buy mobile devices and connectivity, replacing their handsets less often and buying them separately or as part of more flexible bundles. Our business carries the burden of volume commitments on our network contracts and a cost base geared to traditional postpay. We have reacted by renegotiating all our legacy network contracts and beginning to revamp our own mobile offer, to address the trend of unbundling handsets from connectivity, and consolidate duplicate cost bases.

The essential next step in the transformation of our UK Mobile business was taken when we closed all 531 small, standalone Carphone Warehouse stores in the UK. Our full range of Mobile products is still available online and in our large 3-in-1 stores, featuring Currys PC World and Carphone Warehouse, which allow customers to see, touch and play with technology and receive trusted independent advice from expert colleagues. Our contract with O2 ended in March 2020 and the remaining legacy volume commitments with the mobile network operators will substantially roll off during 2020/21. As a result, the Group will then no longer be encumbered by historic sales volume targets.

Unfortunately, Covid-19 has impacted the Mobile business. Compared to our Electricals business, our Mobile business has a much smaller share of revenue from online operations and is running on a platform that has deliberately seen little investment over the last two years as it will be integrated into our new platform. Consequently, it has not seen the same sales transfer to online as Electricals during lockdown. Our new Mobile offer will reflect how customers are buying phones and technology while still providing flexibility, transparency and value. But this has also been delayed as we paused system development during the crisis.

In total, this Covid-19 impact will mean that operating losses will grow slightly in 2020/21. We are still on course to eliminate trading losses as we remove costs such as running the historic Mobile POS systems, on top of the removal of duplicate cost bases as part of the One Business £200m cost reduction programme. However, due to the delay in transformation, we expect this to happen during 2021/22, 6-12 months later than originally planned.

Capable and Committed Colleagues

Capable and committed Colleagues are our greatest advantage. We are building capabilities that are important for the long term in areas such as data, information security, analytics, financial services, digital, CRM and connectivity. We have invested in learning for all our colleagues and in September, we opened our new training facility, The Academy@Fort Dunlop. This will have an intake of over 6,000 colleagues annually and will provide new colleagues with an additional 400,000 hours of training a year.

We also extended our award-winning colleague shareholder scheme to almost 7,000 newly eligible colleagues in the year, granting each of them at least £1,000 worth of shares, which vest three years from the award date. Over 38,000 colleagues in 11 countries have received an award under the Colleague Shareholder Scheme launched in 2019. This is a crucial lever of engagement and alignment behind our common vision. Our colleagues are acting more like owners, because they are. It gives us all a stake in the business's success and positions us as a progressive employer.

In collaboration with 6,500 Colleague contributors across the business, we recently launched our new culture and values. Many world class businesses have shown the power of strong values and we strongly believe in them here.

The senior leadership team has also been strengthened: Paula Coughlan joined as Chief People Officer from McDonald's at the end of last year, Erik Sønsterud was promoted to CEO of International, Mark Allsop is our new Chief Operating Officer having joined in December from Merlin Entertainments plc, Lindsay Haselhurst, previously of Kingfisher plc, joined in January to become our new Chief Supply Chain Officer and Ed Connolly joined in March from John Lewis Partnership as our new Chief Commercial Officer.

One Business

We have made further progress in becoming One Business that is a clearer, simpler and faster place to work. As we move towards being one truly joined up business, this means a joined up customer experience, so customers get the full benefit of everything we have to offer, and a joined up business behind the scenes, realising the cost benefits of moving to One Business. 

In the year we made savings through outsourcing contact centres, decommissioning 40 legacy IT applications, restructuring the head office teams, re-gearing some store leases and making many efficiencies in cost areas such as Supply Chain.

The closure of our standalone Mobile shops in the UK is an enabling step towards a significant portion of the £200m of gross annual Group cost savings that we are targeting by the end of 2021/22.

Stronger Infrastructure

The introduction of new colleague tools has further improved our in-store experience. Our new store mode tablets have enabled conversations with customers away from fixed terminals and given customers access to our full online range. Our new zero-contact Drive Thru Order & Collect proposition has enabled a closer connection between online and stores. A new pricing platform has helped us ensure we are always cost competitive whilst in the Nordics, we went live with the first phase of our SAP based Next Generation Retail platform.

We deliberately paused spend on our large UK re-platforming programme as Covid-19 began. During the crisis we successfully pivoted to a new more agile approach for technology innovation and delivery. This saw us launch our ShopLive online personal shopping service in less than four weeks and which already now supports over 20,000 customer conversations each week.

Technology infrastructure is still a constraint for the business, but clear progress is being made and this will accelerate as investment in this area is prioritised to ensure We Help Everyone Enjoy Amazing Technology through rich customer centric experiences.

Reaction to Covid-19

Since the start of the pandemic, the business has focussed on three priorities: Keeping our Colleagues and Customers Safe, Helping our Customers and Securing our Future. Through this focus we transformed our operations and services almost overnight, including implementing social distancing and hygiene standards in our Nordics stores, which have remained open throughout the crisis, and operating our UK and Greek businesses as online-only retailers for the first time in their history. The speed and skill with which our colleagues reacted meant that through these challenging times we can still provide the vital technology our customers need, to keep them connected with loved ones, their families fed, clean and entertained, to work from home and home-school their children. The vital role we play has been reflected in customer demand and we have generated strong sales in every channel open for business.

Keeping Our Colleagues and Customers Safe

There is no bigger priority than colleague and customer safety at any time. During the lockdown we have taken even further steps to protect colleagues while meeting high customer demand. These measures ensure social distancing, provide high levels of personal hygiene, maintain the highest standards of customer safety, and help us to continue to deliver to customers the technology they need. Our colleagues have risen to this challenge brilliantly.

Helping Our Customers

Our customers need our products, services and expert advice, especially now. As well as continuing to provide all our usual technical expertise and support we have taken steps to ensure that older and vulnerable customers who need us can get our help and get it safely.

Supporting vulnerable people

· Through Age UK, our UK charity partner, we have donated hundreds of tablets with network connectivity to help older people at risk of social isolation stay connected and up to date with the latest information on the pandemic. A dedicated phoneline has been launched to provide any follow up tech support.

· We donated hundreds of laptops, headsets, chargers and phones to SilverLine, an Age UK organisation, to ensure they could carry on their important work during lockdown.

· iD Mobile, our mobile network, offered NHS workers and customers over-70 years old free texts, minutes and data.

· In Finland, Sweden and Greece we focused on donating hundreds of items of vital technology to care homes to support the most vulnerable during the crisis.

Supporting medical teams

· In the UK we are prioritising requests for tablets, mobile phones, laptops, webcams, headsets and chargers for all NHS Trusts and individual hospitals to help critically ill patients stay in touch with loved ones.

· In Sweden, teams have donated refrigerators and microwaves to hospitals, TVs for nursing staff rooms and radios for wards for Covid-19 patients.

· In Greece, we supported local hospitals through donations of electronic and electrical equipment for newly-established Covid-19 units and provided 200,000 medical masks and gloves to the Ministry of Health.

· In Nordics, we donated unused processing power from c.1,500 in-store Gaming computers to Stanford University's Folding@Home project to research ways to tackle Covid-19.

Securing Our Future

When considering the impact of business interruption, the most material impact on the Group's liquidity will arise through the change in trade payables. The Group generally buys goods for resale on 60-90 day payment terms and sells the product before payment becomes due. A decline in sales drives a short-term outflow of working capital. As evidenced by our sales to the end of April, the strength of trading in the Group's online businesses and in the Nordics has somewhat compensated for sales lost through store closures. Working capital outflow was therefore manageable.

In order to be prudent and maximise spare liquidity to cope with current and potential future business interruption, the Group has undertaken the following actions:

Extended debt facilities - As previously announced, the Group has extended its committed debt facilities with an additional £266m RCF and now has total committed facilities in excess of £1,350m. At the year end, the Group had net debt of £284m and access to over £1bn of unutilised committed facilities.

Utilised Government cost support - We furloughed over 16,500 store, supply chain and support colleagues across territories who were temporarily not working due to Covid-19. All UK&I furloughed colleagues are paid at 80% of their salary, with the company making up any difference beyond the Government subsidy limits. In 2019/20, the UK job retention scheme combined with the UK business rates suspension and International government support measures lowered net operating costs by c.£30m. We expect these measures to reduce net operating costs by c.£80m in 2020/21.

Reduced central costs - All Executive and Board members took a temporary 20% pay reduction and other senior leaders took a temporary 10% pay reduction, effective from 5 April to 28 June 2020, and non-essential expenditure was stopped.

Reduced Capital expenditure - The Group capital expenditure in 2019/20 was £191m, slightly lower than previous guidance of around £200m. Due to the delay to transformation projects, we would expect 2020/21 expenditure to be closer to run rate of £175m than the previously expected £240m. The Group can control capital expenditure and will continue to evaluate the right level for 2020/21 as the Covid-19 situation develops.

Streamlined working capital - We moved some of our rents to monthly payments and, where offered, have accepted extended payment terms from some of our large, global suppliers. Our normal inventory commitment is 4-14 weeks in advance, depending on product.

Delayed tax payments - At the end of 2019/20 the Group had a cash benefit from Government backed tax payment delays of c.£70m which will reverse through 2020/21. In addition, UK VAT payments due between March and July 2020 will be deferred until March 2021.

Spread pension payments - The Group's annual pension contribution of £46m will now be paid in monthly instalments, instead of an annual lump sum in May.

Not declared a final dividend - The Group paid an interim dividend of 2.25p per share (£26m total) in January. The Board has decided not to pay a final dividend for 2019/20. Dividend payments will not be resumed at least until our standby debt facilities have been cancelled. Given the current uncertain environment, the Board will keep the payment of dividends under review to establish the appropriate time and level to recommence payment.

Our internal planning has stress tested the business against a range of downside scenarios, including the possibility that stores may need to close on a national or local basis for another extended period. We do not foresee needing to access any additional liquidity, and we expect to comply with bank covenants, unless substantially all our operations are required to close for an extended period, which we regard as highly unlikely.

2019/20 Financial Performance Review

During the period, the Group has adopted IFRS 16 which requires lease liabilities and corresponding right-of-use assets to be recognised on the balance sheet. The Group has adopted IFRS 16 using the modified retrospective approach, therefore prior year comparative numbers have not been restated.

This financial year is reported on a 53-week basis. The 53rd week has a small impact on sales, which is highlighted where appropriate but an immaterial impact on profits.

To aid understanding of our performance through the year, here we present like-for-like and online sales growth for Electricals both pre and post Covid-19:

UK & Ireland Electricals

*See page 41 for further information on our alternative performance measures (APMs). This includes definitions, purpose, changes to the prior year, and reconciliation to the nearest IFRS measures.

Sales increased +1%, driven by like-for-like sales +1% with slight negative impact from store closures and +1% benefit from the 53rd week. Like-for-like sales grew +3% across the first 11 months of the year before declining -16% in April due to stores closing from 24 March. Across the year, online sales grew +26% and contributed 35% of sales, +7%pts higher than last year. There was a sharp acceleration in this growth when stores were closed in April as online sales grew +166% from +10% across the first 11 months.

Sales were very strong in large screen TVs, computing, gaming and smart tech across the whole year, as were sales of small domestic appliances where our extended ranges and experience zones drove performance. White goods saw solid performance across most of the year, but sales were impacted by the Covid-19 lockdown.

The market declined -1.4% over the year as a whole, with Currys PCWorld gaining +0.7% of share, with market share gains both in stores and online. To the end of February 2020, the share gain was +1.0%, however, our market share declined by -1.3% in March and April 2020 as some of our competitors were able to keep stores open as they were part of broader businesses deemed to be essential retailers. Encouragingly, over this period our online market share increased significantly as customers valued the breadth and depth of range sold online.

Gross margin declined -170bps (1H: -40bps / 2H: -280bps) including a c.-110bps (1H: na / 2H: -200ps) impact from Covid-19 due to the accelerated shift towards online, delay of product launches, negative impact from not hitting supplier volume targets and associated end of range provisions. The remaining movement of -60bps (1H: -40bps / 2H: -80bps) was due to the continuing expected growth of online as a proportion of our sales, continued investment in our unambiguous price promise and our improved delivery proposition.

Operating costs improved relative to sales driven by head office team restructuring, contact centre outsourcing, renegotiated rent deals and government schemes that reduced rates and colleague costs.

As a result, adjusted EBIT reduced -10% to £162m in 2019/20, from £180m in 2018/19. We estimate that without the impact of Covid-19 our operating margins would have been flat for the year, driving profit growth on an increased revenue base.

The adoption of IFRS 16 increased EBIT by £2m in the year. Other adjusting items of £45m were lower by £41m year on year with current year costs relating to the strategic change programmes and ongoing amortisation of acquisition intangibles recognised during the 2014 merger and impairment losses. Statutory EBIT increased to £119m in 2019/20 from £94m in 2018/19.

Nordics

*See page 41 for further information on our alternative performance measures (APMs). This includes definitions, purpose, changes to the prior year, and reconciliation to the nearest IFRS measures.

Nordics delivered another year of sales and profit growth. On a currency neutral basis, this business has almost doubled sales over the last eight years and adjusted EBIT growth has averaged +11% over the last three years. Currency neutral revenue grew by +6%, with strong growth in all territories. The 53rd week benefitted sales growth by +1%. Reported revenue was +2% year-on-year, the difference from local currency due to the relative weakening of Nordic currencies.

Like-for-like revenue grew by +4% with particularly strong performance in March and April as the majority of the stores continued to trade.

Online sales grew +22% during the year and contributed 19% of sales, +3%pts higher than last year. Online saw a marked acceleration in April when online sales grew +98% from +14% over the first 11 months of the year.

Across the year, there was an uplift in built-in kitchen appliances on the back of our increased emphasis on the kitchen category while headphones, wearables and cordless vacuums all sold well driven by innovation and new product launches. 

Market share in the Nordics grew again, up +0.5% to 26.0%, with share gains across most categories.

Gross margin was flat year-on-year, as the impact of weaker currency was offset by commercial initiatives including services, subscriptions, peripherals and accessories.

Operating costs ratio remained flat relative to sales due to cost efficiencies and a small benefit of weaker currency offset by higher branch costs.

The resulting adjusted EBIT of £116m was up +4% year-on-year in reported terms, and +10% year-on-year in local currency. Every market saw EBIT growth in local currency.

The impact of IFRS 16 adoption was an increase in EBIT of £10m. Other adjusting items relate to amortisation of acquisition intangibles.

As a result of the above factors statutory EBIT increased to a profit of £115m in 2019/20 from a profit of £100m in 2018/19.

Greece

*See page 41 for further information on our alternative performance measures (APMs). This includes definitions, purpose, changes to the prior year, and reconciliation to the nearest IFRS measures.

Sales in local currency increased +3%, with like-for-like sales +2% over the year. Store closures from the 18 March to 10 May meant that like-for-like sales dropped from +5% over the first 11 months of the year to -40% in April.

Across the year, online sales grew +60% and contributed 8% of sales, with a significant acceleration in April when online grew +597%.

Products that sold well during the year included TVs, laundry and cooling equipment.

This sales performance resulted in market share increasing to 35% (2018/19: 34.6%).

Gross margin was up +10bps over prior year due to better trading offset by higher distribution costs.

Operating costs increased due to investments in IT services and additional depreciation associated with recent store developments.

Overall EBIT impact from Covid-19 was slightly negative, as a result of lost gross profit, offset by reduced store costs due to rent reductions in March and April and lower payroll as employees' contracts were suspended with Government support.

The total adjusted EBIT was £20m, down -4% year-on-year in reported terms and -1% on a neutral currency basis.

The adoption of IFRS 16 increased EBIT by £1m while costs associated with the strategic change programme totalled £1m in the year, resulting in statutory EBIT of £20m.

UK & Ireland Mobile

*See page 41 for further information on our alternative performance measures (APMs). This includes definitions, purpose, changes to the prior year, and reconciliation to the nearest IFRS measures.

Revenue decreased by -20% reflecting the continuing challenges in the 24-month postpay market and our decision in March 2020 to close the Carphone Warehouse standalone stores in the UK.

The decrease in adjusted EBIT to a £104m loss in 2019/20 from a £50m profit in 2018/19 mostly reflects the reduced sales of our constrained offer on a largely fixed legacy cost base.

The implementation of IFRS 16 has resulted in a £7m increase in EBIT.

In the year the net decrease in the network commission receivables and contract assets was £181m as a result of £47m negative out of period network debtor revaluations and £1,139m cash received, offset by £995m of new capitalisation and £10m of other movements.

The negative revaluation of £47m (2018/19: negative revaluation of £41m) was driven by three factors: Regulatory impacts causing total consumer spend reduction and end of contract notifications; changes in customer behaviour driven by Covid-19 and impacts from the closure of the UK standalone Mobile stores. These are exceptional events and we believe there will be no further significant reversal of revenue in future periods. Out of period revaluations are excluded from the Group's alternative performance measures as explained further on page 41.

Other adjusting items of £138m predominantly reflected the costs associated with the closure of the UK Carphone Warehouse standalone stores and redundancies and claims from a small proportion of customers who believe they were mis-sold Geek Squad mobile phone insurance policies in the past.

Statutory EBIT has improved to a loss of (£282m) from a loss of (£438m).

Finance costsStatutory net finance costs have increased from £36m to £112m year-on-year primarily as a result of interest on newly recognised lease liabilities following the adoption of IFRS 16. Adjusted net finance costs were £4m higher than last year at £28m, mainly driven by costs associated with the increased debt facilities (2018/19: £24m).

TaxThe full year adjusted effective tax rate at 25% was higher than the prior year rate of 21% due to a reduction in the Group's total adjusted profits for the year and the impact of different tax rates in the UK and overseas on the mix of those profits, together with the impact of prior period adjustments.

Income statement - Discontinued operationsThe current year discontinued operations charge of £2m relates to a change in provisions for potential payments under warranties for legacy European Carphone operations.

Cash flow

*See page 41 for further information on our alternative performance measures (APMs). This includes definitions, purpose, changes to the prior year, and reconciliation to the nearest IFRS measures.

Free cash flow was an inflow of £109m (2018/19: £153m). Adjusted EBIT decreased for the reasons described above.

Depreciation and amortisation in the year decreased by £18m due to the reduced depreciation on assets fully impaired in the prior year.

The Group benefited from a working capital inflow of £108m (2018/19: -£17m), this was largely as a result of £134m network debtor unwind in the year (2018/19: £219m).

Capital expenditure was £191m, an increase of £25m compared to the prior year reflecting the investment in our UK IT infrastructure and store estate.

Taxation cash flows were lower than prior year reflecting lower profitability in the UK & Ireland and tax cash refunds during the period.

Exceptional items predominantly related to strategic change programmes and payment of previously provided data incident costs.

A reconciliation of cash generated from operations to free cash flow is presented in note A9 to the Financial Information.

*See page 41 for further information on our alternative performance measures (APMs). This includes definitions, purpose, changes to the prior year, and reconciliation to the nearest IFRS measures. The Group's net debt APM does not have a direct IFRS equivalent measure. This has been reconciled back to the statutory balance sheet within the financial information.

As at 2 May 2020, the Group had net debt of £284m (2018/19: £265m). A reconciliation of net debt is presented in note A10 to the financial information. Free cash flow was an inflow of £109m (2018/19: inflow of £153m) for the reasons above.

Of the free cash flow, £78m was returned to shareholders in the form of dividends. This was the payment of the prior year's final dividend and the interim dividend for 2019/20. The Board has decided not to pay a final year dividend for the current year. The employee benefit trust acquired £12m of shares to satisfy share awards to colleagues.

Pension contributions of £46m are consistent with the prior period, and in line with the current agreement with the Trustees of the fund.

Statutory Cash flow statement

The movements in statutory loss before interest and tax, capital expenditure and dividend cash flows are for those reasons previously discussed in this report.

Depreciation and amortisation in the current year includes £217m of depreciation on newly recognised right-of-use assets following the adoption of IFRS 16 and £25m of amortisation of acquisition related assets. The prior year includes depreciation and amortisation on UK & Ireland Mobile tangible, intangible and acquisition related assets fully impaired at the prior year end.

Working capital cash inflow on a free cash flow basis was £155m (2018/19: £24m) as explained above. The remaining £80m increase in statutory working capital was mainly due to the group adopting IFRS 16 (free cash flow is shown excluding IFRS 16) resulting in a £56m increase and £43m increase due to lower provisions, partially offset by share based payment charges.

Other operating cash flows primarily relate to pension contributions and taxation cash flows.

The increase in capital repayment of lease liabilities relates to the adoption of IFRS 16. Prior year relate solely to capital repayments on finance leases under IAS 17.

Interest paid relates to interest on borrowings and lease liabilities.

Other financing cash flows related to increased use of the revolving credit facility in the year offset by shares purchased in the period to satisfy the colleague share scheme. Prior year other financing cash flows related to reduction in usage of the revolving credit facility.

Balance sheet

*See page 41 for further information on our alternative performance measures (APMs). This includes definitions, purpose, changes to the prior year, and reconciliation to the nearest IFRS measures. This includes a reconciliation of the above working capital balance to the statutory balance sheet. The IFRS 16 leases relate to the incremental impact of leases brought on balance sheet due to the adoption of IFRS 16. For comparability purposes this excludes leases that were previously on balance sheet classified as finance leases under IAS 17.

Goodwill decreased in the period as a result of revaluation of foreign currency goodwill in Nordics operations.

Other fixed assets increased by £1,083m primarily as a result of newly recognised right-of-use assets following the adoption of IFRS 16 in the year of £1,114m (net of depreciation).

Network commission receivables and contract assets decreased by £181m as the scale of our mobile business reduced resulting in a net cash inflow, as well as a negative £47m out of period network debtor revaluation. Out of period network debtor revaluations are excluded from the Group's APMs as further detailed on page 41.

Working capital increased by £161m as a result of the timing of payments around year end due to the financial close being a week later than prior year.

Net debt increased by £19m due to working capital outflow caused by lower sales, offset by reduced capital expenditure and deferral of taxes and rent.

Tax and other decreased as a result of a reassessment of the deferred tax asset position due to the loss in year.

Comprehensive income / changes in equity

Total equity for the Group decreased from £2,640m to £2,280m in the period, driven by the statutory loss, the loss on retranslation of overseas operations of £39m, dividend payments of £78m and the actuarial loss (net of taxation) on the defined benefit pension deficit for the UK pension scheme of £3m.

Following the adoption of IFRS 16 a £37m charge has been taken to reserves reflecting the impact of transitional impairments net of taxation.

Pensions

The IAS 19 accounting deficit of the defined benefit section of the UK pension scheme amounted to £550m at 2 May 2020 (26 October 2019: £586m, 27 April 2019: £579m). Contributions during the period under the terms of the deficit reduction plan amounted to £46m (2018/19: £46m).

The deficit decreased largely as a result of decreases in inflation rate assumptions and increased values of underlying assets in the period and the annual contributions made in H1 of £46m, offset by changes in discount rates following falling bond yield returns.

A full actuarial valuation of the scheme was carried out as at 31 March 2019 and showed a shortfall of assets compared with liabilities of £645m. A 'recovery plan' based on this valuation was agreed with the Trustees such that contributions in respect of the scheme will be £46m for 2020/21, rising to £78m per year from 2021/22 until 2027/28, with a final payment of £52m in 2028/29.

Dividends

The Group paid an interim dividend of 2.25p per share (£26m total) in January. The Board has decided not to pay a final dividend for 2019/20. Dividend payments will not be resumed at least until our standby debt facilities have been cancelled. Given the current uncertain environment, the Board will keep the payment of dividends under review to establish the appropriate time and level to recommence payment.

Appendix

Financial Information

Consolidated income statement

Consolidated statement of comprehensive income

Consolidated balance sheet

* During the period the Group has adopted IFRS 16: 'Leases' using the modified retrospective approach, as a result prior year comparative numbers have not been restated. Lease liabilities for the year ended 27 April 2019 relate solely to finance lease obligations recognised in accordance with IAS 17.

** Cash and cash equivalents and loans and other borrowings have been restated to meet the presentational requirements of IAS 32 as further described in note 1. This has had no impact on net assets.

*** In order to provide better visibility of reserves, the Group has restated the comparative periods to reclassify certain reserves balances. The Group has separately presented 'other reserves' for the first time in the period. This is to separately disclose the hedging, investment in own shares, and investment revaluation reserves which were previously presented within accumulated profits. Other reserves also include the previously disclosed translation and demerger reserves.

* In order to provide better visibility of reserves, the Group has restated the comparative periods to reclassify certain reserves balances. The Group has separately presented 'other reserves' for the first time in the period. This is to separately disclose the hedging, investment in own shares, and investment revaluation reserves which were previously presented within accumulated profits. Other reserves also include the previously disclosed translation and demerger reserves.

Consolidated cash flow statement

* During the period the Group has adopted IFRS 16 using the modified retrospective approach, as a result prior year comparative numbers have not been restated. For the year ended 27 April 2019 capital repayments on lease liabilities relate solely to finance leases recognised in accordance with IAS 17. Prior period cash generated from operations includes lease rental expenses that fall within the scope of IFRS 16 in the current period.

Notes to the Financial Information

1 Basis of preparation

The Financial Information, which comprises the consolidated income statement, consolidated statement of comprehensive income, consolidated balance sheet, consolidated statement of changes in equity, consolidated cash flow statement and extracts from the notes to the accounts for the year ended 2 May 2020 and 27 April 2019, has been prepared in accordance with the accounting policies set out in the full financial statements and on a going concern basis.

Alternative performance measures (APMs)

In the prior year, the financial statements included presentation of alternative performance measures in addition to IFRS measures. In the current year, the financial statements present only IFRS measures which are in line with the basis of preparation disclosed above. The alternative performance measures used by the group are included within the glossary and definitions section on page 41. This includes further information on the definitions, purpose, and reconciliation to IFRS measures.

Going concern

Going concern is the basis of preparation of the financial statements that assumes an entity will remain in operation for a period of at least 12 months from the date of approval of the financial statements. The Directors have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future and they continue to adopt the going concern basis of accounting in preparing the annual financial statements. The Directors have reached this conclusion based on the following considerations.

Key judgements

The key judgement that the Directors have considered in forming their conclusion is the potential impact of Covid-19 on future revenue and earnings. In relation to forecast revenue the primary consideration is the likelihood and future impact of a recurrence of Covid-19 which could result in the closure of stores in the Group's key markets. The Directors have also considered the longer-term economic outlook in the countries where the Group operates. In forming their conclusion, the directors have reviewed the trading performance during the first lockdown period, which varied across the countries where the Group operates, between 18 March 2020 and 14 June 2020, the trading performance since restrictions have been lifted in the Group's key markets and have considered the extent to which the observed level of trading activity should influence the trading forecasts over the lookout period, particularly in light of the uncertain economic environment.

In forming their conclusions, Management have considered the potential mitigating actions that the Group could take to preserve liquidity and ensure compliance with the Group's financial covenants. In doing so, judgement has been applied in determining whether such actions would be reasonably possible to execute as well as the financial impact of taking such actions.

Operational impact of the virus

Stores

- In line with Government regulations, the Group's stores in Greece closed on 18 March 2020 and all UK and Ireland stores closed on 24 March 2020. Our Nordics stores predominantly remained open throughout the period. Our stores in Greece were then fully reopened between 11 - 18 May 2020, and our stores in UK and Ireland began to reopen from 15 June 2020 and 18 May 2020 respectively.

- In our stores we have ensured colleague and customer safety through measures including protective barriers for cashiers, contactless payment, pre-paid pickups and increased cleaning and hygiene actions.

Online

- Across the Group, the online sales channel remained operational, and the Group benefitted from an increase in online activity. To ensure delivery colleague safety, shift patterns were adjusted to reduce potential congestion and rosters are designed to keep colleagues in the same pairs and the same vehicle wherever possible. Among many measures, our colleagues are equipped with masks and full safety equipment, and deliveries are done on a no-contact basis. We ask customers to keep a safe distance from our colleagues while they are delivering to, or working in or near, their homes.

- Our distribution centres have introduced extensive measures to keep our colleagues safe, including social distancing in all areas, one-way systems, signage and tannoy reminders, regular cleaning and sanitisation of all frequently touched surfaces.

Head office and customer service

All UK contact centres and offices have enabled working from home for all colleagues by providing laptops and increasing VPN access. Our UK head office building has been closed since 20 March 2020 with continuity of operations maintained.

Mitigations implemented

In responding to the impact of the pandemic the Group has initiated a number of mitigations that are relevant for assessing cashflows during the going concern period:

Utilised Government cost support - We furloughed over 16,500 store, supply chain and support colleagues across territories who were temporarily not working due to Covid-19. All UK&I furloughed colleagues are paid at 80% of their salary, with the Company making up any difference beyond the Government subsidy limits. In 2019/20 the UK job retention scheme combined with the UK business rates suspension and International government support measures lowered net operating costs by c.£30m. We expect these measures to reduce net operating costs by c.£80m in 2020/21.

Reduced central costs - All Executive and Board members took a temporary 20% pay reduction and other senior leaders took a temporary 10% pay reduction, effective from 5 April to 28 June 2020, and non-essential expenditure was stopped.

Reduced Capital expenditure - The Group capital expenditure in 2019/20 was £191m, slightly lower than previous guidance of around £200m. Due to the delay to transformation projects, we would expect 2020/21 expenditure to be closer to run rate of £175m than the previously expected £240m. The Group has the ability to control capital expenditure and will continue to evaluate the right level for 2020/21 as the Covid-19 situation develops.

Streamlined working capital - We moved some of our rents to monthly payments and, where offered, have accepted extended payment terms from some of our large, global suppliers. Our normal inventory commitment is 4-14 weeks in advance, depending on product.

Delayed tax payments - At the end of 2019/20 the Group had a cash benefit from Government backed tax payment delays of c.£70m which will reverse through 2020/21. In addition, UK VAT payments due between March and July 2020 will be deferred until March 2021.

Spread pension payments - The Group's annual pension contribution will now be paid in monthly instalments, instead of an annual lump sum.

Not declared a final dividend - The Group paid an interim dividend of 2.25p per share (£26m total) in January. The Board has decided not to pay a final dividend for 2019/20. Dividend payments will not be resumed at least until our standby debt facilities have been cancelled. Given the current uncertain environment, the Board will keep the payment of dividends under review to establish the appropriate time and level to recommence payment.

Modelling and potential future impact of Covid-19

In their consideration of going concern, the Directors have reviewed the Group's future cash forecasts and profit projections, which are based on market data and recent past experience. Given the global political and economic uncertainty resulting from the Covid-19 pandemic, it is difficult to estimate with precision the impact on the Group's prospective financial performance. We have therefore modelled a range of Covid-19 scenarios into our going concern considerations.

The Directors have also modelled a 'downside worst case' scenario which assumes that the Group's stores are required to shut in all territories in the event of a second Covid-19 outbreak during our peak Christmas trading period later in the year, with a gradual reopening throughout the following two months. The scenario assumes Group sales decrease by approximately £800m throughout the closure and following two months. Throughout this second closure, which we have modelled within our peak trading period, we have assumed no government support across our territories. This modelled 'downside worst case' scenario is significantly worse than the initial Covid-19 outbreak we have witnessed to date given our stores in the Nordics markets did not close in this period. In this scenario once the stores reopen this is followed by ongoing reduced sales against pre Covid-19 levels for the remainder of the going concern period across all of the Group's key markets. The scenario models a recessionary impact of 15% for the UK&I and Greece markets, and 7% within the Nordics markets over the remainder of the going concern 12 month period. The scenario models approximately £1.4bn lower sales over the 12 month going concern period compared to a similar 12 month period of the pre-Covid-19 budget for 2020/21. During this period, online in these territories would continue operating at a level similar to that seen during the first period of lockdown but would not include any increase for recovery of store sales during the following two month period, which is again a worse case than has actually occurred during the first period of lockdown. This 'downside worst case' scenario includes a number of cost savings and cash mitigations that are within the Group's control and would need to be implemented. Throughout this 'downside worst case' scenario the Group would not breach any of their financing covenants and would not require any additional sources of financing.

As a result of the uncertainties surrounding the forecasts due to the Covid-19 pandemic, the Group has also modelled a reverse stress test scenario. The reverse stress test models the decline in sales that the Group would be able to absorb before requiring additional sources of financing in excess of those that are committed. Such a scenario, and the sequence of events which could lead to it, is considered to be remote.

Financing

The Group has extended its committed debt facilities with an additional £266m RCF and now has total committed facilities in excess of £1,350m. At the year end the Group had net debt of £284m and access to over £1bn of unutilised committed facilities. The Group has a number of financing facilities that contain covenants terms requiring the Group to comply with certain financial covenants. The financial covenants are tested semi-annually in line with our October interim reporting and April year end reporting. The covenants relate to fixed charge cover (1.75x) and leverage (2.5x) ratios. These covenants are normally met with significant headroom and are outside times of peak liquidity demands for the Group which tends to be in February and March following peak trading inventory purchases. As at 2 May 2020 the financial covenants were met. As a result of the Covid-19 outbreak and the uncertainty caused, the Group requested and received a reduction in the hurdle rate for assessing covenant compliance for October 2020. The additional £266m RCF expires in April 2021. The other RCF's totalling £1bn expire in October 2022 and the €50m term loan expires in October 2020.

Under the 'downside worst case' Covid-19 scenario as explained above, factoring in the cost savings and mitigations within the Group's control, the Group is forecast to comply with all financial covenants throughout the going concern period.

Going concern conclusion

The additional RCF and the reduction in the hurdle rate for assessing covenant compliance agreed with the banks combined with the other measures taken mean that, even under the Covid-19 scenarios modelled (excluding the reverse stress test), the business would continue to have significant liquidity headroom on its existing facilities and against the revolving credit facility financial covenants for the going concern period. As a result, the Board believes that the Group is well placed to manage its financing and other significant risks satisfactorily and that the Group will be able to operate within the level of its facilities for the foreseeable future. For this reason, the Board considers it appropriate for the Group to adopt the going concern basis in preparing its financial statements. The long-term impact of Covid-19 is uncertain and should the impacts of the pandemic on trading conditions be more prolonged or severe than what the Directors consider to be reasonably possible, the Group would need to implement additional operational or financial measures.

Restatement of prior periods

Within the period, it was determined that the Group's cash and overdrafts within notional cash pooling arrangements did not meet the requirements for offsetting in accordance with IAS 32: 'Financial Instruments: Presentation' and cannot be presented net in the balance sheet. For presentational purposes, amounts have therefore been restated for the preceding period ended 27 April 2019 and the beginning of the preceding period being 28 April 2018 in accordance with IAS 8: 'Accounting Policies, Changes in Accounting Policies and Errors'. The impact of this change is to increase both cash and cash equivalents and overdrafts within current loans and other borrowings for the year ended 27 April 2019 by £540m (2017/18: £1,155m) in the Group's Consolidated balance sheet.

This has had no impact on net assets as seen on the face of the Consolidated balance sheet.

Further information

The Financial Information set out in this announcement does not constitute statutory accounts within the meaning of Sections 434 to 436 of the Companies Act 2006 and is an abridged version of the Group's financial statements for the year ended 2 May 2020 which were approved by the directors on 14 July 2020. Statutory accounts for the year ended 27 April 2019 have been delivered to the Registrar of Companies, the auditor has reported on those accounts, their report was unqualified and did not contain statements under Section 498(2) or (3) of the Companies Act 2006. Statutory accounts for the year ended 2 May 2020 will be delivered in due course. The auditor has reported on those accounts, their report was unqualified and did not contain statements under Section 498 of the Companies Act 2006.

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, IFRS issued by the International Accounting Standards Board and those parts of the Companies Act 2006 applicable to those companies reporting under IFRS. The consolidated financial statements incorporate the financial statements of the Company and its subsidiary undertakings for the year ended 2 May 2020.

2 Segmental analysis

The Group's operating segments reflect the segments routinely reviewed by the Board and which are used to manage performance and allocate resources. This information is predominantly based on geographical areas which are either managed separately or have similar trading characteristics such that they can be aggregated together into one segment.

The Group's operating and reportable segments have therefore been identified as follows:

- UK & Ireland Electricals comprises the operations of Currys PCWorld and the Dixons Travel business.

- UK & Ireland Mobile comprises the Carphone Warehouse, iD Mobile and Simplify Digital businesses and the Connected World Services B2B operations.

- Nordics operates in Norway, Sweden, Finland, Denmark and Iceland.

- Greece, consisting of our ongoing operations in Greece.

UK & Ireland Electricals, UK & Ireland Mobile, Nordics and Greece are involved in the sale of consumer electronics and mobile technology products and services, primarily through stores or online channels.

Transactions between segments are on an arm's length basis.

In accordance with IFRS 5, discontinued operations are disclosed separately as a single amount within the Group's consolidated income statement after profit after tax for continuing operations. Discontinued operations are therefore excluded from the segmental analysis. Further information on the Group's operations classified as discontinued is outlined in note 7.

2 Segmental analysis (continued)

2 Segmental analysis (continued)

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:

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

3 Net finance costs

(i) During the period the Group has adopted IFRS 16: 'Leases' using the modified retrospective approach, as a result prior year comparative numbers have not been restated. Interest expense on lease liabilities for the year ended 27 April 2019 relates to finance leases recognised in accordance with IAS 17.

(ii) All finance costs in the above table represent interest costs of financial liabilities and assets, other than amortisation of facility fees which represent non-financial assets.

4 Loss per share

Basic and diluted loss per share is based on the loss for the period attributable to equity shareholders.

5 Equity dividends

Following the Group's Covid-19 business update, announced 29 April 2020, the Board has made the decision not to pay a final dividend.

6 Notes to the cash flow statement

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

6 Notes to the cash flow statement (continued)

b) Changes in liabilities arising from financing activities

The table below details changes in the Group's liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group's consolidated cash flow statement as cash flows from financing activities.

* The Group uses interest rate swaps and FX forward contracts to hedge borrowings. The fair value of these derivatives rounded to £nil (2019: £nil). There were no material cash flows or changes in fair value on these instruments during the year.

(i) Other changes include interest accruals and FX.

(ii) During the period the Group has adopted IFRS 16 using the modified retrospective approach. The current period lease liabilities are recognised on balance sheet under IFRS 16.

** The presentation of Financing cash flows has increased from £61m to £84m and Other changes decreased from £nil to -£23m for the year ended 27 April 2019 to reflect the gross movement of interest paid on Loans and other borrowings. This has had no impact on the opening or closing balance of liabilities.

7 Discontinued operations and assets held for sale

There have been no additional operations classified as discontinued during the year ended 2 May 2020. The following were classified as discontinued in the year ended 27 April 2019 and have continued to incur costs in the current financial year:

honeybee

For the year ended 2 May 2020 no profit or loss has been recognised in relation to the disposal of the honeybee operation.

For the year ended 27 April 2019 additional costs of £7m were recognised in relation to onerous contracts following the sale of the operation and compensation to previous employees. A further £4m tax credit was recognised in the year ended 27 April 2019 relating to accelerated capital allowances.

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. For the year ended 27 April 2019, the £1m tax credit was recognised in relation to the reversal of previously held provisions for tax risks due to the fact that the statute of limitations had lapsed.

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.

During the current year, VAT assessments have been issued for historical periods relating to the disposed Phonehouse Germany business. These assessments fall under warranties given as part of the sale agreement and as such, it is probable that the Group will need to pay these amounts. Therefore, the full amount of these assessments has been provided, resulting in a current year charge of £6m.

An additional £4m credit has been recognised following the release of provisions relating to other legacy European Carphone operations which are now in liquidation.

No additional profit or loss has been recognised in relation to Portugal (2018/19: £2m) or Virgin Mobile France (2018/19: £5m) in the current period.

7 Discontinued operations and assets held for sale (continued)

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

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: