H1 2019/20 Interim Results

RNS Number : 5924W

Dixons Carphone PLC

12 December 2019

Unaudited Results for the Half Year Ended 26 October 2019

Performance robust, good progress on transformation

· Group adjusted^* profit before tax of £24m (H1 2018/19: £60m)

· Group statutory loss before tax of £86m (H1 2018/19: loss of £440m)

· UK & Ireland H1 Electricals revenue -1%, like-for-like revenue flat

o Q2 like-for-like -2% against tough comparatives

o Share gains online and in-store against market down -3% in H1

o H1 profits down as expected given investment in customer proposition

· International H1 revenue +1%, like-for-like revenue +3%

o Q2 like-for-like revenue +1%

o Share gains across all markets with strong online growth

o Profit growth driven by sales and operating margin improvements

· UK & Ireland H1 Mobile revenue -18%, like-for-like revenue -10%

o In line with plan, guidance for £90m^* loss for the year unchanged

o Traditional postpay market continues to be challenging, down -8% in H1

o Negative network debtor revaluation of -£26m

· Transformation driving increasing customer satisfaction across Group

o Online / Multichannel: Online growth in Electricals +11%. 81 UK stores remodelled

o Credit: UK Credit adoption over 11%, active customers +15% since year end

o Services: Improved protection products to launch in the UK this financial year

o Mobile: New mobile offer to launch in H1 2020/21

o Colleagues: Quadrupled investment in training. Extending share award

o One Business: On track to deliver £200m of cost savings by FY22

o Stronger Infrastructure: Good progress on IT, rephasing of spend on larger projects

· Adjusted PBT^* expected to be around £210m for FY20, as previously guided

· Capital expenditure to be c.£200m (from £275m) due to rephasing of IT spend, adjusted net debt^* expected to be lower year-on-year

· All medium-term guidance unchanged

*See page 2 for the basis of preparation for all performance measures and guidance given.

Alex Baldock, Group Chief Executive, said:

"We're on track to deliver what we promised this year, and with our longer-term transformation.

In a tough UK Electricals market, we've gained significant share, and strengthened our market leadership. Our planned investments in the colleague and customer experience have played a big part in this resilient performance, demonstrated by sharply increased customer satisfaction scores. Our big International business also registered market share gains in every territory, with solid sales and margin improvements.

And we've taken important strides in our transformation. It's easier for customers to shop how they want: we're now gaining share Online as well as in stores, where we are investing to create exciting, enticing stores. More customers can also afford the tech they want: we now won't be beaten on price, and more are taking up our Credit offer. More, too, are getting the most out of their tech through our Services.

Mobile is challenging as expected. As promised, this will be the trough year for Mobile losses, and it will be break-even by 2022.

Good progress, yes, but all of us at Dixons Carphone are shareholders, and conscious that our business is still nowhere near its full potential. We're determined to realise that potential, and confident we're on the right path to do so."

H1 Revenue	2019/20 £m	2018/19 £m	Reported % change	Local Currency % change	Like-for- Like % change
UK & Ireland Electricals	1,979	1,997	-1%	-1%	0%
International	1,904	1,887	1%	3%	3%
- Nordics	1,677	1,675	0%	3%	2%
- Greece	227	212	7%	8%	8%
Electricals	3,883	3,884	0%	1%	1%
UK & Ireland Mobile	830	1,009	-18%	-18%	-10%
Group	4,713	4,893	-4%	-3%	-1%

Quarterly Revenue	Q2 2019/20			Q1 2019/20
	Reported	Local currency	Like-for- like	Reported	Local currency	Like-for- like
UK & Ireland Electricals	-3%	-3%	-2%	2%	2%	2%
International	-2%	2%	1%	4%	5%	4%
- Nordics	-3%	1%	0%	4%	5%	4%
- Greece	8%	9%	9%	7%	6%	7%
Electricals	-2%	-1%	0%	3%	3%	3%
UK & Ireland Mobile	-23%	-23%	-10%	-12%	-13%	-10%
Group	-7%	-5%	-2%	0%	0%	0%

Basis of preparation

Items excluded from adjusted results can evolve from one financial year to the next depending on the nature of exceptional items or one-off type activities. During the period the Group has adopted IFRS 16 which requires lease liabilities and corresponding right-of use assets to be recognised on balance sheet. The Group has adopted IFRS 16 using the modified retrospective approach, as a result prior year comparative numbers have not been restated. The adoption of IFRS 16 has a material impact on the current year reported performance, composition of net debt and presentation of cash flows for the period. In the current period the adjusting items therefore include the impact of adoption of IFRS 16 using the modified retrospective approach. The Directors believe this adjustment is helpful in the current year to aid shareholders in comparability with prior periods.

Following the separation of the UK & Ireland mobile reporting segment in the prior year, those performance measures, internal targets and KPIs reviewed by the Board and performance guidance given to the external stakeholders have evolved to provide greater transparency over in year trading results. To reflect this, current year adjusting items include the impact of revaluations of network debtor balances due to changes in assumptions, where the original transaction was recorded in periods prior to the current financial reporting year. The removal of such items is considered to be additional useful information to aid the understanding of current year trading. Details of all adjustments can be found in note 2 to the financial information. Prior year comparatives have been restated accordingly.

All guidance is based on assumption of no major macro-economic changes, for example no material impact from Brexit, and the profit numbers also exclude any significant revaluation in network debtors, up or down, which might arise from changes in the regulatory environment or for other reasons. It is also before implementation of IFRS 16.

H1 Profit, EPS and Net Debt
	2019/20 Statutory	2018/19 Statutory	2019/20 Adjusted	2018/19 Adjusted
EBIT	£m	£m	£m	£m	% change
UK & Ireland Electricals	19	(44)	31	42	-26%
International	55	44	54	50	7%
- Nordics	46	38	47	44	6%
- Greece	9	6	7	6	15%
Electricals	74	-	85	92	-8%
UK & Ireland Mobile	(107)	(423)	(49)	(21)	-133%
Group EBIT	(33)	(423)	36	71	-49%
Net finance costs	(53)	(17)	(12)	(11)
(Loss) / profit before tax	(86)	(440)	24	60
Tax	16	(20)	(5)	(14)
(Loss) / profit after tax	(70)	(460)	19	46
Basic continuing (loss) / earnings per share	(6.0)p	(39.7)p	1.6p	4.0p

Discontinued operations	(2)	(12)
Statutory loss after tax	(72)	(472)
Basic loss per share	(6.2)p	(40.7)p

Net debt	(1,592)	(274)	(290)	(274)

Next announcement

The Group will publish its Peak Trading Statement on Tuesday 21 January 2020.

For further information

Assad Malic	Group Strategy & Corporate Affairs Director	+44 (0)7414 19144
Dan Homan	Head of Investor Relations	+44 (0)7400 401442
Amy Shields	Head of External Communications	+44 (0)7588 201442
Tim Danaher	Brunswick Group	+44 (0)207 404 5959

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

About Dixons Carphone

Dixons Carphone plc is a leading multichannel retailer of technology products and services, operating through 1,500 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 42,000 capable and committed colleagues. 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 PCWorld 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.

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.

Continuing to Transform and Perform

We Help Everyone Enjoy Amazing Technology

Our vision is to help customers choose, afford and enjoy amazing technology however they choose to shop with us. By offering the best range of Products, Credit and Services across a true multichannel platform we will drive customer relationships that are stickier and more valuable over time. This will benefit our customers, our colleagues and our shareholders.

The strategy to deliver this vision was outlined 12 months ago and focuses on our core business, and on four things that matter most: two big profitable growth opportunities in Online/Multichannel and Credit, helping customers enjoy their technology through an easy experience and Services, and revitalising our Mobile business. We are delivering this through three enablers: Capable and Committed Colleagues; working in One Business; with Stronger Infrastructure.

In this section we provide an assessment on the four key priorities and three enablers. In the following performance review is an assessment of performance by division during H1 2019/20.

PRIORITIES

Online / Multichannel

This is a big profitable growth opportunity for us. Electricals saw online revenue growth of +11% in H1, including +7% in the UK & Ireland and +19% in Nordics. We are taking share online and in-store across all our markets.

In the UK this has been aided by making it easier for customers to find what they want: through improved digital marketing such as AI driven emails, up to 30% quicker site speed and increasing our range. We are on track to add c.4,000 SKUs this year without holding additional stock and to have 40,000 SKUs available by the end of the plan. We've made it easier for customers to buy too with improved AI driven product recommendations and an easier single check-out page. All of this has been done in a smartphone first way. Since the period-end we have launched a Currys PCWorld smartphone app which has had over 100,000 downloads with early data suggesting a higher conversion rate and average order value than mobile web. In the Nordics, improved Click & Collect propositions and a new customer care centre chatbot was launched in Norway, followed by Denmark and Sweden. The early feedback is positive, and this has contributed to the strong growth in those markets.

We want to make stores exciting, enticing destinations for face-to-face advice and demos. We're therefore making our biggest investment in UK stores in five years to give more space to such high-growth categories as large screen TVs, while putting slower moving products online only. We are giving more space for experience zones where customers can see, touch and interact with amazing technology, including 40 gaming battlegrounds, 52 TV experience zones and 72 experience zones for Major Domestic Appliances to date. We have so far remodelled 81 UK stores. Early results are promising, and we will invest in a further 64 this year.

We already know that many of our customers are multichannel shoppers. Online and stores need to work together to give a true multichannel experience. We've made a start here. A customer in store can now be sold the full online range by instore colleagues equipped with Store Mode tablets where NPS is up to 20pts higher, driving a +35% increase in online sales in stores. Online customers can use stores to access our services including laptop set-up, repairs and trade-in while having an easier Reserve & Collect experience, which climbed to 33% of online sales. This is only the start: we have a long way to go in order to deliver a full multichannel experience.

Credit

We are going with the flow of how customers want to buy as two thirds of customers already use some form of credit to buy technology in the UK.

We are committed to being responsible and safe in this area and all of our 21,000 frontline colleagues are fully trained and compliant. The credit and fraud risk sit with our lending partner, BNP Paribas.

Credit appeals to customers as technology is exciting but expensive, and credit makes the amazing technology they want more affordable: demonstrated by a +16%pts higher satisfaction score than for non-credit customers. And credit is good for us. It gives customers a reason to shop with us, then shop more, and adoption of other services by credit customers is almost double that of cash customers. Credit is good for suppliers as well. All this produces stickier, more valuable customer relationships.

This is another big profitable growth opportunity for us where we've made strong progress. Credit adoption is now over 11% in the UK (+90bps y-o-y) and our number of active credit customers is over 1 million (+15% from year end). Credit sales were up +8% year-on-year.

In the Nordics business, the credit penetration lags the UK but we are making progress towards achieving 16% adoption in line with the UK ambition.

Easy Customer Experience / Services

Customers find technology exciting but also confusing and value our help to get the most out of their products for life through our services. These services include set up and connect, protect, maintain, repair, trade-in and upgrade. We can provide this range of services in ways no competitor can match at scale. In the UK our two-person delivery network covers 99.9% of the country, with 73% next day and 95% within two days. In a year we will carry out 4.6m two-person home visits, including deliveries, installations, collections and repairs. In stores, we set up 250,000 laptops annually.

Our commitment to recycling and our scale means that we are the only national retailer that collects Waste Electrical and Electronic Equipment (WEEE) from homes and will take in WEEE in any of our stores without requiring a purchase. This has a commercial as well as environmental benefit. This has helped drive a greater than 400% increase in our small WEEE collection. This recycling gives customers another reason to prefer us.

These services also help make customer relationships stickier and more valuable, and at the full year we will update on where we are taking this unique set of capabilities.

One set of Services that consumers tell us they consistently value is in protection. Our protection services are good for customers. Technology is expensive and 69% of customers tell us they want protection against the risk of breakdown and accidental damage. This is a big strength for us today as we already have 10m warranty agreements. We're making our protection products market-leading, fit for the future, and even better value for money. We are investing in our customer protection proposition, here as elsewhere, to give customers flexibility, transparency that they value and to ensure the sustainability of this core service. We will land our new products as planned in Q4.

In the Nordics, initiatives in the period included launching the Customer Club Loyalty Scheme in Norway, Denmark and Finland - following a successful launch in Sweden in 2016. We now have over 2.6m customers and are on course to have 3m customers by the year end. Membership provides such benefits as early access to Black Tag discounts and VIP shopping. Again, early signs are good that this results in stickier and more valuable customer relationships. Security & Alarms was launched as a new product group in the Smart Home category in the Nordics. This is a fast-growing segment with an opportunity for us to become a destination for home security solutions involving hardware and subscription models.

Our Kitchen category continues to grow in the Nordics. We offer kitchen installation in all countries with a large range both on kitchens and hardware including built-in appliances. Our share of integrated Major Domestic Appliances is growing.

Mobile

Our UK&I Mobile performance was as challenging as expected, underlining the need for the actions we have previously set out and are underway with. This includes successfully renegotiating all our legacy network contracts last year, revamping our own mobile offer and consolidating duplicate cost bases.

The renegotiation of our legacy network contracts resulted in lower volume commitments with better economics (PBT is £60m better in FY20 than it otherwise would have been). We still have these legacy volume commitments, but they will expire during FY21.

We have improved our offer to address the trend of unbundling handsets from connectivity. 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, which has over 1m customers.

We are also developing our own credit-based bundles. Good progress has been made and we expect this to make a meaningful contribution in FY21 when we are not constrained by postpay volume commitments.

The consolidation of the duplicate cost bases into One Business is also on track to deliver £100m of mobile related cost reductions by FY22 as planned.

As guided, we expect FY21 to be the trough year for losses (£90m) and FY22 at least break-even in Mobile.

ENABLERS

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, and are also investing in our frontline colleagues. We have increased the frontline training budget four-fold this year and empowered employees with our new assisted selling model, 'Freedom in a Framework'. 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.

In collaboration with 6,500 Colleague contributors across the business, we recently launched our new Culture and Values and over the next twelve months we will embed these, starting with our frontline colleagues. Many world class businesses have shown the power of strong values - standards that colleagues themselves have set - to bind us together as we get behind our common vision. We strongly believe in them here.

A year ago we launched a colleague share ownership scheme which saw every permanent colleague with 12 months' service granted an award of at least £1,000 worth of shares vesting three years later. This complements existing Sharesave schemes and we now have over 30,000 Colleagues who are shareholders in 11 countries. 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' success and positions us as a progressive employer.

Today we are very pleased to announce that we have extended the Colleague share award scheme and every colleague will become eligible for at least £1000 award after 12 months of service.

One Business

We are on course to deliver £200m of cost savings by FY22 by improving and removing duplication in IT, Supply Chain and Central costs through consolidating the two legacy UK businesses into one.

Stronger Infrastructure

In a multichannel world, better infrastructure starts with better IT. Currently this is a constraint for the business but over the course of the plan it will become an enabler and then an accelerant for us.

We have made some good progress and landed new IT in areas important to our transformation. This includes customer-facing colleague tools such as store mode tablets, headsets, laptops and store Wi-Fi to help the assisted sale and demo of products. We've rolled out more scientific pricing technology, and tools to allow us to keep our delivery promises through better planning and forecasting systems and improved routing software. We have taken more time planning our underlying ERP re-platforming programme to ensure we land this right first time and within planned costs. This delays the spend, without increasing it. The benefits of this will still be realised within the original timelines of our transformation plan.

Our new leadership team in Digital and IT, Mark Allsop as Chief Digital Officer and Andy Gamble as Chief Information Officer, join in January to give further confidence in delivery.

In the Nordics and Greece, the implementation of SAP is progressing in line with plans.

Financial guidance

Current year financial guidance

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

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

• Adjusted PBT expected to be around £210m with growth thereafter as transformation benefits feed through

• Capital expenditure of circa £200m (down from £275m), due to rephasing of spend on some larger IT projects

• Exceptional cash costs expected of c.£80m including cash associated with the regulatory provision made in the period. See note 3(vi) to the financial information

• Adjusted Net debt to be down (from broadly flat) year-on-year

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

Full year Impact of IFRS 16 implementation

• EBIT increase of c.£26m

• EBITDA increase of c.£244m

• PBT decrease of c.£42m

Longer term financial guidance - up to and including FY24

• Group adjusted EBIT margin improvement to at least 3.5% by FY23

• Underpinned by £200m of identified cost savings, delivered by FY22

• Combination of transformation benefits and Mobile improvement to drive adjusted PBT to over £300m 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 life of the plan, including working capital improvements of over £500m, mostly from Mobile debtor

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. The impact of adopting IFRS 16 in the current period is as follows:

Statutory performance	H1 2019/20 £m	IFRS 16 adjustment £m	Excluding IFRS 16 £m
Revenue	4,713	-	4,713
EBITDA	148	(117)	31
Loss before interest and tax	(33)	(12)	(45)
Net finance costs	(53)	34	(19)
(Loss) / profit before tax	(86)	22	(64)
Tax	16	(5)	11
(Loss) / profit after tax - continuing operations	(70)	17	(53)

UK & Ireland Electricals

	2019/20 £m	2018/19 £m	Reported % change	Local Currency % change	Like-for- Like % change
Revenue	1,979	1,997	-1%	-1%	0%

Statutory EBIT	19	(44)

Less IFRS 16 impact (note 1b)	(1)	-
Add back other adjusting items (note 3)	13	86
Adjusted EBIT	31	42	-26%	-26%

Sales declined -1%, with like-for-like sales flat over the period. In Q2 like-for-like sales declined -2%, but on a 2-year basis, like-for-like growth was broadly stable across the half at +2%. Across H1, online sales grew +7% and contributed 27% of sales. Store sales saw some disruption from the remodelling of 81 stores.

The market declined -3% over the six months and Currys PCWorld gained +0.7% of share, with market share gains both in stores and online.

The market was particularly challenged in categories such as console gaming, imaging and major domestic appliances, while market growth was particularly strong in health & beauty and headphones. We drove broad based market share gains with notable success in gaming where our sales were up, major domestic appliances and smart tech where sales were up double digit. In contrast we lost share in Imaging as we dedicated less space to the category.

Gross margins declined -40bps as we invested in the customer proposition through more competitive pricing and improved, more reliable delivery propositions. We have strengthened our price promise policy this year, making it simpler for customers to understand and building on our opportunity to be more trusted on price.

During the period we have carried out a full review of our 3-in-1 store estate and negotiated new leases where appropriate. We will agree terms on almost 100 stores this year, this will extend the average outstanding lease length to 6 years, from 4 years at the end of April, but will generate an average rent reduction of over 30% per annum on these leases.

Operating costs were flat relative to sales as branch costs declined year-on-year due to the renegotiation of leases, partially offset by increases in payroll due to National Living Wage rises and investment in training.

We expect progress in UK&I Electricals sales and profits for the year, with H2 to benefit from cost saving programmes implemented in H1.

The implementation of IFRS 16 has increased EBIT by £1m in the year.

Other adjusting items of £13m decreased by £73m year on year with current year costs relating to those associated with the strategic change programmes and ongoing amortisation of acquisition intangibles recognised during the 2014 Merger.

Statutory EBIT improved from a £44m loss in H1 2018/19 to a profit of £19m in H1 2019/20 whilst adjusted EBIT reduced 26% to £31m in the same period.

Nordics

	2019/20 £m		2018/19 £m	Reported % change	Local Currency % change	Like-for- Like % change
Revenue		1,677	1,675	0%	3%	2%

Statutory EBIT		46	38

Less IFRS 16 impact (note 1b)		(5)	-
Add back other adjusting items (note 3)		6	6
Adjusted EBIT		47	44	6%	10%

The Nordics saw good H1 growth with local currency revenue increasing by +3%, with positive growth in all territories and Finland the standout performer. Reported revenue in H1 was flat year-on-year, the difference from local currency due to the relative weakening of Nordic currencies. At current spot rates, we would expect a c.-4% impact on sales in H2.

Like-for-like revenue grew by +2%, maintaining our leadership position with market share gains in each country against a market that was broadly flat. This growth was particularly pleasing given the strong comparatives, with two year like-for-like sales up +5% driven by continued improvements in availability and customer satisfaction. Online sales grew +19% over the period and contributed 17% of sales.

Gross margins decreased by c.30bps, mainly due to the impact of channel shift as sales moved online with some impact from the weaker currency. Operating costs declined by -40bp relative to sales due to cost efficiencies and a small benefit of weaker currency. The overall impact of currency is margin neutral.

The impact of IFRS 16 adoption was an increase in EBIT of £5m.

Other adjusting items related to amortisation of acquisition intangibles and remained flat year on year.

As a result of the above factors statutory EBIT increased by £8m and adjusted EBIT increased by £3m.

Greece

	2019/20 £m		2018/19 £m	Reported % change	Local Currency % change	Like-for- Like % change
Revenue		227	212	7%	8%	8%

Statutory EBIT		9	6

Less IFRS 16 impact (note 1b)		(2)	-
Adjusted EBIT		7	6	15%	18%

Greece continued to perform strongly with like-for-like sales increasing +8% and market share increasing across all categories. Online sales grew +18% but still only constitute a small proportion of divisional sales.

The profit reflects the strong sales performance alongside continued investments to underpin future growth and which resulted in stable margins.

The adoption of IFRS 16 increased EBIT by £2m in the year.

UK & Ireland Mobile

	2019/20 £m		2018/19 £m	Reported % change	Local Currency % change	Like-for- Like % change
Revenue		830	1,009	-18%	-18%	-10%

Statutory EBIT		(107)	(423)

Less IFRS 16 impact (note 1b)		(4)	-
Add back mobile network debtor revaluations (note 3)		26	10
Add other adjusting items (note 3)		36	392
Adjusted EBIT		(49)	(21)	-133%	-133%

Revenue decreased by -18% reflecting the continuing challenges in the 24 month postpay market. Like-for-like revenue for H1 and Q2 was down -10%.

The profit outturn reflects the reduced sales on a largely fixed cost base. The benefit of reduced depreciation on assets fully impaired at the prior half year was largely offset by the non-repeat of £14m EBIT from multiplay and broadband sales with third parties in the prior year, following the mutual cancellation of the contract as disclosed in June.

The implementation of IFRS 16 has resulted in a £4m increase in EBIT.

Changes in customer behaviour and regulatory impacts on previously recognised transactions led to a negative revaluation of mobile network debtors of £26m (H1 18/19: negative revaluation of £10m).

Other adjusting items decreased by £356m year-on-year to £36m, reflecting the £344m non-cash impairment of assets in the prior year. Costs associated with strategic change programmes have reduced from £18m to £5m year-on-year.

In the prior year the Group reported that it was subject to a fine imposed by the FCA following the conclusion of an investigation into historical Geek Squad mobile phone insurance selling processes.

The Group has subsequently received claims from a small proportion of customers who believe they were mis-sold policies. In the six month period to 26 October 2019, the Group has paid a total of £1m in respect of such customer compensation.

Taking into account the short period of time elapsed since this announcement and the small proportion of customers who have made claims, the volume and value of any potential future claims is highly uncertain. Despite this level of uncertainty the Group has recorded an additional provision of £30m in the six month period to 26 October 2019 leading to a total provision of £35m.

Statutory EBIT loss has decreased from £423m to £107m with adjusted EBIT loss increasing from £21m to £49m year-on-year.

Finance costs
Statutory net finance costs have increased from £17m to £53m year-on-year primarily as a result of interest on newly recognised lease liabilities following the adoption of IFRS 16. Adjusted net finance costs remained in line with the prior year at £12m (2018/19: £11m).

Tax
The full year adjusted effective tax rate is expected to be 21%. The Group's adjusted effective rate of taxation applied to this period is 23%, due to the weighting of profits in H1. The full year rate is higher than the UK statutory rate of 19% due mainly to higher statutory rates in the Nordics.

Income statement - Discontinued operations

The 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

Free cash flow*	H1 2019/20	H1 2018/19
	£m	£m
Adjusted EBIT	36	71
Depreciation and amortisation	63	81
Working capital	133	99
Capital expenditure	(98)	(84)
Taxation	(5)	(24)
Interest	(15)	(14)
Other	-	9
Free cash flow before adjusting items	114	138
Cash adjusting items	(37)	(22)
Free cash flow - continuing operations	77	116

*excludes the impact of adoption of IFRS 16

Free cash flow before adjusting items in H1 was an inflow of £114m (2018/19: £138m). Adjusted EBIT has decreased for the reasons described above.

Depreciation and amortisation in the half decreased by £18m, largely reflecting the reduced depreciation on assets fully impaired at the prior half year.

The Group benefited from a working capital inflow of £133m (2018/19: £99m). Working capital inflow is largely as a result of higher trade creditors reflecting an increased mix of suppliers on extended payment terms.

Capital expenditure in H1 was £98m, an increase of £14m compared to the prior year reflecting the investment in our IT infrastructure.

Taxation cash flows were £19m lower than prior year reflecting lower profitability in the UK & Ireland and tax cash refunds during the period.

Cash adjusting items predominantly relate to payment of previously provided data incident costs and strategic change programmes.

A reconciliation of free cash flow to cash generated from operations is presented in note 9 to the financial information.

Funding	H1 2019/20	H1 2018/19
	£m	£m
Free cash flow	77	116
Dividends	(52)	(90)
Net issue of new shares and purchase of own shares	(5)	-
Pension contributions	(46)	(46)
Other items	1	(5)
Movement in net debt	(25)	(25)
Opening net debt	(265)	(249)
Closing net debt before IFRS 16 lease liability	(290)	(274)
Closing additional IFRS 16 lease liability	(1,302)	-
Closing net debt including IFRS 16 lease liability^*	(1,592)	-

^*A reconciliation of net debt is included within note 9 to the financial information

At 26 October 2019 the Group had net debt of £290m excluding additional IFRS 16 lease liabilities (£1,592m including additional IFRS 16 lease liabilities) (2018/19: £274m). A reconciliation of net debt is presented in note 9 to the financial information. Free cash flow was an inflow of £77m (2018/19: inflow of £116m) for the reasons above.

Of the free cash flow, £52m was returned to shareholders in the form of dividends for the 2018/19 financial year.

Pension contributions of £46m are consistent with the prior period, and in line with the current agreement with the Trustees of the fund. Annual contributions are paid in full in H1.

Statutory Cash flow statement

	H1 2019/20	H1 2018/19
	£m	£m
Loss before interest and tax - continuing operations	(33)	(423)
Loss before interest and tax - discontinued operations	(2)	(11)
Depreciation and amortisation	181	96
Impairments	-	343
Working capital	185	208
Other operating cash flows	(35)	(61)
Cash flows from operating activities	296	152

Acquisitions	(2)	(1)
Capital expenditure	(98)	(84)
Other investing cash flows	-	17
Cash flows from investing activities	(100)	(68)

Dividends paid	(52)	(90)
Capital repayment of lease liabilities	(116)	(1)
Other financing cash flows	(4)	(80)
Cash flows from financing activities	(172)	(171)

Increase / (decrease) in cash and cash equivalents	24	(87)

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

Depreciation and amortisation in the current year includes £106m of depreciation on newly recognised right-of-use assets following the adoption of IFRS 16 and £13m 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.

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

Capital repayment of lease liabilities relate to capital repayments for lease liabilities following the adoption of IFRS 16. Prior year relate solely to capital repayments on finance leases under IAS 17.

Other financing cash flows relate to interest paid on borrowings, interest paid on IFRS 16 lease liabilities net of cash inflows from increased use of the revolving credit facility in the year. Prior year other financing cash flows relate to interest paid on borrowings and reduction in usage of the revolving credit facility.

Balance sheet

	26 October 2019	27 April 2019
	£m	£m
Goodwill	2,821	2,840
Other fixed assets	1,835	740
Network commission receivable	785	797
Working capital	(937)	(956)
Net debt	(1,592)	(265)
Tax, pension & other	(484)	(516)
	2,428	2,640

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

Other fixed assets have increased by £1,095m primarily as a result of newly recognised right-of-use assets following the adoption of IFRS 16 in the year of £1,081m (net of H1 depreciation), capital expenditure in the year of £98m, net of depreciation and amortisation on non IFRS 16 assets of £74m.

Negative working capital has decreased by £19m since the year end. Inventory has increased by £231m in readiness for peak trading and an additional buffer in case of hard Brexit. This increase in inventory is offset by a corresponding increase in trade and other payables. Trade receivables have decreased £40m in the year. Provisions have decreased as a result of adjusting item cash flows as discussed above, and IFRS 16 transitional adjustments.

Net debt has increased by £1,327m as a result of newly recognised lease liabilities of £1,302m and other net cash out flows as described above.

Tax, pensions and other has decreased as a result of lower income tax creditors, reflecting the lower taxable profits in the half year and an increase in deferred tax assets on IFRS 16 transitional adjustments.

Comprehensive income / changes in equity

Total equity for the Group has decreased from £2,640m to £2,428m in the period, driven by the statutory loss in the period, the loss on retranslation of overseas operations of £22m, dividend payments of £52m and the actuarial loss (net of taxation) on the defined benefit pension deficit for the UK pension scheme of £37m.

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 £585m at 26 October 2019 (27 October 2018: £514m, 27 April 2019: £579m). Contributions during the period under the terms of the deficit reduction plan amounted to £46m (H1 18/19: £46m, FY 18/19: £46m) reflecting the timing of contributions following the 2016 triennial valuation.

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

Dividends

The Board has declared an interim dividend of 2.25p per share. The ex-dividend date is 24 December 2019, with a record date of 27 December 2019 and an intended payment date of 24 January 2020.

Financial information Consolidated income statement
		26 weeks ended 26 October 2019 Unaudited			26 weeks ended 27 October 2018 (restated) Unaudited
	Note	Adjusted* £m	Adjusting items* £m	Total £m	Adjusted* £m	Adjusting items* £m	Total £m
Continuing operations
Revenue	2,3	4,739	(26)	4,713	4,903	(10)	4,893

Profit / (loss) before interest and tax	2,3	36	(69)	(33)	71	(494)	(423)

Finance income		5	-	5	6	-	6
Finance costs		(17)	(41)	(58)	(17)	(6)	(23)
Net finance costs		(12)	(41)	(53)	(11)	(6)	(17)

Profit / (loss) before tax		24	(110)	(86)	60	(500)	(440)

Income tax (expense) / credit	4	(5)	21	16	(14)	(6)	(20)
Profit / (loss) after tax - continuing operations		19	(89)	(70)	46	(506)	(460)

Loss after tax - discontinued operations	10	-	(2)	(2)	-	(12)	(12)

Profit / (loss) after tax for the period		19	(91)	(72)	46	(518)	(472)

Loss per share (pence)	5
Basic - continuing operations				(6.0)p			(39.7)p
Diluted - continuing operations				(6.0)p			(39.7)p
Basic - total				(6.2)p			(40.7)p
Diluted - total				(6.2)p			(40.7)p

* Adjusted results reflect adjustments to total performance measures. The directors consider adjusted performance to reflect the ongoing trading performance of the Group and are consistent with how the business performance is measured internally. Such excluded items are described as 'adjusting items' as discussed in note 3. Discontinued operations are disclosed in note 10.

The adjusted results have been restated for the 26 weeks ended 27 October 2018 and the year ended 27 April 2019 to reflect the updated performance measures reported to the Board as discussed in note 1a. The restatement has no impact on Statutory reported results.

		Year ended 27 April 2019 (restated) Audited
	Note	Adjusted* £m	Adjusting items* £m	Total £m
Continuing operations
Revenue	2,3	10,474	(41)	10,433

Profit / (loss) before interest and tax	2,3	363	(586)	(223)

Finance income		11	-	11
Finance costs		(35)	(12)	(47)
Net finance costs		(24)	(12)	(36)

Profit / (loss) before tax		339	(598)	(259)

Income tax (expense) / credit	4	(70)	18	(52)
Profit / (loss) after tax - continuing operations		269	(580)	(311)

Loss after tax - discontinued operations	10	-	(9)	(9)

Profit / (loss) after tax for the period		269	(589)	(320)

Loss per share (pence)	5
Basic - continuing operations				(26.8)p
Diluted - continuing operations				(26.8)p
Basic - total				(27.6)p
Diluted - total				(27.6)p

Consolidated statement of comprehensive income
	26 weeks ended 26 October 2019 Unaudited £m	26 weeks ended 27 October 2018 Unaudited £m	Year ended 27 April 2019 Audited £m
Loss after tax for the period	(72)	(472)	(320)

Items that may be reclassified to the income statement in subsequent years:
Cash flow hedges
Fair value movements recognised in other comprehensive income	14	2	10
Reclassified and reported in income statement	(12)	(12)	(19)
Amounts recognised in inventories	(2)	1	1
Fair value through other comprehensive income financial assets
(Losses) / gains arising during the period	(1)	(4)	1
Exchange (losses) / gains arising on translation of foreign operations	(22)	19	(30)
Tax on items that may be subsequently reclassified to profit or loss	-	-	2
	(23)	6	(35)

Items that will not be reclassified to the income statement in subsequent years:
Actuarial losses on defined benefit pension schemes: - UK	(46)	(66)	(128)
- Overseas	-	-	(1)
Tax on actuarial losses on defined benefit pension schemes	9	12	22
	(37)	(54)	(107)

Other comprehensive expense for the period (taken to equity)	(60)	(48)	(142)

Total comprehensive expense for the period	(132)	(520)	(462)

Consolidated balance sheet
	Note	26 October 2019 Unaudited £m	27 October 2018 Unaudited £m	27 April 2019 Audited £m
Non-current assets
Goodwill		2,821	2,882	2,840
Intangible assets		478	420	464
Property, plant & equipment*		236	322	276
Right-of-use assets*		1,121	-	-
Investments	8	17	14	18
Lease receivable*		5	-	-
Trade and other receivables		366	447	387
Deferred tax assets*		296	247	282
		5,340	4,332	4,267
Current assets
Inventory		1,387	1,410	1,156
Lease receivable*		1	-	-
Trade and other receivables*		1,020	1,210	1,039
Derivative assets	8	39	21	18
Cash and cash equivalents		135	119	125
		2,582	2,760	2,338
Total assets		7,922	7,092	6,605
Current liabilities
Trade and other payables*		(2,717)	(2,886)	(2,350)
Derivative liabilities	8	(20)	(15)	(6)
Contingent consideration	8	(1)	(2)	(1)
Income tax payable*		(55)	(79)	(76)
Loans and other borrowings		(43)	(36)	(19)
Lease liabilities*		(226)	(3)	(3)
Provisions*		(112)	(171)	(86)
		(3,174)	(3,192)	(2,541)
Non-current liabilities
Trade and other payables*		(109)	(283)	(252)
Contingent consideration	8	(2)	(3)	(4)
Loans and other borrowings		(300)	(273)	(288)
Lease liabilities*		(1,164)	(81)	(80)
Retirement benefit obligations	7	(586)	(516)	(579)
Deferred tax liabilities		(153)	(122)	(156)
Provisions*		(6)	(24)	(65)
		(2,320)	(1,302)	(1,424)
Total liabilities		(5,494)	(4,494)	(3,965)
Net assets		2,428	2,598	2,640
Capital and reserves
Share capital		1	1	1
Share premium account		2,263	2,263	2,263
Accumulated profits		927	1,026	1,117
Translation reserve		(13)	58	9
Demerger reserve		(750)	(750)	(750)
Equity attributable to equity holders of the parent company		2,428	2,598	2,640

* 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. As a result prior year comparative numbers have not been restated. Prior period lease liabilities relate solely to finance lease obligations recognised in accordance with IAS 17. See note 1b for details of transitional impacts.

Consolidated statement of changes in equity
	Note	Share capital £m	Share premium account £m	Accumulated profits £m	Translation reserve £m	Demerger reserve £m	Total equity £m
As reported at 27 April 2019		1	2,263	1,117	9	(750)	2,640
Adjustment on initial application of IFRS 16	1b	-	-	(45)	-	-	(45)
Taxation on IFRS 16 transition adjustment	1b	-	-	8	-	-	8
Adjusted balance at 27 April 2019		1	2,263	1,080	9	(750)	2,603
Loss for the period		-	-	(72)	-	-	(72)
Other comprehensive expense recognised directly in equity		-	-	(38)	(22)	-	(60)
Total comprehensive expense for the period		-	-	(110)	(22)	-	(132)

Equity dividends		-	-	(52)	-	-	(52)
Net movement in relation to share schemes		-	-	14	-	-	14
Purchase of own shares		-	-	(5)	-	-	(5)
At 26 October 2019		1	2,263	927	(13)	(750)	2,428

	Share capital £m	Share premium account £m	Accumulated profits £m	Translation reserve £m	Demerger reserve £m	Total equity £m
As reported at 28 April 2018	1	2,263	1,643	39	(750)	3,196
Adjustment on initial application of IFRS 15 (net of tax)	-	-	4	-	-	4
Adjustment on initial application of IFRS 9 (net of tax)	-	-	(1)	-	-	(1)
Adjusted balance at 28 April 2018	1	2,263	1,646	39	(750)	3,199
Loss for the period	-	-	(472)	-	-	(472)
Other comprehensive income and expense recognised directly in equity	-	-	(67)	19	-	(48)
Total comprehensive income and expense for the period	-	-	(539)	19	-	(520)

Equity dividends	-	-	(90)	-	-	(90)
Net movement in relation to share schemes	-	-	9	-	-	9
At 27 October 2018	1	2,263	1,026	58	(750)	2,598

	Share capital £m	Share premium account £m	Accumulated profits £m	Translation reserve £m	Demerger reserve £m	Total equity £m
As reported at 28 April 2018	1	2,263	1,643	39	(750)	3,196
Adjustment on initial application of IFRS 15 (net of tax)	-	-	4	-	-	4
Adjustment on initial application of IFRS 9 (net of tax)	-	-	(1)	-	-	(1)
Adjusted balance at 28 April 2018	1	2,263	1,646	39	(750)	3,199
Loss for the period	-	-	(320)	-	-	(320)
Other comprehensive expense recognised directly in equity	-	-	(112)	(30)	-	(142)
Total comprehensive expense for the period	-	-	(432)	(30)	-	(462)

Equity dividends	-	-	(116)	-	-	(116)
Net movement in relation to share schemes	-	-	19	-	-	19
At 27 April 2019	1	2,263	1,117	9	(750)	2,640

Consolidated cash flow statement
	Note	26 weeks ended 26 October 2019 Unaudited £m	26 weeks ended 27 October 2018 Unaudited £m	Year ended 27 April 2019 Audited £m
Operating activities
Cash generated from operations*	9	347	222	377
Special contributions to defined benefit pension scheme		(46)	(46)	(46)
Income tax paid		(5)	(24)	(45)
Net cash flows from operating activities		296	152	286
Investing activities
Net cash outflow arising from acquisitions		(2)	(1)	(1)
Proceeds from disposal of property, plant & equipment		-	9	9
Proceeds on sale of business		-	8	8
Acquisition of property, plant & equipment and other intangibles		(98)	(84)	(166)
Net cash flows from investing activities		(100)	(68)	(150)
Financing activities
Interest paid		(13)	(14)	(23)
Interest paid on lease liabilities*		(39)	-	-
Capital repayment of lease liabilities*		(116)	(1)	(8)
Purchase of ordinary shares		(5)	-	-
Equity dividends paid		(52)	(90)	(116)
Drawdown / (Repayment) of borrowings		53	(66)	(61)
Facility arrangement fees paid		-	-	(1)
Net cash flows from financing activities		(172)	(171)	(209)

Increase / (decrease) in cash and cash equivalents and bank overdrafts		24	(87)	(73)


Cash and cash equivalents and bank overdrafts at beginning of the period		106	185	185
Currency translation differences		5	(5)	(6)
Cash and cash equivalents and bank overdrafts at end of the period		135	93	106

* 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. Prior period interest and 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 under the scope of IFRS 16 in the current period. See note 1b for details of transitional impacts.

Notes to the financial information

1 Accounting policies

a) Basis of preparation

The interim financial information for the 26 weeks ended 26 October 2019 was approved by the directors on 11 December 2019. The interim financial information, which is a condensed set of financial statements, has been prepared in accordance with the Listing Rules of the Financial Conduct Authority and International Accounting Standard 34 "Interim Financial Reporting" (IAS 34) as adopted by the European Union and has been prepared on the going concern basis as described further in the section on risks to achieving the Group's objectives.

The accounting policies adopted are those set out in the Group's Annual Report and Accounts for the year ended 27 April 2019 which were prepared in accordance with IFRS as adopted by the European Union, except for as disclosed in note 1b, where the impact of new accounting standards is detailed for IFRS 16 "Leases". Additional amendments to standards and IFRIC interpretations which became applicable during the period were either not relevant or had no impact on the Group's net results or net assets.

The interim financial information uses definitions that are set out on pages 50 to 54 of this document.

The interim financial information is unaudited and does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006, but has been reviewed by the auditor. The financial information for the year ended 27 April 2019 does not constitute the Company's statutory accounts for that period but has been extracted from those accounts which have been filed with the Registrar of Companies and are also available on the Group's corporate website www.dixonscarphone.com. The auditor has reported on those accounts, their report was unqualified, did not draw attention to any matters by way of emphasis, and did not contain statements under Sections 498 (2) or (3) of the Companies Act 2006.

The Group's income statement and segmental analysis identify separately alternative performance measures, reflecting adjustments to total performance measures. The directors consider these 'adjusted' measures to be an informative additional measure of the ongoing trading performance of the Group and believe that these measures provide additional useful information for shareholders on the Group's performance and are consistent with how business performance is measured internally.

Adjusted results are stated before the results of discontinued operations or exited / to be exited businesses, amortisation of acquisition intangibles, acquisition related costs, any exceptional items considered so one-off or material that they distort underlying performance (such as significant reorganisation costs, impairment charges, property rationalisation costs, out of period mobile network debtor revaluations and non-recurring charges), income from previously disposed operations and net pension interest costs. Businesses exited or to be exited are those which the Group has exited or committed to or commenced to exit through disposal or closure but do not meet the definition of discontinued operations as stipulated by IFRS and are material to the results and/or operations of the Group.

Items excluded from adjusted results can evolve from one financial year to the next depending on the nature of exceptional items or one-off type activities described above. In the current period the adjusting items include the impact of adoption of IFRS 16 using the modified retrospective approach. The Directors believe this adjustment is helpful in the current year in aiding shareholders in comparability with prior periods, which are reported under IAS 17.

Following the separation of the UK & Ireland mobile reporting segment in the prior year, those performance measures, internal targets and KPIs reviewed by the board and performance guidance given to the external stakeholders have evolved to provide greater transparency over in year trading results. To reflect this, current year adjusting items include the impact of revaluations of network debtor balances due to changes in assumptions, where the original transaction was recorded in periods prior to the current financial reporting year (out of period). The removal of such items is considered to be additional useful information to aid the understanding of current year trading. Comparative period performance measures have been restated accordingly as disclosed in Note 2.

A reconciliation of adjusted profit and losses to total profits and losses is shown in Note 2, together with a description of the nature of the adjustments recorded.

These performance measures may not be directly comparable with other similarly titled measures or 'adjusted' revenue or profit measures used by other companies.

The accounting policy for the use of these measures is outlined in the 'Alternative Performance Measures' section of the Glossary.

b) Impact of new standards

The group has adopted IFRS 16 "Leases" from 28 April 2019 using the modified retrospective approach. Comparatives for the prior reporting period have not been restated and continue to be reported under IAS 17 "Leases", as permitted under the specific transitional provisions of IFRS 16. The reclassifications and the adjustments arising from the new leasing standard are therefore recognised in the opening balance sheet on 28 April 2019.

IFRS 16 introduces new requirements with respect to lease accounting. It presents significant changes to lessee accounting by removing the distinction between operating and finance leases and requiring the recognition of a right-of-use asset and a lease liability at commencement for all leases, except for short-term leases and leases of low value assets. In contrast to lessee accounting, the requirements for lessor accounting have remained largely unchanged. The impact of the adoption of IFRS 16 on the Group's consolidated financial statements is described below.

1 Accounting policies (continued)

b) Impact of new standards (continued)

Impact of the new definition of a lease

The group has performed a review of all leasing arrangements and applied the definition of a lease and related guidance as set out in IFRS 16. The change in definition mainly relates to the concept of control. IFRS 16 distinguishes between leases and service contracts on the basis of whether the use of an identified asset is controlled by the customer. Control is considered to exist if the customer has:

- the right to obtain substantially all of the economic benefits from the use of an identified asset; and

- the right to direct the use of that asset.

Impact on Lessee Accounting

Former operating leases

IFRS 16 changes how the Group accounts for leases previously classified as operating leases under IAS 17, which were off-balance sheet and charged to the income statement on a straight-line basis over the period of the lease.

On initial application of IFRS 16, for all leases (except as noted below), the Group:

a) Recognises right-of-use assets and lease liabilities in the consolidated balance sheet, initially measured at the present value of future lease payments;

b) Recognises depreciation of right-of-use assets and interest on lease liabilities in the consolidated income statement; and

c) Recognises the total amount of cash paid (both principal and interest portion) within financing activities (previously presented within operating activities under IAS 17) in the consolidated cash flow statement.

On transition to IFRS 16 these lease liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate as of 28 April 2019. The Group's weighted average incremental borrowing rate applied to the lease liabilities on 28 April 2019 was 5.4%.

Lease incentives (e.g. rent-free periods) are recognised as part of the measurement of the right-of-use assets and lease liabilities whereas under IAS 17 they resulted in the recognition of a lease incentive liability, amortised as a reduction of rental expense on a straight-line basis.

On initial adoption, the right-of-use assets were adjusted for any previously recognised prepaid and accrued lease payments as well as any liabilities from previously applying IFRS 3 "Business Combinations" relating to unfavourable terms of an operating lease.

Under IFRS 16, there is a lease-by-lease transition choice whereby a lessee can take a practical expedient to rely on assessments immediately before the date of initial application of whether leases are onerous under the IAS 37 "Provisions, Contingent Liabilities and Contingent Assets" definition and to adjust the right-of-use asset by this amount. Alternatively, the new requirements under IFRS 16 can be applied and the right-of-use asset is tested for impairment in accordance with IAS 36 "Impairment of Assets". The Group has considered this on a lease by lease basis with a transitional impairment review taken on a number of leases.

On those leases where an impairment review was performed, rather than taking the practical expedient, this resulted in an opening adjustment to reserves of £37m (net of tax). Changes around assumptions on the probability of future sub-lease cash flows used in the impairment tests caused impairments. In addition to this, the impairment predominantly resulted from the application of different discount rates in line with the applicable accounting standards. The onerous contract provisions previously recognised in accordance with IAS 37 used a risk-free rate however on adoption of IFRS 16 and recognition of right-of-use assets, these assets are tested for impairment under IAS 36 which uses a market participants rate. The application of these standards and changes in discount rates caused an impairment on numerous right-of-use lease assets.

Payments associated with short-term leases, leases of low-value assets, and variable lease payments not included in the right-of-use asset are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT-equipment and small items of office furniture.

Former finance leases

The Group did not change the initial carrying amounts of recognised assets and liabilities at the date of initial application for leases previously classified as finance leases (i.e. the right-of-use assets and lease liabilities equal the lease assets and liabilities recognised under IAS 17). The requirements of IFRS 16 were applied to these leases from 28 April 2019.

Impact on lessor accounting

IFRS 16 does not change substantially how a lessor accounts for leases. Under IFRS 16, a lessor continues to classify leases as either finance leases or operating leases and account for those two types of leases differently.

Under IFRS 16, an intermediate lessor accounts for the head lease and the sublease as two separate contracts. The intermediate lessor is required to classify the sublease as a finance or operating lease by reference to the right-of-use asset arising from the head lease (and not by reference to the underlying asset as was the case under IAS 17).

Because of this change, the Group has reclassified certain sublease agreements as finance leases and recognised finance lease asset receivables. This change has impacted the timing of recognition of the related revenue (recognised in finance income).

1 Accounting policies (continued)

b) Impact of new standards (continued)

Practical expedients applied on adoption

In applying IFRS 16 for the first time, the group has used the following practical expedients permitted by the standard:

- the use of a single discount rate to a portfolio of leases with reasonably similar characteristics;

- reliance on previous assessments on whether leases are onerous (with the exception of certain leases as discussed above);

- the accounting for operating leases with a remaining lease term of less than 12 months as at 28 April 2019 as short-term leases;

- the exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application; and

- the use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

The following table reconciles the minimum lease commitments for the year ended 27 April 2019, to the amount of lease liabilities recognised on 28 April 2019:

	£m
Operating lease commitments restated as at 27 April 2019*	1,680

Discounted using the lessee's incremental borrowing rate at the date of initial application	1,346
Add: Finance lease liabilities recognised as at 27 April 2019	83
(Less): short-term leases recognised on a straight-line basis as expense	(23)
Add: adjustments as a result of a different treatment of extension and termination options	79

Lease liability recognised at 28 April 2019	1,485

Of which are:
Current lease liabilities	210
Non-current lease liabilities	1,275

	1,485

* Operating lease commitments have been restated as at 27 April 2019 to reflect the future minimum lease payments under non-cancellable operating leases in line with IAS 17. The figure disclosed within the 27 April 2019 Annual Report and Accounts overstated these future lease payments.

Impact on primary statements

Consolidated income statement

Statutory performance	As reported 26 weeks ended 26 October 2019 £m	IFRS 16 adjustment £m	Amounts without the adoption of IFRS 16 £m
Revenue	4,713	-	4,713
Loss before interest and tax	(33)	(12)	(45)
Net finance costs	(53)	34	(19)
(Loss) / Profit before tax	(86)	22	(64)
Tax	16	(5)	11
(Loss) / Profit after tax for the period - continuing operations	(70)	17	(53)

Consolidated balance sheet

	26 October 2019 £m	IFRS 16 adjustment £m	Amounts without the adoption of IFRS 16 £m
Right-of-use asset	1,121	(1,121)	-
Property, plant & equipment	236	40	276
Deferred tax asset	296	(8)	288
Lease receivable	5	(5)	-
Other non-current assets	3,682	-	3,682
Non-current assets	5,340	(1,094)	4,246

Lease receivable	1	(1)	-
Other current assets	2,581	20	2,601
Current assets	2,582	19	2,601

Total assets	7,922	(1,075)	6,847

Trade and other payables	(2,717)	(8)	(2,725)
Lease liabilities	(226)	223	(3)
Provisions	(112)	(5)	(117)
Other current liabilities	(119)	(6)	(125)
Current liabilities	(3,174)	204	(2,970)

Trade and other payables	(109)	(130)	(239)
Lease liabilities	(1,164)	1,086	(78)
Provisions	(6)	(31)	(37)
Other non-current liabilities	(1,041)	-	(1,041)
Non-current liabilities	(2,320)	925	(1,395)

Total liabilities	(5,494)	1,129	(4,365)

Net assets	2,428	54	2,482

Accumulated profits	927	54	981
Other capital and reserves	1,501	-	1,501
Equity attributable to equity holders of the parent	2,428	54	2,482

Consolidated cash flow statement

	As reported 26 weeks ended 26 October 2019 £m	IFRS 16 adjustment £m	Amounts without the adoption of IFRS 16 £m
Net cash flows from operating activities	296	(151)	145
Net cash flows from investing activities	(100)	-	(100)
Net cash flows from financing activities	(172)	151	(21)
Increase in cash and cash equivalents and bank overdrafts	24	-	24

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 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.

Changes to performance measures

During the period, the performance measures reported to the Board, who are considered the Chief Operating Decision Maker in accordance with IFRS 8 "Operating Segments", have changed. Accordingly the performance measures disclosed have changed to reflect this.

The previously disclosed 'headline' performance measure has been adjusted to eliminate the effect of out of period mobile network debtor revaluations, the impact of IFRS 16 and those items previously disclosed as 'non-headline'. The Group has changed the information presented to the Board to provide greater clarity over the relative performance of the Group against comparative periods and to support decisions related to the allocation of the Groups resources. This new measure is now referred to as 'adjusted' and further information is included within note 1a.

Adjusting items are allocated to each reportable segment. Where these relate to businesses to be exited or income or expense from previously disposed operations, they are allocated where practicable to the region in which the operation was originally held.

Discontinued operations are excluded from this segmental analysis. Results are reviewed by the Board on an adjusted basis by segment.

2 Segmental analysis (continued)

(a) Segmental results

					26 weeks ended 26 October 2019
	UK & Ireland electricals £m	UK & Ireland mobile £m	Nordics £m	Greece £m		Eliminations £m	Total £m
Adjusted external revenue	1,979	856	1,677	227		-	4,739
Inter-segmental revenue	43	42	-	-		(85)	-
Total adjusted revenue	2,022	898	1,677	227		(85)	4,739

Adjusted EBIT	31	(49)	47	7		-	36

Reconciliation of adjusted profit to total profit

						26 weeks ended 26 October 2019
	Adjusted profit / (loss) £m	Mobile network debtor revaluations £m	Impact of IFRS 16 £m	Acquisition / disposal related items £m	Strategic change programmes £m		Regulatory costs £m	Pension scheme interest £m	Total profit / (loss) £m
UK & Ireland electricals	31	-	1	(7)	(6)		-	-	19
UK & Ireland mobile	(49)	(26)	4	(1)	(5)		(30)	-	(107)
Nordics	47	-	5	(6)	-		-	-	46
Greece	7	-	2	-	-		-	-	9
EBIT	36	(26)	12	(14)	(11)		(30)	-	(33)
Finance income	5	-	-	-	-		-	-	5
Finance costs	(17)	-	(34)	-	-		-	(7)	(58)
Profit / (loss) before tax	24	(26)	(22)	(14)	(11)		(30)	(7)	(86)

			26 weeks ended 27 October 2018 (restated)
	UK & Ireland electricals £m	UK & Ireland mobile £m		Nordics £m	Greece £m	Eliminations £m	Total £m
Adjusted external revenue*	1,997	1,019		1,675	212	-	4,903
Inter-segmental revenue	36	41		-	-	(77)	-
Total adjusted revenue*	2,033	1,060		1,675	212	(77)	4,903

Adjusted EBIT*	42	(21)		44	6	-	71

2 Segmental analysis (continued)

(a) Segmental results (continued)

Reconciliation of adjusted profit to total profit

						26 weeks ended 27 October 2018 (restated)
	Adjusted profit / (loss) £m	Mobile network debtor revaluations £m	Acquisition / disposal related items £m	Strategic change programmes £m	Data incident costs £m		Regulatory costs £m	Impairment losses and onerous leases £m	Pension scheme interest £m	Total profit / (loss)* £m
UK & Ireland electricals	42	-	(7)	(39)	(17)		(23)	-	-	(44)
UK & Ireland mobile	(21)	(10)	4	(18)	-		(34)	(344)	-	(423)
Nordics	44	-	(6)	-	-		-	-	-	38
Greece	6	-	-	-	-		-	-	-	6
EBIT	71	(10)	(9)	(57)	(17)		(57)	(344)	-	(423)
Finance income	6	-	-	-	-		-	-	-	6
Finance costs	(17)	-	-	-	-		-	-	(6)	(23)
Profit / (loss) before tax	60	(10)	(9)	(57)	(17)		(57)	(344)	(6)	(440)

			Year ended 27 April 2019 (restated)
	UK & Ireland electricals £m	UK & Ireland mobile £m		Nordics £m	Greece £m	Eliminations £m	Total £m
Adjusted external revenue*	4,475	2,039		3,501	459	-	10,474
Inter-segmental revenue	79	90		-	-	(169)	-
Total adjusted revenue*	4,554	2,129		3,501	459	(169)	10,474

Adjusted EBIT*	180	50		112	21	-	363

Reconciliation of adjusted profit to total profit

						Year ended 27 April 2019 (restated)
	Adjusted profit / (loss) £m	Mobile network debtor revaluations £m	Acquisition / disposal related items £m	Strategic change programmes £m	Data incident costs £m		Regulatory costs £m	Impairment losses and onerous leases £m	Pension scheme interest £m	Total profit / (loss)* £m
UK & Ireland electricals	180	-	(14)	(44)	(12)		(16)	-	-	94
UK & Ireland mobile	50	(41)	3	(23)	(8)		(36)	(383)	-	(438)
Nordics	112	-	(12)	-	-		-	-	-	100
Greece	21	-	-	-	-		-	-	-	21
EBIT	363	(41)	(23)	(67)	(20)		(52)	(383)	-	(223)
Finance income	11	-	-	-	-		-	-	-	11
Finance costs	(35)	-	-	-	-		-	-	(12)	(47)
Profit / (loss) before tax	339	(41)	(23)	(67)	(20)		(52)	(383)	(12)	(259)

2 Segmental analysis (continued)

* Adjusted results have been restated to exclude the mobile network debtor revaluations to reflect the performance measures reported to the Board, who are considered the Chief Operating Decision Maker under IFRS 8 "Operating Segments". IFRS 16, as further described in note 1b, has been adopted using the modified retrospective approach and as such prior year results have not been restated.

(b) Seasonality

The Group's business is highly seasonal, with a substantial proportion of its revenue and EBIT generated during its third quarter, which includes Black Friday and the Christmas and New Year season.

	Capital expenditure
	26 weeks ended 26 October 2019 £m	26 weeks ended 27 October 2018 £m	Year ended 27 April 2019 £m
UK & Ireland electricals	50	41	90
UK & Ireland mobile	5	11	20
Nordics	35	28	49
Greece	8	4	7
Total	98	84	166

(d) Disaggregation of adjusted revenues

26 weeks ended 26 October 2019


	UK & Ireland electricals £m	UK & Ireland mobile £m	Nordics £m	Greece £m	Total £m
Sales of goods	1,789	196	1,506	215	3,706
Commission revenue	2	602	126	1	731
Support services revenue	140	-	14	8	162
Other services revenue	46	57	31	3	137
Other revenue	2	1	-	-	3
Total adjusted revenue	1,979	856	1,677	227	4,739

26 weeks ended 27 October 2018 (restated)*


	UK & Ireland electricals £m	UK & Ireland mobile £m	Nordics £m	Greece £m	Total £m
Sales of goods	1,802	243	1,482	201	3,728
Commission revenue	9	715	141	-	865
Support services revenue	135	-	11	7	153
Other services revenue	47	61	41	4	153
Other revenue	4	-	-	-	4
Total adjusted revenue	1,997	1,019	1,675	212	4,903

2 Segmental analysis (continued)

(d) Disaggregation of adjusted revenues

Year ended 27 April 2019 (restated)*


	UK & Ireland electricals £m	UK & Ireland mobile £m	Nordics £m	Greece £m	Total £m
Sales of goods	4,085	474	3,161	437	8,157
Commission revenue	9	1,442	263	1	1,715
Support services revenue	275	-	25	14	314
Other services revenue	99	123	52	7	281
Other revenue	7	-	-	-	7
Total adjusted revenue	4,475	2,039	3,501	459	10,474

* Adjusted revenue has been restated to exclude the out of period mobile network debtor revaluations to reflect the performance measures reported to the Board, who are considered the Chief Operating Decision Maker under IFRS 8 "Operating Segments" (see note 1a).

3 Adjusting items

	Note	26 weeks ended 26 October 2019 £m	26 weeks ended 27 October 2018 (restated)* £m	Year ended 27 April 2019 (restated)* £m

Included in revenue:
Mobile network debtor revaluation*	(i)	(26)	(10)	(41)
		(26)	(10)	(41)

Included in profit / (loss) before interest and tax:
Mobile network debtor revaluation*	(i)	(26)	(10)	(41)
Impact of IFRS 16	(ii)	12	-	-
Acquisition / disposal related items	(iii)	(14)	(9)	(23)
Strategic change programmes	(iv)	(11)	(57)	(67)
Data incident costs	(v)	-	(17)	(20)
Regulatory costs	(vi)	(30)	(57)	(52)
Impairment losses and onerous leases	(vii)	-	(344)	(383)
		(69)	(494)	(586)

Included in net finance costs:
Impact of IFRS 16	(ii)	(34)	-	-
Net non-cash finance costs on defined benefit pension schemes	(viii)	(7)	(6)	(12)
Total impact on profit / (loss) before tax - continuing operations		(110)	(500)	(598)

Tax regulatory matters	(ix)	-	(46)	(46)
Tax on other adjusting items	4	21	40	64
Total impact on profit / (loss) after tax - continuing operations		(89)	(506)	(580)

Discontinued operations	10	(2)	(12)	(9)
Total impact on profit / (loss) after tax		(91)	(518)	(589)

*Restated to include the impact of out of period mobile network debtor revaluations (see note 1a)

(i) Mobile network debtor revaluations

Changes in consumer behaviour and legislative impacts on previously recognised transactions have led to negative revaluations of network receivables of £26m (half year ended 27 October 2018: £10m, year ended 27 April 2019: £41m). See note 1 for more details.

(ii) Impact of IFRS 16

In the current period adjusting items include the impact of adoption of IFRS 16 using the modified retrospective approach. As a result of using this approach there has been no impact on the prior periods. The Directors believe this adjustment is helpful in aiding shareholders in comparability with prior periods. As further described in note 1b, the impact of IFRS 16 results in a credit of £12m to profit / loss before interest and tax and a charge of £34m in net finance costs.

(iii) Acquisition / disposal related items

Amortisation of acquisition intangibles:

A charge of £14m (half year ended 27 October 2018: £15m, year ended 27 April 2019: £28m) relates primarily to amortisation of acquisition intangibles arising on the Dixons Retail Merger (prior periods include intangibles recognised on the CPW Europe and Simplify Digital acquisitions which were impaired at 27 October 2018).

3 Adjusting items (continued)

Acquisition related:

For the half year ended 27 October 2018 acquisition related income of £6m (year ended 27 April 2019: £5m) primarily related to the release of deferred consideration for a previous acquisition no longer payable given the strategic change of the business.

(iv) Strategic change programmes:

During the current period, additional costs of £11m (half year ended 27 October 2018: £38m, year ended 27 April 2019: £49m) have been incurred in relation to the previously announced strategic change programme, the costs relate to redundancy and third party consultancy services.

Property rationalisation:

Costs of £19m in the half year ended 27 October 2018 (year ended 27 April 2019: £18m) related to additional provisions for the remaining stores under the Currys PCWorld 3-in-1 and Carphone Warehouse programme announced in 2015/16, due to the challenges in the UK retail property market.

(v) Data incident costs:

During the half year ended 27 October 2018, costs associated with the data incident announced on 13 June 2018 of £17m were recorded (year ended 27 April 2019: £20m).

(vi) Regulatory costs:

The Group operates in a regulated environment and failure to manage the business in line with regulation could expose the Group to financial penalties.

In the year ending 27 April 2019 the Group reported that it was subject to a £29.1m fine imposed by the FCA following the conclusion of an investigation into historical Geek Squad mobile phone insurance selling processes. This fine related to a period prior to June 2015. Historical regulatory investigations may be subject to potential future claims and subsequent payments that may take several years to complete and evaluate. The Group ran two voluntary redress programmes which led to the refund of £1.5m.

Nonetheless, the Group has subsequently received claims from a small number of customers who believe they were mis-sold Geek Squad policies. These claims are carefully considered by the Group on a case by case basis. The majority of claims received have been invalid. In the six month period to 26 October 2019, the Group has paid a total of £1m in respect of customer compensation.

Taking into account the short period of time elapsed since this announcement and the small proportion of customers who have made claims, the volume and value of any potential future claims is highly uncertain. Despite this level of uncertainty the Group has recorded an additional regulatory costs provision of £30m in the six month period to 26 October 2019 leading to a total provision of £35m.

This is the Group's best estimate of what the future cost of claims may be. In calculating this provision, assumptions have been made in relation to the uphold rate, customer compensation and the total number of claims to be repaid. The provision is most sensitive to a change in the uphold rate. Based on the average claim paid to date, if the rate of upheld claims were to increase or decrease by 1%, the sensitivity is c£1m. This provision may materially change in the future. The Group has engaged third party experts to advise on managing and assessing any future actions.

(vii) Impairment losses and onerous leases:

As part of the strategic review performed by the Group in the prior year, the Group separated the operating segments from the previously reported UK & Ireland into separate electricals and mobile operating segments. As a result of the change, the goodwill previously allocated to the UK & Ireland group of cash generating units (CGUs) was separated into the UK & Ireland electricals and UK & Ireland mobile CGUs. This identified a material non-cash impairment charge to be recorded in the UK & Ireland mobile segment of £344m for the half year ended 27 October 2018 (year ended 27 April 2019: £383m). Further information on the matter can be found in the 2018-19 Annual Report and Accounts on pages 136 to 137.

(viii) 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 adjusted earnings.

3 Adjusting items (continued)

(ix) 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 the risk associated with this matter, had increased in the comparative periods and therefore a provision was recognised in the year ended 27 April 2019.

4 Tax

The Group's adjusted effective rate of taxation for the full year has been estimated at 21% (2018/19: 21%). A rate of 23% has been applied to the adjusted half year results due to the weighting of profit in different jurisdictions. The rate is higher than the UK statutory rate of 19% due mainly to higher statutory rates in the Nordics. The effective tax rate on adjusting items is 19%.

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.

5 Earnings / (loss) per share

	26 weeks ended 26 October 2019 £m	26 weeks ended 27 October 2018 (restated) £m	Year ended 27 April 2019 (restated) £m
Adjusted earnings
Continuing operations	19	46	269

Total loss
Continuing operations	(70)	(460)	(311)
Discontinued operations	(2)	(12)	(9)
Total	(72)	(472)	(320)

	Million	Million	Million
Weighted average number of shares
Average shares in issue	1,162	1,160	1,160
Less average holding by Group EBT	(2)	(1)	(1)
For basic earnings per share	1,160	1,159	1,159
Dilutive effect of share options and other incentive schemes	18	4	9
For diluted earnings per share	1,178	1,163	1,168

	Pence	Pence	Pence
Basic earnings / (loss) per share
Total (continuing and discontinued operations)	(6.2)	(40.7)	(27.6)
Adjustment in respect of discontinued operations	0.2	1.0	0.8
Continuing operations	(6.0)	(39.7)	(26.8)
Adjustments - continuing operations (net of taxation)	7.6	43.7	50.0
Adjusted basic earnings per share	1.6	4.0	23.2

Diluted earnings / (loss) per share
Total (continuing and discontinued operations)	(6.2)	(40.7)	(27.6)
Adjustment in respect of discontinued operations	0.2	1.0	0.8
Continuing operations	(6.0)	(39.7)	(26.8)
Adjustments - continuing operations (net of taxation)	7.6	43.7	49.8
Adjusted diluted earnings per share	1.6	4.0	23.0

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

6 Dividends

	26 weeks ended 26 October 2019 £m	26 weeks ended 27 October 2018 £m	Year ended 27 April 2019 £m
Amounts recognised as distributions to equity shareholders in the period - on ordinary shares of 0.1p each
Final dividend for the year ended 28 April 2018 of 7.75p	-	90	90
Interim dividend for the year ended 27 April 2019 of 2.25p	-	-	26
Final dividend for the year ended 27 April 2019 of 4.50p	52	-	-
	52	90	116

The proposed interim dividend for the year ending 2 May 2020 is 2.25p per share. The expected cost of this dividend is £26m and incorporates the agreement of the Dixons Carphone plc Employee Benefit Trust to waive its rights to receive dividends.

7 Retirement benefit obligations

	26 October 2019 £m	27 October 2018 £m	27 April 2019 £m
Retirement benefit obligations - UK	585	514	579
- Nordics	1	2	-
Net obligation	586	516	579

The Group operates a number of defined contribution and defined benefit pension schemes. The principal scheme operates in the UK and includes a funded defined benefit section, the assets of which are held in a separate trustee administered fund. The defined benefit section of the scheme was closed to future accrual on 30 April 2010. The net obligations of this scheme, calculated in accordance with IAS 19 "Employee Benefits", are analysed as follows:

	26 October 2019 £m	27 October 2018 £m	27 April 2019 £m
Fair value of plan assets	1,324	1,143	1,196
Present value of defined benefit obligations	(1,909)	(1,657)	(1,775)
Net obligation	(585)	(514)	(579)

The value of obligations is particularly sensitive to the discount rate applied to liabilities at the assessment date as well as mortality rates. The value of the plan assets is sensitive to market conditions, particularly equity values. The assumptions used in the valuation of obligations are listed below:

		26 October 2019	27 October 2018	27 April 2019
Rates per annum:
Discount rate		1.95%	2.80%	2.50%
Rate of increase in pensions in payment / deferred pensions	- pre April 2006	2.95%	3.20%	3.25%
	- post April 2006	2.10%	2.20%	2.20%
Inflation		2.95%	3.30%	3.25%

Mortality rates are based on historical experience and standard actuarial tables and include an allowance for future improvements in longevity.

8 Financial instruments, loans and other borrowings

The Group holds the following financial instruments at fair value:

	26 October 2019 £m	27 October 2018 £m	27 April 2019 £m
Investments	17	14	18
Derivative financial assets	39	21	18
Derivative financial liabilities	(20)	(15)	(6)
Deferred and contingent consideration	(3)	(5)	(5)

The fair value of short-term investments has values determined by 'Level 1' inputs as defined by the fair value hierarchy of IFRS 13 "Fair Value Measurement". Investments comprise shares indirectly held in Unieuro S.p.A., an omni-channel distributor of consumer electronics and household appliances and listed stock corporation in Italy.

The significant inputs required to fair value the Group's net derivatives are observable and are classified as 'Level 2' in the fair value hierarchy.

Deferred and contingent consideration is categorised as 'Level 3' in the fair value hierarchy as the valuation requires the use of significant unobservable inputs. The fair value of contingent consideration arrangements has been estimated by applying the income approach. A reduction in growth assumptions used in the fair value methodology would result in a reduction in the amount of contingent consideration payable. The movement in deferred and contingent consideration during the period is due to cash payments of the amounts due.

Fair values have been arrived at by discounting future cash flows (where the impact of discounting is material), assuming no early redemption, or by revaluing forward currency contracts and interest rate swaps to period end market rates as appropriate to the instrument.

The Group has assessed network commission receivables to be accounted for at amortised cost under IFRS 9 "Financial Instruments: Recognition and Measurement". The carrying value of such ongoing network commission contract receivables (net of commission received at the point of connection) is £785m (27 October 2018: £1,044m, 27 April 2019: £797m). If network receivables were alternatively classified at fair value through profit or loss these receivables would be categorised as level 3 in the fair value hierarchy as the valuation requires the use of significant unobservable inputs. Under this alternative measurement basis their fair value is approximately equal to their current carrying value.

There have been no transfers of assets or liabilities between levels of the fair value hierarchy. For all other financial assets and liabilities, the carrying amount approximates their fair value.

In October 2015, the Group signed a five-year £800m Revolving Credit Facility ('RCF') with a number of relationship banks; this facility was extended in October 2016 and December 2017 by an additional year and the facility currently expires in October 2022. The interest rate payable for drawings under this facility is at a margin over LIBOR (or other applicable interest basis) for the relevant currency and for the appropriate period. The actual margin applicable to any drawing depends on the fixed charges cover ratio calculated in respect of the most recent accounting period. A non-utilisation fee is payable in respect of amounts available but undrawn under this facility and a utilisation fee is payable when aggregate drawings exceed certain levels.

In October 2016, the Group signed a four year £250m RCF with a group of relationship banks; this facility is on broadly similar terms to the £800m RCF; this facility was extended in February 2019 by an additional two years and the facility expires October 2022.

Also in October 2016, the Group signed a four-year loan of €50m with BBVA. This facility in October 2020, all other terms of this facility are broadly similar to the £800m RCF.

The Group also has overdrafts and short-term money market lines, all on an uncommitted basis, with available facilities of £109m.

9 Note to the cash flow statement

	26 weeks ended 26 October 2019 £m	26 weeks ended 27 October 2018 £m	Year ended 27 April 2019 £m
Loss before interest and tax - continuing operations	(33)	(423)	(223)
Loss before interest and tax - discontinued operations	(2)	(11)	(14)
Depreciation and amortisation	181	96	174
Share-based payment charge	15	9	21
Profit on disposal of fixed assets	1	-	-
Impairments and other non-cash items	-	343	347
Operating cash flows before movements in working capital	162	14	305

Movements in working capital:
Increase in inventory	(246)	(255)	(26)
Decrease / (increase) in receivables	15	(6)	226
Increase / (decrease) in payables	400	373	(182)
Increase in provisions	16	96	54
	185	208	72


Cash inflow from operations	347	222	377

Restricted funds, which predominantly comprise funds held by the Group's insurance business for regulatory reserve requirements, were £44m (27 October 2018: £55m; 27 April 2019: £43m).

Included in trade payables are amounts due where extended payment terms have been requested by the Group and agreed with the supplier. These terms are made available and administered under arrangements between the supplier and third-party banks for which a fee is payable by the Group. The total amount outstanding on such extended payment terms at 26 October 2019 is £165m (27 October 2018: £100m, 27 April 2019: £59m). These arrangements do not provide the Group with significant benefit of additional financing and accordingly are classified as trade payables.

9 Note to the cash flow statement (continued)

Reconciliation of cash inflow from operations to free cash flow

	26 weeks ended 26 October 2019 £m	26 weeks ended 27 October 2018 £m	Year ended 27 April 2019 £m
Cash inflow from operations	347	222	377
Operating cash flows from discontinued operations*	(2)	7	8
Taxation	(5)	(24)	(45)
Interest, facility arrangement fees, dividends from investments and repayment of finance leases**	(15)	(14)	(30)
IFRS 16 impact***	(150)	-	-
Capital expenditure	(98)	(84)	(166)
Proceeds from disposal of fixed assets	-	9	9
Free cash flow	77	116	153

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

** Current period excludes cash interest on leases and repayment of leases now within the scope of IFRS 16. Prior period interest and capital repayment on lease obligations relate solely to finance leases recognised in accordance with IAS 17.

*** In the comparative periods cash inflow from operations includes rental expenses on leases that now fall under the scope of IFRS 16 and are therefore now included within cash flows from financing activities within the current period. As part of the reconciliation to free cash flow, the cash flows arising from leases have been reclassified into free cash flow in the current period. See note 1b for details of transitional impacts.

Reconciliation of net debt

	26 weeks ended 26 October 2019 £m	26 weeks ended 27 October 2018 £m	Year ended 27 April 2019 £m
Cash	135	119	125
Loans and other borrowings	(343)	(309)	(307)
Lease liabilities*	(1,384)	(84)	(83)
	(1,592)	(274)	(265)

* 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. Prior period lease liabilities relate solely to finance leases recognised in accordance with IAS 17. See note 1b for details of transitional impacts. The current period lease liabilities are net of lease receivables recognised on balance sheet under IFRS16.

10 Discontinued operations

honeybee

For the 26 weeks ended 26 October 2019 no profit or loss has been recognised in relation to the disposal of the honeybee operation.

For the comparative periods, 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 in relation to a prior year tax credit relating to accelerated capital allowances.

10 Discontinued operations (continued)

Spain

On 29 September 2017, the Group completed the disposal of 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, a £1m tax credit was recognised in relation to the reversal of previously held provisions for tax risks where 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.

During the 26 weeks ended 26 October 2019 no profit or loss has been recognised in relation to Portugal (26 weeks ended 27 October 2018: £2m, year ended 27 April 2019: £2m) or Virgin Mobile France (26 weeks ended 27 October 2018: £2m, year ended 27 April 2019: £5m).

(a) Loss after tax - discontinued operations

		26 weeks ended 26 October 2019
	honeybee £m		Spain £m	Other £m	Total £m
Revenue	-		-	-	-
Expenses	-		-	(2)	(2)
Loss before tax	-		-	(2)	(2)
Income tax	-		-	-	-
	-		-	(2)	(2)

	26 weeks ended 27 October 2018
	honeybee £m	Spain £m	Other £m	Total £m
Revenue	-	-	-	-
Expenses	(7)	-	(4)	(11)
Loss before tax	(7)	-	(4)	(11)
Income tax	(1)	-	-	(1)
	(8)	-	(4)	(12)

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

10 Discontinued operations (continued)

(b) Cash flows from discontinued operations

	26 weeks ended 26 October 2019
	honeybee £m	Spain £m	Other £m	Total £m
Operating activities	2	-	-	2
Investing activities	-	-	-	-
	2	-	-	2

	26 weeks ended 27 October 2018
	honeybee £m	Spain £m	Other £m	Total £m
Operating activities	(5)	-	(2)	(7)
Investing activities	8	-	-	8
	3	-	(2)	1

	Year ended 27 April 2019
	honeybee £m	Spain £m	Other £m	Total £m
Operating activities	(5)	-	(3)	(8)
Investing activities	8	-	-	8
	3	-	(3)	-

11 Contingent liabilities

In recent years the Group has entered into agreements to dispose of certain operations. As part of these disposal agreements, the Group has provided the acquirer with general and tax-related warranties. At the date of signing these financial statements, some of these warranties remain open and it is possible that claims could arise under these warranties. Due to the nature of these contingent liabilities, it is not practicable to estimate their timing or possible financial impact.

The Group is subject to periodic tax and regulatory audits and investigations by various authorities covering corporate, employee and sales taxes across various jurisdictions in which the Group operates. Applicable laws and regulations are subject to differing interpretations and the resolution of a final position, through negotiation or litigation, can take several years to complete.

The Group continues to cooperate with HMRC in relation to open tax enquiries arising from pre-merger legacy corporate transactions in the Carphone Warehouse group. The potential range of tax exposures relating to these is estimated to be approximately £nil - £220m excluding interest and penalties. Based on the strength of third-party legal advice it is not considered probable that these enquiries will result in an economic outflow to the Group and therefore no provision has been made.

12 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:

26 weeks ended 26 October

2019

£m

26 weeks ended 27 October

2018

£m

Year ended

27 April

2019

£m

Revenue for services provided

Amounts owed to the Group

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

Risks to achieving the Group's objectives

The Board continually reviews and monitors the risks and uncertainties which could have a material effect on the Group's results. The updated risks and uncertainties are listed below. The Group's risks, and the factors which mitigate them, are set out in more detail in the 2018-19 Annual Report and Accounts on pages 22 to 24 and remain relevant in the current period.

1. Failure to appropriately safeguard against cyber risks and associated attacks could result in reputational damage, customer compensation, financial penalties and a resultant deterioration in financial performance;

2. Failure in appropriately safeguarding sensitive information and failure to comply with legislation could result in reputational damage, financial penalties and a resultant deterioration in financial performance;

3. Failure to deliver an effective business transformation programme in response to a changing consumer environment could result in a loss of competitive advantage impacting financial performance;

4. The decision of the UK to leave the European Union could lead to a period of economic uncertainty and a loss of consumer confidence, foreign exchange volatility and long-term changes in tax and other regulations which may impact the Group's operations and financial performance;

5. Failure to comply with Financial Services regulation could result in reputational damage, customer compensation, financial penalties and a resultant deterioration in financial performance;

6. Failure to adequately invest in and integrate the Group's IT systems and infrastructure could result in restricted growth and reputational damage impacting financial performance;

7. Crystallisation of potential tax exposures resulting from legacy corporate transactions, employee and sales taxes arising from periodic tax audits and investigations across various jurisdictions in which the Group operates may impact cash flows for the Group;

8. Failure to action appropriate Health and Safety measures resulting in injury could give rise to reputational damage and financial penalties;

9. Dependence on key suppliers in driving profitability, cash flow and market share;

10. Business continuity plans are not effective and major incident response is inadequate resulting in reputational damage and a loss of competitive advantage;

11. Failure to sufficiently diversify the Group's long term funding could result in restricted growth and reputational damage; and

12. Failure to employ adequate procedures and due diligence regarding product quality and safety could result in the provision of products which pose a risk to customer health, resulting in fines, prosecution and significant reputational damage.

The directors have prepared the interim financial information on a going concern basis. In considering the going concern basis, the directors have considered the above mentioned principal risks and uncertainties, especially in the context of a highly competitive consumer and retail environment as well as the wider macro-economic environment and how these factors might influence the Group's objectives and strategy.

The directors have reviewed the Group's future cash forecasts and profit projections, which are based on market data and past experience. The directors are of the opinion that the Group's forecasts and projections, which take into account reasonably possible changes in trading performance, show that the Group is able to operate within its current facilities and comply with its banking covenants for the foreseeable future. In arriving at their conclusion that the Group has adequate financial resources, the directors were mindful of the level of borrowings and facilities and that the Group has a robust policy towards liquidity and cash flow management.

Accordingly the directors have a reasonable expectation that the Group has adequate resources to continue in operation for the foreseeable future and consequently the directors continue to apply the going concern basis in the preparation of the financial statements.

Responsibility Statement

The directors confirm that to the best of their knowledge:

• the interim financial information has been prepared in accordance with IAS 34 as adopted by the European Union;

• the financial highlights, performance review and interim financial information include a fair review of the information required by DTR 4.2.7R (indication of important events during the first 26 weeks and description of principal risks and uncertainties for the remaining 26 weeks of the year); and

• the financial highlights and performance review includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).

At the date of this statement, the directors are those listed in the Group's 2018-19 Annual Report and Accounts.

By order of the Board

Alex Baldock

Group Chief Executive

11 December 2019

Jonny Mason

Group Chief Financial Officer

11 December 2019

Independent review report

To Dixons Carphone plc

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the interim statement for the 26 weeks ended 26 October 2019 which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated statement of changes in equity, the consolidated cash flow statement and related notes 1 to 12. We have read the other information contained in the interim statement and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The interim statement, including the condensed set of financial statements contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim statement in accordance with the Disclosure and Transparency Rules of the UK Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this interim statement has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting" (IAS 34) as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the interim statement based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council for use in the UK. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed set of financial statements in the interim statement for the 26 weeks ended 26 October 2019 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the European Union and the Disclosure and Transparency Rules of the UK Financial Conduct Authority.

Deloitte LLP

Statutory Auditor

London, UK

11 December 2019

Retail store data (unaudited)
Number of stores
	26 October 2019			27 April 2019
	Own stores	Franchise stores	Total	Own stores	Franchise stores	Total

UK Dixons	312	-	312	314	-	314
UK Dixons Travel	30	-	30	29	-	29
Ireland Dixons	18	-	18	18	-	18
UK & Ireland electricals	360	-	360	361	-	361
UK Carphone	548	-	548	560	-	560
Ireland Carphone	70	-	70	70	-	70
UK & Ireland mobile	618	-	618	630	-	630
Total UK & Ireland	978	-	978	991	-	991

Norway	82	67	149	80	67	147
Sweden	109	67	176	110	62	172
Denmark	38	-	38	38	-	38
Finland	22	19	41	22	19	41
Other Nordics	-	13	13	-	13	13
Nordics	251	166	417	250	161	411

Greece	73	21	94	70	25	95
Greece	73	21	94	70	25	95

Total	1,302	187	1,489	1,311	186	1,497

Selling space '000 sq ft
	26 October 2019			27 April 2019
	Own stores	Franchise stores	Total	Own stores	Franchise stores	Total

UK Dixons	5,603	-	5,603	5,613	-	5,613
UK Dixons Travel	38	-	38	42	-	42
Ireland Dixons	204	-	204	204	-	204
UK & Ireland electricals	5,845	-	5,845	5,859	-	5,859
UK Carphone	484	-	484	493	-	493
Ireland Carphone	44	-	44	44	-	44
UK & Ireland Mobile	528	-	528	537	-	537
Total UK & Ireland	6,373	-	6,373	6,396	-	6,396

Norway	1,096	630	1,726	1,100	630	1,730
Sweden	1,214	368	1,582	1,260	345	1,605
Denmark	691	-	691	691	-	691
Finland	537	163	700	537	163	700
Other Nordics	-	90	90	-	90	90
Nordics	3,538	1,251	4,789	3,588	1,228	4,816

Greece	910	80	990	886	101	987

Total	10,821	1,331	12,152	10,870	1,329	12,199

Glossary and definitions

Alternative performance measures ('APMs')

In the reporting of financial information, the Group uses certain measures that are not required under IFRS. We consider that these additional measures (commonly referred to as 'alternative performance measures') provide additional information on the performance of the business and trends to shareholders. These measures are consistent with those used internally, and are considered critical to understanding the financial performance and financial health of the Group. APMs are also used to enhance the comparability of information between reporting periods, by adjusting for non-recurring or items considered to be distortive on trading performance which may affect IFRS measures, to aid the user in understanding the Group's performance. These alternative performance measures may not be directly comparable with other similarly titled measures or 'adjusted' revenue or profit measures used by other companies, and are not intended to be a substitute for, or superior to, IFRS measures.

Adjusted measures

The Group's income statement and segmental analysis identify separately adjusted measures and adjusting items. These adjusted measures reflect adjustments to IFRS measures. The directors consider these 'adjusted' measures to be an informative additional measure of the ongoing trading performance of the Group. Adjusted results are stated before adjusting items.

Adjusting items consist of out of period mobile network debtor revaluations, the impact of IFRS 16, the results of discontinued operations or exited / to be exited businesses, amortisation of acquisition intangibles, acquisition-related costs, any exceptional items considered sufficiently material that they distort underlying performance (such as re-organisation costs, impairment charges, property rationalisation costs and other non-recurring charges), income from previously disposed operations and net pension interest costs.

Items excluded from adjusted results can evolve from one financial year to the next depending on the nature of exceptional items or one-off type activities. Where appropriate, for example where a business is classified as exited / to be exited, comparative information is restated accordingly.

Local currency

Some comparative performance measures are translated at constant exchange rates, called 'local currency' measures. This restates the prior period results at a common exchange rate to the current year in order to provide appropriate year-on-year movement measures without the impact of foreign exchange movements.

In response to the Guidelines on Alternative Performance Measures issued by the European Securities and Markets Authority ('ESMA'), we have provided additional information on the APMs used by the Group below.

Alternative performance measure	Closest equivalent GAAP measure	Reconciliation to IFRS measure	Definition and purpose
Revenue measures
Adjusted revenue	Revenue	See notes 2 and 3	Adjusted revenues are adjusted to remove out of period mobile network debtor revaluations and the revenues of those operations in which the Group classifies as exited or to be exited but do not meet the definition of discontinued in accordance with IFRS 5 "Non-Current Assets Held for Sale and Discontinued Operations".
Like-for-like (LFL) % change	No direct equivalent	Not applicable	Like-for-like revenue is calculated based on adjusted store and online revenue using constant exchange rates. New stores are included where they have been open for a full financial year both at the beginning and end of the financial period. Revenue from franchise stores are excluded and closed stores are excluded for any period of closure during either period. Customer support agreement, insurance and wholesale revenues along with revenue from Connected World Services and other non-retail businesses are excluded from like-for-like calculations. We consider that LFL revenue represents a useful measure of the trading performance of our underlying and ongoing store and online portfolio.
Local currency % change	Revenue compared to prior period consolidated at a constant exchange rate.	Not applicable	Reflects total revenues on a constant currency and period basis. Provides a measure of performance excluding the impact of foreign exchange rate movements.
Profit measures
Adjusted profit / (loss) before tax, adjusted EBIT and adjusted profit / (loss) after tax	Profit / (loss) before interest and tax, profit / (loss) after interest and tax.	See notes 2 and 3	As discussed above, the Group uses adjusted profit measures in order to provide a useful measure of the ongoing performance of the Group. These are adjusted from total measures to remove adjusting items, the nature of which are disclosed above.
EBIT	Profit / (loss) before interest and tax	No reconciling items	Earnings before interest and tax (EBIT) is directly comparable to profit / (loss) before tax. The terminology used is consistent with that used historically and in external communications.
Other earnings measures
Adjusted net finance costs	Net finance costs	See note 3	Adjusted net finance costs exclude certain adjusted finance cost items from total finance costs. The adjusting items include the impact of IFRS 16, the finance charge of businesses to be exited, net pension interest costs, finance income from previously disposed operations not classified as discontinued, and other exceptional items considered so one-off or material that they distort underlying finance costs of the Group. Under IAS 19 'Employee Benefits', the net interest charge on defined benefit pension schemes is calculated based on corporate bond yield rates at a specific date, which, as can vary over time, creates volatility in the income statement and is unrepresentative of the actual investment gains or losses made on the liabilities. Therefore, this item has been removed from our adjusted earnings measure in order to remove this non-cash volatility.
Adjusted income tax expense / (credit)	Income tax expense / (credit)	See notes 3 and 4	Adjusted income tax expense / (credit) represents the income tax on adjusted earnings. Income tax expense / (credit) on adjusting items represents the tax on items classified as 'adjusted', either in the current year, or the current year effect of prior year tax adjustments on items previously classified as adjusted. We consider the adjusted income tax measures represent a useful measure of the ongoing tax charge / credit of the Group.
Adjusted / Total effective tax rate	No direct equivalent	See note 4	The effective tax rate measures provide a useful indication of the tax rate of the Group. Adjusted effective tax is the rate of tax recognised on adjusting earnings, and total effective tax is the rate of tax recognised on total earnings.
Adjusted basic EPS - continuing operations, adjusted diluted EPS - continuing operations, adjusted basic EPS - total, adjusted diluted EPS - total	Statutory EPS figures	See note 5	EPS measures are presented to reflect the impact of adjusting items in order to show an adjusted EPS figure, which reflects the adjusted earnings per share of the Group. We consider the adjusted EPS provides a useful measure of the ongoing earnings of the underlying Group.
Cash flow measures
Free cash flow	Cash generated from operations	See note 9	Free cash flow comprises cash generated from / (utilised by) continuing operations including restructuring costs, but before cash generated from / (utilised by) businesses exited / to be exited, less net finance expense, less income tax paid, less net capital expenditure and before any special pension contributions and dividends. Free cash flow is derived from adjusted EBIT which excludes the impact of IFRS 16 and other adjusting items.
Net debt	Cash and cash equivalents less loans and other borrowings and IFRS16 lease liabilities.	See note 9	Comprises cash and cash equivalents and short-term deposits, less borrowings and IFRS16 lease liabilities. We consider that this provides a useful measure of the indebtedness of the Group.
Adjusted net debt	Cash and cash equivalents less loans and other borrowings and before the incremental impact of IFRS16 lease liabilities	See note 9 and note 1b	Comprises cash and cash equivalents and short-term deposits, less borrowings and before the incremental impact of IFRS16 lease liabilities (£1,309m) and before the impact of IFRS 16 lease receivables (£6m). The impact of previous finance lease liabilities under the scope of IAS17 are included (£81m). We consider that this provides a useful measure of the indebtedness of the Group and a comparable measure with prior periods.

Other definitions

The following definitions may apply throughout this Interim report and the Annual Report and Accounts 2018 / 19 previously published:

Acquisition intangibles	Acquired intangible assets such as customer bases, brands and other intangible assets acquired through a business combination capitalised separately from goodwill. Where businesses have grown organically rather than through acquisition, there is no amortisation of acquired intangibles and therefore the non-cash amortisation charge is removed from our adjusted earnings measures in order to increase comparability between segments.
ADRs	American Depositary Receipts
ARPU	Average monthly revenue per user
B2B	Business to business
Best Buy	Best Buy Co., Inc. (incorporated in the United States) ‌‌ and its subsidiaries and interests in joint ventures and associates
Best Buy Europe	Best Buy Europe Distributions Limited and its subsidiaries and interests in joint ventures and associates (incorporated in England & Wales) ‌‌
Board	The Board of Directors of the Company
Businesses to be exited	Businesses exited or to be exited are those which the Group has exited or committed to or commenced to exit through disposal or closure but do not meet the definition of discontinued operations as stipulated by IFRS and are material to the results or operations of the Group. Comparative results in the statement of comprehensive income and the notes are restated accordingly for the impact of businesses exited or to be exited.
Carphone, Carphone Warehouse or Carphone Group	The Company or Group prior to the Merger on 6 August 2014
CGU	Cash Generating Unit
Colleague engagement	Measured using 'Make a Difference' survey in Greece and UK & Ireland and a colleague engagement survey in the Nordics
Company or the Company	Dixons Carphone plc (incorporated in England and Wales under the Act, with registered number 07105905)‌‌, whose registered office is at 1 Portal Way, London W3 6RS
CPW	The continuing business of the Carphone Group
CPW Europe	Best Buy Europe's core continuing operations
CPW Europe Acquisition	The Company's acquisition of Best Buy's interest in CPW Europe, which completed on 26 June 2013
CRM	Customer Relationship Management
CWS	The Connected World Services division of the Company
Dixons or Dixons Retail	Dixons Retail Group Limited and its subsidiary companies
Dixons Carphone or Group	The Company, its subsidiaries, interests in joint ventures and other investments
Dixons Retail Merger or Merger	The all-share merger of Dixons Retail plc and Carphone Warehouse plc which occurred on 6 August 2014
EBT	Employee benefit trust
Electricals	Represents sales made from the legacy Dixons brands
HMRC	Her Majesty's Revenue and Customs
honeybee	honeybee was our proprietary IT software operation for which an asset sale was completed on 31 May 2018
GfK	Growth from Knowledge
IFRS	International Financial Reporting Standards as adopted by the European Union
Market position	Ranking against competitors in the electrical and mobile retail market, measured by market share. Market share is measured for each of the Group's markets by comparing data for revenue or volume of units sold relative to similar metrics for competitors in the same market
MNO	Mobile network operator
Mobile	Represents sales made from legacy Carphone brands, iD Mobile and SimplifyDigital
MVNO	Mobile virtual network operator
NPS	Net Promoter Score, a rating used by the Group to measure customers' likelihood to recommend its operations
Peak / post peak	Peak refers to the 10-week trading period ending on 4 January 2020 as to be announced in the Group's Christmas Trading statement on 21 January 2020. Post peak refers to the trading period from 5 January to the Group's year-end on 2 May 2020.
RCF	Revolving credit facility
Sharesave or SAYE	Save as you earn share scheme
SIMO	Sales of SIM-only contracts, without attached handset
SKU	Stock keeping unit
Special pension contributions	Represent contributions made under the schedule of contributions agreed with the scheme trustees following the 2016 triennial review
Sprint JV	The 50% investment previously held by the Group in Sprint Connect LLC, a disposed distribution joint venture held with Sprint LLC in the USA.
SWAS	Stores-within-a-store
TSR	Total shareholder return
UK GAAP	United Kingdom Accounting Standards and applicable law
WAEP	Weighted average exercise price

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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