Audited Results for the Year Ended 27 April 2024

Performance continues to strengthen

We Help Everyone Enjoy Amazing Technology

Summary

  • Group adjusted profit before tax £118m, +10% YoY
  • Group net funds +£193m YoY
  • Trading momentum improving throughout the year
  • UK credit adoption +240bps to 20.1%, and +17% growth in active accounts to 2.3m
  • iD Mobile growing strongly to 1.8m subscribers, +34% YoY
  • Colleague engagement score +3 to 81, amongst top 10% of global companies1
  • Customer satisfaction rising with UK NPS +4pts YoY and Nordics “Happy or Not” climbing again
  • Successful disposal of Greece business for a significant valuation premium

Financial performance

  • UK&I like-for-like revenue (2)% and adjusted EBIT £142m, (16)% YoY
    • Underlying gross margin improvement and cost savings offset sales decline
    • Adjusted EBIT up +£2m excluding non-repeat of c.£30m of one-off mobile revaluations in the prior year
  • Nordics like-for-like revenue (3)% and adjusted EBIT £61m, +135% YoY
    • Gaining share in a market that declined, with H2 market share +100bps YoY
    • Gross margin returning close to level of two years ago
  • Continuing operations statutory profit before tax of £28m, +£490m YoY
  • Free cash flow of £82m, +£174m improvement YoY
  • Year-end net cash of £96m, +£193m YoY
  • Period end IAS 19 pension deficit £(171)m, +£78m improvement YoY

Outlook

  • Group trading in early part of the new financial year has been in line with expectations
  • Group planning confidently for year ahead, expect profit and free cash flow growth
  • Targeting continued growth in high margin, recurring revenue services, including reaching at least 2m iD Mobile subscribers before year end

Alex Baldock, Group Chief Executive

“Our performance continues to strengthen. We’ve kept up our encouraging momentum in the UK&I, our Nordics business is getting back on track, and we're stronger financially.

We can see our progress in ever-more engaged colleagues, more satisfied customers and better financial performance. Continued growth in sales of solutions and services were particular highlights: they’re good for customers, margins and recurring revenues, and they lean on Currys’ competitive strengths. We're planning prudently but confidently for the year ahead, on course to grow both profits and cashflow while carefully stepping back up to more normal investment levels.

Encouraged as we are by our progress, we know we can go further. For one thing, we expect AI-powered technology to be the most exciting new product cycle since the tablet in 2010. With our partnerships, scale and expert colleagues to demystify AI, we’re best-placed to benefit.

As ever, I’m thankful to our thousands of capable and committed colleagues, whose skill and will is an inspiration to me. With them we can go so much further, and they will benefit alongside customers, shareholders and society.”

Performance Summary

Group like-for-like sales decreased (2)% with a decline in both segments as high inflation and rising interest rates caused weak consumer confidence and depressed demand.

 

 

Year-on-year

Revenue

 2023/24
£m

2022/23
£m

Reported

% change

Currency neutral

% change

Like-for-Like

% change

- UK & Ireland

4,970

5,067

(2)%

(2)%

(2)%

- Nordics

3,506

3,807

(8)%

(2)%

(3)%

Continuing operations

8,476

8,874

(4)%

(2)%

(2)%

UK&I adjusted EBIT decreased (16)% YoY. This reflects a positive underlying performance, offset by the non-repeat of c.£30m of mobile revaluations in the prior year. Underlying improvements to gross margin were driven through higher adoption of services and solutions, better monetisation of our improved customer experience, a focus on more profitable sales, and cost savings. Operating costs fell in absolute terms as savings across property, marketing, central and IT costs more than offset inflationary cost pressures.

Nordics adjusted EBIT increased +135% YoY. Despite a challenging consumer spending environment, our disciplined focus on margins and costs is getting this business back on track. A year-on-year gross margin increase of +190bps has returned margins to the level of two years ago while cost savings have largely offset the impact of inflation.

Group operating cash flow was broadly flat YoY as the small improvement in adjusted EBIT was offset by lower depreciation. Free cash flow was an inflow of £82m, a +£174m improvement YoY, largely reflecting lower capital expenditure and a much-improved working capital outflow. Total cash inflow of £193m was £334m better YoY due to the higher free cash flow, lower dividend, reduced pension payments and the proceeds from the disposal of Kotsovolos.

Profit and Cash Flow Summary

2023/24

£m

2022/23

£m

2023/24

Adjusted
£m

2022/23

Adjusted

(restated)
£m

Reported

% change

Currency neutral

% change

Segmental EBIT

 

 

- UK & Ireland

88

(353)

142

170

(16)%

(16)%

- Nordics

29

(11)

61

26

+135%

+163%

EBIT on continuing operations

117

(364)

203

196

+4%

+8%

EBIT Margin

1.4%

(4.1%)

2.4%

2.2%

+20 bps

+20 bps

 

 

Net interest expense on leases

(59)

(63)

(59)

(63)

n/a

Other net finance costs

(30)

(35)

(26)

(26)

n/a

Profit / (loss) before tax on continuing operations

28

(462)

118

107

+10%

+16%

Tax on continuing operations

(1)

(30)

(31)

(25)

Profit / (loss) after tax on continuing operations

27

(492)

87

82

Profit after tax on discontinued operations

138

11

 Profit after tax

165

(481)

 

Earnings / (loss) per share on continuing operations

2.4p

(44.6)p

7.9p

7.4p

+7%

 

Operating cash flow

246

244

+1%

+5%

Operating cash flow margin

2.9%

2.7%

+20 bps

+20 bps

 

Cash generated from continuing operations

419

342

 

 

 

Free cash flow

82

(92)

n/a

Net (cash) / debt

96

(97)

n/a

Balance sheet and capital allocation

The Group has a clear capital allocation framework:

  1. Maintain prudent balance sheet (defined as meeting banking covenants and meeting our own targets for indebtedness fixed charge cover of >1.5x and indebtedness leverage <2.5x)
  2. Pay required pension cash contributions
  3. Invest to grow business/profits/cashflow
  4. Pay and grow ordinary dividend
  5. Surplus capital available to return to shareholders

Trading over the last year, combined with the successful disposal of the Greece business, means that the Group has finished the year with £96m net cash and a pension deficit of £171m, a net position of £(75)m. This is a more than £700m improvement compared to before the pandemic and represents a healthy position from which the company can pay required pension contributions, invest in future success and return cash to shareholders.

Currently, the Group continues to benefit from the relaxed bank covenants and lower pension contributions that were negotiated in spring 2023, although pension contributions will increase to £50m this year, and capital expenditure will rise back towards normalised levels. In this context, the Board has taken a prudent decision not to declare a dividend at this year-end. Providing trading is in line with expectations, it is the Board’s intention to announce a recommencement of shareholder returns during the next twelve months.

Current year guidance

The Group expects to see growth in profits and free cash flow

  • Capital expenditure of around £90m, doubling YoY and returning to normalised levels
  • Net exceptional cash costs around £30m, due to lower restructuring costs
  • Pension contributions of £50m, in line with scheduled increase from £36m in 2023/24

Other technical cashflow items:

  • Depreciation & amortisation around £290m
  • Cash payments of leasing costs, debt & interest around £260m
  • Cash tax around £10m
  • Cash interest of around £20m

2024/25 is a 53-week year. This will have a small impact on sales but immaterial impact on profits and cashflows.

Longer term guidance

The Group is continuing to target at least 3% adjusted EBIT margin. This, combined with maintained leading market share, tight discipline on capital expenditure, controllable exceptional cash costs and working capital, is expected to deliver improving free cash flow.

The Group pension contributions are scheduled to rise to £78m in 2025/26 and for the following two years, before a final payment of £43m in 2028/29. Pension contributions will cease ahead of schedule if the deficit falls to zero on a defined basis agreed between the Group and the scheme trustees. The next triennial valuation date is March 2025 and the Group will work proactively with the scheme trustees through this process to maximise value for all stakeholders.

In the reporting of financial information, the Group uses certain measures that are not required under IFRS. These are presented in accordance with the Guidelines on APMs issued by the European Securities and Markets Authority (‘ESMA’) and are consistent with those used internally by the Group’s Chief Operating Decision Maker to evaluate trends, monitor performance, and forecast results. These APMs may not be directly comparable with other similarly titled measures of ‘adjusted’ or ‘underlying’ revenue or profit measures used by other companies, including those within our industry, and are not intended to be a substitute for, or superior to, IFRS measures. Further information and definitions can be found in the Notes to the Financial Information of this report.

Unless otherwise stated, 2022/23 figures have been restated throughout this report to exclude discontinued operations.

1 Viva-Glint, December 2023.

We Help Everyone Enjoy Amazing Technology

Chief Executive’s Review

Our priorities last year were simple: to get the Nordics back on track, to keep the UK&I’s encouraging momentum going, and to strengthen our balance sheet and liquidity in a turbulent environment. I am pleased to say that we made good progress in all three areas, and we can plan confidently for the future.

In the Nordics, consumer demand remained weak. Headwinds of inflation and interest rate rises impacted consumer confidence and drove a market decline of (3)% YoY. Against this backdrop, we grew market share (1H: (90)bps, 2H: +100bps), recovered our gross margin (+190bps) back to the level of two years ago, and saw our profits more than double, despite a headwind from currency translation.

In the UK&I, the market was similarly soft, declining (3)% YoY. We maintained our #1 position but lost (70)bps of share, as we continued to focus on more profitable sales. This focus saw UK&I gross margin improve +120bps Yo2Y, and, alongside significant net cost savings, this resulted in adjusted profits climbing +£25m compared to two years ago, despite a (9)% drop in revenue over the same period.

These achievements have been built on our long-term strategy.

Our strategy starts with colleagues, as it is difficult in a business like ours for the customer experience to exceed that of the colleague. We have supported colleagues with better tools, training and reward, and now have world class colleague engagement scores to show for it, with Group eSat climbing +3 to 81, putting Currys plc in the top 10% of global companies. I am lucky enough to see my colleagues in action every day, and the calibre of people in our business, from my immediate leadership team through to colleagues on the front line, has never been higher.

Second, we are making our customer proposition ever easier to shop. We look to constantly improve on the retail fundamentals of range, price, and availability. To this we add solution selling whereby we seek to sell the customer everything they need (products, accessories and services) rather than just a product on its own. We have seen a +10pts YoY improvement in UK&I solutions adoption rates to nearly 30% of eligible products sold now have ancillary products alongside, helping customers enjoy the technology to the full while growing our profits. We are also doing more to get it ‘Right First Time’ for customers. This big business-wide effort improves customer satisfaction (they like it when the right washing machine arrives undamaged at the appointed time, and can be installed there and then), and so indirectly reduces customer acquisition costs. It also reduces the cost of repeat work (by £8m last year), while boosting margins: customers will pay more for a better service.

We are doing all this with the benefit of the omnichannel shopping model. Customers clearly prefer to use stores as an integral part of their shopping journey, and we have invested to continually improve that experience online and in-store. This year will see prudent increases to those investments.

The third leg of our strategy is to create customers for life. At the heart of this is our unique range of services that help customers afford and enjoy amazing technology to the full.

We help customers afford tech through credit, and we have seen UK&I adoption climb +240bps to 20.1%, and active customer accounts grow +17% to almost 2.3m.

We help customers get tech started, through installation and set-up. Our installation services are becoming ever more valued by customers, and 28% of UK big box deliveries now include installation, a rise of +290bps YoY. Our in-home customer satisfaction is amongst the highest of all activities we carry out.

Once they have the tech, customers want to keep it working. We are uniquely well placed to keep tech working as we operate repair services in Norway, Sweden and the UK, where we have Europe’s largest technology repair centre. We are the only tech retailer that operates our own repair facilities, allowing us to offer customers the protection they want at good value. The result of this can been seen in the 12m protection plans in place across the Group. During the year, our team of over 1,400 engineers successfully completed 1.4 million product repairs, both at our repair centres and in customers' homes.

When tech has reached the end of its life, we want everyone to bring their old or unwanted tech into our stores to be reused or recycled for free – whether they bought it from us or not. If we can’t reuse it, then we can harvest the parts which can be put to good use by our amazing repair colleagues in our labs. Or we can recycle it.

Currys has worked on responsible recycling for many years. We provide free in-store drop off and collect our customers’ unwanted electrical equipment and small electrical appliances for recycling when we deliver their new technology. In 2023/24, 8.1 million e-waste products were collected for reuse and recycling across the Group.

The circularity of trade-in, protection, repair, refurbishment, reuse and recycling is not just a PR exercise for Currys, it’s our business model. Colleagues increasingly want to work for organisations with powerful societal benefit, and customers want to shop there. Customers value the economic benefit of pre-loved and repaired products. Currys’ well-invested capabilities in this area are barriers to competitors, while our unmatched scale makes offering the complete set of activities more profitable for us.

Finally, we help customers get the most out of their tech, with connectivity being the greatest enabler of this.

Our mobile business is growing, profitable and cash generative. iD Mobile, our MVNO (Mobile Virtual Network Operator) in the UK, has been the standout performer this year. It has grown +34% to 1.8m subscribers, as customers have realised the value in the deals we offer. iD is an increasingly valuable asset in the business, one that we intend to keep growing, targeting at least 2m subscribers before year end.

Credit, protection plans and connectivity are all sources of higher margin, recurring revenue. Our aim is to continue growing these, so that over time our business mixes away from single product purchases to the more predictable, recurring and higher margin revenue streams of solution sales.

All of this rests on important progress in collecting, protecting and using data, evidenced by our Nordics Customer Club growing to 8.6m members, and 8.9m Currys Perks members. These memberships generate over £4bn of customer revenue per year.

Delivering on our strategy drives improved customer satisfaction, which has climbed to record levels this year. It also drives improved profits.

Our UK&I gross margin is now +240bps higher than three years ago and our Nordics gross margin has rebounded strongly, up +190bps YoY. The drivers of gross margin are the same across the Group:

  • Better bundling of products – Selling customers a complete solution enhances customer satisfaction and our margins
  • Higher adoption of services – Our services are higher margin than our product sales, and produce recurring revenues
  • Monetising the improved experience – As our strategy has improved the customer experience we have been able to charge more for it
  • Focus on higher margin sales – Our enhanced data and analytics have provided a better understanding of end-to-end profitability, which we have used not to chase sales that fall below internal margin thresholds
  • Cost savings – We have delivered significant cost savings in our supply chain and service operations through outsourcing and efficiencies

Cost savings have also reduced our operating costs, and in the UK&I we have delivered £268m of total cost reductions over the last three years as a result of actions in supply chain and service operations, stores, central operations and IT. Cost saving processes and culture are now embedded across the Group. There is more cost to go after, with more we can do on Group synergies, and through process improvement enhanced by Artificial Intelligence (AI) technology. We are in the early phases of exploring Generative AI and, having identified over 60 potential use cases, we are focussing, with our partners Accenture and Microsoft, on opportunities in aftersales returns and repairs.

Alongside improved profitability, we have been prudent in deploying cash. Last year, our capital expenditure was deliberately reduced and working capital was tightly controlled. In April, we completed the disposal of our Greece business for net proceeds of £156m, allowing us to focus on our larger businesses in the UK&I and Nordics and further strengthening our balance sheet. We finished the year with £96m net cash and a pension deficit of £(171)m. This £(75)m net position is £700m better than it was four years ago at the start of the pandemic.

We are the clear #1 brand in all our markets, with a diversified revenue base and a strategy that is working. After a volatile five years that have been impacted by the legacy issues in UK Mobile, the pandemic disruption, and a challenging situation in the Nordics, we have delivered a year without any surprises and with material progress in all three priorities of Nordics recovery, UK&I momentum and financial strength. Our priority for the year ahead is simple: to continue doing the same. We are planning prudently but confidently on this basis.

After three years of revenue declines, there are also reasons to be more cheerful about the outlook for topline growth. First, when we look at what we sell, the coming wave of AI led technology offers arguably the most exciting tech cycle since the Apple iPad in 2010. We are uniquely placed to help consumers understand the power of this technology and are working closely with suppliers on recent and upcoming product launches. For example, we were the first retailer globally to launch Microsoft Copilot+PC. We also see opportunities in product categories and services where we’re growing but are still underweight. Second, in terms of who we sell to, we are starting to see consumers in all our markets recover, with confidence and spending indicators increasing. We also have an opportunity in B2B, where we are well placed to serve small and medium sized enterprises, a market almost as large as B2C which currently represents only 6% of our sales. Finally, on how we sell product, we will continue making improvements to our websites, and further judicious investments in our stores.

We remain focussed on generating improved free cash flow through improved operating performance, tight working capital management and increasing capital expenditure back to normalised levels to support profitable growth and the long-term success of this business.

Combined with our proactive actions to strengthen the balance sheet, this will enable resumption and growth of shareholder returns. We will then see a business that’s increasingly valuable for shareholders as well as colleagues, customers and society.

Results call

There will be a live presentation followed by Q&A call for investors and analysts at 9:30am today.

It will be webcast here: https://brrmedia.news/CURY_FY24

Next scheduled announcement

The Group is scheduled to publish a trading update at its AGM on 5 September 2024.

For further information

Dan Homan

Investor Relations

+44 (0)7401 400442

Carla Fabiano

Investor Relations

+44 (0)7460 944523

Toby Bates

Corporate Communications

+44 (0)7841 037946

Tim Danaher

Brunswick Group

+44 (0)2074 045959

Information on Currys plc is available at www.currysplc.com
Follow us on Twitter: @currysplc


About Currys plc

Currys plc is a leading omnichannel retailer of technology products and services, operating online and through 719 stores in 6 countries. We Help Everyone Enjoy Amazing Technology, however they choose to shop with us.

In the UK & Ireland we trade as Currys and in the UK we operate our own mobile virtual network, iD Mobile. In the Nordics we trade under the Elkjøp brand. We’re the market leader in all markets, able to serve all households and employing 24,000 capable and committed colleagues.

We help everyone enjoy amazing technology. We believe in the power of technology to improve lives, helping people stay connected, productive, fit, healthy, and entertained. We’re here to help everyone enjoy those benefits and with our scale and expertise, we are uniquely placed to do so.

Our full range of services and support makes it easy for our customers to discover, choose, afford and enjoy the right technology to the full. The Group’s operations include Europe’s largest technology repair facility, a sourcing office in Hong Kong and an extensive distribution network, centred on Newark in the UK and Jönköping in Sweden, enabling fast and efficient delivery to stores and homes.

We’re a leader in giving technology a longer life through repair, recycling and reuse. We’re reducing our impact on the environment in our operations and our wider value chain and we aim to achieve net zero emissions by 2040. We offer customers products that help them save energy, reduce waste and save water, and we partner with charitable organisations to bring the benefits of amazing technology to those who might otherwise be excluded.

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 Currys plc website or the Twitter feed does not form part of this announcement and should not be relied on as such.

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