Group performance
The Group continues to build on its strategic advantages to ensure that it will be well positioned for the economic recovery over the longer term.
Our focus on operational excellence and further investment in our multi-channel leadership has delivered a solid performance and enabled us to gain or hold market share in our businesses. Although we remain cautious about the consumer outlook over the short term, we will continue to invest and innovate in our customer proposition and use our competitive advantage to provide customers with the best value and widest choice in home and general merchandise.
Operational highlights
- Continued market leadership in multi-channel retailing
- Further operational efficiencies achieved
- Argos:
- Maintained market share
- Multi-channel sales grew to £1.9bn, representing almost half of its total sales
- Second largest UK internet retailer with 400 million visits to its website
- Store refurbishment investment delivering sales uplifts ahead of plan
- Homebase:
- Continued market share gains
- Significant growth in multi-channel sales
- Installation services investment driving big ticket sales
Financial highlights
- Sales down 3% to £5,852m
- Cash gross margin down 4% to £2,177m
- Operating and distribution costs reduced by £60m or 3% to £1,926m, reflecting further cost saving initiatives
- Benchmark operating profit1 down 13% to £251m, with a reduction of £47m or 18% at Argos and an increase of £6m or 16% at Homebase
- Benchmark profit before tax2 down 13% to £254m
- Basic benchmark earnings per share3 down 9% to 21.3p
- Reported profit before tax of £265m; reported basic earnings per share of 23.1p
- Completed £150m share buy-back; representing 7% of issued ordinary share capital at 27 February 2010, which enhanced earnings by 4% in the period
- Strong net cash position of £259m
- Full-year dividend maintained at 14.7p; Final dividend of 10.0p recommended
Notes 1, 2 and 3: refer to definitions of benchmark measures.
Group key performance indicators
Sales (£m)
Group sales decreased by 2.8% to £5,852m. Argos accounts for 72% of Group sales, and declined by 3.5% or £153m in the year. Homebase accounts for 26% of Group sales, and declined by 1.4% or £21m in the year. Financial Services accounts for the remaining 2% of Group sales, and grew by 2.8% in the year.
Definition: Income received for goods and services.
Source: Audited financial statements.
Benchmark operating profit (£m) and benchmark operating profit margin (%)
Group benchmark operating profit decreased 13% to £251m. Argos profit decreased by 18% or £47m, Homebase profit grew 16% or £6m, Financial Services profit was maintained at £6m and costs of Central Activities decreased by 7% or £1.6m. Group benchmark operating profit margin reduced to 4.3% in the year.
Definition: Benchmark operating profit is defined as operating profit before amortisation of acquisition intangibles, store impairment and onerous lease charges or releases, exceptional items and costs related to demerger incentive schemes.
Source: Audited financial statements.
Benchmark pre-tax return on invested capital (ROIC) (%)
Benchmark operating profit plus share of post-tax results of joint ventures and associates was £251m, down 13% or £37m, while year-end invested capital increased by 6%. This resulted in a pre-tax ROIC of 10.0%.
Definition: Benchmark pre-tax return on invested capital (benchmark pre-tax ROIC) is defined as benchmark operating profit plus share of post-tax results of joint ventures and associates, divided by year-end net assets excluding retirement benefit balances, tax balances, derivative financial instruments and financing net cash/debt.
Source: Audited financial statements.
Financing net cash (£m)
Cash outflow excluding the £150m share buy-back programme was £5m. Our strong cash generation enabled us to complete the share buy-back programme this year, resulting in a year-end net cash position of £259m.
Definition: Year-end balance sheet financing net cash.
Source: Audited financial statements.
Share price performance
Note: FTSE 350 data rebased to 11 October 2006.
FOR ALL CHARTS, 2007 IS ON A 52-WEEK PRO FORMA BASIS
