Completion of Kotsovolos disposal
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Currys plc (Currys) is pleased to announce that it has completed the sale of Dixons South East Europe A.E.V.E., the holding company of Currys' entire Greece and Cyprus retail business, trading as Kotsovolos, to Public Power Corporation S.A. for an enterprise value of €200 million (£175 million). As anticipated, the cash proceeds received by Currys were £156 million (€179 million) after taking into account transaction and separation costs, intercompany balances and cash in the business.
With the disposal of Kotsovolos, the Group's structure has been simplified and Currys will continue to focus on its larger markets of the UK & Ireland and the Nordics, whilst the strengthened balance sheet will increase flexibility to invest in and grow the business, as well as improve shareholder returns.
As previously announced, in the near term, it is the Board's intention to use the net cash proceeds to reduce net debt and the Group expects to finish the year in a net cash position.
Current year guidance
Group expectations for adjusted profit before tax is unchanged and is expected to be at least £115m if Kotsovolos was fully consolidated for the year.
Following the disposal, the Group will present full year adjusted results on a continuing operations basis. On this basis, adjusted profit before tax is expected to be at least £105m. Please see below for full cashflow guidance on a continuing operations basis.
Alex Baldock, Group Chief Executive
"The sale of Kotsovolos is an excellent outcome for Currys' shareholders. It further strengthens the Group, while we continue to get the Nordics back on track and keep up the UK&I's encouraging momentum. We continue to progress well on both.
Kotsovolos is a fine business that we've been proud to own. I'd like to thank every one of our Greek colleagues for everything they've done, and wish them every future success."
Current year guidance
Guidance below is based on Greece being fully consolidated for the year. This basis is consistent with previous guidance and excludes the cash proceeds from the disposal of Kotsovolos.
| ● | Group adjusted profit before tax is expected to be at least £115m (unchanged) |
| ● | Capital expenditure of around £65m (previously £70m) |
| ● | Net exceptional cash costs around £50m (unchanged) |
| ● | Pension contributions of £36m (unchanged) |
| ● | Depreciation & amortisation of around £310m (unchanged) |
| ● | Cash payments of leasing costs, debt & interest of around £270m (unchanged) |
| ● | Cash interest of around £25m (previously £30m) |
| ● | Cash tax payments of around £10m (unchanged) |
| ● | Group to finish the year with net debt slightly worse than last year's closing position of £(97)m (previously better than last year's closing position). The reduction from previous guidance is due to the continued growth of iD Mobile, which creates a short term drag on net cash, but is a growing source of recurring, predictable revenue and cashflow |
Following the disposal of Kotsovolos, the Group will report full year adjusted results on a continuing operations basis (excluding Kotsovolos), the guidance below is presented on this basis. Note this is not pro-forma guidance as certain cashflow items, notably interest, will be impacted by the receipt of proceeds.
| ● | Group adjusted profit before tax is expected to be at least £105m |
| ● | Capital expenditure of around £50m |
| ● | Net exceptional cash costs of around £50m |
| ● | Pension contributions of £36m |
| ● | Depreciation & amortisation of around £280m |
| ● | Cash payments of leasing costs, debt & interest of around £250m |
| ● | Cash interest of around £20m |
| ● | Cash tax payments of around £10m |
| ● | Group to finish the year in a net cash position |
| Longer term guidance | |
| ● | Group continuing to target at least 3.0% adjusted EBIT margin with focus on sustainable free cash flow generation |
| ● | Exceptional cash costs expected to fall significantly from 2024/25 onwards |
| ● | Scheduled pension contributions will rise to £50m in 2024/25 and to £78m for the following three years before a final payment of £43m in 2028/29 within the current agreement. Pension contributions will cease when the actuarial deficit reaches zero |
Next scheduled announcement
The Group is scheduled to publish a pre-close full year trading update on Tuesday 14 May 2024.
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