Home Retail Group plc, 2013 Earnings Call, May 01, 2013

Home Retail Group plc declared a final dividend in respect of the year ended March 2, 2013 of 2.0 pence per share, amounting to a total final dividend of £16.0 million, has been proposed by the board of directors, and is subject to approval by the shareholders at the Annual General Meeting. This would make a total dividend for the year of 3.0 pence per share, amounting to £24.0 million. The dividend will be paid on July 24, 2013 to shareholders who are on the register of members at close of business on May 24, 2013. The final dividend paid for 2012 was 10.0 pence. In the 2013-2014 financial year, the company is expected there will be around 10 store closures, where the lease has come to an end, alongside a number of additional stores that are likely to be relocated to better sites.

Home Retail Group plc reported group financial results for the 52 weeks ended March 2, 2013. For the period, the company reported revenue was £5,475.4 million against £5,491.5 million a year ago. Benchmark operating profit was £93.3 million against £97.7 million a year ago. Benchmark PBT was £91.1 million against £101.6 million a year ago. Profit before tax was £130.1 million against £90.2 million a year ago. Profit was £94.0 million against £62.6 million a year ago. Basic benchmark EPS was 7.7 pence against 8.7 pence a year ago. Basic EPS was 11.7 pence against 7.8 pence a year ago. Net interest income was £3.8 million against £3.4 million a year ago. Income statement net financing charge was £1.3 million against income statement net financing income of £5.0 million a year ago. Cash inflow from operating activities was £322.1 million against £220.0 million a year ago. Net capital expenditure was £78.7 million against £130.7 million a year ago. The company’s view of the 2013/14 financial year is that it will remain similar to 2012/13 with consumer spending continuing to be impacted by ongoing inflationary pressures and low levels of consumer confidence. However, the group's strong financial position enables to deliver on the transformation plan to reinvent Argos as a digital retail leader and to invest in the rollout of the Homebase proposition, and as a result, ensure that the group is well positioned for economic recovery. The company expects capital expenditure to increase to around £175 million, which is unchanged from the guidance that at the time of its half-year results. Gross margin rate in Homebase will be broadly flat. The company expects effective tax rate to reduce to around 29%, mainly reflecting the 1% reduction in the UK corporation tax rates. The company expects the cash outflow about £100 million.