Carphone Warehouse 2003 Annual Report Download - page 11

Earnings per share (EPS)
Headline EPS, before amortisation of goodwill and
exceptional items, was 5.25p, compared with 4.41p in
the previous period. Basic EPS was 2.60p (2002: loss
per share of 3.39p).
Balance sheet, cash flow and dividend
At 29 March 2003, the Group had net cash and short term
investments of £29.1m, compared to £53.0m (including
£18.4m in respect of the Group’s London offices) at the end
of the previous period. During the year the Group generated
cash flow from operations of £77.7m (2002: £29.4m), and
total free cash flow (excluding the capital cost of new stores
and before acquisitions) of £50.8m (2002: £0.5m).
The Group is heavily focused on cash generation and
working capital management, as reflected in this strong
performance. As a result we are delighted to be proposing
our maiden dividend for the March 2003 year of 1.0p
per share, which will be satisfied wholly in cash. This
decision reflects confidence in our ability to generate
sufficient funds both to return cash to shareholders and
to continue to invest in the future growth of the Group.
Net funds
2003 2002
£m £m
Operating cash inflows 77.7 29.4
Tax and interest (1.5) (9.1)
Capex (ex-new stores) (25.4) (19.8)
Free cash flow 50.8 0.5
New store capex (10.9) (18.5)
London offices 31.5 (7.0)
Acquisitions (62.1) (43.4)
Net cash inflow (outflow) 9.3 (68.4)
Opening net funds 34.6 102.9
Shares and foreign exchange (14.8) 0.1
Closing net funds 29.1 34.6
Financing and treasury
The Group’s operations are largely financed by retained
profits and equity. During the year, the Group’s existing
£150m revolving credit facility (expiring April 2003) was
replaced with a new committed facility of £180m maturing
in August 2005, of which £27.4m was utilised at the year
end (2002: £24.7m). The Group was in compliance with
the covenant conditions of the new facility at the year end.
Borrowings peaked during the year at £108m due to the
Opal acquisition and investment in working capital during
the peak Christmas trading period.
In addition to the revolving credit facility, the Group has
a number of uncommitted loan facilities, overdrafts and
guarantee lines which enable it to optimise cash management
efficiency, particularly at times of peak working capital
requirements. Surplus cash that cannot be utilised to offset
other Group debt, or which is ring-fenced for insurance
purposes, was £34.2m at the period end (2002: £29.4m).
Funding of our subsidiaries is arranged and monitored
centrally and on an arm’s length basis. Currency risk on
inter-company funding is hedged using foreign exchange
swaps or currency borrowings, as appropriate, at all times.
Other than inter-company loans, balance sheet translational
risk is not hedged against adverse movements in exchange
rates and the results of any such movements are taken to
reserves. The Group is exposed to limited cross-border
transactional commitments and where significant, these
are hedged at inception using forward currency contracts.
The Group does not trade or speculate in any
financial instruments.
Shareholders’ funds and return on shareholders’ funds
Total shareholders’ funds at March 2003 were £459.5m
(2002: £407.3m).
Post-tax earnings before amortisation and exceptional
items generated a return on average shareholders’ funds,
excluding goodwill on minority interests acquired in
the period to March 2001, of 15.8% (2002: 14.1%).
Roger Taylor, Chief Financial Officer
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The Carphone Warehouse Group PLC Annual Report 2003