Carphone Warehouse 2016 Annual Report Download - page 108

Notes to the Group financial statements
106
4 Non-Headline items continued
(ii) Exceptional items – Dixons Retail Merger:
Year ended
30 April
2016
£million
13 months
ended
2 May
2015
£million
Merger transaction costs — (9)
Merger integration costs (48) (32)
Revolving Credit Facility fee write off (4) —
(52) (41)
The Dixons Retail Merger is described further in notes 1 and 24. The Merger has given rise to the following costs which have
been treated as exceptional items:
• Merger transaction costs comprise banking and professional fees in relation to the transaction.
• Merger integration costs relate to the reorganisation of the Group following the Merger and comprise the rationalisation
of certain operational and support functions. These costs mainly comprise professional fees, employee severance and
property costs associated with the integration process.
• Revolving Credit Facility fee write off relates to the deferred facility fees written off following the recent refinancing.
The fees incurred were a result of the Merger and the financing required to facilitate the Merger at short notice
(iii) Property rationalisation costs:
Following the Merger it was announced that the Group would launch a major roll out of its fully refurbished 3-in1 store
concept in the UK & Ireland. This involves merging the remaining PC World and Currys stores and inserting a Carphone
Warehouse, reducing the overall store portfolio by 134. The costs associated with this initiative, being early lease termination
premiums, onerous lease provisions, dilapidations and fixed asset impairments, have been treated as exceptional items. In
addition a further 50 stores have been exited in the year in the normal course of business and their exit costs have not been
included in the above item.
(iv) Acquisition related:
Acquisition related comprises an increase in the deferred consideration payable on a business acquired by Dixons in the
Nordics in 2011/12 following better than expected actual and forecast trading (£5 million), and current year costs incurred
in the acquisition of Simplifydigital and Infocare (£1 million) (note 24).
(v) Net non-cash financing costs on defined benefit pension schemes:
Under IAS 19 ‘Employee Benefits’, the net interest charge on defined benefit pension schemes is calculated by applying the
corporate bond yield rates applicable on the last day of the previous financial year to the net defined benefit obligation.
Corporate bond yield rates vary over time which in turn creates volatility in the income statement and balance sheet and
results in a non-cash remeasurement cost which can be volatile due to corporate bond yield rates prevailing on a particular
day and is also unrepresentative of the actual investment gains or losses made or the liabilities paid and payable. Consistent
with a number of other companies, the accounting effects of these non-cash revaluations of net defined benefit pension
liabilities have been excluded from Headline earnings.
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