Carphone Warehouse 2016 Annual Report Download - page 30

Dixons Carphone plc Annual Report and Accounts 2015/16
Strategic Report
Performance review
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were incurred as a result of the Merger and the financing
required to facilitate the Merger at short notice.
The charge for the amortisation of acquisition intangibles was
£40 million (2014/15: £35 million) with the current period
including a full 12 months of amortisation of intangible assets
recognised as a result of the Merger (2014/15 period from
6 August 2014 to 2 May 2015). The prior period charge also
includes amortisation for 13 months for those intangibles
recognised as a result of the CPW Europe Acquisition whilst
the current period reflects a 12 month period.
As explained on page 25, the Group has initiated a
reorganisation of its property portfolio to put it into its
long-term state. The costs associated with this programme
relate to committed property exit costs, asset write-downs and
operational costs associated with the 3-in-1 store concept
roll out across the UK & Ireland.
Acquisition-related costs in the period relate to professional
fees incurred in the current year as a result of the acquisition
of Simplifydigital in the UK and InfoCare in the Nordics and the
revaluation of deferred consideration payable to the former
shareholders of the Epoq kitchen business in the Nordics
following a reassessment of the likely final payment to be
made on the back of recent trading performance.
Net pension interest was £16 million reflecting the charge
incurred in relation to the Dixons Retail UK pension scheme.
The current period charge reflects a full 12 months whilst the
prior period charge related to that incurred from the date of
Merger to the 2 May 2015 period end.
Discontinued operations
As reported at 2 May 2015, Virgin Mobile France and the
Group’s retail operations in Germany, the Netherlands and
Portugal were treated as discontinued operations following the
decision to exit these businesses. The assets and liabilities
associated with Germany, the Netherlands and Portugal were
recognised as held for sale at 2 May 2015. The sale of
operations in Germany was completed on 5 May 2015, the
Netherlands on 30 June 2015 and Portugal on 31 August 2015.
Virgin Mobile France was sold on 4 December 2014 in the
previous financial year.
A loss of £18 million (2014/15: £114 million) has been
recognised during the year in relation to the disposal of these
operations.
Balance sheet
2015/16
£million
2014/15
£million
Goodwill 3,054 2,989
Other fixed assets 906 852
Working capital (361) (387)
Net debt (267) (313)
Tax, pension & other (472) (378)
2,860 2,763
The movement in goodwill is due to the acquisition of
Simplifydigital and InfoCare, and the retranslation of currency
denominated balances largely in the Nordics. Fixed assets
have increased, with the higher capital expenditure during the
year exceeding amortisation and depreciation. Working capital
has stayed flat, whilst net debt has decreased with positive
cash flows during the year as described below. Other net
liabilities (tax, pension & other) have increased following the
disposal of assets held for sale (primarily in relation to Phone
House Germany).
Cash flow statement
2015/16
£million
2014/15
£million
EBIT 304 324
Depreciation and amortisation 177 149
Working capital (14) (377)
Other operating cash flows (73) (53)
Cash flows from operating activities 394 43
A
cquisitions (59) 322
Capital expenditure (221) (166)
Other investing cash flows 24 20
Cash flows from investing activities (256) 176
Dividends paid (106) (52)
Other financing cash flows (11) (290)
Cash flows from financing activities (117) (342)
Cash flows from continuing operations 21 (123)
Cash flows from discontinued
operations 32 3
53 (120)
The statutory EBIT for the Group has reduced for the reasons
explained above. Depreciation and amortisation have
increased with the prior period only including nine months
of Dixons Retail. Working capital has stayed relatively flat
year-on-year whilst the outflow in the prior period was due to
timing issues associated with the change of year end and the
day on which month end fell, as well as a permanent unwind
of certain extended supplier payment terms.
Acquisition cash inflows in the comparative period reflects
cash acquired through the Dixons Retail Merger whilst
cash outflows in the current year comprise the final CPW
Europe Acquisition deferred payment and the acquisitions
of Simplifydigital and InfoCare. The increase in capital
expenditure reflects both a full 12 months of Dixons Retail
and an increase in underlying spend.
The reduction in financing outflows is due to the prior period
including the pay down of loans and borrowings of Dixons
Retail soon after the Merger whilst borrowings have remained
relatively flat year-on-year in the current period. Cash inflows
from discontinued operations largely relates to consideration
on the disposal of Phone House Germany.
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