Carphone Warehouse 2001 Annual Report Download - page 36

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6Exceptional items
2001 2000
£’000 £’000
Profit (loss) on disposal of subsidiary undertakings (a) 16,514 (1,613)
(Loss) profit on disposal of fixed assets (b)(i) (2,484) 1,981
(b)(ii) (2,945) –
Cost of fundamental reorganisation (c) (4,530) (5,500)
6,555 (5,132)
a) Profit and loss on disposal of subsidiary undertakings
MViva
On 13 June 2000 the Group entered into a strategic partnership agreement with AOL Europe SA to provide funding, functionality, content
and services for the Group’s subsidiary, MViva Limited. AOL Europe paid $25m for a 15% interest resulting in a gain of £16.5m. The loss in
the period ended 25 March 2000 resulted primarily from the sale of Tecno Holdings Limited.
b) Profit and loss on disposal of fixed assets
(i) On 30 March 2001, the Group disposed of the individual investments in its Wireless Internet Portfolio into an independently managed fund.
Although the consideration for the transfer was equal to the aggregate cost of the individual investments, in accordance with the Group’s
accounting policy, exceptional losses of £2.5m have been recognised in respect of the disposal of certain investments.
The prior period gain of £2.0m relates to the disposal of various properties for a cash consideration of £4.4m.
(ii) In certain non-key markets where the prospects of achieving acceptable financial returns are not evident, the Group has announced its
intention to either restructure its operations or to withdraw its involvement.
As such the Group has provided for the loss of £2.9m expected to arise on the disposal of specific fixed assets. The Group anticipates
that further restructuring costs of £3.0m will be incurred in the period to 30 March 2002.
c) Cost of fundamental reorganisation
In the period ended 25 March 2000, the Group made provision of £5.5m for the anticipated costs of a fundamental reorganisation arising
from the integration of the support function and retail operations of Antika Retail Limited (trading as Tandy) into those of the other UK
operations. The total cost of the integration, which was completed by 31 March 2001, was £10.0m and as such a charge of £4.5m has
arisen in the period.
Effect of exceptional items on taxation and minority interests
The effects of the exceptional items reported after operating profit on the amounts charged to the profit and loss account for taxation and
minority interests were:
Tax on profit on Minority interests
ordinary activities
2001 2000 2001 2000
£’000 £’000 £’000 £’000
(a) Profit and loss on disposal of subsidiary undertakings – – 2,475 (56)
(b) Profit and loss on disposal of fixed assets –––817
(c) Cost of fundamental reorganisation (1,350) –––
(Decrease) increase in charge to profit and loss account (1,350) – 2,475 761
Notes to the financial statements continued
34 The Carphone Warehouse Group PLC Annual Report 2001