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Notes to the financial statements continued
34 The Carphone Warehouse Group PLC Annual Report 2002
Notes to the financial statements continued
6Exceptional items
2002 2001
£’000 £’000
Costs of operational reorganisation
Store closures (a) (11,956) –
Business closures and reorganisation (a) (12,907) –
Exceptional operating items (24,863) –
Loss on disposal of fixed assets (b) (6,336) (5,429)
Amounts written off fixed asset investments (c) (18,681) –
Cost of fundamental reorganisation (d)(5,210) (4,530)
Profit on disposal of subsidiary undertakings (e) –16,514
Total exceptional costs (55,090) 6,555
(a) Costs of operational reorganisation
As anticipated in the financial statements for the period ended 31 March 2001, the Group has incurred costs in reorganising its operations
across Europe. This reorganisation comprises:
– the withdrawal from certain non-key territories;
– the closure of a significant number of under-performing retail outlets;
– the reorganisation of back office operations across the Group, including the establishment of shared service centres in the UK and Portugal.
(b) Loss on disposal of fixed assets
Fixed assets with a net book value of £6.3m have been written down in the period principally as a result of the withdrawal from non-key
territories and the store closures noted in 6a. A provision of £2.9m was made in the period ended 31 March 2001 in anticipation of the
withdrawal from non-key territories; this provision has been utilised to offset the charge in the current period.
(c) Amounts written off fixed asset investments
A total of £18.7m has been written off the Group’s holding in Wireless Frontiers, an independently managed internet fund, to reflect the
diminution in the value of the fund at 30 March 2002.
(d) Cost of fundamental reorganisation
A charge of £5.2m, reflecting the write-down of fixed assets and other restructuring costs, has been made during the period principally in
respect of the fundamental reorganisation of the Group’s Data services division, involving a significant downscaling of wireless internet
portal activities. Costs arising in the period ended 31 March 2001 relate to the integration of the support function and retail operations of
Tandy into those of other UK operations.
(e) Profit on disposal of subsidary undertakings
During the period ended 31 March 2001, the Group entered into a strategic partnership agreement with AOL Europe SA to provide funding,
functionality and services to the Group’s subsidiary, MViva Limited, whereby AOL Europe paid $25m for a 15% interest, giving rise to a
profit of £16.5m.
Effect of exceptional items on taxation and minority interests
The effect of exceptional items on the amounts charged to the profit and loss account for taxation and minority interests was as follows:
Tax on profit on Minority interests
ordinary activities
2002 2001 2002 2001
£’000 £’000 £’000 £’000
Costs of operational reorganisation (3,290) –––
Cost of fundamental reorganisation (855) (1,350) (653) –
Profit on disposal of subsidiary undertakings –––2,475
(Decrease) increase in charge to profit and loss account (4,145) (1,350) (653) 2,475