Carphone Warehouse 2011 Annual Report Download - page 22

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18 Carphone Warehouse Group plc Annual Report 2011
BUSINESS REVIEW
BEST BUY EUROPE: PERFORMANCE REVIEW CONTINUED
Headline EBITDA within CPW Europe
and Best Buy Mobile US grew by 25.4%
year-on-year from £252.7m to £317.0m,
reflecting the strong improvements in
profitability noted above.
CPW Europe absorbed £35.0m of working
capital in the year (2010: £27.1m) principally
reflecting increased stock levels.
The focus of capex in CPW Europe
continued to be its store portfolio and IT
platforms. Capex increased from £53.9m
last year to £69.4m, principally due to
additional investment in the store portfolio.
Total cash investment in Best Buy UK
was up from £44.0m in 2009-10 to £78.0m,
reflecting EBITDA losses of £59.6m
(2010: £21.0m) and capex of £18.4m
(2010: £23.0m). Capex relates to new store
openings, net of landlord contributions,
and IT and online platforms.
The business paid corporation tax of
£44.0m in the year, up from £24.0m in
the previous year, reflecting the growth
in pre-tax earnings seen over the last
two years.
The principal other component of other
cash flows in the year is interest expense,
which was offset in the previous year by
foreign exchange gains.
At the end of the year, net funds within
Best Buy Europe were £131.7m, up from
£57.4m at the start of the year, reflecting
the cash generation described above.
Outlook
Best Buy Europe continues to benefit from
the proliferation of smartphone technology
and the ever-expanding range of tablets
coming to market, playing well into the
business’ core proposition in both Europe
and the US. We believe that the business
is well positioned strategically and
operationally to capitalise on the strong
product cycle over time. The business is
not entirely immune to the wider economic
environment, however, and there is some
uncertainty on the outlook for the prepay
segment in particular this year.
Cash flow (100% basis)
2011
£m
2010
£m
Headline EBITDA pre-Best Buy UK 317.0 252.7
Working capital (35.0) (27.1)
Capex (69.4) (53.9)
Operating free cash flow pre-Best Buy UK 212.6 171.7
Best Buy UK (78.0) (44.0)
Other (60.3) (23.3)
Movement in net funds 74.3 104.4
Opening net funds (debt) 57.4 (47.0)
Closing net funds 131.7 57.4
2009 2010 2011
132
57
(47)
BEST BUY EUROPE
NET FUNDS £M