Carphone Warehouse 2013 Annual Report Download - page 66

CARPHONE WAREHOUSE GROUP PLC ANNUAL REPORT 201364
4 NONHEADLINE ITEMS continued
a) BEST BUY EUROPE continued
BEST BUY MOBILE DISPOSAL
During the year ended 31 March 2012 the Group disposed of its interest in Best Buy Mobile for an initial consideration of £813.0m.
Theinitial consideration was returned to shareholders in February and April 2012 via the B/CShare Scheme. As a result of this transaction
a number of long-term incentive schemes either vested or were replaced, resulting incash costs and non-cash accounting charges.
Other costs were also incurred as a result of thistransaction by both the Group and BestBuyEurope.
i) Costs incurred by the Group comprise cash costs of £7.2m and other non-cash accounting charges of £13.4m.
As a result of theBest Buy Mobile Disposal, existing Best Buy Europe incentive schemes were cancelled, andinrecognition of the
value that had built up in relation to Best Buy Mobile, the Company gifted 7.0m shares to senior Best Buy Europe executives. This gift
resulted in a non-cash accounting charge of £11.4m and employer taxes of £1.6m for the Group as BestBuy Europe agreed to paycash
compensation of £11.7m to satisfy the cost of the remaining shares. As described in note 5, certain Group incentive schemes were allowed
to vest early in order to facilitate the Best Buy Mobile Disposal and to avoid a substantial loss invalue. This resulted in cash costs of £2.5m
and non-cash accounting charges of £2.0m.
Professional fees of £3.1m were also incurred in relation to the disposal.
iii) The Group’s share of the results of Best Buy Mobile has been excluded from Headline results in order to provide visibility
oftheperformance of the continuing business.
iv) The cancellation of existing incentive plans, the share gift described above, associated employment taxes and bonuses paid asaresult
of the transaction resulted incash costs of £26.7m and non-cash accounting charges of £0.7m within Best Buy Europe, including
the compensation to the Group described above.
Best Buy Europe also incurred fees of £1.0m in relation to the transaction.
A tax credit of £7.2m was recognised in respect of these charges. This was offset by the derecognition of £12.7m ofdeferred tax
assets which were expected to be irrecoverable due to the Best Buy Mobile Disposal.
viii) The Group received initial consideration of £813.0m for its interest in Best Buy Mobile in the form of a dividend.
ix) The Group recognised a tax credit of £0.9m in relation to costs associated with the Best Buy MobileDisposal.
BEST BUY UK CLOSURE
During the year ended 31 March 2012 Best Buy Europe closed its Best Buy UK business. While the 11 stores that had been opened
haddelivered positive customer satisfaction scores, they did not have the national reach to achieve scale and brand economies.
v) The Group’s share of the results of Best Buy UK has been excluded from Headline results in order to provide visibility of the
performance ofthe continuing business.
vi) Total costs of closure of £146.8m were recognised, against which a tax credit of £25.9m was booked. These closure costs
areanalysed asfollows:
2012
£m
Property exit costs 57.5
Employee redundancies and other employee-related costs 10.7
Non-cash asset write-downs (net) 45.9
Other exit costs 32.7
Exceptional charge before tax 146.8
Tax credit (25.9)
Exceptional charge after tax 120.9
Group share 60.5
Other exit costs predominantly reflect stock write-downs and contract exit costs.
b) VIRGIN MOBILE FRANCE
VIRGIN MOBILE FRANCE AMORTISATION
vii) Amortisation of acquisition intangibles within Virgin Mobile France relates to the acquisition of Tele2 France in December 2009.
NOTES TO THE FINANCIAL STATEMENTS continued