Carphone Warehouse 2014 Annual Report Download - page 24

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Carphone Warehouse Group plc
Annual Report 2014
22
STRATEGIC REPORT
Performance review continued
VIRGIN MOBILE FRANCE
HEADLINE INCOME STATEMENT (100% BASIS)*
2014 2013
£m £m
Revenue 346 385
EBITDA 13 20
Depreciation and amortisation (10) (8)
EBIT 312
EBIT % 0.7% 3.1%
Interest (1) (1)
PBT 211
Tax (1) (4)
PAT 17
Group share —3
* See note 24 to the Group financial statements.
As announced in May , we, alongside our fellow shareholders, have
entered into an exclusivity agreement for the sale of Virgin Mobile France
to Numericable Group for an enterprise value of €m. During the
exclusivity period, the parties have carried out the necessary consultations
with employee work councils; the transaction is subject to regulatory
approval. In light of the disposal process, the business is now reported
as a discontinued operation in the income statement and has been
recorded as an asset held for sale in the balance sheet at March .
Virgin Mobile France revenue fell by .% year-on-year on an actual
currency basis to £m (: £m) reflecting a decline of .%
at constant currency, partly offset by a strengthening of the Euro
year-on-year. The reduction was broadly in line with expectations
and reflects market re-pricing in the past two years, driven by intense
market competition, which has caused downward pressure on
outbound ARPU.
The total customer base was down year-on-year at .m customers
(: .m) with a .% reduction in the postpay base to .m
(: .m) and a .% reduction in the prepay base to .m
(:.m). The business continues to perform creditably despite
intense market competition, maintaining its focus on innovative
propositions and high quality customer service to provide differentiation.
We have seen further good progress on migrating the base to a
FullMVNO infrastructure, which enables the business to participate
more fully in customer revenue streams, including termination
revenues, and to reduce its operating costs. At the end of March,
% of the customer base was on this platform, and substantially
more of the base by value.
Reduced revenue, together with competitive pressure on margins,
resulted in a reduction in EBITDA to £m (: £m), while
increased depreciation and amortisation of £m (: £m)
reflects investment in the Full MVNO infrastructure.
Interest was flat year-on-year at £m (: £m) and the tax charge
decreased to £m (: £m), reflecting the lower level of pre-tax
earnings described above.
CASH FLOW (100% BASIS)
2014 2013
£m £m
EBITDA 13 20
Working capital (9) 4
Capex (12) (19)
Operating free cash flow (8) 5
Other (2) (5)
Movement in net debt (10) —
Opening net debt (40) (40)
Closing net debt* (50) (40)
* Comprises shareholder loans of £37m (2013: £42m), third party financing
of£15m (2013: nil) and net cash of £2m (2013: £2m).
EBITDA decreased from £m to £m for the reasons described above.
As anticipated, after substantial working capital inflows over the
previous five years, the business recorded a working capital outflow,
of£m (: inflow of £m).
Capex decreased year-on-year to £m (: £m) with the prior
year spend including investment in the Full MVNO deferred from
theprevious year.
Other cash flows reflect interest and tax payments and the impact
of foreign exchange.
GROUP RESULTS
HEADLINE INCOME STATEMENT
2014 2013
£m £m
EBIT
— Wholly owned operations 133 3
— Joint ventures 351
Interest (9) 2
PBT 127 56
Tax (25) (1)
PAT 102 55
EPS (basic) 18.4p 11.6p
EBIT for wholly owned operations includes CPW Europe
fromJune . In the period from  April  to  June 
CPWEurope registered a post-tax profit of £m, of which the Group’s
share was £m, which is included in results from joint ventures. The
Group’s share of post-tax results from joint ventures was £m for
the year to March .
Net interest expense of £m (: income of £m) reflects
additional borrowings followingthe CPW Europe Acquisition, with
netincome in the prior year principally reflecting interest on loans
toVirgin Mobile France.