Carphone Warehouse 2015 Annual Report Download

Download and view the complete annual report

Please find the complete 2015 Carphone Warehouse annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 152

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152

Annual Report and Accounts
2 0 14 / 15
www.dixonscarphone.com
@DixonsCarphone

Table of contents

  • Page 1
    Annual Report and Accounts 2014/15 www.dixonscarphone.com @DixonsCarphone

  • Page 2
    ...increases in both sales and profitability and we have made very encouraging progress with the tricky job of integrating these two great companies. At the same time, we have continued to generate strong customer satisfaction numbers, made significant strides in our Connected World Services business...

  • Page 3
    ... cash flow statement Notes to the Group financial statements Company balance sheet Notes to the Company financial statements Investor information 145 Five-year record 146 Shareholder and corporate information 147 Glossary and definitions Dixons Carphone plc Annual Report and Accounts 2014...

  • Page 4
    ... are presented as if the CPW Europe Acquisition and the Merger had occurred at the start of the comparative period. Headline figures for the year ended 29 March 2014 have been re-presented to exclude the results of discontinued operations. 2 Dixons Carphone plc Annual Report and Accounts 2014/15

  • Page 5
    ... Warehouse is the largest independent telecommunications retailer in the UK & Ireland. • Dixons Travel operates in major UK airports and Dublin. • KNOWHOW is our market leading services brand. • Geek Squad is the repairs and support provider for the Carphone Warehouse. • PC World Business...

  • Page 6
    ... traction with some key new clients in our Connected World Services business including our agreement with Sprint. In short, it has been a good year and the Board is pleased to recommend a final dividend of 6.0p per share to be paid on 25 September 2015. At the same time, the team have made really...

  • Page 7
    ...and opened almost 250 Carphone Warehouse SWAS. We have opened a number of co-branded Elgiganten Phone House stores in Sweden and launched the Phone House in Norway. In both cases the performance of these stores has been very encouraging. The Connected World Services management team have put in place...

  • Page 8
    ..., skill, fortitude and hard work of the very talented men and women that make up Dixons Carphone. I would like to take this opportunity to offer my humble and heartfelt thanks to them. Sebastian James Group Chief Executive 16 July 2015 6 Dixons Carphone plc Annual Report and Accounts 2014/15

  • Page 9
    ... set up and instructional Showhow teach-ins. In this increasingly complex world we believe our assisted sales model is best placed to help customers navigate the market and to help them choose a complete solution that best meets their needs. Dixons Carphone plc Annual Report and Accounts 2014...

  • Page 10
    ... looking to develop their own connected world solutions. CWS already provides managed We are one of the largest specialist electrical retailing and services to a number of businesses and is actively exploring services companies in Europe with leading market shares in the UK, Ireland, the Nordic...

  • Page 11
    ... Example services Existing clients • Sales processes and Samsung proposition design Sprint • Store format design • Employee blueprint and reward model • Customer fulfilment and loyalty • Insurance and claim management • Trade-ins • Repairs • Delivery • Remote technical support...

  • Page 12
    Strategy and business model Strategic report The Merger of Carphone and Dixons brought two market leading businesses together with an unrivalled offer for the new connected world, as mobile, electricals and connectivity increasingly integrate. The Group now has a unique independent position in the...

  • Page 13
    ... applies to a number of market segments, including health, security, content and home management. Linked to this market development will be a need for a raft of new services that will ensure that these technologies work. Dixons Carphone plc Annual Report and Accounts 2014/15 11 Strategic report

  • Page 14
    ... year and take 125,000 technical support calls each week. Our Geek Squad and KNOWHOW teams in stores, in our call centres as well as field technicians, can provide set-up and upgrade services and online fix and back up services. Our market leading range of help and support services ensure a customer...

  • Page 15
    ...multi-channel environment, suppliers trust us with their new product releases and stock allocations, as they appreciate the superior service and advice offered by our stores and indeed our websites, as well as the exciting Dixons Carphone plc Annual Report and Accounts 2014/15 13 Strategic report

  • Page 16
    ...the right choices as to how each division utilises or preserves cash, whether it be in determining ranges and stock held in store, growing mobile share with accompanying working capital utilisation or managing returns and related processes. 14 Dixons Carphone plc Annual Report and Accounts 2014/15

  • Page 17
    ...ability to deliver returns for shareholders. The Group previously used the FTSE 250 index but in 2015 changed to measure itself against the FTSE 350 index reflecting the Group's increased market capitalisation. 2014/15 2013/14†25.5p 20.5p 3 Year Compound Annual Growth Dixons Carphone plc 44...

  • Page 18
    ... • Changes in Mobile Network Operator (MNO) strategies in relation to the Group, or more generally, and / or their performance, could materially affect the revenues and profits of the business • Reduced revenue and profitability • Deteriorating cash flow • Reduced market share 2. Consumer...

  • Page 19
    ... • Strategic and business planning takes into account varying and sustainable economic scenarios, with ongoing monitoring by finance and business model senior executives • Close scrutiny of product performance, trading results, competitor activity and market share • Use of customer insight...

  • Page 20
    ... Loss of competitive advantage 9. Health and Safety • Failure to effectively protect customers and / or colleagues from injury or loss of life • Employee / customer injury or loss of life • Reputational damage • Financial penalties 18 Dixons Carphone plc Annual Report and Accounts 2014...

  • Page 21
    ... to manage health and safety risks across the business • Quality checks and factory audits for own-brand products • Sustainable retail business model in a multi-channel world • Sustainable retail business model in a multi-channel world Dixons Carphone plc Annual Report and Accounts 2014/15...

  • Page 22
    ...business Headline revenue(1) 2014/15 £million 2013/14 £million Local currency % change Like-for-like(3) % change Headline profit / (loss)(1) 2014/15 £million 2013/14 £million Note UK & Ireland Nordics Southern Europe Connected World Services Group Net finance costs Profit before tax Tax Profit...

  • Page 23
    ... 2013 the Carphone Warehouse Group plc acquired the 50% of CPW Europe which it did not already own from Best Buy Co. Inc., and on 6 August 2014 an all share merger of Carphone Warehouse and Dixons Retail plc (the Merger) took place. The information in the highlights and performance review sections...

  • Page 24
    ... new Carphone Warehouse SWAS now open and our head office teams The team has launched co-branded Elgiganten Phone House combined and operating as one. We are also rationalising stores with very positive results. In addition the 'Epoq' kitchen down to one single head office location in each of the UK...

  • Page 25
    ...Samsung Experience Stores which launched at the end of last year, in addition to the benefit of the additional five weeks of trading from the legacy Carphone Warehouse business. Pro forma Headline EBIT was £8 million (2013/14: £5 million). The CWS management team has worked hard during the year to...

  • Page 26
    ... Europe Acquisition and the Merger had been in place throughout the current and comparative periods. Group results as reported in the financial information are prepared on a statutory basis, consolidating the results of CPW Europe from 26 June 2013 and Dixons Retail from 6 August 2014. These results...

  • Page 27
    ...(including CPW Europe) at 31 March 2013 and for Dixons Retail at 30 April 2013. (2) Pro forma net debt reflects the consolidated net debt of the Group at 2 May 2015 including net funds recognised within assets held for sale of £53 million. Dixons Carphone plc Annual Report and Accounts 2014/15 25...

  • Page 28
    ... used for determining the accounting valuation use a consistent basis to that adopted within the financial statements of Dixons Retail for the year ended 30 April 2014 and which build from the most recent actuarial valuation as at 31 March 2013, which was completed during the period being reported...

  • Page 29
    ... and are a member of the UK Government's All-Party Parliamentary Corporate Responsibility Group. Our Values Our culture supports the discovery of new and better ways of working, two-way communication and the speedy resolution of concerns and queries. • Continually improve customer service and...

  • Page 30
    ... for employees who wish to participate. Specific areas of the business also offer support in other ways too. For example, at our Support Centre in Acton a physiotherapist comes in regularly and offers treatments to employees at reduced rates. 28 Dixons Carphone plc Annual Report and Accounts 2014...

  • Page 31
    ...Statistics for the UK, Ireland and Nordics are as follows: All employees Number % Senior managers Number % Number Directors % Customers Every decision we make is driven by our ambition to provide unparalleled expertise and services to help customers and businesses navigate the new digital era. Each...

  • Page 32
    ...: Best High Street Retailer, What Mobile Awards: Best Services and Repairs for Geek Squad. KNOWHOW At the KNOWHOW Contact Centre in Sheffield we support the UK & Ireland retail customer base on behalf of both the Currys and PC World brands in every step of their journey with our business. Prior...

  • Page 33
    ... for 2015/16. Reporting for 2014/15 will be completed in line with previous years under Dixons Retail plc (CRC registration number 8584817) and Carphone Warehouse Group plc (CRC registration number 6030144). Green Energy in the Nordics We have made the decision to implement the exclusive use of...

  • Page 34
    ...data and supporting information required by The Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013, Part 7: Disclosures Concerning Greenhouse Gas Emissions. This report covers the international operations of the Group, including the UK & Ireland; Nordics and Southern Europe...

  • Page 35
    ..., we will implement new ideas to make a positive impact locally. The business contributed a total of £935,000 to charitable causes in the UK & Ireland and a further NOK 1.9 million (£154,000) in the Nordics. Get Connected Dixons Carphone continued Carphone Warehouse's long term support of Get...

  • Page 36
    ... charity partner, Get Connected. Sponsorship of this event continues for 2015 as the Dixons Carphone Race to the Stones. Over 250 employees from across Dixons Carphone will take part, many of them trialling wearable technology for training. 34 Dixons Carphone plc Annual Report and Accounts 2014/15

  • Page 37
    ... continuing operations in the period. This strategic report was approved by the Board and signed on its behalf by: Sebastian James Group Chief Executive 16 July 2015 Humphrey Singer Group Finance Director 16 July 2015 Dixons Carphone plc Annual Report and Accounts 2014/15 35 Strategic report

  • Page 38
    ... Best Buy Mobile operation in the US. He also retained responsibility for both the Carphone Warehouse and Phone House operations and, in 2010 he was appointed Chief Executive Officer of the Best Buy Europe joint venture. Following the ending of the joint venture in 2013, Andrew became Group Chief...

  • Page 39
    ...Dixons Carphone and joined the Carphone Board as a non-executive director on 2 April 2014. He is a former Deloitte LLP partner and was leader of its Professional Practices Group with direct industry experience in consumer business, retail and technology, media and telecommunications. He was a member...

  • Page 40
    ... Committee Structure Corporate Governance As part of the annual reviews, the non-executive directors were asked to confirm that they continue to have enough time to dedicate to company business and all have formally done so. As a unitary board the directors acknowledge their joint responsibility...

  • Page 41
    ... the 2015 review. Dixons Carphone plc Annual Report and Accounts 2014/15 39 Corporate Governance It is noted that John Gildersleeve was a non-executive director of Old Carphone Warehouse for more than nine years but the Board does not believe this affects his independence having given detailed...

  • Page 42
    ... that had been arranged before the Merger and the subsequent change of Board dates. (2) John Allwood was the Senior Independent Director until his resignation when John Allan took on this role until his resignation on 17 February 2015. 40 Dixons Carphone plc Annual Report and Accounts 2014/15

  • Page 43
    ... the businesses, operations, systems and markets in which the Group operates. New directors are also encouraged to meet with the Group's auditor and advisors. The Board receives an update on corporate governance best practice at every other meeting. Performance evaluation The internal annual review...

  • Page 44
    ... this Corporate Governance statement by reference and is deemed to be part of it. Risk and internal controls Risk management The Group has established a risk management programme that assists management to identify, assess and mitigate business, financial, operational and compliance risks. The Board...

  • Page 45
    ... 2015 Dixons Carphone plc Annual Report and Accounts 2014/15 43 Corporate Governance Internal audit The Group has an internal audit department which conducts reviews of selected business processes each year. The internal audit programme for 2014/15 consisted of reviews across a range of areas...

  • Page 46
    ...' responsibilities The directors' responsibilities for the financial statements contained within this Annual Report and Accounts and the directors' confirmations required under Disclosure and Transparency Rule 4.1.12 are set out on page 75. 44 Dixons Carphone plc Annual Report and Accounts 2014/15

  • Page 47
    ... did not make any market purchases of its own shares during the year under review. Details of employee share schemes are provided in note 5 to the Group financial statements. The Carphone Warehouse ESOT held 791,100 shares on 2 May 2015 (2014: 4.9 million shares) and the Dixons Retail plc ESOT held...

  • Page 48
    ... use of financial instruments is given in note 25 to the Group financial statements. Auditor Each director at the date of approval of this Annual Report and Accounts confirms that: • Corporate Governance so far as the director is aware, there is no relevant audit information of which the Company...

  • Page 49
    ...with the new requirements of the 2014 UK Corporate Governance Code and the FRC Guidance on Risk Management, Internal Control and Related Financial and Business Reporting. This will include adopting the longer term viability statement for the first time. The development of the IT strategy and control...

  • Page 50
    ... half year and full year financial statements and any formal announcements relating to the Group's financial performance; • review the results and conclusions of work performed by the external auditor; • advising the Board on whether, as a whole, the Annual Report and Accounts is fair, balanced...

  • Page 51
    ...the fair values which have been recognised as set out in note 23 to the Group financial statements. Disposal accounting The Committee reviewed the judgements taken in the calculation of gains and losses made in respect of the disposal transactions of Virgin Mobile France as well as the operations in...

  • Page 52
    ... fee and fees for non-audit services which are set out in note 3 to the Group financial statements, with due regard to the balance between audit and non-audit fees and the policy for approval of non-audit fees paid to the Group's auditor; 50 Dixons Carphone plc Annual Report and Accounts 2014/15

  • Page 53
    ... primarily related to activities in relation to the Merger, assignments which were closely related to the annual audit or work of such a nature that a detailed understanding of the Group was necessary. The Audit Committee reviewed the services performed by the external auditor during the year and...

  • Page 54
    ... and other governance obligations. At Merger a thorough review of the Board structure and membership was performed. Also at the year end the Committee performed a further review of the skills required to successfully lead the Company and matched those skills to the current Board membership. No...

  • Page 55
    ... Meeting. Each of the directors are being unanimously recommended by the other members of the Board due to their experience, knowledge and wider management and industry experience, continued effectiveness and commitment to their role. Dixons Carphone plc Annual Report and Accounts 2014/15 53

  • Page 56
    ... launch a combined Dixons Carphone plc Sharesave plan for all UK and Ireland employees, which has enjoyed a take-up rate of approximately 20% of the combined UK and Ireland workforce. The proposed Remuneration policy set out in this Annual Report and Accounts will be put to shareholders for approval...

  • Page 57
    ... Board a remuneration policy for executive directors and senior management in order to attract and retain executives who have the ability, experience and dedication to deliver outstanding returns for our shareholders. The Committee has adopted the principles of good governance relating to directors...

  • Page 58
    ...pay) • Purpose and link to strategy To aid the recruitment, retention and motivation of high-performing people. To reflect their experience and importance to the business. • Operation Corporate Governance Reviewed annually. The review reflects a range of factors including merit levels, internal...

  • Page 59
    ..., customer and strategic measures. The weighting of measures will be determined by the Committee each year. Financial measures (such as profit and cash) will represent the majority of the bonus, with other measures representing the balance. Dixons Carphone plc Annual Report and Accounts 2014/15...

  • Page 60
    ... delivering significant shareholder value. • Operation Corporate Governance The executive directors participate in the Dixons Carphone (formerly Carphone Warehouse Group plc) Share Plan approved by Carphone Warehouse shareholders. The intention is to use this plan for the most senior management...

  • Page 61
    ... schemes in accordance with the statutory limits in place from time to time. • Performance assessment / targets The performance of the scheme will be determined by the share price of the Company at the end of the relevant savings period. Dixons Carphone plc Annual Report and Accounts 2014/15 59

  • Page 62
    Remuneration Policy report Share ownership guidelines • Purpose and link to strategy • Operation Provides close alignment between the longer term interests of executive directors and shareholders in terms of the Company's growth and performance. The Company requires executive directors to ...

  • Page 63
    ...(each set of awards being subject to a 2% dilution cap), representing £1.6 billion of incremental shareholder returns. (6) The value of the Share Plan at vesting has been reduced by the value of the loan outstanding (excluding interest payments). Dixons Carphone plc Annual Report and Accounts 2014...

  • Page 64
    ..., the Company takes into consideration company performance and other market metrics as necessary. When setting the policy for executive directors the Committee takes into consideration salary increases throughout the Company as a whole. 62 Dixons Carphone plc Annual Report and Accounts 2014/15

  • Page 65
    ... the Company terminates their service contract. The Committee will take such mitigation obligation into account when determining the amount and timing of any compensation payable to any departing director. Dixons Carphone plc Annual Report and Accounts 2014/15 63 Corporate Governance In addition...

  • Page 66
    ... avoidance of doubt, in approving the Remuneration Policy report, authority is given to the Company to honour any commitments previously entered into with the current or former directors which have been disclosed previously to shareholders. 64 Dixons Carphone plc Annual Report and Accounts 2014/15

  • Page 67
    ... from the Board. John Allan was appointed to the Board on 6 August 2014 and resigned on 17 February 2015. More details are set out in the single figure of total Directors' remuneration tables on pages 68 and 69. Dixons Carphone plc Annual Report and Accounts 2014/15 65 Corporate Governance

  • Page 68
    ...The Committee reviewed the executive directors' salaries in 2014 as part of the Merger. Where individuals were appointed to new roles, in line with our recruitment policy, base salary levels were set taking into account a range of factors including market levels, experience and internal relativities...

  • Page 69
    ... because that company is not part of the current Group. Details of remuneration associated with Old Carphone Warehouse incentive schemes were provided in the company's annual report for the year ended 31 March 2012. Future reports will include long term incentives operated by the current Group when...

  • Page 70
    ...500 in respect of the period of service in the 2014/15 financial year and in respect of ongoing support up to the announcement of the preliminary results for 2014/15. (7) Roger Taylor continues to receive private medical insurance benefits. 68 Dixons Carphone plc Annual Report and Accounts 2014/15

  • Page 71
    ...Board. Nigel Langstaff's share entitlements under the Share Plan lapsed on leaving the Group. Annual bonus for 2014/15 During the year the maximum bonus opportunity for all executive directors was aligned to 125% of base salary. In addition, due to the Merger and the change to the financial year end...

  • Page 72
    ... Executive UK head office employees Salary and fees Taxable benefits(1) Annual bonuses N/A N/A N/A 2.5% 0% 0% (1) Taxable benefits have not been separately measured since there have been no material changes in Group benefits year on year. 70 Dixons Carphone plc Annual Report and Accounts 2014...

  • Page 73
    ...including performance conditions for vesting are set out on page 58. (4) Nigel Langstaff's share entitlements under the Share Plan remained on resignation from the Board but lapsed on leaving the Group. Dixons Carphone plc Annual Report and Accounts 2014/15 71 Corporate Governance Number Number...

  • Page 74
    Annual Remuneration report Directors' Share Options As part of the Merger participants of the Dixons Retail Sharesave Plan were offered the opportunity to roll over their sharesave awards into options over Dixons Carphone plc. Those awards rolled over by the directors, in addition to other options ...

  • Page 75
    ...902% 558% 564% 821% - - 1,505 1,505 - Corporate Governance Current directors 8,883 5,000,000 (1) Date of appointment, if later. (2) The shares listed here are in 'A' ordinary shares New CPW Limited as part of the shares purchased in relation to the Share Plan. These have been subscribed for by the...

  • Page 76
    ... report 8.60 49,227,504 Following feedback received on the policy during 2014 the Company has reduced the level of annual bonus for executive directors and has excluded them from being eligible to participate in the mid term incentive plan introduced following the Merger. Compliance As required...

  • Page 77
    ... information necessary for shareholders to assess the Group and the Company's performance, business model and strategy. By Order of the Board Sebastian James Group Chief Executive 16 July 2015 Humphrey Singer Group Finance Director 16 July 2015 Dixons Carphone plc Annual Report and Accounts 2014...

  • Page 78
    ...and other intangible assets; • Assets held for sale, discontinued operations and disposal accounting; • Revenue recognition - network commissions; • Supplier funding; • Inventory provisioning; and • Taxation. Financial statements 76 Dixons Carphone plc Annual Report and Accounts 2014/15

  • Page 79
    ... agreements and supporting documentation. We also assessed the classification of disposed businesses and other assets held for sale as discontinued operations against the relevant criteria in the accounting standard. Dixons Carphone plc Annual Report and Accounts 2014/15 77 Financial statements

  • Page 80
    ...the Group financial statements. We used our internal tax specialists to evaluate and test management's assumptions in respect of tax related provisions, including assessment against local tax legislation and review of supporting documentation. 78 Dixons Carphone plc Annual Report and Accounts 2014...

  • Page 81
    ...exit from the French retail market in April 2013. The Dixons Retail plc audit report also included risks related to non-underlying items, defined benefit pension assumptions and customer support agreement revenue recognition. In the new enlarged Group, these risks do not represent areas that had the...

  • Page 82
    ... Rules we are also required to review the part of the Corporate Governance statement relating to the company's compliance with 10 provisions of the UK Corporate Governance Code. We have nothing to report arising from our review. Our duty to read other information in the Annual Report and Accounts...

  • Page 83
    ... or inconsistencies, we consider the implications for our report. John Adam (Senior Statutory Auditor) for and on behalf of Deloitte LLP Chartered Accountants and Statutory Auditors London, United Kingdom 16 July 2015 Dixons Carphone plc Annual Report and Accounts 2014/15 81 Financial statements

  • Page 84
    ... details see notes 4 and 24 to the financial information. The results for the year ended 29 March 2014 have been restated to recognise the results of the operations in France, Germany, Netherlands and Portugal as discontinued operations. 82 Dixons Carphone plc Annual Report and Accounts 2014...

  • Page 85
    ... Year ended 29 March 2014 £million Profit after tax for the period Items that may be reclassified to the income statement in subsequent years Cash flow hedges Fair value remeasurement losses Gains transferred to carrying amount of inventories Movements in relation to interest rate hedges Exchange...

  • Page 86
    ...532) (3,786) 2,763 21 1 2,256 1,369 (113) (750) 2,763 The financial statements were approved by the directors on 16 July 2015 and signed on their behalf by: Sebastian James, Group Chief Executive Humphrey Singer, Group Finance Director 84 Dixons Carphone plc Annual Report and Accounts 2014/15

  • Page 87
    ... 17 1,369 2 - (11) (11) - - - - (9) - (104) (104) - - - - (113) (750 750 750) 661 48 (9) 39 216 (12) (30) 6 880 97 (173) (76) 1,973 (52) 21 17 2,763 Financial statements Dixons Carphone plc Annual Report and Accounts 2014/15 85

  • Page 88
    ...) (38) (4) (342) 3 (14) (2) 124 (12) (30) 19 - (6) 82 (123) 3 (120) 125 41 166 117 - 283 Cash and cash equivalents at beginning of the period Currency translation differences Cash and cash equivalents at end of the period 26 283 - 163 86 Dixons Carphone plc Annual Report and Accounts 2014/15

  • Page 89
    ... profit measures used by other companies. The results for the year ended 29 March 2014 have been restated to recognise the results of the operations in France, Germany, Netherlands and Portugal as discontinued operations. Therefore financial information in the income statement, cash flows statement...

  • Page 90
    ... income, including non-operating income Other income, which is incidental to the Group's principal activities of selling goods and services and accordingly is not recorded as part of revenue, is recognised when the Group Financial statements 88 Dixons Carphone plc Annual Report and Accounts 2014...

  • Page 91
    ... payments are apportioned between finance charges and reduction of the lease obligation. Finance charges are charged to the income statement over the term of the lease in proportion to the capital element outstanding. Dixons Carphone plc Annual Report and Accounts 2014/15 89 Financial statements

  • Page 92
    ... at cost less accumulated amortisation and, where appropriate, provision for impairment in value or estimated loss on disposal. Amortisation is provided to write off the cost of assets on a straight line basis between three and eight years. Dixons Carphone plc Annual Report and Accounts 2014/15

  • Page 93
    ... per annum p) Interests in joint ventures Interests in joint ventures are accounted for using the equity method. The consolidated income statement includes the Group's share of the post-tax profits or losses of the joint ventures based on their financial statements for the year. In the consolidated...

  • Page 94
    ... as a reduction to cost of goods sold based on the agreement terms and only once the item is sold. Marketing income: This income is received in relation to marketing activities that are performed on behalf of suppliers. Financial statements Dixons Carphone plc Annual Report and Accounts 2014/15

  • Page 95
    ... the scheme are based on assumptions regarding salary increases, inflation rates, discount rates and member longevity. Such assumptions are based on actuarial advice and are benchmarked against similar pension schemes. Dixons Carphone plc Annual Report and Accounts 2014/15 93 Financial statements

  • Page 96
    ... through stores or online channels. are not expected to have any material impact on the Group's v) Recent accounting developments net results or net assets. Transactions between segments are on an arm's length basis. Financial statements 94 Dixons Carphone plc Annual Report and Accounts 2014/15

  • Page 97
    ...CPW Europe Acquisition £million France closure £million Pension scheme £million UK & Ireland Nordics Southern Europe Connected World Services Unallocated EBIT before share of results of joint ventures Share of results of joint ventures EBIT Finance income Finance costs Profit / (loss) before tax...

  • Page 98
    ... Europe Acquisition £million Dixons Retail Merger £million France closure £million Pension scheme £million Total profit / (loss) £million UK & Ireland Nordics Southern Europe Connected World Services Unallocated EBIT before share of results of joint ventures Share of results of joint ventures...

  • Page 99
    ... - - - 394 1,549 1,943 Revenue from services predominantly comprises those relating to commissions from MNOs, insurance, customer support agreements, delivery and installation, product repairs and product support. Dixons Carphone plc Annual Report and Accounts 2014/15 97 Financial statements

  • Page 100
    ...and the Group's share of fees for their tax and other services was £nil (2013/14: £0.1 million). Other assurance services relate primarily to the Merger in respect of which the external auditor acted as reporting accountant whilst 2013/14 related primarily to the CPW Europe Acquisition, in respect...

  • Page 101
    ...items 13 months ended 2 May 2015 £million Restated Year ended 29 March 2014 £million Note Included in profit / (loss) before interest and tax: Amortisation of acquisition intangibles Exceptional items - CPW Europe Acquisition - Dixons Retail Merger Share of results of joint ventures exited (post...

  • Page 102
    ... associated with the integration process. (iv) Share of joint ventures exited - Businesses exited: In light of an increasingly challenging market, the closure of the Phone House France operations was announced in April 2013. Prior to the CPW Europe Acquisition, when the French operations were part...

  • Page 103
    ... period (2013/14: £0.3 million). Further information about individual directors' remuneration, share interests, share options, pensions and other entitlements, which form part of these financial statements, is provided in the Remuneration report. Dixons Carphone plc Annual Report and Accounts 2014...

  • Page 104
    ... 2013. In addition to the Group's obligations under the scheme the Group also agreed to satisfy Best Buy's obligations under the scheme. During the year ended 29 March 2014, the Company issued 14 million shares in relation to these obligations. 102 Dixons Carphone plc Annual Report and Accounts...

  • Page 105
    ... the value saved within six months of the Merger in return for 0.155 Dixons Carphone shares for each Dixons option held. The following table summarises the number and WAEP of share options for these schemes: 13 months ended 2 May 2015 Number million WAEP £ Year ended 29 March 2014 Number million...

  • Page 106
    ... average fair value of options granted during the period was £1.62 (2013/14: £0.84). The following table lists the inputs to the model: 13 months ended 2 May 2015 Year ended 29 March 2014 Exercise price Dividend yield Historical and expected volatility Risk-free interest rate Financial statements...

  • Page 107
    ... finance costs Headline finance costs exclude net interest on defined benefit pension obligations (see note 4). - - 15 15 (17) (1) (4) (13) (11) (3) (3) (52) (37) (24) 1 1 6 8 (11) (1) - - (2) (1) (2) (17) (9) (9) Dixons Carphone plc Annual Report and Accounts 2014/15 105 Financial statements

  • Page 108
    ... months to 31 March 2015 and 20% thereafter (2013/14: 23% for the year ended 29 March 2014). (ii) The Headline tax charge excludes those items marked *. Tax related to discontinued operations is included in the figures set out in note 24. 106 Dixons Carphone plc Annual Report and Accounts 2014/15

  • Page 109
    ... capital allowances £million Retirement benefit obligations £million Losses carried forward £million Other temporary differences £million Total £million At 1 April 2013 CPW Europe Acquisition Charged directly to income statement Credited to equity At 29 March 2014 Dixons Retail Merger...

  • Page 110
    ... the Group financial statements 7 Tax continued Analysis of deferred tax relating to items (charged) / credited to equity in the period 13 months ended 2 May 2015 £million Year ended 29 March 2014 £million Actuarial losses on defined benefit pension schemes Credited to comprehensive income Share...

  • Page 111
    ... the profit for the period attributable to equity shareholders. Headline earnings per share is presented in order to show the underlying performance of the Group. Adjustments used to determine Headline earnings are described further in note 4. Dixons Carphone plc Annual Report and Accounts 2014/15...

  • Page 112
    ...Financial statements 1,633 406 6 916 28 - 2,989 - 406 8 - 31 36 481 UK - Carphone Warehouse Ireland - Carphone Warehouse Nordics Spain Netherlands The goodwill arising on the Dixons Retail Merger was allocated to the CGUs which were expected to benefit from the acquisition, based on value in use...

  • Page 113
    ...Growth rates used were determined based on third party long term growth rate forecasts and are based on the GDP growth rate for the territories in which the businesses operate. The pre-tax discount rates applied to the forecast cash flows reflect current market assessments of the time value of money...

  • Page 114
    ... periods are as follows: Net book Amortisation period value Years £million CurrysPCWorld Elgiganten Elkjøp Gigantti Software and licences were independently valued using an amortised replacement cost method. 163 66 54 32 15 15 15 15 112 Dixons Carphone plc Annual Report and Accounts 2014...

  • Page 115
    ... being valued. The valuation of properties was performed by reference to appropriate yield rates and market evidence of recent transactions. Future minimum lease income in respect of the Group's investment properties are set out in note 29. Dixons Carphone plc Annual Report and Accounts 2014/15...

  • Page 116
    ... Non-current Current Financial statements 318 907 1,225 The majority of trade and other receivables are non-interest bearing. Non-current receivables mainly comprise commission receivable on sales. Where the effect is material, trade and other receivables are discounted using discount rates which...

  • Page 117
    ... 2014 £million Opening balance Dixons Retail Merger CPW Europe Acquisition Charged to the income statement Receivables written off as irrecoverable Disposals Transferred to assets held for sell Foreign exchange Closing balance (20) (19) - (8) 16 2 8 1 (20) - - (23) (19) 22 - - - (20) The Group...

  • Page 118
    ... consideration primarily relates to the CPW Europe Acquisition with £25 million payable to Best Buy in June 2015 (2014: payable to Best Buy in equal instalments in June 2014 and June 2015). The amount bears interest at 2.5% per annum. 116 Dixons Carphone plc Annual Report and Accounts 2014/15

  • Page 119
    ... contract date. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. The fair value of the Group's lease obligations approximates their carrying amount. Dixons Carphone plc Annual Report and Accounts 2014/15 117 Financial statements...

  • Page 120
    ... Group relating to the disposal of discontinued operations. Other provisions include £25 million in relation to onerous property lease contracts at 2 May 2015. Non-current provisions are expected to be utilised over a period up to ten years. 118 Dixons Carphone plc Annual Report and Accounts 2014...

  • Page 121
    ... post-employment benefit obligations 2 May 2015 £million 29 March 2014 £million Retirement benefit obligations - UK - Nordics 486 3 489 - - - The Group operates a defined benefit and a number of defined contribution schemes which were acquired as part of the Dixons Retail Merger. The principal...

  • Page 122
    ...assumptions experience adjustments change in demographic assumptions Remeasurement of scheme assets: Actual return on plan assets (excluding amounts included in net interest expense) Cumulative actuarial loss 86 (72) - - (168) 19 (9) - - - 120 Dixons Carphone plc Annual Report and Accounts 2014/15

  • Page 123
    ...Financial statements 2 May 2015 £million 29 March 2014 £million Opening fair value at date of Dixons Retail Merger Interest income Employer special contributions Remeasurements in other comprehensive income: Actual return on plan assets (excluding interest income) Benefits paid Closing fair...

  • Page 124
    ... 13 months ended 2 May 2015 £million Year ended 29 March 2014 £million Net deficit 2 May 2015 £million 29 March 2014 £million Positive / (negative) effect Discount rate: 0.25% increase Inflation rate: 0.25% increase†Mortality rate: 1 year increase Financial statements 2 (2) (2) - - - 73...

  • Page 125
    ... ordinary share 69 Dixons Carphone plc Annual Report and Accounts 2014/15 123 Financial statements During the year, 574.7 million shares with a mid-market price of £3.432 were issued as part of the all share merger with Dixons as described in note 23. (ii) On 30 April 2013 the Group placed 47...

  • Page 126
    ... Dixons share. In accordance with the criteria in IFRS 3 'Business Combinations' it has been determined that Carphone acquired Dixons. The merged entity creates a leader in European consumer electricals, mobiles, connectivity and related services. The directors believe that the Merger will deliver...

  • Page 127
    ... for growth through the provision of services to customers and businesses. On 6 August 2014 the Company issued 574,723,226 shares with a mid-market share price of £3.432 as consideration to Dixons shareholders, resulting in an increase to share capital and share premium of £1,972 million. In...

  • Page 128
    ... retail stores, principally under the Carphone Warehouse and Phone House brands, together with well-developed online propositions. CPW Europe is also increasingly focused on leveraging its assets and expertise to provide services to third parties through its Connected World Services business...

  • Page 129
    ... of the customer. This unwinding had a value of £3 million for the period to 26 June 2013 and is treated as finance income in the joint venture's statutory results. Dixons Carphone plc Annual Report and Accounts 2014/15 127 Financial statements As part of the transaction, the Group agreed to...

  • Page 130
    ... a profit of £87 million. Following the Merger, the Group put in place a strategy of focusing on market leadership positions while engaging in other markets through partnerships with its Connected World Services division. This led the Group to carry out detailed strategic assessments of its Phone...

  • Page 131
    ... Cash flows from discontinued operations - 16 66 55 137 (68) 69 11 - - - 11 - 11 Financial statements 13 months ended 2 May 2015 £million Restated Year ended 29 March 2014 £million Operating activities Investing activities (78) 81 3 44 (3) 41 Dixons Carphone plc Annual Report and Accounts...

  • Page 132
    ... with Group policy, no speculative use of derivatives, foreign exchange or other instruments was permitted. No contracts with embedded derivatives have been identified and, accordingly, no such derivatives have been accounted for separately. 130 Dixons Carphone plc Annual Report and Accounts 2014...

  • Page 133
    ... cash flows arising from these financial instruments depend on interest rates and periods agreed at the time of rollover. Group policy permits the use of long term interest rate derivatives in managing the risks associated with movements in interest rates. The effect on the income statement and...

  • Page 134
    ... - receivable: Forward foreign exchange contracts Interest rate swaps Loans and other borrowings Deferred consideration Trade and other payables 68 - (8) (25) (869) - 4 (303) (25 68 4 (311) (50) (869) (68) (1) - - - - (68) (1) (1) - - (1) 132 Dixons Carphone plc Annual Report and Accounts 2014/15

  • Page 135
    ... The Group also held interest rate swaps with a notional value of £280 million (2014: £280 million) whereby the Group receives a floating rate of interest based on LIBOR and pays a fixed interest rate. This contract matures in April 2017. Dixons Carphone plc Annual Report and Accounts 2014/15...

  • Page 136
    ... the Group financial statements 26 Notes to the cash flow statement a) Reconciliation of operating loss to net cash inflow from operating activities 13 months ended 2 May 2015 £million Year ended 29 March 2014 £million Profit / (loss) before interest and tax - continuing operations Depreciation...

  • Page 137
    ... operations in France. All transactions entered into with related parties were completed on an arm's length basis. 28 Capital commitments 2 May 2015 £million 29 March 2014 £million Contracted for but not provided for in the accounts 55 - Financial statements Dixons Carphone plc Annual Report...

  • Page 138
    ... liabilities 2 May 2015 £million 29 March 2014 £million 2 8 12 22 3 In addition to the figures shown in the table above, contingent liabilities also exist in respect of lease covenants relating to premises assigned to third parties. - 136 Dixons Carphone plc Annual Report and Accounts 2014/15

  • Page 139
    ...079 The financial statements of the Company were approved by the Board on 16 July 2015 and signed on its behalf by: Sebastian James, Group Chief Executive Humphrey Singer, Group Finance Director Dixons Carphone plc Annual Report and Accounts 2014/15 137 Financial statements Share capital C9...

  • Page 140
    ... of Dixons Retail plc, but will continue to draw up accounts to the nearest Saturday and accordingly the financial period is for the 13 months ended 2 May 2015. The comparative period is for the year ended 29 March 2014. The Company has applied the exemption available in FRS 1 'Cash Flow Statements...

  • Page 141
    ..., and this transaction accounts for the majority of the disposals. 2013/14: Additions reflected the cost of shares issued to satisfy Best Buy's obligations in relation to incentive schemes (see note 23 to the Group financial statements). Dixons Carphone plc Annual Report and Accounts 2014/15 139

  • Page 142
    ...C7 Provisions 2 May 2015 £million 29 March 2014 £million Opening balance Utilised in the period / year Closing balance C8 Loans payable Details of loans payable are provided in note 17 to the Group financial statements. 2 - 2 6 (4) 2 140 Dixons Carphone plc Annual Report and Accounts 2014/15

  • Page 143
    ...as part of the Merger as described further in note 23 to the Group financial statements. Share capital £million Share premium reserve £million Profit and loss account £million Capital redemption reserve £million Total £million At 1 April 2013 Net profit for the year Other comprehensive income...

  • Page 144
    ... AB The Carphone Warehouse Limited The Phone House Comercio e Aluguer de bens e Serviços Lda New Technology Insurance Dixons Retail plc DSG international Holdings Limited DSG Retail Limited DSG Retail Ireland Limited Financial statements England and Wales Spain Germany Germany Netherlands Sweden...

  • Page 145
    ... AS PC City (France) SNC PC City Norge AS PC City Spain SAU Petrus Insurance Company Limited Thylin & Ronnlund AB Carphone Warehouse Ireland Mobile Limited Charterhouse Management Limited Compro-Telematics BV Connected World Services Distributions Limited Connected World Services Europe SL Connected...

  • Page 146
    ... DSG Card Handling Services Limited DSG international Retail Properties Limited DSG Ireland Limited Financial statements 06585719 05825842 07135355 03966947 05738735 07881879 02441554 03827277 06585457 05430014 04185110 00476440 00240621 144 Dixons Carphone plc Annual Report and Accounts 2014/15

  • Page 147
    ... as though the Dixons Retail Merger and the CPW Europe Acquisition had occurred at the beginning of the five year period. The Financial Years 2013/14 and prior have been restated to exclude discontinued operations. Dixons Carphone plc Annual Report and Accounts 2014/15 145 Investor information

  • Page 148
    ... Advisors Auditor Deloitte LLP 2 New Street Square London EC4A 3BZ Joint Stockbrokers Deutsche Bank AG 1 Great Winchester Street London EC2N 2DB Citigroup Global Markets Limited 33 Canada Square Canary Wharf E14 5LB Investor information 146 Dixons Carphone plc Annual Report and Accounts 2014/15

  • Page 149
    ... business of the Carphone Group, excluding its interest in Virgin Mobile France. Best Buy Europe's core continuing operations. The Company's acquisition of Best Buy's interest in CPW Europe, which completed on 26 June 2013. The Connected World Services division of the Company. Dixons Retail plc...

  • Page 150
    ... Warehouse Group plc Participation Plan 2011. Profit after taxation. Profit before taxation. Results incorporating Dixons Retail plc as if it had been owned by the Group for the entire reporting period and the previous year. In addition, in respect of 2013/14, the results aggregating CPW Europe...

  • Page 151
    Designed and produced by Whitehouse Associates London Printed in the UK by Pureprint Group This report is printed on Cocoon Offset 100% Recycled board and Soporset paper. Both papers are FSC certified and produced in an ISO 9001 and ISO 14001 certified paper mills.

  • Page 152
    Dixons Carphone plc 1 Portal Way London W3 6RS United Kingdom Telephone: +44 (0) 345 600 4723 Email: [email protected] www.dixonscarphone.com