Carphone Warehouse 2015 Annual Report Download - page 26

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Dixons Carphone plc Annual Report and Accounts 2014/15
Strategic report
Performance review
24
Net finance costs
Pro forma Headline net finance costs were £33 million
(2013/14: £43 million). The reduction in financing costs was
primarily due to the redemption of the bonds previously held
by Dixons Retail on 21 August 2014.
Tax
The Headline pro forma rate of tax for the full year is 23%
(2013/14: 25%). This rate is higher than the UK statutory rate of
21% predominantly reflecting higher statutory rates in the
Nordics and certain non-deductible costs primarily in the UK.
Statutory results
The explanation of the Group’s results presented above is on a
pro forma basis as if the group structure following the CPW
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 are summarised below:
Headline income statement – continuing operations –
statutory basis
2014/15
£million
2013/14(1)
£million
Revenue 8,255 1,943
EBIT 400 137
Net finance costs (24) (9)
Profit before tax 376 128
Tax (91) (25)
Profit after tax 285 103
Basic EPS 29.7p 18.6p
Diluted EPS 28.7p 18.3p
(1) Results for 2013/14 have been restated to reclassify the results
of the operations in Germany, the Netherlands and Portugal as
discontinued operations.
Headline profit before tax increased from £128 million to
£376 million predominantly reflecting the inclusion of a full
period of earnings from CPW Europe and the inclusion of
Dixons Retail results from 6 August 2014. The tax charge
increased from £25 million to £91 million reflecting the higher
pre-tax earnings described above.
This in turn resulted in an increase in basic Headline EPS from
18.6p to 29.7p for the period. This EPS reflects the growth in
profit after tax explained above but also the fact that the
number of shares in issue approximately doubled following
the Merger.
Non-Headline items
Headline profit before tax is reported before Non-Headline
charges of £89 million (2013/14: £51 million). These charges
are analysed below and are reported on a statutory basis with
the Dixons Retail business only consolidated from completion
of the Merger on 6 August 2014.
2014/15
£million
2013/14
£million
Headline profit before tax –
continuing operations –
statutory basis 376 128
Merger related costs (41) —
A
mortisation of acquisition intangibles (35) (13)
Share of JVs – France exit — (23)
CPW Europe Acquisition — (15)
Net pension interest (13) —
Total profit before tax – continuing
operations – statutory basis 287 77
Costs incurred in relation to the Merger include transaction
costs of £9 million, predominantly reflecting banking and
professional fees, and merger integration costs of £32 million
primarily being professional fees, employee severance and
property costs associated with the integration process. Further
integration costs will be incurred during 2015/16 as the
integration of the two businesses continues.
The charge for the amortisation of acquisition intangibles was
£35 million (2013/14: £13 million) with the current period
including a full 13 months of amortisation of intangible assets
recognised following the CPW Europe Acquisition and, since
6 August 2014, the amortisation of intangible assets
recognised as a result of the Merger.
Net pension interest was £13 million reflecting the charge
incurred in relation to the Dixons Retail UK pension scheme
following completion of the Merger.
Non-Headline items included within Dixons Retail total
results in the period prior to the Merger comprised £11 million
in respect of the acceleration of share-based payment
charges which vested on the Merger, £12 million of merger
related professional fees and £5 million of merger integration
planning costs committed to prior to completion of the Merger,
£42 million of debt restructuring costs in respect of early
repayment of the bonds previously held by Dixons Retail,
£5 million of provision releases relating to discontinued
operations and £4 million of pension interest costs. As these
items were incurred prior to the Merger they do not form part
of the Group’s consolidated results.