Carphone Warehouse 2015 Annual Report Download - page 27

Dixons Carphone plc Annual Report and Accounts 2014/15
Strategic report
25
Discontinued operations
On 16 May 2014 the Group announced that it had entered into
an agreement to sell its interest in Virgin Mobile France and
completed the disposal on 4 December 2014 for gross
consideration of £104 million and generated 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. The Group carried out detailed strategic
assessments of its Phone House operations, which led to the
decision to exit certain markets.
• On 15 April 2015, the Group announced that it had agreed to
the sale of its operations in Germany to Drillisch AG, a
leading mobile virtual network operator in Germany. The sale
completed on 5 May 2015.
• On 24 April 2015, the Group entered into an agreement to
dispose of a majority stake (83%) in its operations in the
Netherlands to Relevant Holdings BV, a company set up by
the shareholders of Optie1 which has extensive telecom
retailing experience in the Dutch market. The sale completed
on 30 June 2015.
• On 16 July 2015, the Group announced its commitment to
dispose of its operations in Portugal following the
completion of a strategic review during 2014/15.
Discussions, which commenced with potential acquirers
during 2014/15, are advanced and an announcement
confirming details of the disposal is expected in due course.
The closure of the Phone House operations in France, which
was announced in 2013/14, was completed during the year
ended 2 May 2015 and is therefore now treated as a
discontinued operation.
Prior to the Merger, Dixons Retail agreed to sell its
operations in the Czech Republic and Slovakia (Central
Europe). The net assets held for sale associated with this
business were included within the fair value of assets and
liabilities acquired through the Merger and the sale completed
on 11 August 2014.
The above businesses have been treated as discontinued
operations and a net loss of £114 million (2013/14: £10 million)
has been recognised in relation to them. Comparative
information has been restated to reflect this classification.
Cash and movement on net funds
The information provided below is on a pro forma basis and
aggregates the net funds / (debt) and cash flows of the Group,
Dixons Retail and CPW Europe, as though Dixons Retail and
CPW Europe had been 100% owned by the Group throughout
the current and prior periods, to enable a complete
understanding of cash flows.
Free Cash Flow – pro forma basis
2014/15
£million
2013/14
£million
Headline EBIT 414 359
Depreciation and amortisation 141 170
Working capital (366) 5
Capital expenditure (186) (142)
Taxation (65) (64)
Interest (47) (53)
Other items 13 11
Free cash flow before restructuring
items – continuing operations (96) 286
Restructuring costs (16) (6)
Free Cash Flow (112) 280
Pro forma Free Cash Flow before restructuring was an outflow
of £96 million (2013/14: inflow of £286 million). The Group
experienced a working capital outflow of £366 million (2013/14:
inflow of £5 million) on a pro forma basis with the year-on-year
increase largely reflecting timing issues associated with the
change of year end and the day on which month end fell, as
well as the unwind of certain supplier funding arrangements
previously in place.
Capital expenditure in the period was £186 million on a pro
forma basis (2013/14: £142 million), with the year-on-year
increase reflecting significant capital expenditure on honeyBee
and investment in relation to merging the two businesses.
Restructuring costs in 2014/15 relate to Merger integration
costs and primarily reflect professional fees and employee
severance costs.
Funding – pro forma basis
2014/15
£million
2013/14
£million
Free Cash Flow – pro forma basis (112) 280
Dividends (52) (30)
Merger transaction costs (90) —
A
cquisitions and disposals including
discontinued operations (41) (441)
Pension contributions (28) (20)
Other items — (6)
Movement in net funds / (debt) –
pro forma basis (323) (217)
Opening net funds – pro forma basis(1) 63 280
Closing net (debt) / funds – pro forma
basis(2) (260) 63
(1) Opening net funds in the current period reflects net funds for
Carphone Warehouse at 29 March 2014 and for Dixons Retail at
30 April 2014. Opening net funds in the prior period reflects net
funds for Carphone Warehouse (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.