Carphone Warehouse 2015 Annual Report Download - page 28

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Dixons Carphone plc Annual Report and Accounts 2014/15
Strategic report
Performance review
26
At 2 May 2015 the Group had pro forma net debt of
£260 million compared to prior period pro forma closing net
funds of £63 million. Pro forma net debt at the end of April
2014 for both businesses was £181 million.
Free cash flow was an outflow of £112 million (2013/14: inflow
of £280 million) for the reasons described above.
Merger transaction costs reflect professional and banking fees,
the cash cost of share option exercises as a result of the
Merger and the cost of redeeming the bonds previously held
by Dixons Retail.
Net cash outflows from acquisitions and disposals in the
current year were £41 million reflecting the first payment of
deferred consideration for the CPW Europe Acquisition and
cash outflows in discontinued operations. Cash flows in the
prior period were £441 million predominantly reflecting cash
flows associated with the CPW Europe Acquisition, as well as
those associated with discontinued operations.
The Group has a total of £875 million of committed borrowing
facilities comprising: i) a £625 million multi-currency term and
revolving credit facility; and ii) a £250 million revolving credit
facility, both of which mature in April 2017. The £625 million
facility is split into two tranches: a £400 million revolving
tranche and a term loan tranche of £225 million. The term loan
was amortised by £25 million during the period and is due to
reduce by a further £50 million on 30 June 2016. These
facilities mature in 2017 and we expect to complete refinancing
of our facilities during 2015/16.
Goodwill
The goodwill of £2,629 million arising from the Merger reflects
the fact that the value of Dixons Retail is based on its cash
generating potential rather than its existing assets and the fact
that many of its key strengths, such as its scale and expertise,
do not represent intangible assets as defined by IFRS.
Pensions
The IAS 19 accounting deficit of the defined benefit section
of the UK pension scheme of Dixons Retail amounted to
£486 million at 2 May 2015 compared to £429 million at the
date of the Merger on 6 August 2014. The assumptions
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. Contributions
during the period under the terms of the deficit reduction
plan amounted to £28 million on a pro forma basis
(2013/14: £20 million).
The deficit has increased largely as a result of the changes in
financial assumptions which determine liabilities, partially offset
by an increase in the asset values.
Dividends
The Board declared an interim dividend of 2.5p per share, up
from 2.0p per share last year. The interim dividend was paid
on 23 January 2015.
We are proposing a final dividend of 6.0p per share, taking the
total dividend for the year to 8.5p per share, a 42% increase on
the previous year (2013/14: 6.0p). The final dividend is subject
to shareholder approval at the Company’s forthcoming Annual
General Meeting. The ex-dividend date is 27 August 2015,
with a record date of 28 August 2015 and an intended final
dividend payment date of 25 September 2015.
Going concern
A review of the Group’s business activities, together with the
factors likely to affect its future development, including
consideration of the continuing uncertainty in Greece,
performance and position, are set out within this Strategic
report, including the risk management section. The financial
position of the Group, its cash flows, liquidity position and
borrowing facilities are shown in the balance sheet, cash
flow statement and accompanying notes to the Group
financial statements.
The directors have reviewed the future cash and profit
forecasts of the Group, which they consider to be based on
prudent assumptions. Based on these forecasts, the directors
consider that it is appropriate to prepare the Group financial
statements on the going concern basis.
Humphrey Singer
Group Finance Director
16 July 2015