Interim Results
Carphone Warehouse Group PLC
03 November 2005
Thursday 3 November 2005
For immediate release
The Carphone Warehouse Group PLC
Interim Results for the 26 weeks to 1 October 2005
Continued strong momentum. Major drive into UK broadband market in 2006
(all numbers on an IFRS basis) 26 weeks ended 1 26 weeks ended 25 % growth
October September 2004
2005 £m
£m
Turnover 1,290.7 1,033.0 25.0%
Profit before tax* 37.0 27.3 35.6%
Headline earnings per share* 3.15p 2.33p 35.2%
Dividend per share 0.75p 0.55p 36.4%
* before amortisation of acquisition intangibles
Financial Headlines
• Group revenues up 25.0% to £1,290.7m
• Retail revenues up 16.6% to £572.8m; 2.3% like-for-like
• Retail gross profit up 19.4% to £165.5m; 3.5% like-for-like
• Subscription connections up 20.5% to 1.55m
• Mobile, fixed line and insurance customer bases up 35.0% to 5.75m
Broadband Strategy
• Major drive into UK broadband market in 2006
• Plan to unbundle up to 1,000 exchanges over the next three years
• Proven ability to leverage strong telecoms brand and unrivalled
distribution network
• Incremental network capex of £10-15m a year
Charles Dunstone, CEO, said:
'These strong results show the continuing success of Carphone Warehouse's
strategy and execution. We are growing our retail presence aggressively and
deriving significant additional value from this platform through our
service-based model. Total like-for-like sales growth through all our
distribution channels was 7.5%. Our strong commitment to the UK broadband
market, announced today, further builds on our foundations to become the clear
number one alternative telecoms provider. The Board's confidence in the Group's
prospects is reflected in a 36% rise in the interim dividend.'
Overview
Group turnover for the period was £1,290.7m compared with £1,033.0m for the
prior year, representing growth of 25.0%. Headline operating profits increased
by 35.2% to £40.1m (2004: £29.7m), with operating margin improving to 3.1%
(2004: 2.9%). Pre-tax profits for the Group, before amortisation of acquisition
intangibles, were £37.0m, an increase of 35.6%. Earnings per share on the same
basis grew by 35.2% to 3.15p (2004: 2.33p).
The market environment for our Distribution operations continues to be very
attractive. Competition between mobile networks is greater than ever, and
handset manufacturers are delivering a rapidly-evolving pipeline of new
feature-rich products. The combination of these factors creates a very strong
customer proposition and as a result, connections growth has been ahead of our
expectations. This has been enhanced through our store opening programme and
growth in new channels. This in turn has continued to drive further
outperformance from our higher margin ancillary revenue streams of Insurance and
Ongoing ARPU-sharing revenue.
TalkTalk UK has performed in line with our expectations, with a further 139,000
voice customers added in the first six months of the year. We are building
strongly on TalkTalk's success with the recent launch of line rental and the
launch this week of TalkTalk Mobile, which begins to bundle fixed and mobile
services. Our announcement today of further investment in the Opal network to
enhance the delivery of broadband services to homes and businesses alike is set
to stimulate strong customer growth and improved profitability over the medium
term.
In the fixed line business market, Opal has performed creditably in a difficult
market. Although profits have fallen year-on-year at the interim stage, they
are set to recover in the second half and we are confident of achieving a flat
outcome for the year as a whole. In addition, we have started to invest in
developing additional services to business customers, to deliver renewed growth
in future years. Meanwhile Opal continues to provide significant additional
value to the Group as the network provider for TalkTalk.
It has been an exciting six months for our Mobile operations. The Phone House
Telecom has continued to achieve strong organic growth as we expand our
distribution channels in Germany. On the MVNO side, we are very pleased by the
success of Mobile World, which we launched in May, and the recent relaunch of
Fresh in the UK. Our discussions with Virgin and Virgin Mobile in regard to a
nationwide MVNO in France continue to make progress, with the target of a
potential launch in the first half of 2006.
Outlook
The outlook continues to be positive. We expect the mobile phone market to
continue to grow year-on-year over the Christmas period and into the New Year,
with our own prospects underpinned by our store opening programme and a very
strong product portfolio. Our commitment to local loop unbundling, combined
with our strong consumer brand and distribution channels, provides us with
significant opportunities in both the residential and business fixed line
markets. Our Mobile operations are gaining critical mass and the rate of
customer recruitment is set to accelerate, as we look to build a further
material source of future shareholder value.
Distribution
2005 2004
£m £m
Turnover 752.0 607.4
Retail 572.8 491.4
Online 96.3 45.3
Insurance 56.4 47.8
Ongoing 26.6 22.9
Contribution 94.7 74.2
Retail 39.7 32.8
Online 6.9 3.0
Insurance 21.5 15.5
Ongoing 26.6 22.9
Support costs (39.3) (33.2)
EBITDA 55.4 41.0
Depreciation and amortisation* (20.6) (17.2)
EBIT 34.8 23.8
EBIT % 4.6% 3.9%
* excluding amortisation of acquisition intangibles
The Distribution division generated revenues of £752.0m and EBIT of £34.8m,
representing growth of 23.8% and 46.0% respectively on the prior year. The EBIT
margin increased by 70 basis points, driven by like-for-like growth and strong
performances from all business units. We continue to focus our strategy on
growing profits at the divisional level by driving subscription connection
volumes, which in turn deliver high margin revenues beyond the point of sale.
Retail and Online
Total connections grew 16.8% to 3.23m. The mobile phone market continued to
show good unit growth across most of our regions, driven by network competition
for customers and a strong product pipeline. We continued to gain market share
through new store openings and new channels to market.
Subscription connections grew by 20.5% to 1.55m. We saw strong and consistent
demand throughout the first half as incentives for customers continued to be
compelling, with free handsets and half-price line rental deals widespread. The
level of innovation and design currently being achieved by the leading handset
manufacturers is creating a particularly attractive environment for customers.
In turn, our own increasing scale has enabled us to secure a good supply of key
handsets and a growing number of exclusive arrangements.
Pre-pay connections grew 15.9% to 1.43m. The rate of growth in pre-pay declined
in the second quarter, mainly as a result of a very strong period of pre-pay
sales in the equivalent period last year. SIM-free sales rose 1.5% to 247,000.
We opened 147 stores and closed 22 in the first half, taking the total number of
stores in the portfolio to 1,586, of which 103 are franchise stores (2004: 46
franchise stores). We remain on target to achieve our goal of 250 net
openings during the year. Total average selling space in all stores grew by
16.2% to 84,167 sqm (2004: 72,424 sqm). Excluding franchise stores, average
space was up 13.7% to 80,213 sqm (2004: 70,523 sqm).
Total Retail revenues grew 16.6% to £572.8m. Like-for-like growth was 2.3%.
Subscription revenue per connection rose by 6.7% and pre-pay revenue per
connection fell by 1.3%, again due to strong pre-pay offers last year. Average
connections per owned store fell 3.3% during the period, reflecting an
increasing number of immature stores in the portfolio.
Retail gross profit grew 19.4% to £165.5m. Like-for-like growth was 3.5%.
Subscription gross profit per connection was up 6.5% at £96.9 (2004: £91.0).
Gross profit per connection on pre-pay rose by 7.8% to £26.9 (2004: £24.9).
These improvements have been driven by our strengthening competitive position
and increased buying power.
Retail contribution grew by 21.2% to £39.7m, as cost growth continued to be well
managed. Direct Retail costs grew 18.8% year-on-year. Contribution margin rose
20 basis points to 6.9% (2004: 6.7%). Franchise operations contributed £1.4m to
Retail contribution (2004: £0.4m).
Our Online business grew very strongly, with connections ahead by 77.2% to
330,000, supported by the acquisition of One Stop Phone Shop in March. Revenues
grew 112.7% to £96.3m (2004: £45.3m), with organic revenue growth of 61.7%.
Contribution was up 131.5% to £6.9m (2004: £3.0m). From next year, we intend to
combine Retail and Online for segmental reporting purposes, but will continue to
disclose pure Retail like-for-like performance.
Insurance
Insurance revenues grew 17.9% year-on-year to £56.4m (2004: £47.8m). The
persistent strong trend in subscription connections has been enhanced by
improved retention and customer management, with the base rising by 21.4% to
1.77m. Contribution from Insurance rose 39.0% to £21.5m (2004: £15.5m), driven
by growth in the base, steady claims ratios and good cost control.
Ongoing
Growth in Ongoing revenues, our ARPU-sharing agreements with mobile networks,
also continued to be supported by strong subscription connections growth.
Ongoing revenues grew 15.7% to £26.6m (2004: £22.9m).
Telecoms Services
2005 2004
£m £m
Turnover 475.6 372.9
Mobile 219.2 180.8
Fixed 256.4 192.1
Contribution 42.1 32.2
Mobile 23.1 18.7
Fixed 19.0 13.5
Support costs (13.7) (11.6)
EBITDA 28.4 20.6
Depreciation and amortisation* (22.5) (14.3)
EBIT 5.9 6.3
EBIT % 1.2% 1.7%
* excluding amortisation of acquisition intangibles
The Telecoms Services division generated revenues of £475.6m and EBIT of £5.9m.
Revenues were up 27.6% year-on-year, reflecting continued strong momentum in
customer recruitment across the division. EBIT fell 6.9% mainly as a result of
the costs of customer recruitment and the weaker performance at Opal. However
we anticipate strong growth in divisional EBIT for the year as a whole, driven
by a profits recovery at Opal, continued profitable growth at TalkTalk, and the
recognition of significant annual volume bonuses by The Phone House Telecom.
Mobile
Turnover in Mobile Telecoms Services grew 21.3% to £219.2m, and contribution
grew by 23.6% to £23.1m. The contribution figures for Mobile have been
materially restated under IFRS, with £13.7m of customer acquisition cost
amortisation now recognised within the divisional depreciation and amortisation
line (2004: £8.5m). These changes are purely presentational and have no impact
on divisional profitability.
The Phone House Telecom continued to perform strongly. During the period we
opened up a number of new distribution channels, including third party retailers
and additional agent networks. The total base grew 35.9% year-on-year to 1.02m,
with the subscription base growing by 32.2% to 763,000. The acceleration of
growth in the customer base has inevitably translated into erosion in average
ARPU as we focus on growing the scale of our German operations. Revenues were
up 17.8% to £167.2m (2004: £142.0m), with contribution rising 33.0% to £21.5m
(2004: £16.1m). Net of SAC amortisation costs, which have been recognised at
the divisional level under IFRS, contribution rose 2.3% to £7.8m (2004: £7.6m).
The strong growth in customer numbers is expected to trigger a number of
significant network volume bonuses that will be recognised in the second half.
Our other customer bases in the UK and France grew 19.0% to 1.58m. The rate of
customer acquisition has accelerated this year, driven by the success of Mobile
World, our new MVNO offering significant discounts on international calls, that
was launched at the start of the year, and Breizh Mobile, our regional MVNO in
France. Total revenues from our MVNO and Facilities Management operations grew
34.0% to £52.0m (2004: £38.8m). Contribution fell by 36.0% to £1.6m (2004:
£2.5m) as we incurred customer acquisition costs and start-up losses at Breizh
and Mobile World.
Subsequent to the period end we have seen three further developments in our MVNO
strategy. In October, we relaunched Fresh and have seen a noticeable increase
in uptake of the service as a result. Last week, we announced that we were in
discussions with Virgin and Virgin Mobile with regard to a nationwide MVNO in
France. These discussions continue to progress and we will provide further
information on our plans in due course. Finally, we have launched TalkTalk
Mobile, offering free calls to and from TalkTalk fixed line customers. Each of
these initiatives demonstrate our increasing commitment to this area of our
business, where we believe we can create significant value over time.
Fixed
Total Fixed Line revenues were up 33.5% to £256.4m (2004: £192.1m), with
contribution up 41.2% to £19.0m (2004: £13.5m). Strong revenue growth was
driven predominantly by customer acquisition. The improving contribution margin
reflects the reduction of start-up losses in a number of our TalkTalk
businesses, although this has been offset at the divisional EBIT level by an
increase in support costs and depreciation and amortisation charges.
Overall revenues from Business operations rose 1.6% to £131.7m (2004: £129.6m),
with contribution falling 28.7% to £13.0m (2004: £18.3m). Opal generated
revenues of £116.9m in the first half, an increase of 1.2% year-on-year.
Contribution fell 30.0% to £12.7m, representing a margin of 10.9% (2004: 15.7%).
Business traffic on the Opal network increased by 32.3% to 3.34 billion minutes.
Opal's markets continue to be very competitive, which has driven down revenues
per minute and gross margins. Last September's cut in mobile termination rates
continued to have a negative impact on revenues of approximately 12%. In
addition, a continued decline in premium rate traffic has exaggerated the
decline in revenue per minute.
We are increasing our focus on developing a broader range of services to our
telecoms customers, encompassing line rental, mobile contracts and broadband.
In the short term this is having a small negative effect on profitability but is
an important element of our longer term strategy for Opal. Overall, we
anticipate that full year profits at Opal will be flat, although revenue growth
will pick up again in the second half as last year's mobile termination rate
cuts annualise. We are encouraged that first half profits increased over the
second half of last year, and we expect a further sequential increase in the
second half of this year.
TalkTalk in the UK generated a contribution of £2.6m (2004: loss of £5.8m) on
revenues of £88.9m (2004: £50.2m) in the first half. Net of SAC amortisation
costs, recognised at the divisional level this year under IFRS, TalkTalk UK
contribution was £0.7m. Progress in underlying profitability continues to be
strong, but marketing costs are weighted to the first half, as last year. We
had a total of 1.06m tolling customers at the period end. Our non-UK TalkTalk
operations also made good progress, with revenues up by 191.1% to £35.7m (2004:
£12.3m). Contribution was £3.4m (2004: £1.0m), mainly driven by the
profitability of NTel.
Today we are announcing a major new investment programme for our Opal network,
to support our drive for future growth in the range, quality and value of
services we provide to residential and business customers. We intend to
unbundle up to 1,000 exchanges over the next three years. Based on current
customer distribution, this would give us approximately 67% coverage of the
market.
As always with our network infrastructure strategy, our level of financial
commitment will be demand-driven, so that we will unbundle exchanges where we
are confident of generating an attractive return on that investment through
customer recruitment. Our intention is to pursue a fully unbundled strategy,
enabling us to take control of the switched voice line as well as the broadband
connection.
The capital investment required for this project represents an incremental spend
of £10-15m a year over the next three years, on top of our existing network
capex of approximately £15m a year. We intend to give further details of our
marketing and customer acquisition plans during the first quarter of calendar
2006.
Dealer
2005 2004
£m £m
Turnover 73.1 60.7
Contribution 0.7 0.6
Support costs (0.8) (0.7)
EBITDA (0.1) (0.1)
Depreciation and amortisation (0.4) (0.3)
EBIT (0.5) (0.4)
EBIT % (0.7)% (0.7)%
Dealer operations (previously Wholesale) comprise the provision of handsets,
connections and pre-pay vouchers to third party retailers, and the wholesale
shipment of trade-in handsets. There have been no further developments in
relation to the Customs & Excise investigation of VAT recovery in the handset
trading industry.
Depreciation, intangibles amortisation and support costs
The depreciation charge of £23.4m grew 15.5% year-on-year (2004: £20.2m),
reflecting the on-going investment in IT, new stores and the Opal network.
Amortisation of intangible assets, excluding acquisition intangibles, rose 73.4%
to £20.2m (2004: £11.6m), primarily reflecting acquisition costs for broadband
and The Phone House Telecom. Support costs increased by 18.6% year-on-year to
£53.9m (2004: £45.4m), as we continue to build up our support infrastructure to
handle the strong projected growth across the Group. The runrate is, however,
broadly in line with the second half of last year.
Cash flow and dividend
At 1 October 2005, the group had net debt of £156.0m, compared to net debt of
£68.4m at the last financial year end. During the period the group generated
cash flow from operations of £24.9m (2004: £38.9m). The Board has declared an
interim dividend of 0.75p per share (2004: 0.55p per share), in line with
underlying earnings growth and reflecting its confidence in the future growth
opportunities for the Group. At this stage we anticipate a similar level of
growth in the full year dividend.
The ex-dividend date will be 9 November 2005 and the record date will be 11
November 2005. The intended payment date will be 24 November 2005.
Board appointment
Further to the announcement on 12 October 2005, we are pleased to confirm that
Baroness Morgan of Huyton has joined the Board with effect from 1 November 2005.
There are no further details in respect of this appointment required under LR
9.6.13 of the FSA Listing Rules to be disclosed.
Analysts' presentation and webcast
There will be a presentation for investors and analysts at 9.00 am this morning
at the offices of Deutsche Bank, 1 Great Winchester Street, London EC2N 2DB.
The event will be audio webcast and the presentation slides will be available on
our website, www.cpwplc.com.
Next trading update
The Group will give a full trading update, including revenues, connections and
customer bases, for the third quarter of the current financial year on 12
January 2006.
For Further Information
For analyst and institutional enquiries
Roger Taylor 07715 170 090
Peregrine Riviere 07909 907193
For media enquiries
Vanessa Tipple 07947 000 021
Anthony Carlisle 07973 611 888
Citigate Dewe Rogerson 020 7638 9571
FINANCIAL REVIEW
Consolidated income statement
For the 26 weeks ended 1 October 2005
Before Amortisation After
amortisation of acquisition amortisation
of acquisition intangibles of acquisition
intangibles intangibles
26 weeks 26 weeks 26 weeks 26 weeks 53 weeks
ended ended ended ended ended
1 October 1 October 1 October 25 2 April
2005 2005 2005 September
2004 2005
Notes £'000 £'000 £'000 £'000 £'000
Continuing
operations
Revenue 2 1,290,687 1,290,687 1,032,954 2,355,093
Cost of sales (877,875) (877,875) (715,746) (1,630,936)
Gross profit 412,812 412,812 317,208 724,157
Operating expenses (329,148) (329,148) (255,669) (550,808)
excluding
amortisation and
depreciation
Depreciation (23,381) (23,381) (20,247) (40,792)
Amortisation (20,149) (4,488) (24,637) (13,782) (34,815)
Goodwill expense - - - (958)
Profit from 40,134 (4,488) 35,646 27,510 96,784
operations
Interest payable (5,724) (5,724) (4,334) (10,748)
Interest 2,623 2,623 1,975 5,903
receivable
Profit before 37,033 (4,488) 32,545 25,151 91,939
taxation
Taxation 3 (9,258) 1,337 (7,921) (6,689) (18,033)
Net profit for the 27,775 (3,151) 24,624 18,462 73,906
financial period
Basic earnings per share 4 2.80p 2.11p 8.44p
Consolidated statement of movements in equity
For the 26 weeks ended 1 October 2005
26 weeks ended 26 weeks 53 weeks
ended ended
1 October 25 September 2 April
2005 2004
2005
£'000 £'000 £'000
At beginning of period 547,959 480,728 480,728
Adoption of IAS32 and IAS39 (see note 1) (7,741) - -
At beginning of period (restated) 540,218 480,728 480,728
Net profit for the financial period 24,624 18,462 73,906
Currency translation (1,696) 4,252 5,718
Tax on items recognised directly in reserves 2,263 306 1,996
Net gain in available-for-sale investments 2,165 - -
Issue of share capital 6,753 995 2,750
Purchase of own shares (net) (15,580) (8,064) (8,064)
Cost of share-based payments 2,822 526 3,608
Equity dividends (11,005) (7,869) (12,683)
At end of period 550,564 489,336 547,959
Consolidated balance sheet
As at 1 October 2005
1 October 25 September 2 April
2005 2004 2005
£'000 £'000 £'000
Notes
Non-current assets
Goodwill 446,082 412,931 452,023
Intangible assets 80,054 59,492 69,369
Property, plant and equipment 226,269 166,502 198,220
Other investments - available for sale 4,930 5,865 6,069
Deferred tax assets 3,885 717 4,570
761,220 645,507 730,251
Current assets
Stock 142,044 95,151 95,185
Trade and other receivables 432,348 331,901 353,890
Other investments - available for sale 42,221 17,455 60,468
Cash and cash equivalents 84,114 68,170 41,576
700,727 512,677 551,119
Total assets 1,461,947 1,158,184 1,281,370
Current liabilities
Trade and other payables (502,734) (416,081) (458,685)
Tax liabilities (40,914) (32,032) (37,556)
Bank overdrafts and loans - due within one (39,124) (36,582) (71,994)
year
Provisions (81,193) (36,666) (57,829)
(663,965) (521,361) (626,064)
Non-current liabilities
Bank loans - due after one year (243,209) (135,602) (98,494)
Other creditors (1,945) (9,972) (4,753)
Deferred tax liabilities (2,264) (1,913) (4,100)
(247,418) (147,487) (107,347)
Total liabilities (911,383) (668,848) (733,411)
Total assets and liabilities 550,564 489,336 547,959
Equity
Share capital 884 875 877
Share premium reserve 6 414,432 398,634 402,136
Capital redemption reserve 6 30 30 30
Translation reserve 6 4,022 4,252 5,718
Accumulated profits 6 131,196 85,545 139,198
Total equity 550,564 489,336 547,959
Approved by the Board of The Carphone Warehouse Group PLC
3 November 2005
Consolidated cash flow statement
For the 26 weeks ended 1 October 2005
26 weeks ended 26 weeks ended 53 weeks ended
1 October 25 September 2 April
2005
2004 2005
Notes £'000 £'000 £'000
Operating activities
Profit from operations 35,646 27,510 96,784
Adjustments for non-cash items:
Share-based payments 2,822 526 3,608
Depreciation 23,381 20,247 40,792
Amortisation 24,637 13,782 34,815
Goodwill expense - - 958
Operating cash flows before movements in 86,486 62,065 176,957
working capital
(Profit) loss on disposal of property, plant (781) 58 482
and equipment
Increase in trade and other receivables (79,536) (68,085) (81,523)
Increase in stock (47,243) (15,902) (14,745)
Increase in trade and other payables 46,798 66,326 66,632
Increase in provisions 23,444 4,024 20,810
Cash generated from operations 29,168 48,486 168,613
Taxation paid (4,232) (9,589) (11,641)
Net cash generated from operating activities 24,936 38,897 156,972
Investing activities
Proceeds from sale of property, plant and 1,970 675 1,363
equipment
Acquisition of subsidiaries, net of cash (4,072) (19,829) (35,300)
acquired
Interest paid (5,724) (4,334) (10,748)
Interest received 2,623 1,975 5,903
Acquisition of intangible assets (37,462) (21,969) (53,782)
Acquisition of property, plant and equipment (52,972) (24,413) (71,988)
Disposal (acquisition) of non-current asset 58 (15) (172)
investments
Cash flows from investing activities (95,579) (67,910) (164,724)
Financing activities
Proceeds from the issue of share capital 6,753 995 2,750
Purchase of own shares (net) (15,580) (8,064) (8,064)
Increase in borrowings 133,931 35,480 22,866
Receipts from (payments to acquire) current 21,399 (6,650) (49,663)
asset investments
Dividends paid (11,005) (7,869) (12,683)
Cash flows from financing activities 135,498 13,892 (44,794)
Net increase (decrease) in cash and cash
equivalents 8 64,855 (15,121) (52,546)
Cash and cash equivalents at start of period 19,352 71,638 71,638
Effect of exchange rate fluctuations (93) 182 260
Cash and cash equivalents at end of period 84,114 56,699 19,352
Notes to the financial statements
For the 26 weeks ended 1 October 2005
1 Basis of preparation and accounting policies
This interim report has been prepared under International Financial Reporting
Standards (IFRS). The accounting policies applied are based on management's
best knowledge of the expected standards and interpretations of the
International Accounting Standards Board (IASB) which are expected to apply when
the Group prepares its first complete set of IFRS financial statements as at 1
April 2006. The principal accounting policies adopted in preparing this
financial information are set out in the IFRS financial information published on
22 September 2005 ('IFRS publication') which is available on www.cpwplc.com.
The Group has elected to adopt IAS32 'Financial Instruments: Disclosure and
Presentation' and IAS39 'Financial Instruments: Recognition and Measurement'
prospectively from 3 April 2005, as permitted by the transitional provisions.
A summary of the impact of IAS32 and IAS39 on opening reserves at 3 April 2005
and reconciliations between UK GAAP and IFRS for the 26 weeks ending 25
September 2004 and the 53 weeks ending 2 April 2005 are set out in the IFRS
publication.
Due to the continuing work of the IASB and possible amendments to their guidance
notes, the Group's accounting policies and consequently the information
presented may change prior to the publication of the Group's first annual
financial statements under IFRS.
The financial information for the 26 weeks ended 1 October 2005 has not been
prepared in accordance with IAS34 'Interim Financial Reporting' as permitted by
IFRS1 'First-time Adoption of International Financial Reporting Standards'. The
financial information for the 26 weeks ended 1 October 2005 and the 26 weeks
ended 25 September 2004 is unaudited. An unqualified opinion in relation to the
financial information presented for the 53 weeks ended 2 April 2005 is included
in the IFRS publication, this does not include any opinion over the notes in the
interim financial statements.
The information set out in this interim report for the 26 weeks ended 1 October
2005 does not comprise statutory accounts within the meaning of section 240 of
The Companies Act 1985. The statutory accounts for the 53 weeks ended 2 April
2005 prepared under UK GAAP, incorporating the unqualified auditor's report,
have been filed with the Registrar of Companies.
2 Segmental analysis
Divisional results are analysed as follows:
Revenue Profit before interest and tax
26 weeks 26 weeks 53 weeks 26 weeks 26 weeks 53 weeks
ended 1 ended 25 ended 2 ended 1 ended 25 ended 2
October 2005 September April 2005 October 2005 September April 2005
2004 2004
£'000 £'000 £'000 £'000 £'000 £'000
Retail 572,823 491,362 1,160,228 39,687 32,753 100,884
Online 96,260 45,255 128,238 6,893 2,978 7,684
Insurance 56,368 47,821 101,977 21,549 15,505 35,018
Ongoing 26,560 22,949 46,527 26,561 22,952 46,527
Support costs - - - (39,331) (33,149) (71,462)
Depreciation - - - (17,068) (14,780) (29,778)
Amortisation - - - (3,529) (2,454) (5,638)
Distribution 752,011 607,387 1,436,970 34,762 23,805 83,235
Fixed 256,354 192,073 426,290 19,032 13,482 33,737
Mobile 219,252 180,795 377,749 23,084 18,674 45,880
Support costs - - - (13,739) (11,580) (24,963)
Depreciation - - - (5,962) (5,163) (10,402)
Amortisation - - - (16,566) (9,129) (21,590)
Telecoms 475,606 372,868 804,039 5,849 6,284 22,662
Dealer 73,140 60,732 131,952 736 605 1,513
Support costs - - - (808) (681) (1,469)
Depreciation - - - (351) (304) (612)
Amortisation - - - (54) (34) (81)
Dealer* 73,140 60,732 131,952 (477) (414) (649)
Amortisation of acquisition - - - (4,488) (2,165) (8,464)
intangibles and goodwill
expense
Eliminations (10,070) (8,033) (17,868) - - -
Total Group 1,290,687 1,032,954 2,355,093 35,646 27,510 96,784
* Previously reported as wholesale division
Results by geographical location are analysed by origin as follows:
Revenue Profit before interest and tax
26 weeks 26 weeks 53 weeks 26 weeks 26 weeks 53 weeks
ended 1 ended 25 ended 2 ended 1 ended 25 ended 2
October 2005 September April 2005 October 2005 September April 2005
2004 2004
£'000 £'000 £'000
United Kingdom 743,907 581,905 1,358,580 18,968 66,452
France 90,345 77,274 169,158
Germany 191,877 154,649 334,143
Spain 103,041 77,905 186,671
Other 161,517 141,221 306,541
Rest of Europe 546,780 451,049 996,513 10,707 38,796
Amortisation of acquisition (4,488) (2,165) (8,464)
intangibles and goodwill
expense
1,290,687 1,032,954 2,355,093 35,646 27,510 96,784
3 Taxation
Taxation has been provided using the estimated effective rate of taxation for
the 52 weeks ending 1 April 2006 of 25.0% (53 weeks ended 2 April 2005 - 19.5%).
4 Earnings per share
The calculation of basic earnings per share is based on the following profits
and number of shares:
26 weeks ended 26 weeks ended 53 weeks ended
1 October 25 September 2 April
2005 2004 2005
Weighted average number of shares (000's) 880,387 874,573 875,569
Unadjusted earnings for the financial period (£'000) 24,624 18,462 73,906
Headline earnings for the financial period (£'000) 27,775 20,404 81,009
Basic earnings per share
Unadjusted 2.80p 2.11p 8.44p
Headline 3.15p 2.33p 9.25p
Headline earnings per share is calculated on earnings before amortisation of
acquisition intangibles, goodwill expense and tax credits associated with
acquisition intangibles, which have no impact on underlying tax payments. It
is provided because the Directors consider that it provides assistance in
understanding underlying performance.
5 Dividends
Amounts recognised as distributions to equity shareholders in the period are as
follows:
26 weeks ended 26 weeks ended 53 weeks ended
1 October 2005 25 September 2 April
2004 2005
£'000 £'000 £'000
Final dividend for the period ended 27 March 2004 of - 7,869 7,869
0.90p per ordinary share
Interim dividend for the period ended 2 April 2005 of - - 4,814
0.55p per ordinary share
Final dividend for the period ended 2 April 2005 of 11,005 - -
1.25p per ordinary share
Dividends recognised as distributions to equity 11,005 7,869 12,683
shareholders
Proposed interim dividend for the period ended 1 6,631
October 2005 of 0.75p (2005 - 0.55p) per ordinary share
The proposed interim dividend was approved by the Board on 2 November 2005 but
is not included as a liability as at 1 October 2005, in accordance with IAS10 '
Events After the Balance Sheet Date'.
6 Reserves
Accumulated Translation Share Capital Total
profits reserve premium redemption
reserve reserve
£'000 £'000 £'000 £'000 £'000
At beginning of period 139,198 5,718 402,136 30 547,082
Adoption of IAS32 and IAS39 (see note 1) (7,741) - - - (7,741)
At beginning of period (restated) 131,457 5,718 402,136 30 539,341
Net profit for the financial period 24,624 - - - 24,624
Currency translation - (1,696) - - (1,696)
Tax on items recognised directly in 2,263 - - - 2,263
reserves
Net change in available-for-sale 2,165 - - - 2,165
investments
Issue of share capital (5,550) - 12,296 - 6,746
Purchase of own shares (net) (15,580) - - - (15,580)
Cost of share-based payments 2,822 - - - 2,822
Dividend distributions in the period (11,005) - - - (11,005)
At end of period 131,196 4,022 414,432 30 549,680
7 Reconciliation of headline information to statutory information
26 weeks ended 26 weeks ended 53 weeks ended
1 October 2005 25 September 2004 2 April 2005
Profit from Profit Profit from Profit Profit from Profit
operations before tax operations before tax operations before tax
£'000 £'000 £'000 £'000 £'000 £'000
Headline 40,134 37,033 29,675 27,316 105,248 100,403
Amortisation of acquisition intangibles (4,488) (4,488) (2,165) (2,165) (8,464) (8,464)
and goodwill expense
Statutory 35,646 32,545 27,510 25,151 96,784 91,939
Headline information is provided because the Directors consider that it provides
assistance in understanding underlying performance.
8 Analysis of changes in net debt
At 2 April Opening Cash flows Retranslation Other At 1 October
adjustment non-cash 2005
2005 for IAS32 changes
and IAS39
£'000 £'000 £'000 £'000 £'000 £'000
Cash at bank and in hand 41,576 - 42,638 (100) - 84,114
Overdrafts (22,224) - 22,217 7 - -
19,352 - 64,855 (93) - 84,114
Debt due within one year (49,770) - 10,645 1 - (39,124)
Debt due after more than one (98,494) - (144,576) (139) - (243,209)
year
Current asset investments 60,468 1,978 (21,399) - 1,174 42,221
Net debt (68,444) 1,978 (90,475) (231) 1,174 (155,998)
This information is provided by RNS
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