Carphone Warehouse 2003 Annual Report Download - page 4
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Please find page 4 of the 2003 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.Chief Executive’s Review Through our focus on independence, choice and service
we have achieved over 20% compound annual growth
in subscription connections over the last three years.
The Group has made significant progress over the last
twelve months, both in the execution of our strategy and
in the financial results we have achieved.
Strategy driving earnings growth and quality
Our mobile telecoms strategy is to attract and retain high
quality subscription customers on behalf of our network
partners, and to harness increasing value from our customer
relationships throughout each customer’s mobile lifetime.
We continue to attract high value customers as a result
of the quality and scale of our retail proposition. We remain
truly and passionately independent, representing the widest
possible range of networks and tariffs and being first to
market with the latest technology.
Our aim at all times is to establish a customer’s needs
and match them as accurately as possible with the most
appropriate handset and tariff. The success of this approach
is evidenced by the continued growth in subscription
connections, which we have grown at a compound annual
rate of over 20% over the past three years.
This year we have augmented our strategy with a move
into fixed line services. The acquisition of Opal Telecom,
and the subsequent launch of talktalk™, our residential
fixed line service, present us with a significant additional
opportunity towards which we have already made
significant progress. We are actively reviewing the potential
of other products and services that we believe are relevant
and appropriate to our mobile offer and will allow us to
maximise the return from our retail asset base.
We anticipate that the successful execution of this
strategy will deliver not only continued growth but also
ongoing improvement in the quality of our earnings,
by generating an increasing proportion of profits from
recurring revenue streams.
Market share continues to grow
During the year we consolidated our position as the leading
independent retailer of mobile phone handsets and related
services across Europe. Overall, we connected 4.36 million
mobile phones during the period, an increase of 20.7% on
2002. We attained this level of growth in a handset market
that declined for the second successive year and in the
process we increased our market share from approximately
5.1% to approximately 6.2% across the markets we serve.
International performance strong
The Group’s performance outside the UK has been
particularly encouraging. In key markets such as France,
Spain, the Netherlands and Sweden we have achieved very
strong revenue growth and a significant improvement in
profitability. Our country management teams have worked
very hard to improve back office disciplines and sharpen
the retail proposition, with sales and margins both
benefiting as a result.
Elsewhere we have continued to trade well in Ireland,
Portugal and Switzerland. We exited the Polish market
just before the year end as we did not have sufficient
scale nor did we consider it to be strategically important.
Both Germany and Belgium continue to be loss-making.
The losses in Belgium remain tolerable and we are optimistic
that we can take advantage of opportunities to develop
our business in the Belgian market to move it to profitability
in the medium term. In Germany, we succeeded in our
aim of halving losses year-on-year. After the year end,
we announced our intention to acquire Hutchison
Telecommunications GmbH, a German service provider,
which we believe will transform our German business and
create a platform for profitable growth in that market.
Recurring businesses making strong progress
We have also made good progress with the development
of our recurring revenues strategy during the year. 50%
of Group contribution now derives from recurring business.
The customer bases we manage on behalf of mobile
networks continue to grow and we are helping to stimulate
customer ARPU and reduce churn. Our share of ongoing
ARPU has made rapid progress this year and our insurance
base continues to grow.
Our growing presence in the customer management market
was reinforced by the agreement reached with Sainsbury’s
in April 2003 to provide mobile and fixed line services to
its customer base. We are confident that we will be able
to develop this opportunity into a significant contributor to
Group profitability in the medium term, and will continue to
look for additional affiliate schemes in the coming year.
Opal Telecom acquisition
The acquisition of Opal Telecom plc in November 2002
represents an important strategic development for The
Carphone Warehouse. Opal is a highly successful, rapidly
2
The Carphone Warehouse Group PLC Annual Report 2003
2,081 3,603 3,615 4,364
02 030100
Total connections
(retail and online)
(000s)
1,09 7 1,557 1,767 1,909
02 030100
Subscription connections
(retail and online)
(000s)