Carphone Warehouse 2006 Annual Report Download - page 15

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CONTRIBUTION FROM
NON-UK OPERATIONS
(£m)
’06’05’04’03
48.0
87.6
116.9
163.7
INSURANCE BASE
UP 16.7% (000s)
’06’05’04’03
1,060
1,324
1,645
1,921
SALES PER SQUARE METRE
UP 2.0% (£)
’06’05’04’03
11,676
14,303 15,343 15,654
stream represents an important element of our overall
commercial agreement with many networks. Again,
the key underlying driver for Ongoing is our
subscription connection sales.
Ongoing revenues grew by 25.6% to £58.4m year-
on-year (2005: £46.5m). This performance reflects
the sustained strong subscription connections growth
over the last few years. We continue to view Ongoing
share as a vital element of our network agreements,
as it provides us excellent earnings visibility and clearly
aligns our interests with those of the networks.
£203.5m (2005: £128.2m) and contribution was
£14.7m (2005: £7.7m). Underlying growth continued
to be strong as our web and direct sales activities
grew their market share, and overall performance was
boosted by the acquisition of One Stop Phone Shop,
a further online brand in the UK market, at the end
of the previous year. We continue to review the
European opportunity for direct and online channels.
Insurance
The Group offers a range of insurance products to
its retail customers, providing protection against
the replacement cost of a lost, stolen or damaged
handset, as well as cover for any outstanding
contractual liability and the cost of any calls made
if a mobile phone falls into the wrong hands. Insurance
is a core element of the Group’s customer proposition.
Our Insurance customer base continued to grow
strongly during the year. Overall the customer base
grew by 16.7% to 1.92m. Within this figure, the
business mix improved, with high tier policyholders
(typically mobile subscription customers) up 24.1%.
The non-UK base now represents 45.8% of the total.
Insurance revenues grew 13.8% to £116.1m (2005:
£102.0m) and contribution increased by 30.0% to
£45.5m (2005: £35.0m). The contribution margin
expanded significantly as we began to benefit from
the scale of our operations in a number of markets,
fully underwriting our own business and the
investment in new systems developed in the prior year.
We continue to see good growth prospects in our
Insurance business. The main driver will continue to
be growth in our subscription connections, but we
have also recently relaunched the product suite with
a move to risk-based pricing, which allows us to tailor
individual policies much more closely to a customer’s
needs, while also matching the level of premium to
the customer risk profile.
Ongoing
Ongoing revenue represents the share of customer call
spend (or ARPU) we receive as a result of connecting
subscription customers to certain networks. We are
typically contractually entitled to our share of revenue
for as long as a customer is active, so this income
Operating and Financial Performance Review continued www.cpwplc.com 11
Operating and Financial Performance
STRONG IMPROVEMENT
IN INSURANCE MARGIN
SUBSCRIPTION GROWTH
DRIVING RECURRING REVENUES