Carphone Warehouse 2006 Annual Report Download - page 7

Chairman’s Statement
It has been a year of strong financial and operational
performance for the Group. The mobile phone
market has continued to grow steadily but our own
rate of growth has far exceeded it as we continue
to invest in building scale and taking market share.
On the fixed line side, we have supplemented our
strong organic growth with the acquisition of two
major competitors. The new financial year also
promises to be an exciting one, with the launch of
our free broadband proposition in April stimulating
unprecedented consumer interest.
Group revenue for the period was £3,046.4m, compared
to £2,355.1m for the prior year, representing growth
of 29.4%. Headline pre-tax profit was £136.1m, an
increase of 35.5% on the year to March 2005. Earnings
per share on the same basis grew by 33.8% to 12.38p.
Statutory profit before tax, after reorganisation costs
of £35.2m and acquisition intangibles amortisation
of £19.8m, decreased by 11.9% from £91.9m to
£81.0m, while statutory earnings per share decreased
by 5.3% from 8.44p to 7.99p. Cash generated from
operations increased by 16.5% from £168.6m to
£196.4m. The Board is proposing a final dividend of
1.75p, taking the total for the year to 2.50p, up 38.9%
on last year’s pay-out.
I believe there are two fundamental factors that make
Carphone Warehouse different from most other
companies: its approach to business, and the quality
of its people. It is a privilege to be involved with
a company that makes bold business decisions,
and will not compromise its ability to pursue long-term
strategic goals because of the risk to short-term
earnings targets. The launch of TalkTalk three years
ago showed the conviction and determination of the
management team to seize the opportunity with both
hands despite the short-term cost, and that approach
has been vindicated. The same is true today with the
planned investment in TalkTalk broadband and our
MVNO operations. It is worth noting that our share
register has remained remarkably stable over the last
three years, underlining the support for this approach
from our major external shareholders.
However, at the same time as pursuing new and
exciting opportunities, we continue to invest in our
core Distribution business. After opening over 550
stores over the last two years, we plan to open a
further 250 stores in the forthcoming year, to take our
total portfolio over 2,000 stores. New space continues
www.cpwplc.com 3
Highlights and Strategy
A company that will not
compromise its pursuit of
long term strategic goals
317
NEW STORES OPENED
23.6%
52 WEEK GROWTH IN
SUBSCRIPTION CONNECTIONS
33.8%
GROWTH IN HEADLINE
EARNINGS PER SHARE
John Gildersleeve, Chairman
to generate a very attractive return for us, and we see
plenty of room for further growth in our ten markets.
We will continue to pursue our successful strategy
of reinvesting the benefits of our increasing scale into
the customer proposition rather than our margin, to
establish a business with economics that remain
sustainable in the long term.
The year has seen a number of changes to the Board.
I would like to thank Hans Roger Snook for his three
years’ service as Chairman during a period of rapid
and successful growth for the Group. In addition,
Martin Dawes stepped down as a Non-Executive
Director, and just after the year end Geoffroy Roux
de Bezieux relinquished his role as Chief Operating
Officer, Distribution, to run our new mobile venture in
France under the Virgin brand. Geoffroy has played
a pivotal role in the successful development of our
retail proposition across Europe and I would like to
thank him for his significant contribution.
David Goldie, Chief Operating Officer, Telecoms,
joined the Board during the year, and Andrew
Harrison, Chief Executive of the UK business, joined
just after the year end. We have also attracted three
new Non-Executives of the highest calibre in Steven
Esom, David Mansfield and Sally Morgan, and they
have already made valuable contributions to our
Board discussions.
As I highlighted above, the quality of the Group’s
people is a fundamental factor in its continued
success. This year we have welcomed more people
than ever before into the business, both through our
continued organic growth and the acquisitions we
have made. I would like to thank all our employees
for their outstanding contributions and commitment.
Key achievements