Carphone Warehouse 2001 Annual Report Download - page 14

12 The Carphone Warehouse Group PLC Annual Report 2001
Financial review
Trading review
The Group continued to show strong growth in both turnover and
profitability in the 53 week period to 31 March 2001.
Turnover of £1,110.7m was achieved reflecting growth of 59%
over the 52 week period to 25 March 2000.
The Group generated EBITDA of £66.0m for the period, reflecting
growth of 60%. Significant growth in earnings was generated
across all aspects of our Distribution activities and through our
development and investment in the Telecoms Services division.
This performance was achieved after incurring losses of £4.8m
in establishing our wireless internet portal, MViva.
The Group’s pre–MViva EBITDA grew by 69% from £41.8m to
£70.8m for the period to 31 March 2001.
During the period the principal acquisitions were Cellcom, a
provider of Telecoms based facilities management services in the UK;
Road Phone, a mobile phone retailer in The Netherlands; a portfolio
of 74 stores in Germany; and a portfolio of 27 stores in France, for a
consideration of £9.1m, £6.9m, £6.5m, and £8.0m respectively.
Profit before tax (excluding goodwill amortisation and
exceptional items) increased by 62% to £49.6m reflecting
again the strength of the business performance in the period.
Turnover increased in both our UK and Continental European
operations, by 41% and 119% respectively.
Turnover 2001 2000
£m £m
Distribution 1,079.1 685.8
Retail 649.3 504.5
Online 32.6 23.8
Insurance 49.2 27.4
Wholesale 348.0 130.1
Telecoms Services 30.5 10.5
Wireless Data Services 1.1 1.4
Total Turnover 1,110.7 697.7
Retail
The UK’s Retail sales growth was a reflection of our improved market
position, our continued ability to sell a high proportion of subscription
phones compared to the market and the successful conversion of
158 Tandy stores by 31 March 2001. The total number of Carphone
Warehouse stores in the UK at 31 March 2001 was 411 compared
to 281 at 25 March 2000.
Our European Retail sales growth was generated through our
investment in 298 stores in the period and the benefits that arise
from having a more mature store portfolio.
Total Retail selling space excluding Tandy increased from 37,000
sq m to 63,000 sq m and the average store maturity profile across the
Group was 18 months compared to 20 months in the previous period.
Insurance, Online and Wholesale
Insurance and Online sales showed growth of 80% and 37%
respectively. Insurance activities have grown in line with Retail
activities and specifically our ability to generate a strong subscription
customer mix. Online sales growth was a result of our continued
investment in our call centre operations and our strengthening
web and interactive television sales.
In addition, Wholesale revenue was enhanced by the further
development of activities in Continental Europe and by the pre-pay
voucher business acquired with Cellcom.
Telecoms Services
Telecoms Services generated growth in sales of 192% to £30.5m
as a result of the increased share of airtime from network operators,
which generated turnover of £14.6m in the period, and from the
development of our own Telecoms Services, which include facilities
management, which generated turnover of £15.9m. Since the
acquisition of Cellcom, the Group has successfully developed these
facilities management activities such that 214,000 customers were
under management at the period end.
A significant contributor towards the Group’s growth in profitability
in the period was the enhanced gross profit percentage
within our Retail business. After excluding the Group’s Wholesale
activities (which generate a valuable return albeit at low margins)
gross profit margins improved from 31.3% to 33.0%. This is a
reflection of both our improved purchasing position and our ability
to deliver valuable customers to the network operators and
handset manufacturers alike.
Exceptional items
The following exceptional items arose in the period to 31 March 2001:
.Reorganisation of Tandy operations
Following the commitment made in February 2000 the Group
completed the integration of the Tandy support function and the
conversion of 158 of the 268 stores acquired. The remaining stores
have either been or are in the process of being sold, transferred or
returned to the landlord. As a result of this fundamental
reorganisation the Group has recognised exceptional charges
in the periods to 25 March 2000 and 31 March 2001 of £5.5m
and £4.5m respectively.
.AOL investment in MViva
During the year AOL Europe invested $25m in our Wireless Data
Services subsidiary MViva for a 15% stake. These monies were received
in two tranches, £9.9m in June 2000 followed by £6.6m in October
2000. This investment gave rise to an exceptional profit of £16.5m.
.Restructuring of Group activities in non-key markets
In certain smaller non-key markets, where the prospects of achieving
acceptable financial returns are not evident, the Group has announced
its intention to either restructure its operations or to withdraw its
involvement. As such the Group has provided £2.9m as at 31 March
2001 for the loss expected to arise on the disposal of specific fixed
assets. The Group anticipates that additional restructuring costs of
£3.0m will be incurred in the period to 30 March 2002.
.Disposal of wireless internet investments
In March 2001, the Group disposed of the individual investments
in its Wireless Internet Portfolio into an independently managed
fund. Although the consideration for the transfer was equal to the
aggregate cost of the individual investments, in accordance with
the Group’s accounting policy, losses of £2.5m have been
recognised in respect of the disposal of certain investments.
Earnings per
share (pence)
Before exceptionals
and amortisation
Profit before tax (£m)
Before exceptionals
and amortisation
98 99 00 01 98 99 00 01
5.4 49.6
3.8
2.1
1.6
30.6
19.8
13.9