Carphone Warehouse 2002 Annual Report Download

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Number one choice for
mobile communications
The Carphone Warehouse
Group PLC
Annual Report 2002

Table of contents

  • Page 1
    Number one choice for mobile communications The Carphone Warehouse Group PLC Annual Report 2002

  • Page 2
    ... Chief Executive's review T. S. Morris Review of operations Company Secretary Financial review Corporate responsibility Board of Directors 5and June 2002 Directors advisors Financial contents Corporate governance Registered Remuneration report Office Directors' report Acton Business Park North...

  • Page 3
    ... market increasingly dominated by replacement phone sales. It has therefore migrated its business and its business model. Today, The Carphone Warehouse is not just a retailer. Over 40% of the contribution we are presenting to you in this Annual Report comes from services that provide the Group with...

  • Page 4
    ... around from losing over £5m a year to being profitable. We also identified those retail locations that were under-performing and made the decision to close these stores. This review resulted in us withdrawing from non-key markets, as announced 2 The Carphone Warehouse Group PLC Annual Report 2002

  • Page 5
    ..., Sony Ericsson, Siemens and Samsung. Picture messaging services, Bluetooth technologies and new games applications for mobile phones should also stimulate customer demand this year. This changing environment is clearly creating new opportunities for The Carphone Warehouse and in this regard, I am...

  • Page 6
    ... market share of new connections and upgrades. In France we have extended our store portfolio to 151 and we have also increased the number of express repair centres. Our business in France continues to benefit from the good relationship that it 4 The Carphone Warehouse Group PLC Annual Report 2002

  • Page 7
    ... processes, we have transformed our performance in this country. Our businesses in Portugal and Ireland also performed well in a rapidly changing market place, reflecting the strength of the management in place. Our operations in Sweden and The Netherlands experienced a difficult period of trading...

  • Page 8
    ... the point of sale through billing, messaging and customer care services. During the last year we have grown the Telecoms services business through attracting high value customers, new network arrangements, and through acquisition In the UK we invested in a new call centre in Acton, London and in...

  • Page 9
    Facilities management customer base 863,738 Own customer base Telecoms services call centre in Acton, London. 154,855 68,034 146,133 8,550 01 02 00 01 02 The Carphone Warehouse Group PLC Annual Report 2002 7

  • Page 10
    ... was retailing in the UK from February 2002. In the coming year we anticipate the arrival and customer uptake of Multimedia Messaging Services (MMS), which will allow users to send and receive picture images from their mobile phones. In addition new mobile games applications will be widely available...

  • Page 11
    ... market Financial review Roger Taylor, Chief Financial Officer Trading review The Group demonstrated a strong performance in a challenging market environment in terms of volumes of handsets sold, growth in recurring revenues and profitability for the 52 week period to 30 March 2002. Group turnover...

  • Page 12
    ... and turnover grew from £4.6m to £26.4m. The Group also generates revenue and profits from its own virtual network and customers managed under a service provision contract. There were 155,000 such customers at the end of the period, compared 10 The Carphone Warehouse Group PLC Annual Report 2002

  • Page 13
    ... absence of significant debt within the Group, liquidity and interest rate management is concentrated on maximisation of in-hand funds through good day to day cash management and maximisation of our return Roger Taylor, Chief Financial Officer The Carphone Warehouse Group PLC Annual Report 2002 11

  • Page 14
    ... families living in the UK and UK based families with close relatives missing in New York, to help locate and link up those who were missing. • Auteuil International This French association runs various projects to help children worldwide 12 The Carphone Warehouse Group PLC Annual Report 2002

  • Page 15
    ... UK monthly buyers' guide distributed through our stores has a print run of over one million each month, and the paper used is chlorine free and made from wood from sustainable forests. All old mobile phone batteries are disposed of by a licensed waste management and recycling company. A new policy...

  • Page 16
    ... Executive Officer Age 37. Founder and Managing Director of the Group since 1989. In addition to his role as Chief Executive Officer, he is responsible for new business development and strategic initiatives. Non-Executive Director of HBOS PLC, he is also Chairman of The Prince's Trust Trading Board...

  • Page 17
    ... and operations of Orange. Under Hans' leadership Orange launched on 28 April 1994 and had a profound impact on the global mobile market. In March 1996, Orange listed on the London and New York stock exchanges, in June that year becoming the youngest ever company to enter the FTSE 100. Board...

  • Page 18
    ...profit and loss account Consolidated statement of total recognised gains and losses Consolidated balance sheet Company balance sheet Consolidated cash flow statement Notes to the financial statements Five year record Notice of Annual General Meeting 16 The Carphone Warehouse Group PLC Annual Report...

  • Page 19
    ... and is an opportunity to raise with the Directors issues concerning the Group's operations and performance. Investor information including financial results, press releases and management presentations are available on carphonewarehouse.com The Carphone Warehouse Group PLC Annual Report 2002 17

  • Page 20
    ... period under review and up to the date of approval of the Annual Report and Accounts. This process is reviewed annually by the Board. The process used by the Board through the Audit Committee and risk management team includes the following: • Review of the external and internal audit work plans...

  • Page 21
    ... has a service contract which is terminable by either party on twelve months notice. Hans Roger Snook also has an interest in 1 million share options in the Company and is not therefore considered to be an independent Non-Executive Director. The Carphone Warehouse Group PLC Annual Report 2002 19

  • Page 22
    ... the Company with an exercise price of £0.80, representing the average price over the previous three days, and exercisable after 25 March 2005. From the date of his appointment Hans Roger Snook will receive an annual remuneration of £150,000. 20 The Carphone Warehouse Group PLC Annual Report 2002

  • Page 23
    ... the period are provided in note 31 to the financial statements. 309,028,535 216,590,759 2,276,806 13,038,670 150,500 5,000 45,000 12,461 50,000 309,028,535 216,590,759 38,000 13,038,670 150,500 5,000 45,000 12,461 50,000 The Carphone Warehouse Group PLC Annual Report 2002...

  • Page 24
    ... 2002 The Directors have pleasure in presenting the Annual Report and financial statements of The Carphone Warehouse Group PLC for the 52 weeks ended 30 March 2002. Principal activities The principal activity of the Group continues to be the provision of mobile communication products and services...

  • Page 25
    ... Meeting to appoint Deloitte & Touche as auditors of the Company for the ensuing period. By order of the Board, The Carphone Warehouse Group PLC North Acton Business Park Wales Farm Road London W3 6RS T S Morris Company Secretary 5 June 2002 The Carphone Warehouse Group PLC Annual Report 2002 23

  • Page 26
    ... financial statements comply with the Companies Act 1985. They are also responsible for taking such steps as are reasonably open to them to safeguard the assets of the Company and Group and to prevent and detect fraud and other irregularities. 24 The Carphone Warehouse Group PLC Annual Report 2002

  • Page 27
    Independent Auditors' report Independent Auditors' report to the shareholders of The Carphone Warehouse Group PLC We have audited the financial statements of The Carphone Warehouse Group PLC for the period ended 30 March 2002 which comprise the profit and loss account, balance sheets, cash flow ...

  • Page 28
    ... recognised since last financial statements 23 23 10 (28,262) (302) (28,564) (3,941) (32,505) 34,836 (383) 34,453 - 34,453 The accompanying notes are an integral part of this consolidated statement of total recognised gains and losses. 26 The Carphone Warehouse Group PLC Annual Report 2002

  • Page 29
    ... 772 408,027 833 356,235 30 75,719 432,817 1,687 434,504 The financial statements on pages 26 to 50 were approved by the Board on 5 June 2002 and signed on its behalf by: C W Dunstone Chief Executive Officer R W Taylor Chief Financial Officer The Carphone Warehouse Group PLC Annual Report 2002 27

  • Page 30
    ... 23 835 359,305 24,011 384,151 833 356,235 680 357,748 The financial statements on pages 26 to 50 were approved by the Board on 5 June 2002 and signed on its behalf by: C W Dunstone Chief Executive Officer R W Taylor Chief Financial Officer 28 The Carphone Warehouse Group PLC Annual Report 2002

  • Page 31
    ... (Decrease) increase in creditors Net cash inflow from operating activities 31,733 (24,863) 6,870 26,335 14,736 47,941 (646) 9,533 2,700 26,422 (56,598) 29,352 38,457 - 38,457 18,788 8,771 66,016 31 (11,256) 5,187 (54,248) 37,933 43,663 The Carphone Warehouse Group PLC Annual Report 2002 29

  • Page 32
    ...other than investments which are independently managed within external funds, which are evaluated on a portfolio basis at the end of the period. Current asset investments are stated at the lower of cost and net realisable value. c) d) e) f) 30 The Carphone Warehouse Group PLC Annual Report 2002

  • Page 33
    ... the grant of share options at a discount to the market price at the date of the grant. The Company has made use of the exemption under UITF Abstract 17 not to recognise any compensation charge in respect of these options. h) i) j) k) l) The Carphone Warehouse Group PLC Annual Report 2002 31

  • Page 34
    ...Telecoms services Common costs 2,799 43,565 - 46,364 46,364 - 46,364 (51) 8,096 (3,891) 4,154 8,045 (3,891) 4,154 (109) 12,604 - 12,495 12,495 - 12,495 Rest of Europe Common costs Details of acquisitions in the period are given in note 13. 32 The Carphone Warehouse Group PLC Annual Report 2002

  • Page 35
    ... employed by the Group during the period was: 2002 Number 2001 Number Administration Selling and distribution 1,113 5,879 6,992 979 4,466 5,445 Details of Directors' remuneration are provided in the Remuneration report on pages 19 to 21. The Carphone Warehouse Group PLC Annual Report 2002 33

  • Page 36
    ...number of under-performing retail outlets; - the reorganisation of back office operations across the Group, including the establishment of shared service centres in the UK and Portugal. Loss on disposal of fixed assets Fixed assets with a net book value of £6.3m have been written down in the period...

  • Page 37
    ...) for tax losses have not yet been recognised as there is insufficient evidence that there will be suitable taxable profits against which these losses can be recovered. Details of deferred tax assets and liabilities are provided in note 21. The Carphone Warehouse Group PLC Annual Report 2002 35

  • Page 38
    ... 2001 £'000 Profit and loss account Increase in deferred tax charge in the period ended 25 March 2000 Increase in deferred tax charge in the period ended 31 March 2001 Cumulative decrease in profit and loss account (618) (3,323) (3,941) 36 The Carphone Warehouse Group PLC Annual Report 2002

  • Page 39
    ... note 13) Foreign exchange At 30 March 2002 Amortisation At 31 March 2001 Charge for the period At 30 March 2002 Net book value At 30 March 2002 At 31 March 2001 Total £'000 240,913 57,948 115 298,976 (9,442) (14,736) (24,178) 274,798 231,471 The Carphone Warehouse Group PLC Annual Report 2002 37

  • Page 40
    ...London offices in May 2002 and the relevant assets have been transferred to short-term investments during the period. Exceptional disposals and write-offs relate to the withdrawal from non-key territories and store closures (note 6b) and to the fundamental reorganisation of the Group's Data services...

  • Page 41
    ...(UK) Limited* Wireless Internet Portfolio BV The Phone House BV The Phone House Investments SA *held directly by the Company. England England Belgium Czech Republic France Germany Ireland Netherlands Poland Portugal Spain Sweden Switzerland England England France Isle of Man Isle of Man Switzerland...

  • Page 42
    ...taxation Tax on profit on ordinary activities Profit on ordinary activities after taxation All recognised gains and losses for the period are included in the profit and loss account. £'000 12,084 (8,148) 3,936 (2,827) 1,109 92 1,201 (400) 801 40 The Carphone Warehouse Group PLC Annual Report 2002

  • Page 43
    ... 2002 is £27.8m (2001 - £47.3m). As explained in notes 12 and 30, the Group sold the freehold on its London offices after 30 March 2002 and the relevant assets, with a value of £18.4m have therefore been included within short-term investments. The Carphone Warehouse Group PLC Annual Report 2002...

  • Page 44
    ... currency hedges, consist of committed and uncommitted loans in Sterling and Euro as well as local overdraft facilities, which are denominated in a variety of European currencies. The Group does not trade in financial assets and liabilities. 42 The Carphone Warehouse Group PLC Annual Report 2002

  • Page 45
    ...2001 - 4.79%) for weighted average periods of 1.1 years (2001 - 1.4 years). The interest rate on floating rate financial assets and liabilities is linked to market interest rates, mainly on an overnight basis or one, two or three month periods. The Carphone Warehouse Group PLC Annual Report 2002 43

  • Page 46
    ... deals to year-end market or rates as appropriate to the instrument. (vi) Gains and losses on hedges At 30 March 2002, the Group had unrecognised net gains of £0.7m (2001 - net loss £0.1m). All these gains are expected to be recognised in the period ending 29 March 2003. 44 The Carphone Warehouse...

  • Page 47
    ... charges Insurance funds and reserves £'000 Restructuring provisions £'000 Deferred tax £'000 Other £'000 Total £'000 Group At 31 March 2001 (restated) Charge (credit) to profit and loss account Acquisition of subsidiary undertakings Utilised in the period Foreign exchange At 30 March 2002 11...

  • Page 48
    ... 200,000 125,000 125,000 10,156,500 850,000 - - - 17,660,490 It is proposed to award a further 8,109,438 options in June 2002 at an exercise price to be determined at that time. 46 The Carphone Warehouse Group PLC Annual Report 2002

  • Page 49
    ... with the exemption permitted by section 230 of the Companies Act 1985, the profit and loss account of the Company is not separately presented. The profit attributable to shareholders of the Company for the period is £23.5m (2001 - £0.6m). The Carphone Warehouse Group PLC Annual Report 2002 47

  • Page 50
    ... interests' share of profits or losses in the period At 30 March 2002 1,687 (915) 772 26 Analysis of cash flows a. Returns on investments and servicing of finance Group Interest received Interest paid Net cash inflow from returns on investments and servicing of finance b. Taxation Corporation tax...

  • Page 51
    ... operating leases, all of which relate to land and buildings, are as follows: 2002 £'000 2001 £'000 Operating leases which expire: Within one year In two to five years After five years 4,115 10,583 22,260 36,958 1,652 7,604 24,558 33,814 The Carphone Warehouse Group PLC Annual Report 2002...

  • Page 52
    ...000,000. Roger Taylor is prohibited from selling such shares until 21 December 2004 except with the permission of the Company. The acquisition was also further approved by the Remuneration Committee and the Board of Directors of the Company. 50 The Carphone Warehouse Group PLC Annual Report 2002

  • Page 53
    ....1 26.1 19.8 32.0 32.2 (15.3) (21.2) 27.7 28.4 (0.7) 27.7 2.1p 2.1p 180.2 16.0 13.9 18.9 10.3 (6.2) (7.4) 15.6 15.5 0.1 15.6 1.6p 1.6p * Results and Earnings per share are stated before exceptional items and amortisation. The Carphone Warehouse Group PLC Annual Report 2002 51

  • Page 54
    ... to any such offer, agreement or other arrangements as if the power conferred hereby had not expired. By order of the Board T. S. Morris Company Secretary 5 June 2002 Registered Office North Acton Business Park Wales Farm Road London W3 6RS 52 The Carphone Warehouse Group PLC Annual Report 2002

  • Page 55
    ... to Her Majesty The Queen Mobile Phone Communications The Carphone Warehouse London The Carphone Warehouse Group PLC North Acton Business Park Wales Farm Road London W3 6RS Tel +44 (0)20 8896 5000 Fax +44 (0)20 8753 8009 Email [email protected] Registered no. 3253714 carphonewarehouse.com