Carphone Warehouse 2004 Annual Report Download - page 4

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The last 12 months have been a period of dynamic growth
and rapid change for The Carphone Warehouse, achieved in
the context of a mobile phone market that has strengthened
markedly and a fixed line market in which deregulation has
heralded a major opportunity for us. We achieved organic
growth in turnover of 28.9% in our core operations, with
headline profit before tax increasing by 33.8%. Earnings
per share on the same basis increased by 29.7%, while
statutory earnings per share increased by 21.9%.
Our strategy of developing recurring income streams from
providing a range of services to our network and end-user
customers continues to bear fruit. 55.3% of Group
contribution came from recurring business, up from just
27.5% four years ago. As a result we have succeeded in
both improving the quality of our earnings and maximising
the potential for future earnings growth.
In addition, we continue to take a long-term approach to
the creation of shareholder value, by investing in businesses
that we believe will support attractive growth in Group
earnings and cash generation in the years to come. In the
past year we incurred start-up losses of £11.0m in TalkTalk,
our new residential fixed line service, because of our firm
belief that we are investing in a significant long-term
opportunity. The acquisitions of fixed line providers in Spain
and Switzerland just before the year end demonstrate our
commitment to this new market, which has a natural affinity
with our mobile retail proposition.
Our acquisition of Hutchison Telecommunications GmbH,
a German mobile service provider in June 2003 also
typified our determination to build sustainable businesses,
and our ability to take the difficult decisions that give due
consideration to long-term potential rather than simply
finding ‘quick fixes’. Our German retail chain is now sharing
in the lifetime value of the customers it recruits and will
break even this year if its current progress continues.
During the year the Group underwent an important internal
restructuring, with the UK and non-UK distribution
operations now being managed as a single unit under
Geoffroy Roux de Bezieux as Chief Operating Officer,
Distribution. We are already beginning to see tangible
benefits, both in the negotiation of supplier agreements
and in the consolidation of retail best practice. In addition,
David Goldie, formerly Chief Executive Officer of Opal
Telecom, has been appointed Chief Operating Officer,
Telecoms, so that his expertise can be most effectively
put to use across all of the Group’s telecoms businesses.
There were two changes to the Board in the last twelve
months. We were sorry to say farewell to Des Wilson,
who retired from his non-executive role after three years
of valuable service. At the same time we were very pleased
to appoint Martin Dawes to the Board as a Non-Executive
Director during the year.
We are confident of our prospects in the coming year.
Competition between mobile operators and continued
innovation by handset manufacturers are set to continue
to stimulate the market. In fixed line telecoms, we expect
this to be the year when TalkTalk establishes itself as the
natural alternative to BT in the UK residential market.
The significant progress we have made this year would
not have been possible without the efforts of all of our
employees. Loyalty and dedication to The Carphone
Warehouse is evident in the quality of everyone’s
contributions and the low levels of employee turnover.
Our employees are the key to our continued success and it
is my honour to express the Board’s gratitude to them.
Hans Roger Snook, Chairman
Chairman’s Statement
“We continue to take a long-term approach
to the creation of shareholder value, by
investing in businesses that we believe
will support attractive growth in Group
earnings and cash generation in the years
to come.”
Hans Roger Snook, Chairman