Carphone Warehouse 2004 Annual Report Download - page 7

The Carphone Warehouse Group PLC Annual Report 2004
5
In mobile services we further developed our customer
management operations with the acquisition of Hutchison
Telecommunications GmbH in Germany in June 2003.
The acquisition gives us over 600,000 mobile customers
and an important recurring revenue stream in a market
in which our retail operations have historically struggled
through lack of scale. The combined operations are now
profitable and provide a stable platform for future growth in
Germany. Overall, we now manage nearly two million mobile
customer relationships across Germany, the UK and France.
Finally, it is worth noting that in spite of the heightened
activity of launching new services during the year, our other
recurring businesses did not suffer. On the contrary, we
added a record 0.26m new insurance customers, taking the
total to 1.32m, and grew profits in our insurance business
by 27.4%. This is testament to our sales consultants’ ability
to offer new services without compromising sales of more
established products, and proof of the wider viability of our
business model.
Growing our business-to-business fixed line operations
In its first full year within the Group, Opal performed
outstandingly well and exceeded all our expectations,
with traffic over the network growing by 100.5% on a pro
forma basis. The combination of engineering excellence
and a rigorous sales and marketing focus is proving to be
a powerful one.
Looking forward, we are confident that we can continue
to grow Opal both organically and through acquisition. We
expect consolidation in the sector to accelerate over the next
twelve months and we will explore appropriate opportunities.
Outlook
The outlook for our core businesses is promising. We are
once again operating in a handset market demonstrating
strong growth. The rapid increase in the volume of our 3G
connections since the start of 2004 gives some indication
of likely future demand, and we are now seeing the
incumbent operators start to come to market with their
own 3G services. At the same time the rate of innovation
and renewal from the handset manufacturers continues
to stimulate consumer demand.
These are good market conditions for The Carphone
Warehouse as customers not only rely on our advice for the
most appropriate handset and tariff, but also progressively
require educating in maximising the functionality of their
chosen mobile phone. We therefore expect to continue
to strengthen our position through market share gains and
new store openings.
On the fixed line side, we anticipate further strong growth
in our TalkTalk customer base as the appeal of our free calls
proposition becomes more widely recognised. We anticipate
that we will have over 900,000 customers by March 2005.
Our fledgling fixed line operations outside the UK will start
to recruit customers in the coming months and should
break even in the first year, with good growth in profits
anticipated over the medium term.
Opal has had an outstanding 12 months. We remain
confident that Opal can continue to grow revenues at an
attractive rate in the year ahead, and maximise efficiency
through increased interconnection and strict control of
operating costs.
As always, our continued success is down to the dedication
and expertise of all of our employees. Recruitment and
training remain as important as ever and in the last
12 months over 1,500 people joined the Group, bringing
the total to nearly 11,000. I am delighted to welcome all
of these new recruits, including those who have joined as
a result of our acquisitions in Germany, Spain and Switzerland.
With our accelerated store opening plans, the continued
expansion of our customer service activities and our
investment in the infrastructure to support future growth,
we expect to create a further 1,000 jobs across Europe
in the current year.
I would also like to extend my thanks to all of our
customers, suppliers and investors for their continued
support as we grow through what are very exciting times.
I am confident that over the next year we will extend our
position as the leading independent mobile phone retailer
in Europe, continue to execute on our fixed line strategy,
and deliver further profitable growth.
Charles Dunstone, Chief Executive Officer
38.4 57.7 77.1 110.5
03 040201
Contribution from recurring
revenues (£m)
33.7 44.7 49.7 55.3
03 040201
Contribution from recurring
revenues (% of total)
The outlook for our core businesses is
promising. We are once again operating
in a handset market demonstrating strong
growth. The rate of innovation and renewal
from the handset manufacturers continues
to stimulate consumer demand.