Carphone Warehouse 2007 Annual Report Download - page 7

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Highlights and Strategy Business Review Governance Financial Statements
Chairman’s Statement
the Onetel integration demonstrates that there is the
necessary quality of operational expertise to support
the strategic vision. Execution will become an ever
more important theme over the next 12 months as
we bed down the AOL business and make further
significant enhancements to the quality of our
broadband service.
However, it is not in the Group’s nature to stand still
for long, and we were very pleased to agree a major
strategic partnership shortly before our year end with
Best Buy Co, Inc., the largest consumer electronics
retailer in the US. After a successful trial in New York,
we are rolling out a mobile retail joint venture to
150-200 stores in the US in the next 18 months.
In addition, we are bringing Best Buy’s Geek Squad
home technology customer service operation to the
UK. The business case for both of these projects is
compelling, and we believe the partnership will create
significant value over the coming years.
This year we have asked more of our people than ever
before, and they have responded to the challenges
we have faced with great commitment, dedication and
patience. I would like to extend the Board’s thanks
and gratitude to everyone in the Group for their
continued efforts. We all share the same
dissatisfaction in falling well short of our usual high
standards of customer service and are united in our
determination to deliver a very positive and consistent
customer experience in the years ahead.
John Gildersleeve,
Chairman
The Group has experienced a year of mixed
fortunes. The Distribution business has once again
exceeded our expectations, continuing to prosper in
an attractive market and taking share from our
competitors. Our fixed line telecoms business has
achieved real scale, with the strong organic growth
stimulated by our Free Broadband proposition
augmented by the acquisition of the UK customer
base of AOL. However, the unprecedented demand
created by our broadband offer led to unacceptable
levels of customer service.
As an organisation that has always sought to put the
customer at the centre of all of our business decisions,
we were very disappointed to have let our customers
down in this way. In response to the problems, we
have dedicated significant additional resource in our
call centres and re-engineered our provisioning and
customer management processes to create a robust
and scaleable platform. It is our aspiration to
differentiate our broadband proposition not only on
value but also on service, and this will be one of the
Group’s key goals for the coming year.
Group revenue for the period was £3,991.5m, a rise
of 31.0% on last year’s figure of £3,046.4m. Headline
pre-tax profit fell by 9.5% from £136.1m to £123.1m,
reflecting, as expected, start-up losses of £80.5m in
the launch of Free Broadband and Virgin Mobile in
France, and a net gain on fixed asset disposals of
£3.7m. Earnings per share on the same basis
decreased by 4.5% from 12.38p to 11.82p. Statutory
profit before tax, after the amortisation of acquisition
intangibles, and reorganisation costs in the prior year,
fell by 15.6% from £81.0m to £68.4m, while statutory
earnings per share decreased by 6.0% from 7.99p to
7.51p. Cash generated from operations increased by
30.5% from £196.4m to £256.3m, reflecting strong
growth in the Group’s underlying business. The Board
is proposing a final dividend of 2.25p, taking the total
for the year to 3.25p. The increase of 30% on last
year’s distribution reflects the Board’s confidence that
the current level of investment will generate significant
long-term value.
As the business grows up, we will increasingly need to
balance its natural dynamism and creativity with a tight
focus on operational efficiency and business
processes. Over the past 18 months, with the
acquisition of Onetel and the AOL base, and the
launch of Free Broadband, the entrepreneurial spirit of
the business has been self-evident. The success of
3
366
new stores opened
17.3%
52 week growth in
subscription connections
31.0%
growth in Group revenue
www.cpwplc.com
KEY ACHIEVEMENTS
As the business grows up,
we will increasingly need to
balance its natural dynamism
with a tight focus on
operational efficiency