Carphone Warehouse 2009 Annual Report Download - page 7

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Highlights
www.cpwplc.com 3
Highlights
Chairman’s Statement
John Gildersleeve, Chairman
“ ”
The Group’s performance
has held up well in the
tough trading conditions –
a testament to the resilience
of the model.
It has been a momentous year for the
Group, as it has been for many enterprises
worldwide, given the rapid deterioration in
the global economy. Carphone Warehouse
has not been immune to these pressures.
Our customers have been feeling the
pinch, our suppliers have become less
protable, and the currencies in which our
assets and liabilities are denominated have
been extremely volatile. However, where
possible we have continued to focus on
our long-term goals: to build market share,
to remain relevant to customers and to
offer excellent value in everything we do.
Group revenue for the period was down
3% to £1,385m (2008: £1,424m). Both of
these gures exclude Best Buy Europe
to make comparability easier. Following
the transaction with Best Buy at the end
of June 2008, the results of the Group’s
retail and distribution business are shown
net of interest and tax within joint
ventures and associates. Results for
the rst quarter and for 2007-08 are
shown as discontinued operations,
again net of interest and tax. Best Buy
Europe revenue was up 15% to £3,563m,
reecting signicant market share gains
and a stronger Euro.
At a divisional level, TalkTalk Group
achieved EBIT of £124m. Whilst
representing an increase of 80% on
the previous year (2008: £69m), this
was some way below our aspirations
at the start of the year and reected
an unexpected slowdown in the rate
of growth in the broadband market,
principally as a result of a markedly
less active housing market.
EBIT at Best Buy Europe fell 33% to
£101m (2008: £151m) with strong top
line growth more than offset by margin
deterioration, caused partly by product
mix and partly by our own trading
strategy, which focused on market share
gains in a weaker handset market.
Headline earnings per share fell 18% to
12.6p (2008: 15.2p). Statutory earnings
per share, after exceptional items and
amortisation of acquisition intangibles,
increased from 8.1p in the prior year to
61.6p, reecting the substantial gain on
the transaction with Best Buy during the
year. The Board is proposing a nal
dividend of 3.00p (2008: 3.00p), taking the
total for the year to 4.35p (2008: 4.25p).
While protability has suffered against
a backdrop of a very harsh environment,
I am pleased to be able to report on
some areas of substantial progress
for the Group. The deal with Best Buy,
completed in June 2008, brought our
retail operations together with the
acknowledged global leader in consumer
electronics retailing. Together we are
condent of not only refreshing our
existing retail proposition to deliver the
“Connected World” to customers, but
also building a substantial Big Box
consumer electronics retail business in
Europe. It also enabled us to pay off the
large majority of our underlying bank
borrowings, leaving us with a very strong
balance sheet.
We have been using this nancial strength
to trade aggressively on the high street,
accepting lower margins in return for
sustained top line growth and burgeoning
market share in a more depressed mobile
phone market. Our increasing market
presence will allow us to start to rebuild
margins as volumes recover.
Within the TalkTalk Group, the service
problems of a couple of years ago have
been all but eradicated and we are now
beginning to be recognised for good
service as well as outstanding value.
During the year we have focused on
making our network even more robust
and putting in place the additional
capacity required to exceed our
customers’ growing usage needs.
After six years of heavy investment,
the business is now set to generate
signicant amounts of cash.
Despite the tough times, morale is high:
our internal employee surveys are
showing very positive readings and our
people are excited about our plans for the
businesses. It can be a challenge to feel
motivated during times of such great
uncertainty but our employees have really
risen to the challenge and I would like to
thank them on behalf of the Board for their
continued efforts.