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Charles Dunstone,
Chairman
02 Carphone Warehouse Group plc Annual Report 2011
OVERVIEW
CHAIRMAN’S STATEMENT
HARNESSING THE CONNECTED
WORLD TO DELIVER VALUE
FOR SHAREHOLDERS AND
CUSTOMERS
One year on from the creation of the
‘new’ Carphone Warehouse Group
through the successful demerger of
TalkTalk, it is a pleasure to report on
the company’s performance.
Strategically, Carphone is capitalising
on the rapid growth and development of
the ‘Connected World’. Operationally, its
execution has been impressive, driving its
position in its markets. Financially, despite
the tough economic environment, it has
delivered results significantly ahead of
original expectations. During the year,
Carphone consecutively increased its
guidance three times, ending the year
with earnings per share of 15.0 pence,
good cash flow generation from operations
and a strong balance sheet.
It was in June 2000 that the original
Carphone Warehouse floated on the
London Stock Exchange. At that time,
we were still riding the growth wave in
mobile penetration and we were benefiting
from being a source of both great variety
and impartial advice – two constants in
Carphone’s ethos. We had just seen the
award of 3G licences and we were
looking forward to mobiles becoming
the individual’s primary access to the
internet as well as their primary means
of voice communication.
We could not have mapped out the
explosive growth of mobile usage and
applications, but a great deal of what we
saw in 2000 as possibilities, have now
become realities. The ‘mobile data wave’
is well and truly with us. The internet and
indeed the office, are now in our pockets.
Increasingly, individuals, groups and
organisations are communicating and
accessing whatever information they
want, wherever they are and whenever
they want – and, more and more, they
are doing so ‘wirefree’, or at least
with a fusion of wireless and fixed line
broadband. Hardware advances have been
extraordinary, and mobile devices today
are powerful computers. Perhaps more
impressively, software now enables
hundreds of thousands of applications
and provides an intuitive ease and diversity
of usage, which has changed our world
and the way we live, work and play – and
will continue to do so.
Against this backdrop, competition among
mobile operators and device manufacturers
has grown even fiercer. The customer’s
need for a trusted guide to the most
appropriate device, to how it works and
to the best tariff for them has grown all
the more relevant. We are by no means
immune to the economic climate, but it
is the product and service development
cycles which, for us, I believe are the
more powerful and which place us well
for the future.
The smartphone revolution, the rapid
emergence of tablets and the explosion
of applications are still just the beginning
of the ‘Connected World’. Big strides are
being made in mobile payment systems,
location based services, mobile video
and social networking.
Throughout our retail portfolio, Carphone
is extremely well positioned to bring our
customers the latest and best products
and services that the ‘Connected World’
has to offer. Our ‘Wireless World’ format
stores, which have a wider range of
products and services than our traditional
stores, produce excellent customer
feedback and compelling financial returns.
We are accelerating the roll-out of these
stores in Europe with 350–400 planned
by the end of this year. CPW Europe’s
Headline EBIT grew by 18% to £134.6m
for 2011, reflecting the success of the
business during the year.
The extraordinary performance of
Best Buy Mobile in the US has exceeded
all our expectations. Best Buy Mobile is
powerfully differentiated from its US
competitors. It provides a wide range of
smartphones, tablets and accessories,
together with transparency on pricing
and the impartial advice and strength of
customer service which are hallmarks
of both Carphone and Best Buy. Best Buy
Mobile is now well-established in the US
mobile market, and we see considerable
One year on from
a successful demerger,
we are delighted
with the performance
of the Carphone
Warehouse Group.