Carphone Warehouse 2014 Annual Report Download - page 7

05
STRATEGIC REPORT
Chief Executive Officer’s statement
This has been a good year for Carphone Warehouse. Financially,
we have delivered on the guidance we gave; operationally, we have
strengthened our business and growth platform; and strategically,
we are proposing a merger of equals with Dixons Retail plc to add
substantially to our growth potential going forward and to capture
the opportunities of a changing marketplace.
FINANCIAL HIGHLIGHTS
We completed our buy-back of Best Buy’s % share in CPW Europe
on  June . Consequently, in order to give a more meaningful
picture of our performance, we have provided the results for CPW
ona pro forma basis, as if CPW Europe had been % owned
bytheGroup for the whole of – and the previous year.
On a top line basis, total pro forma revenue dropped % to £,m
compared to £,m in –. This primarily reflects decreased
activity in our dealer business, which was particularly strong in the
prior year. However, our dealer business operates at low margins
andhas little impact on the overall profitability of the business.
Within this performance, we saw like-for-like revenue growth for
thefull year of .%, building on the .% growth in the prior year,
predominantly driven by postpay growth in the UK and a continued
shift towards high-end smartphones which drive higher revenues.
We delivered pro forma Headline EBIT of £m (: £m), an
increase of % year-on-year, and in line with the guidance we gave
ayear ago. Improved pro forma EBIT in CPW, along with the benefits
of consolidating % of CPW Europe from  June , resulted in
anincrease in Group Headline net earnings from £m to £m
and an increase in Headline EPS to .p (: .p).
PERFORMANCE REVIEW
PAGES 20-24
CPW
Our retail operation enjoyed a good year with like-for-like revenue
growth of .%, despite the continued sharp reduction in the prepay
market, reflecting the regulatory cuts in mobile termination rates
and the consequent withdrawal by network operators of subsidies
on prepay handsets. While the fall in prepay connections reduced
overall total connections, both for us and for the market in general,
we held our prepay market share.
More important for us has been the strength of our postpay sales,
on which we have again grown our UK market share. We have been
particularly encouraged by the uptake of G phones, with G now a
major new dynamic in the mobile marketplace. The speed of G has
a significant impact on data usage, and the sale of G devices typically
brings with it additional data packages, the result of which is an
overall increase in the average revenue per user and therefore
therevenues we earn.
G is a very clear example of the way that technology is becoming
more complicated, with an increasingly wide choice of new devices
and G tariffs. Our customers are looking for simple, independent
and impartial advice to simplify technology for them and to ensure
they have the right solution for their needs; providing this is our
primary purpose.
During the last year we invested significantly in our brand and in our
distribution channels. We introduced a new tablet-based assisted
sales tool called Pin Point. This gives our customers a personalised
experience, guiding them through the overwhelming variety of devices,
networks, tariffs and services, to find the most suitable package
tomeet their needs. Pin Point has been rolled out throughout our
stores in the UK and has resulted in our highest levels of customer
satisfaction and customers’ willingness to recommend us to others.
Pin Point was acknowledged through the BT Retail Week Technology
Awards, for the Customer Experience Technology Award of the year
for .
IN SUMMARY
+Pro forma Headline EBIT of £m (: £m)
+Like-for-like revenue growth of .%; second
consecutive year of growth
+Significant gains in UK postpay market share,
buildingon growth in –
+Signed partnership agreements with Media-Markt
Saturn in the Netherlands, and Harvey Norman in Ireland
+Significant progress for Connected World Services,
most notably through preferred-partner agreement
with Samsung and the development of our omni-channel
platform, honeyBee, with Accenture
+Proposed all-share merger with Dixons Retail plc
expected to deliver synergies of £m in the financial
year –
IT'S ALL ABOUT POSITIONING OUR
BUSINESS IN THIS CHANGING WORLD
AND ENSURING THAT WHAT WE DO IS
RELEVANT FOR
OUR CUSTOMERS
Andrew Harrison Chief Executive Officer