Carphone Warehouse 2015 Annual Report Download - page 24

Dixons Carphone plc Annual Report and Accounts 2014/15
Strategic report
Performance review
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Group
Group pro forma Headline revenue was up 2% to
£9,936 million (2013/14: £9,752 million) and up 6% on a
local currency basis, with both including a 2% benefit due to
an extra five weeks of trading from the Carphone Warehouse
business. Like-for-like revenue growth was 6% reflecting
growth in our UK & Ireland, Nordic and Greek businesses,
partially offset by performance in the Spanish market. The
difference between the total revenue growth on a local
currency basis (adjusted for the additional weeks from the
Carphone Warehouse business) and like-for-like is
predominantly due to a reduction in stores.
Despite operating in a highly competitive market place, the
Group has continued to grow market share and maintain stable
gross margin across the year.
Pro forma Headline EBIT was up 15% to £414 million (2013/14:
£359 million) driven by the strong operating performance in
the UK & Ireland. Pro forma Headline profit before tax was
£381 million (2013/14: £316 million) reflecting the improved
EBIT and a lower interest charge year-on-year following the
redemption of the bonds previously held by Dixons Retail in
August 2014.
As a part of the Merger we carried out a thorough analysis of
the opportunities that combining the two businesses could
bring and, as previously communicated, our stated target of a
minimum £80 million of synergies by 2017/18 has now been
brought forward by one year to 2016/17. Integration of the two
businesses continues to progress well with 244 new Carphone
Warehouse SWAS now open and our head office teams
combined and operating as one. We are also rationalising
down to one single head office location in each of the UK,
Ireland and Sweden and we have announced the integration
of our UK logistics and repair centres to the legacy Dixons
Retail site in Newark.
UK & Ireland
The UK & Ireland had a very strong year with pro forma
revenue up by 7% to £6,451 million (2013/14: £6,011 million)
including a 2% benefit of the additional five weeks of trading
from the Carphone Warehouse business. Like-for-like revenue
for the year was up 8% reflecting strong performances in both
electricals and mobile and the roll-out of the Carphone
Warehouse SWAS which have delivered strong revenue
growth on existing floor space, contributing 1% of the like-for-
like increase. The difference between the total revenue growth
(as adjusted for the additional five weeks of trading from the
Carphone Warehouse business) and like-for-like predominantly
reflects a reduction in stores.
Pro forma Headline EBIT up 26% versus last year, to
£306 million. The business continued to gain market share
with strong sales driving increased profitability.
The electricals business had a very positive year supported by
record advocacy and customer net promoter scores and our
pricing being at its most competitive ever. The peak period,
which now stretches six weeks from ‘Black Friday’ into the
new year, was particularly strong with both small and large
white goods, as well as large screen TVs, selling very well.
Our mobile business in the UK & Ireland also performed well.
Postpay volumes and market share continued to grow year-
on-year, driven by the exit of Phones 4u and some very
successful product launches. During the year all the major
networks have moved the majority of their customers onto
4G tariffs. These factors have helped drive a better customer
experience and have led to higher data usage.
In May 2015, the Group launched iD, a new mobile network
focused on providing users with increased contract flexibility,
greater access to free data roaming and competitively priced
4G tariffs. The initial performance of iD and the customer
response, so far, has been very promising indeed.
Nordics
Nordics revenue, expressed in Sterling was affected by a
significant movement on foreign exchange rates in the region.
As a result pro forma Headline revenue in the Nordics was
down 6% to £2,718 million (2013/14: £2,895 million). Pro forma
Headline revenue on a local currency basis was up 4%.
Nordics pro forma Headline EBIT was £86 million (2013/14:
£102 million) reflecting a negative impact of foreign exchange
of £11 million and the investments noted below.
The Nordics business has had a sound year, continuing to
consolidate and grow its position as market leader in all of the
countries in which it operates. The business has invested in
various areas during the year to strengthen its market position
further and drive customer satisfaction which is at an all-time
high in each of its countries.
The team has launched co-branded Elgiganten Phone House
stores with very positive results. In addition the ‘Epoq’ kitchen
business has provided very encouraging results with strong
revenue growth, driving market share and appliance sales.
We expect that this operation will also provide opportunities
in smart home and integrated products.
The Phone House operations in Sweden encountered tough
trading conditions during the year, but its integration with the
Elgiganten business has been swift, driving synergy savings
and we expect both the businesses to benefit greatly from
the Merger.