Connections of 661,000 against 687,000 last year
Like for like gross margin of +2% and like for like revenues of -5%
Market share increased to over 20%
Connections of 484,000 against 529,000 last year
Connections excluding Germany, Holland and Belgium up 3% on last year
Like for like gross margin of -16% and like for like revenues of -16%
Connections of 1,145,000 compared to 1,216,000 last year
Like for like gross margin of -6% and like for like revenues of -9%
Mix of high value subscription connections increased from 37.5% to 43.2%
Average revenue and gross margin per connection maintained in line with expectations
Store portfolio increased from 1,020 (ex-Tandy) last year to 1,138
Recurring Revenue: telecoms services and insurance
Substantial growth in telecoms services base as at 29 December 2001 to over one million customers; recurring revenue streams increased by 93% in the period compared to last year.
Our own customer base increased to 160,000 from 55,000 last year
Facilities management base increased to 850,000 from 105,000 last year
Insurance base increased to 929,000 from 752,000 last year
Christmas Trading (4 weeks to 29 December 2001)
UK connections of 303,000 compared to 318,000 last year
European connections of 228,000 compared to 251,000 last year
Group connections of 531,000 compared to 569,000 last year with subscription mix of 33.6%
Like for like gross margin of -9% and like for like revenues of -12%
Charles Dunstone, Chairman and Chief Executive said:
The company has delivered a strong performance in a European handset market which is estimated to be down by over 40%. The Group has continued to win market share across Europe with an increase of over 40% in nearly all markets. In the UK we have made particularly strong gains, where our share of the mobile handset market is now in excess of 20%.
Like for like revenues declined against very tough comparatives, though by significantly less than the market as a whole. Against this backdrop our UK operating business achieved a 2% increase in like-for-like gross margin and a 21% growth in subscription connections, a particularly strong performance. We continue to be disappointed by our performance in Germany, and The Netherlands and Belgium were also weaker than we had anticipated. Management focus has increased accordingly.
During the period we have continued to enjoy substantial growth in our recurring revenue streams. These revenues generated from services and billing, insurance and our share of continuing customer spend have almost doubled in the period. The combination of our customers under management and subscribers to our virtual operator ‘Fresh’ now exceed one million for the first time. Our strategy of developing revenue streams that participate in the lifetime value of subscribers is proving particularly successful and is significantly improving the quality of our earnings as we move forward. We continue to see this as an important area of growth for the future.
Our wholesale business continues to under perform and revenues are down in this period against last year. We do not expect any significant improvement in this area for the next twelve months at least, although the impact on our overall Group gross margin is limited in comparison to the headline sales impact.
During the Christmas period we bought well, had good stock availability and were particularly successful in gaining market share through innovative products and offerings. We also enjoyed the benefits of the flexible Fresh customer proposition.
The success of our innovative prepay offerings generated incremental profits but did prove to have an adverse effect on our prepay/subscription mix profile. This trend continued into early January.
In the period from 30 December to 19 January we have continued to see a very strong performance in our core UK retail market and a number of leading European markets but weak performance in Germany, Holland and Belgium.
The overall market for mobile handset sales will continue to be tough for the next six months. We intend however to continue to grow our market share, our subscription connection numbers and our quality of earnings. In addition we foresee an ongoing contraction in the total number of distribution points for mobile phones across Europe.
From this Autumn onwards we believe that a combination of new handset functionality and innovative technology will once again stimulate the market. The strength of our retail proposition, improving sales mix and commitment to customer service will continue to drive forward our business and increase our market share.
The current financial year will be impacted by the shortfall of connection numbers in weaker European markets, the higher proportion of prepay sales than previously anticipated and the level of wholesale activity. This considered, we anticipate that our current full year EBITDA will be below market expectations by up to 10%.
