Trading Statement

Carphone Warehouse Group PLC 14 April 2005 Thursday 14 April 2005 Embargoed until 0700 hours The Carphone Warehouse Group PLC Fourth Quarter Trading Update Full year results at the upper end of market expectations The Carphone Warehouse announces its fourth quarter trading update and guidance for the year to March 2006. The group has continued to perform well and we expect to report profit before tax and earnings per share at the upper end of the market forecast range for the current year. Fourth quarter highlights* • 16.6% growth in connections to 1.68m • 9.9% growth in subscription connections to 0.73m • 920,000 TalkTalk UK customers • 61.9% growth in switched minutes through Opal, with business traffic growth accelerating • 37 stores opened, with 1,461 stores at period end • 24.3% growth in The Phone House Telecom Germany base to 0.86m * all connections data is reported on a like-for-like 13 week basis. Telecoms customer numbers and Opal traffic are on a calendar month basis. Guidance for the year to March 2006 • Confident of continued strong performance • Investing £80-90m in capex to enhance long term growth platform • 250 new stores planned, including 50 franchise stores • Mobile connections growth in line with new space growth • TalkTalk UK targeting 2m customers by March 2008 Charles Dunstone, Chief Executive Officer, said: 'We are delighted to report another robust performance across the group. We have achieved strong connections growth despite exceptional trading in the comparative period. We anticipate that full year profits will be at the upper end of market forecasts, and are excited about the investment and growth opportunities in the coming year.' Distribution In the fourth quarter connections grew 16.6% to 1.68m as we continued to benefit from competitive mobile market conditions. Subscription connections grew 9.9% to 0.73m, a higher rate of growth than in the third quarter. Pre-pay connections (including SIM-free sales) were up by 22.4% to 0.95m. We opened 37 new stores during the period, taking the total across the group to 1,461. Of these, 70 are franchise stores. Our insurance base continued to grow strongly, driven by subscription connections. During the period we added 79,000 new customers, taking the base to 1.65m. Telecoms Services Traffic over the Opal network grew by 61.9% to 2.89bn minutes in the quarter. Excluding TalkTalk, traffic grew by 25.7% to 1.58bn minutes, an improvement on the rate of growth achieved in the third quarter. The TalkTalk UK customer base grew by 158,000 to 920,000 in the quarter, as we continued to grow our market share of the CPS market. ARPU, margin and customer acquisition costs were in line with expectations. Our customer base in our other European markets now stands at over 170,000. Our Mobile customer base grew by 14.6% to 2.26m. This was mainly driven by continued strong growth at The Phone House Telecom in Germany, where the subscription customer base is now 0.64m and the pre-pay base is 0.22m. Outlook and guidance for the year to March 2006 As part of our presentation to analysts and investors today, we will be giving updated financial guidance for certain business areas in the coming year. For the group as a whole we are confident of delivering further strong growth. The key elements of this guidance are set out below. We are optimistic about the prospects for the Distribution business and aim to build on the rapid store roll-out of the last 12 months by opening a further 250 stores in the coming year. The UK and Spain will represent the bulk of new openings but we intend to expand our presence in all our major markets, including Germany. Approximately 50 of the new stores will be franchises, mainly in The Netherlands, Spain and Germany. We expect mobile connections to grow in line with new space in the coming year, with similar levels of growth in subscription and pre-pay. Our confidence to invest in further rapid physical expansion derives from the continued strong demand for customers from mobile networks and manufacturers, and our ability to grow market share. Our guidance for a broadly flat like-for-like gross profit outcome is based on a cautious view of the UK consumer outlook and does not assume rapid acceleration in the replacement cycle from a more aggressive migration to 3G services. In Mobile Telecoms Services we expect good profits growth. The Phone House Telecom Germany is set to continue its successful strategy of customer acquisition, supported by a renewed expansion of its distribution platform through new store openings and the recruitment of new dealers. Our MVNO strategy continues to be one of identifying and exploiting market niches, as our recent launch of Mobile World demonstrates. Although still a very small contributor to group profitability, we are excited about the long term prospects for these new services in several of our markets. At Opal we expect revenue growth of approximately 15%, driven by organic growth and the impact of the acquisitions made during the past year. This growth will, however, be weighted towards the second half when the effects of last September's cut in mobile termination rates annualise. We expect some continued margin erosion as the market remains competitive and as we invest in new areas such as business broadband, but are confident of delivering growth in profits. Our residential broadband service, launched in November, has now attracted nearly 50,000 subscribers, which is well ahead of our original expectations. At present the stand alone economics of broadband remain marginal although there are benefits from extending our range of services to voice customers. At the current runrate we expect to grow the broadband base to 100-150,000 customers by March 2006, but as the year progresses we will seek to evolve our broadband strategy to take full advantage of this growth opportunity. We are very focused on making TalkTalk UK the clear number one alternative in the residential telecoms market and are targeting 2 million customers by March 2008. The provision of a workable wholesale line rental product and the adoption of a more strategic approach to broadband will be central to this goal, and we will continue to monitor OFCOM's pronouncements on these areas over the next few months. Overall we expect a contribution margin on TalkTalk UK customers of 7-8% after all SAC and marketing costs, and a small loss on our broadband operations. Our TalkTalk activities outside the UK continue to grow steadily as we refine our propositions in each market. Overall these businesses are likely to make a small positive contribution to group profitability, with a further strong performance in Switzerland offset by small losses in other territories. In order to take advantage of the growth opportunities available to us, we will continue to make significant investments in capital and people. As a result we expect capex for the coming year to be approximately £80-90m, driven predominantly by investment in IT projects, the store portfolio, and fixed line network infrastructure. In turn, we anticipate that support costs and depreciation will both increase in line with underlying profitability. Presentation There is a presentation for investors and analysts on the group strategy and guidance for the coming year at the offices of Deutsche Bank, 1 Great Winchester Street, London EC2, starting at 9am this morning. Next announcement The group will publish its preliminary results for the year to March 2005 on 7 June 2005. For Further Information For analyst and institutional enquiries Roger Taylor 07715 170 090 Peregrine Riviere 07909 907193 For media enquiries Vanessa Tipple 07947 000 021 Anthony Carlisle (Citigate Dewe Rogerson) 07973 611 888 020 7638 9571 Operating Statistics • Connections, mix and store numbers 13 weeks to 14 weeks to 2 April 26 March 2005 2005 2005 2004 % change 2005 Connections (000s) Subscription 728 663 9.9% 775 Pre-pay 835 694 20.3% 879 SIM-free 113 80 40.6% 119 Group 1,676 1,437 16.6% 1,773 Store numbers Directly operated 1,391 1,188 17.1% Franchises 70 26 169.2% Group 1,461 1,214 20.3% 52 weeks to 53 weeks to 2 April 26 March 2005 2005 2005 2004 % change 2005 Connections (000s) Subscription 2,770 2,413 14.8% 2,816 Pre-pay 3,227 2,520 28.1% 3,272 SIM-free 506 417 21.4% 512 Group 6,503 5,350 21.6% 6,600 Customer bases As at March 2005 (000s) 2005 2004 % change Insurance 1,645 1,324 24.3% Telecoms Services - Mobile 2,262 1,973 14.6% TalkTalk 920 385 139.0% Pro forma switched minutes 4th Quarter to March Year to March (m) 2005 2004 % change 2005 2004 % change Opal 1,583 1,260 25.7% 5,451 4,508 20.9% TalkTalk 1,303 523 149.0% 4,112 1,009 307.7% Total 2,886 1,783 61.9% 9,563 5,517 73.4% This information is provided by RNS The company news service from the London Stock Exchange

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