However, pre-tax profits fell 9.5 per cent to£123.1 million, following start-up losses of more than£80 million relating to its broadband and Virgin Mobile France operations.
In its retail division, like-for-like sales rose 6.6 per cent, with gross like-for-like profits up 5 per cent for the year. Connections soared 22.3 per cent to 10 million, compared with the previous year. Subscription connections, the key driver of value in its distribution business, rose 17.3 per cent to 4 million.
The company, which bought AOL's Uk business last year, said fashion and technology concerns continued to drive customers back to its stores for new phones. It added that, in the competitive broadband market, it had 'great confidence' in future profitability.
The group said its joint venture trials of Best Buy Mobile in the US and Geek Squad in the UK were also successful. In addition, Carphone Warehouse opened 366 stores during the year.
Carphone Warehouse chief executive Charles Dunstone said: 'These are strong results. We have grown revenues and made significant investments in telecoms infrastructure, customer recruitment and strategic acquisitions. We now have an excellent platform to deliver on our strategy.'
Panmure Gordon analyst Christian Koefoed-Nielsen said: 'A strong full-year performance, with headline earnings above consensus, good cash flow generation and broadband sign-ups to their own network going well. The underlying distribution business continues to power on and the growth platforms will show increasing visibility and profitability in the year ahead.'
Dunstone added that executive chairman of insurance Jim Dale is retiring from the group and is today stepping down as a director, after 10 years with the group and six years on the board. He said: 'Under his guidance, the insurance business has grown to be a major contributor to group profitability and I would like to thank him for his significant contribution and wish him very well for his retirement.'