Preliminary Results 2015/16 and Strategy Update 29th June 2016
Seb James Group Chief Executive
Our growth story Synergies Core Business Core Business Opportunities Connected World Services Knowhow
Awards Mobile Industry Awards: Personality of the Year Shop Idol Winner: Retail Week Supply Chain Awards What Mobile Awards: Best High Street Retailer CIPD Recruitment Awards: Best online recruitment - CPW Marketing Society Awards: Customer insight ISell Mobile Awards: Team of the Year PriceRunner Awards: Best Online in Demark #1 Retail Week Power List: Extel Awards: Best IR (non-food retail) Retail Week Rising Stars Retail Week: Retailer of the Year Creative Circle Awards: Gold of Golds TV commercial Institute of Internal Communications Awards UK Search Awards: Best SEO campaign European Supply Chain Excellence Awards FD Magazine Awards: Best FTSE 100 FD British Arrows Awards: Commercial of the Year Institutional Investor Awards: Most Honoured Mobile Choice Awards: Best Online Retailer Mobile Industry Awards: Outstanding Achievement RAD HR Awards: Candidate Engagement Timewise Power Part Time List: Stock Market Awards: Best Retail & IR comms
2015/16 Overview Integration progressing strongly 276 UK&I SWAS Announced 3-in-1 roll-out Own the Kitchen store-in-store initiative New Carphone Warehouse web platform Carphone Warehouse Click & Collect launched Share gains in all markets Pricing at most competitive ever Customer satisfaction levels at all time highs Launched id Acquisitions of Simplifydigital and Infocare Norsk Prising Co-branding in Norway and Sweden Sprint Joint Venture launched honeybee extends contract with major US manufacturer CWS agreements signed with TalkTalk, EE and RBS
2015/16 Key numbers Group like-for-like revenue up 5% (UK & Ireland up 6% and Nordics up 4%) Strong profit performance: Headline PBT of 447 million (2014/15: 381 million), up over 17% Headline basic EPS 29.3p (2014/15: 25.5p) Free cash flows of 202 million (2014/15: 89 million) and year end net debt broadly flat year-on-year at 267 million Final dividend of 6.50p (2014/15: 6.00p) proposed, taking total dividends for the year to 9.75p (2014/15: 8.50p), up 15% year-on-year Sprint joint venture in the US expected to contribute $40 million - $50 million of annual EBIT to the Group by 2019/20 honeybee platform: major 3rd party deal signed with US carrier
Long term growth metrics UK electrical pricing Customer satisfaction Q1 CY 14 Q1 CY 15 Q1 CY 16 21.4% UK market shares 23.5% 24.7% 25.7% 13.7% 23.4% CPW (Postpay) Currys PC World
Finance Update Humphrey Singer Group Finance Director
Strong earnings growth m 500 YOY : + 60m ( 7m) + 2m Flat + 55m + 11m + 66m 400 79 17 7 (21) 300 200 100 365 468 447 UK & Ireland Nordics Southern Europe Connected World Services EBIT Net finance cost PBT Finance Update
Free Cash Flow m 700 Headline EBIT Dep. & amort. Working capital Capex Taxation Interest Restr. / Merger Other Free cash flow 600 500 137 (76) 400 (221) 300 200 468 (56) (31) (43) 24 100 202 Finance Update
Balance Sheet m Opening Net debt Free cash flow Dividends Acquisitions and disposals Pension contributions Other items Closing Net debt (50) (100) (150) (260) 202 (106) (267) (200) (82) (250) (300) (35) 14 Finance Update
Property optimisation No. of stores 2 Jan 2016 29 Jun 2016 Future plan Ireland CPW 75 71 71 Ireland Dixons 27 24 15 UK CPW 723 715 684 UK Dixons 402 374 323 No. of UK Dixons stores 2 Jan 2016 29 Jun 2016 Future Plan - Currys 91 63 0 - PC World 60 45 0 - Currys Digital 8 2 0 - CurryPCWorld CPW 243 264 323 Total 402 374 323 Finance Update
What s happening in Hull UK & Ireland - Property
The numbers behind the plan Store A Store B Retained Store (A) Revenue 4.8m 2.8m 7.6m Margin 1.4m 0.9m 2.3m Rent and Rates (0.3)m (0.3)m (0.4)m Employees (0.3)m (0.3)m (0.5)m Contribution 0.8m 0.3m 1.4m Finance Update
Guidance Full year Headline interest c. 20m Effective Headline tax rate c.25% Capex c. 250m although dependent on speed of integration work Exceptional cash flow in 2016/17 c. 90m Pension contribution of 36m Brexit areas to consider Finance Update
Market Updates Seb James Group Chief Executive
Successful retailing Exciting stores Seamless digital experience Great service and after sales support UK & Ireland - Property
Store initiatives UK & Ireland - Property
Digital/online The Pay Monthly Journey New Carphone Warehouse website Everyday Heroes Soft credit check Extension of Click & Collect to more CPW stores Radical transparency
Relentless focus on service Today Last year Delivery days (ave.) 6.1 5.8 Next Day Availability 72% 66% Free National Delivery 1-3 days 2-3 days 1-3 days 94% 94% Same day delivery Early bird and night owl delivery
Connectivity id base of over 335,000 Multiplay launched in over 270 stores Simplifydigital Leasing proposition
Nordic initiatives Norway pricing Jönköping extension Knowhow/Infocare B2B
Nordic initiatives (cont.) Co-branded stores Epoq kitchen MDA Accessories
Southern Europe Tough conditions but strong effective team Market share gains, strong like-for-like growth Greater focus on franchise operations Development of new smart home proposition
Integration
Technology to drive customer excitement iphone 7 Samsung S7 True wireless buds Wallpaper TV Continuum Ambient computing Virtual Reality (VIVE)
Knowhow and CWS Andrew Harrison Deputy Chief Executive
Knowhow Addressable Value Pools (Revenue) mn 2,500 2,000 1,500 1,000 500 0 Repairs Insurance / Extended Warranty Broadband switching Computing 2.3bn Consumer Credit Mobile devices 1.5bn Ongoing Support White goods 0.7bn Installation TV 0.5bn Energy switching Setup Installed Base and Spend on Connected Devices m units 16 Volume of devices 14 Spend on devices 12 10 8 6 4 2 0 2014 2015 2016 2020 $bn 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 Sources: Gartner Symposium/ITxpo, Nov 2015 5bn addressable technology services market, supported by a continued increase in connected devices fragmented and poorly served today in the UK
Leeds trial 1: Build in-home services Launching Energy Saver and Broadband & Wi-Fi Expert Compare and switch Promoted in store and in the home 2: Own repairs Mobile and computing repairs in store Up to same day turn around at new Leeds Super clinic Aim to increase chargeable repair market share in all categories 3: Acquire a membership base Demonstrate a new model that acquires and monetises customers 30 day free phone tech support to drive sign up with up sell Tailored self help content to create stickiness Knowhow
CWS Leverage the specialist skills, operating processes and technology of the Dixons Carphone business to provide services to third parties looking to develop their own connected world solutions
Support and Services Extended contract with RBS for the provision of 3 rd party mobile phone insurance Signed a new contract with EE for the provision of 3 rd party mobile phone insurance Extended contract with TalkTalk beyond mobile services to support all customer channels and categories Ambition to be the largest provider of 3rd party mobile insurance in the UK CWS
Connected Retailing Successfully completed trial in the US resulting in the agreement to roll-out 500 stores Conversion significantly better and customer satisfaction scores almost double Operating 27 of Sprint s own stores in Miami and Dallas as part of our IP work stream, with current performance +30% vs targets Joint venture expected to contribute $40m-$50m of annual EBIT to the Group by 2019/20 CWS
Our rollout plan c.150 stores to roll-out in the next 12 months 5 region strategy to follow network investment to access the highest value customers New, optimised store format created resulting in significant savings Implemented 20 new back office systems and processes to drive greater efficiencies 17 stores now open, 7 more in July, 14 in August & 42 in September CWS
honeybee software MAKE HONEYBEE THE GLOBAL INDUSTRY STANDARD FOR BUILDING, DELIVERING AND MANAGING DIGITAL CUSTOMER JOURNEYS Agreement reached with Sprint to roll-out honeybee across their entire estate in the US multi-industry product specialist telecoms product multi-industry product 35 CWS
Summary and Q&A
Our growth story Synergies Core Business Core Business Opportunities Connected World Services Knowhow Price Market share Cust. satisfaction 80m synergies Property and store initiatives New categories Digital/online Multi-play Connectivity honeybee Sprint Support and services Leeds trial National rollout
Q&A