Preliminary Results 2006/07 20 June 2007
John Clare Group Chief Executive
Group performance Year of significant change Underlying sales Underlying Like for Like sales Underlying PBT Gross margins down 0.3% 7.93bn 295.1m +14% +4% 52 weeks to 28 April 2007 vs. 52 weeks to 29 April 2006 For definitions see appendix
Group performance Strong demand for digital products Units Value Flat Panel Televisions +104% +70% Laptops +59% +33% Satellite Navigation +109% +54% Digital Audio Products (excl. UK) +42% +49% 52 weeks to 28 April 2007 vs. 52 weeks to 29 April 2006
Italy Significant restructuring programme Decentralised to centralised Weak economy Competitive markets Distribution centre Store
Italy Management team strengthened Marketing investment Store refurbishment programme 35 in 8 weeks further 25 planned Improved shopping experience
Italy Improved ranging, pricing and availability Brand awareness and value perception improving Store portfolio expansion Improved internet offer launched Confident in long term prospects
Eldorado Group has terminated the agreement Significant progress in understanding Corporate, economic and political risks Russia remains a potential opportunity 100 million share buy back
Kevin O Byrne Group Finance Director
Underlying sales million 06/07 05/06 YOY UK & Ireland Electricals 2,809 2,743 2% International Electricals 2,472 2,169 14% Total Electricals 5,281 4,912 8% UK Computing 1,851 1,752 6% International Computing 347 288 21% Total Computing 2,198 2,040 8% e-commerce 451 26 n/a Underlying sales * 7,930 6,984 14% 52 weeks to 28 April 2007 vs. 52 weeks to 29 April 2006 For definitions see appendix * Underlying sales total include Codic
Underlying profit million 06/07 05/06 UK & Ireland Electricals 103.1 79.8 International Electricals 89.7 117.8 Total Electricals 192.8 197.6 UK Computing 124.8 129.4 International Computing (28.2) (22.2) Total Computing 96.6 107.2 e-commerce 1.2 - Corporate centre (25.7) (27.3) Property profits 8.7 7.4 Underlying net finance income 21.5 26.1 Underlying profit 295.1 311.0 52 weeks to 28 April 2007 vs. 52 weeks to 29 April 2006 For definitions see appendix
Underlying profit before tax million 06/07 05/06 Reported PBT 114.1 295.9 Net fair value remeasurement 10.5 (10.3) Profit on sale of investments - (2.9) Profit on sale of subsidiary - - Amortisation of acquired intangibles 4.7 1.8 Restructuring costs 55.4 22.4 One off charges - impairment / other 115.1 4.1 Effect of changes in pension benefits (4.7) - Net charges 181.0 15.1 Underlying profit before tax 295.1 311.0 Underlying adjusted diluted EPS 10.9p 11.8p 52 weeks to 28 April 2007 vs. 52 weeks to 29 April 2006 For definitions see appendix
Restructuring and one off costs million million Restructuring costs (55.4) Distribution network (17.0) PC City operating model (38.4) Charges relating to UniEuro (115.1) 52 weeks to 28 April 2007 vs. 52 weeks to 29 April 2006 For definitions see appendix
Free cash flow million 06/07 05/06 YOY Underlying profit before tax 295 311 (16) Depreciation & Amortisation 139 132 7 Working capital 57 94 (37) Working capital impact of PAYG (67) (86) 19 Taxation (101) (85) (16) Capital Expenditure (136) (153) 17 Sales of freehold property 52 34 18 Other (11) 3 (14) Free Cash Flow before restructuring items 228 250 (23) Logistics restructure (27) 37 (64) Exceptional items (37) (3) (34) Underlying Free Cash Flow 164 284 (120) 52 weeks to 28 April 2007 vs. 52 weeks to 29 April 2006 For definitions see appendix
Net funds Million 700 600 164 500 400 440 246 158 300 200 194 200 50 29 225 114 100 111 0 Opening funds Free cash flow Dividends Acquisitions / Disposals Pension contribution Other Closing funds 52 weeks to 28 April 2007 vs. 52 weeks to 29 April 2006 For definitions see appendix
Taxation Underlying tax charge 89m Full year tax rate 30% Increase in effective overseas tax rates 52 weeks to 28 April 2007 vs. 52 weeks to 29 April 2006 For definitions see appendix
Dividends & share buy back Final dividend 6.85p +5% Full year dividends of 8.87p Underlying earnings cover 1.22 Dividend covered by Free Cash Flow Dividends grow in line with earnings over time 100 million share buy back initiated 52 weeks to 28 April 2007 vs. 52 weeks to 29 April 2006 For definitions see appendix
Cost savings Incremental savings million 06/07 07/08 Information systems 5m 5m Logistics 5m 10m General 15m 10m 25m 25m Underlying LfL cost inflation of 2.5% - 3.0%
John Clare Group Chief Executive
Year of change Significant number of actions taken Discontinued operations Communications - changing market PC City France - focus on e-commerce F r a n c e
Investment in customer service Engagement and development programme Team bonuses Training in product and customer handling Launch of The TechGuys European service opportunities
Investment in support 50 million investment UniEuro restructuring International buying teams UK logistics infrastructure
Investment in e-commerce
International growth Elkjøp Sales growth of 217% since acquisition Kotsovolos Sales growth of 67% since acquisition PC City Spain now profitable NOK Millions 14,000 10,000 6,000 2,000 450 Euro Millions 400 350 300 250 200 217% 1999 2007 67% 2001 2007 Electro World in Czech now profitable
International growth Sharing of best practices across countries 1.6 million ft 2 of new space mostly outside UK International represents 41% of Group sales 3600 45% Sales m 3100 2600 2100 1600 1100 600 40% 35% 30% 25% 20% 15% 10% 5% 100 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 0% Acquired Growth post acquisition Investments % of underlying Group sales
Outlook Year started well Cautious in many markets Exciting product pipeline Earnings back on track
Preliminary Results 2006/07 20 June 2007
Appendices
Appendices Group 5 Year Financials Group LFL Sales Trends Group Store Numbers and Space Trends Shares in issue Notes and definitions 52 weeks to 28 April 2007 vs. 52 weeks to 29 April 2006
Group 5 year financials IFRS IFRS IFRS UK GAAP UK GAAP UK GAAP Sales 7,930 6,984 6,452 6,452 5,947 5,294 Operating profit (1) 274 285 263 272 280 247 Operating margin (1) 3.5% 4.1% 4.1% 4.2% 4.7% 4.7% Net Finance Income (1) 21 26 27 29 10 4 Profit before tax (1) 295 311 290 300 290 251 Adjusted diluted EPS 10.9p 11.8p 10.9p 11.3p 11.1p 10.0p Depreciation (2) 139 132 129 126 113 111 Free cash flow 164 284 289 286 207 140 (1) Figures shown on an underlying basis (2) Includes amortisation of other intangibles
Group like for like sales trend 06/07 06/07 06/07 05/06 05/06 05/06 FY H2 H1 FY H2 H1 UK Electricals 3% 1% 5% 3% 8% (3%) Ireland 8% 3% 14% 11% 15% 6% UK & Ireland Electricals 3% 1% 5% 3% 8% (2%) Elkjøp 9% 6% 11% 7% 10% 5% UniEuro (8%) (6%) (10%) 3% 2% 4% Kotsovolos 7% 5% 8% 7% 3% 10% Southern Europe (3%) (2%) (5%) 4% 2% 6% Total Electricals 3% 1% 4% 4% 7% 0% PC World 4% 4% 3% (4%) 0% (8%) E-Commerce 182% 176% 192% n/a n/a n/a Total Group (Underlying) 4% 3% 5% 2% 6% (1%)
Group - stores & space UK & Ireland Electricals Store numbers 06/07 05/06 04/05 03/04 UK Electricals 535 568 590 693 Ireland 28 21 16 15 UK & Ireland Electricals 563 589 606 708 Space 000 sq ft 06/07 05/06 04/05 03/04 UK Electricals 4,966 5,005 4,983 5,147 Ireland 281 211 171 159 UK & Ireland Electricals 5,247 5,216 5,154 5,306
Group - stores & space International Electricals Store numbers 06/07 05/06 04/05 03/04 Elkjøp 251 221 174 168 UniEuro 153 110 102 96 Kotsovolos 85 77 77 - Electro World 24 16 11 9 Int l Electricals 513 424 364 273 Space 000 sq ft 06/07 05/06 04/05 03/04 Elkjøp 3,493 3,181 2,434 2,260 UniEuro 2,505 2,111 1,952 1,722 Kotsovolos 789 671 605 - Electro World 810 578 437 382 Int l Electricals 7,596 6,541 5,428 4,363
Group - stores & space Computing Store numbers 06/07 05/06 04/05 03/04 UK Computing 164 151 145 138 Int l Computing 59 51 37 26 Total Computing 223 202 182 164 Space 000 sq ft 06/07 05/06 04/05 03/04 UK Computing 2,513 2,421 2,355 2,243 Int l Computing 999 875 643 448 Total Computing 3,512 3,296 2,998 2,691
Group - stores & space total Store numbers 06/07 05/06 04/05 03/04 UK & Ire Electricals 563 589 606 708 Int l Electricals 513 424 364 273 UK Computing 164 151 145 138 Int l Computing 59 51 37 26 Total Group 1,299 1,215 1,152 1,145 Space 000 sq ft 06/07 05/06 04/05 03/04 UK & Ire Electricals 5,247 5,216 5,154 5,306 Int l Electricals 7,596 6,541 5,429 4,363 UK Computing 2,513 2,421 2,355 2,243 Int l Computing 999 875 643 448 Total Group 16,356 15,053 13,581 12,360
Geographical store distribution 06/07 05/06 04/05 UK & Ireland 727 740 751 Southern Europe 288 230 214 Owned Stores 247 229 214 Franchises 41 1 - Nordic 260 229 176 Owned Stores 182 160 122 Franchises 78 69 54 Central Europe 24 16 11 Total Group (underly ing) 1,299 1,215 1,152 Owned Stores 1,180 1,145 1,098 Franchises 119 70 54
Shares in issue Number of shares at year end 06/07 05/06 04/05 FY FY FY Number of shares in issue 1,842.7m 1,824.7m 1,892.0m Weighted average number 1,836.7m 1,844.7m 1,922.1m of shares for basic eps Weighted average number 1,855.8m 1,863.2m 1,941.5m of shares for diluted eps
Notes and definitions (1) Unless otherwise stated, figures relate to continuing operations. (2) Like for like sales are calculated based on stores that have been open for a full financial year both at the commencement and end of the financial period. Customer support agreement sales are excluded from all UK like for like calculations to remove the distorting effect of the introduction of pay as you go customer support agreements. Chains that are subject to closure have sales excluded as of the announcement date. (2) Throughout this statement, references are made to 'underlying' performance measures. Underlying results are defined as being before amortisation of acquired intangibles, exceptional asset impairments, restructuring and other one off items, profit on sale of investments, net fair value remeasurements of financial instruments and, where applicable, discontinued operations. (3) Free Cash Flow relates to continuing operations and comprises net cash flow from operating activities before special pension contributions, plus net finance income, cash flows related to finance leases, less income tax paid and net capital expenditure.
Preliminary Results 2006/07 20 June 2007