INTERIM RESULTS 2019/20 12 December 2019 1
Today’s agenda INTRODUCTION Alex Baldock FINANCIAL RESULTS & GUIDANCE Jonny Mason TRANSFORMATION UPDATE Alex Baldock Q&A Alex Baldock & Jonny Mason 2
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Growing market leading positions UK&I ELECTRICALS UK&I MOBILE 40.0% 40.0% 35.0% 35.0% 30.0% 30.0% 25.0% 25.0% 20.0% 20.0% 25.7% 15.0% 25.1% 25.2% 25.5% 25.0% 24.2% 15.0% 22.5% 24.6% 23.8% 21.9% 20.6% 18.9% 19.2% 10.0% 16.5% 10.0% 5.0% 5.0% 0.0% 0.0% 2014/15 2015/16 2016/17 2017/18 2018/19 H1 2018/19 H1 2019/20 2014/15 2015/16 2016/17 2017/18 2018/19 H1 2018/19 H1 2019/20 NORDICS GREECE 40.0% 40.0% 35.0% 35.0% 30.0% 30.0% 25.0% 25.0% 36.3% 20.0% 20.0% 35.0% 35.2% 34.4% 32.2% 28.7% 26.3% 15.0% 25.4% 25.3% 26.0% 15.0% 25.0% 24.2% 21.1% 10.0% 10.0% 0.0% 5.0% 5.0% 0.0% 0.0% 2014/15 2015/16 2016/17 2017/18 2018/19 H1 2018/19 H1 2019/20 2014/15 2015/16 2016/17 2017/18 2018/19 H1 2018/19 H1 2019/20 4 Sources: GfK. DC internal analysis and supplier data. Nordics data unavailable on same basis for 2014/15
Customer satisfaction continues to increase UK&I ELECTRICALS UK&I MOBILE ONLINE STORES +3pts NPS +13pts +12pts 1H FY19 1H FY20 1H FY19 1H FY20 1H FY19 1H FY20 NORDICS GREECE +4pts +1pts HAPPY OR NOT 1H FY19 1H FY20 1H FY19 1H FY20 5 Note: NPS is now measured in a more demanding way, 7 day NPS encompasses the end to end customer sales journey from research to purchase and fulfilment
Financial targets for medium term Market share gains 1 • Positive like-for-like revenue growth £1bn of Improving profitability free cash • EBIT margin of at least 3.5% flow 2 through • £200m cost savings identified Strong cash flow the plan • Incremental capex of £200m • Funded by working capital 1 Excludes UK mobile during transformation 2 Free cash flow including incremental capex and exceptional charges but before dividends and pension contributions 6
H1 FINANCIAL RESULTS & GUIDANCE Jonny Mason Group Chief Financial Officer
Group financial highlights H1 2019/20 H1 2019/20 H1 2018/19 YoY Revenue £4,713m £4,893m (4)% Adjusted EBIT £36m £71m £(35)m Adjusted EBIT % 0.8% 1.4% (60)bps Adjusted PBT £24m £60m £(36)m Statutory PBT £(86)m £(440)m £354m Free cash flow £77m £116m £(39)m Net debt £(290)m £(274)m £(16)m 8
UK&I Electricals H1 2019/20 H1 2018/19 YoY H1 LFL Revenue £1,979m £1,997m (1)% 0% Adj EBIT £31m £42m £(11)m EBIT % 1.6% 2.1% (50)bps Q1 LFL +2%, Q2 LFL -2% Overall market in H1 down 3% as share grew +0.7%pt, gains both online and in-store • Broad based gains, notably Gaming, MDAs and Smart tech • Small share losses in Imaging • Online growth +7% 9
UK&I Electricals EBIT margin EBIT H1 2018/19 Gross margin Operating costs EBIT H1 2019/20 (0.4)% (0.1)% 2.1% 1.6% Improved delivery proposition • Investment behind initiatives • Price promise • 10
International Local currency H1 2019/20 H1 2018/19 YoY H1 LFL change Revenue £1,904m £1,887m 1% 3% 3% Adj EBIT £54m £50m £4m 11% EBIT % 2.8% 2.6% 20bps 20bps Nordics LFL +2%, Q1 +4%, Q2 flat • Positive growth in all territories • Online growth +19% Greece LFL +8%, Q1 +7%, Q2 +9% • Increased market share across all categories 11
International EBIT margin EBIT H1 2018/19 Gross margin Operating costs EBIT H1 2019/20 0.4% (0.2)% 2.8% 2.6% Investment in delivery • Operating cost leverage •
UK&I Mobile H1 2019/20 H1 2018/19 YoY H1 LFL Revenue £830m £1,009m (18)% (10)% Adjusted Revenue £856m £1,019m (16)% Adj EBIT £(49)m £(21)m £(28)m EBIT % (5.7)% (2.1)% (370)bps Q1 LFL -10%, Q2 LFL -10% • Overall postpay market down -4%, new 24m subscribers down -8% • Market share down -3%pts 13
Mobile full year EBIT Bridge £41M £50M £9M £(90)M 14
Group EBIT and PBT H1 2019/20 EBIT PBT H1 2019/20 H1 2018/19 H1 2019/20 H1 2018/19 Adjusted £36m £71m £24m £60m Revaluations £(26)m £(10)m £(26)m £(10)m IFRS16 £12m - £(22)m - Non-headline £(55)m £(484)m £(62)m £(490)m Statutory £(33)m £(423)m £(86)m £(440)m 15
Other adjusting items Cash Cash £m P&L Non-cash (in period) (future) Acquisition and disposal related (14) (13) (1) - Strategic change programme (11) 2 (13) - Data Incident costs - - - - Regulatory costs (30) - - (30) Impairment and onerous leases - - - - Total before interest and tax (55) (11) (14) (30) Prior Exceptional Items (23) (37) Exceptional FCF 16
Free cash flow Workin ing FCF before Headline EBIT Dep. & Amort. capital Capex Other Excep. Excep. Free cash flow £(98)m £133m £(20)m £(37)m £63m £114m £77m £36m Prior Yr H1 71 81 99 (84) (29) 138 (22) 116 YoY (35) (18) 34 (14) 9 (24) (15) (39) * Other includes Taxation and Interest 17
UK&I Mobile Network Debtor FY 18/19 Capitalised in period Amortised in period Revaluation H1 19/20 £(521)m £535m £(26)m £797m £785m 18
Net debt Opening Closing Net debt Free cash flow Dividend Pension Other Net debt £(265)m £(290)m £(52)m £77m £(46)m £(4)m Prior Yr H1 (249) 116 (90) (46) (5) (274) YoY (16) (39) 38 - 1 (16) 19
FINANCIAL GUIDANCE 20
Financial guidance for 2019/20 UK Mobile expect UK&I Electricals & International loss of up to £90m growth low single digit Group Headline PBT expected to be around £210m Capex of ~£200m Exceptional cash cost of c£80m (from £275m) Net debt lower Dividend broadly flat* * Target to be covered by Free Cash Flow minus pension contributions All of this guidance is based on assumptions of no major macro economic changes, for example no material impact from Brexit, and the profit numbers also exclude any significant revaluation in network debtors, up or down, which might arise from changes in regulatory environment or for other reasons. It is also based on current accounting 21
TRANSFORMATION UPDATE Alex Baldock Group Chief Executive
We offer amazing Capable and We are big – we We have an easy advice to our Our sites and stores committed have something for end to end customer customers through are amazing colleagues everyone; range experience assisted selling We are with our We understand We are affordable: Our partnerships We work together customers throughout technology and our trusted on price and with suppliers make as One Business the life of the product customers; data through credit a big difference – via our Services We serve our customers however Mobile is central Stronger infrastructure they want to shop: to our vision online or in store 23
Priorities and enablers Priorities Online / Multichannel Credit Easy / Services Mobile We have an easy end to We serve our customers Mobile is central end customer experience We are affordable: trusted however they want to shop: to our vision on price and through credit We help customers get the online or in store most out of their tech Enablers Capable & committed colleagues One Business Stronger infrastructure 24
ONLINE / MULTICHANNEL Online: continuing to increase our share ONLINE REVENUE ONLINE SHARE OF BUSINESS ONLINE MARKET SHARE UK&I ELECTRICALS +7% +2ppts +0.4% 1H FY19 1H FY20 1H FY19 1H FY20 1H FY19 1H FY20 NORDICS +19% +3ppts 1H FY19 1H FY20 1H FY19 1H FY20 25
ONLINE / MULTICHANNEL Accelerating growth online Easier to find Easier to buy Easier to get Smartphone first Crossover benefits Smartphone first Larger range Less friction Supply Chain Credit development Increase Contact Centres Services personalisation Search Recommendation FY20 + 4k SKUs Transactional App Checkout Site Speed 26
ONLINE / MULTICHANNEL Creating exciting stores Gaming +2.8 ppt s 81 remodelled Market Share 62 post peak Smart Tech +1.5 ppts MDA +0.8 ppts 27
ONLINE / MULTICHANNEL Moving towards true multichannel retail +1ppt Click & collect share of online sales Online sales made in store +35% (33%) 28
CREDIT Credit: making good progress Credit Customer NPS +16pts vs non-credit customers Credit Adoption (% of Sales) 11% (+90bps vs 1H FY19) Active Credit Customers Over 1m, +35% vs 1H FY19 Credit Sales +8% vs 1H FY19 29
EASY / SERVICES Delivery & Set up & Trade-in Protect Maintain Repair installation connectivity & upgrade 4.6m home visits >250k laptop Mobile insurance Maintenance Repair >2m Shortening per year set-ups almost 1m customers products product Health replacement 1m installations 10m Warranty checks Inc repair >700k cycles in homes agreements phones 30
EASY / SERVICES Customer satisfaction improving through their journey +31pts +22pts +16pts +17pts +21pts CSAT purchase in store purchase online collect delivery installation 1H FY19 1H FY20 31 Source: Dixons Carphone internal data - Currys PC World CSAT based on purchases for 1H FY20 vs 1H FY19
EASY / SERVICES Protection: Big and sustainable service Protect Good for Customers Good for Us Unique assets (10m warranty agreements) 69% Stickier and more valuable customers want protection Annuity stream 32
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