Page 2 Dixons Retail - Results Presentation 29th November 2012 - PDF document

WORLD TELEVISION Dixons Retail Results Presentation - 29th November 2012

Dixons Retail - Results Presentation 29th November 2012 DIXONS RETAIL Sebastian James, Chief Executive Humphrey Singer, Group Finance Director QUESTIONS FROM Charlie Muir Sands, Deutsche Bank Eithne O'Leary, Oriel Chris Chaviaras, Barclays Geoff Lowery, Redburn Nick Hawkins, Cenkos Geoff Ruddell, Morgan Stanley Matthew Taylor, Numis Assad Malic, Citi Andy Hughes, UBS Rod Whitehead, Deutsche Bank Simon Bowler, Exane Andy Wade, Numis Page 2

Dixons Retail - Results Presentation 29th November 2012 Presentation Sebastian James, Chief Executive Thank you first of all very much for coming this morning. I'm just also very grateful to our hosts Rothschild's for lending us this amazing space and we love it and we'll certainly use it again. I want to run through this morning a quick canter round the Group and how we've done in these first six months. Overall I think we're pretty pleased with these results and I think that they show some encouraging trends in terms of how customers are choosing to shop with us more and more and so I want to talk about that a little bit. Then Humphrey is going to go through in more detail the numbers, then I wanted to go through with you to recap on what I think the three key strategic priorities are for the Group and to give you a little bit of an update on how we're doing on them and give you some examples of some of the new products and how we're working … that's a fantastic ringtone by the way. All of that should take a little over half an hour after which Humphrey and I will be delighted to answer any questions you may have. So just to start with the interim results for this year, firstly overall Group like for likes up 3%. And particularly I'm pleased with the UK and Ireland up 3%, Northern Europe up 11%, we've seen some very good growth in various areas and I'll talk about that a little bit later on. In particular I'm pleased to see Group EBIT up by 5.1, I think that's a little better than consensus expectation and certainly I think augurs well for performance this year. We have got difficulties in France with PIXmania having a very difficult and poor trading first half and I'm going to talk a little bit later about actions we're taking to address that which are both radical and urgent. The business has had a very good and strong cash year so far, and we've been absolutely thrilled that we've been able to pay down our bond and our currency hedge without drawing on our revolving credit facilities, this is something that I think only a year ago much of the market would have thought was quite impossible and we were very pleased to be able to do it. And we have made good progress on our core three strategic priorities. So just to canter around the Group very quickly and give you a sense of what's happening in each of the territories. First half we're up 3%; we had an extremely strong quarter, helped by the summer of sport and helped by relatively weak comparables, so we had an excellent first quarter. The second quarter was as expected a little quieter, there were a few things playing into that, one was a lot of people who bought TVs for the Olympics obviously didn't buy them in the second quarter and also the timing of these results is such that Windows 8 was launched just after the end of these results so we were running down computing stocks of Windows 7 and that had some impact. Page 3

Dixons Retail - Results Presentation 29th November 2012 But overall we were quite comfortable with our second quarter, and we have seen, as expected, as we got computers back in stock we have seen some improvement since then and we would expect - at the moment we're cautiously expecting that to continue. Market consolidation continues, that is probably the politest way of saying Comet has gone out of business. And Comet, you know, as our principal specialist competitor exiting the market is clearly helpful from a capacity point of view. We do not feel complacent about that, we think that that means that we will need to continue to drive our service proposition and continue to drive our value propositions for customers. We think that Comet's departure increases the pressure on us in a very competitive world. We have returned to first half profitability in the UK for the first time in five years, I think that's a great result and I'm very pleased with it; I'm very proud of the team and what they've achieved. And I think it's given a real boost to our morale, I think those of you who've been into our stores recently will feel a sense of a team that feels what it's like to be on the winning side. And actually making money in both halves of the year is curiously psychologically impactful for our team. And our gross margins overall have been flat, which as we'll see later, given what we've been able to do on pricing I think is again a remarkable achievement. This Christmas and in fact from now three quarters of our sales go through our new format and as I said earlier this year, I'm really pleased that most of the customers who buy from us are buying with us with our best foot forward, with our new format stores they're really getting the kind of experience that I want them to get from the Dixons Retail Group and I'm pleased that we're doing that now in three quarters. Over the next two or three years we will complete the journey, it's really a property story now, we need to make sure we get the right deals and investors and stakeholders generally will want me to be sensible about how we do that and we're doing that in a sensible way. And we've had further improvements to our multichannel offer, so when we spoke earlier this year I said that we were determined to become as good as the best multichannel retailer in the UK and I think we've done that. We've got our pay and collect working now, so we you can not only reserve products that are in store but you can get products delivered to store. You can choose to have any combination of order, deliver and pick up from any point, either your home, your store, your office, anything. And you can order on any channel and we're completely indifferent now, that is best practice. We allocate store sales, internet sales to the nearest store, so that stores are genuinely indifferent, we're beginning to properly feel that we are an Omni-channel retailer. We did one other thing which I'm just going to show you, we introduced - a lot of businesses have multichannel, have mobile sites and we're no exception. But we introduced one this year, the so called liquid HTML and it automatically adapts to the screen size that you have. So even if you have it on a browser on your PC and you make it smaller we will adapt the website that we serve you to exactly give you the best experience that you can for the size of screen that you want to operate on. And we think we're unique in retail to do that. It's a small thing, but it's an indication that we're absolutely determined to be at the cutting edge of our so called Omni-channel retail. Page 4