INTERIM RESULTS 2019/20 12 December 2019 1 Todays agenda - - PowerPoint PPT Presentation

INTERIM RESULTS 2019/20

12 December 2019

1

Q&A

Alex Baldock & Jonny Mason

TRANSFORMATION UPDATE

Alex Baldock

FINANCIAL RESULTS & GUIDANCE

Jonny Mason

INTRODUCTION

Alex Baldock

2

Today’s agenda

3

4

Sources: GfK. DC internal analysis and supplier data. Nordics data unavailable on same basis for 2014/15

Growing market leading positions

UK&I ELECTRICALS UK&I MOBILE

22.5% 24.2% 25.1% 25.2% 25.5% 25.0% 25.7%

2014/15 2015/16 2016/17 2017/18 2018/19 H1 2018/19 H1 2019/20

20.6% 24.6% 23.8% 21.9% 18.9% 19.2% 16.5%

2014/15 2015/16 2016/17 2017/18 2018/19 H1 2018/19 H1 2019/20

NORDICS GREECE

0.0% 21.1% 24.2% 25.0% 25.4% 25.3% 26.0%

2014/15 2015/16 2016/17 2017/18 2018/19 H1 2018/19 H1 2019/20

26.3% 28.7% 32.2% 34.4% 35.0% 35.2% 36.3%

2014/15 2015/16 2016/17 2017/18 2018/19 H1 2018/19 H1 2019/20

STORES ONLINE

Customer satisfaction continues to increase

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

UK&I ELECTRICALS NPS HAPPY OR NOT

1H FY19 1H FY20 1H FY19 1H FY20 1H FY19 1H FY20

+13pts +12pts +3pts

UK&I MOBILE

1H FY19 1H FY20 1H FY19 1H FY20

+1pts +4pts

NORDICS GREECE

Market share gains1

• Positive like-for-like revenue growth

Improving profitability

• EBIT margin of at least 3.5%
• £200m cost savings identified

Strong cash flow

• 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

Financial targets for medium term

£1bn of free cash flow2 through the plan

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

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

UK&I Electricals

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

2.1% 1.6% (0.4)% (0.1)% EBIT H1 2018/19 Gross margin Operating costs EBIT H1 2019/20

10

UK&I Electricals EBIT margin

• Improved delivery proposition
• Investment behind initiatives
• Price promise

H1 2019/20 H1 2018/19 YoY

Local currency change

H1 LFL Revenue £1,904m £1,887m 1% 3% 3% Adj EBIT £54m £50m £4m 11% EBIT % 2.8% 2.6% 20bps 20bps

International

11

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

2.6% 2.8% 0.4% (0.2)% EBIT H1 2018/19 Gross margin Operating costs EBIT H1 2019/20

International EBIT margin

• Investment in delivery
• Operating cost leverage

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

UK&I Mobile

13

Q1 LFL -10%, Q2 LFL -10%

• Overall postpay market down -4%, new 24m subscribers down -8%
• Market share down -3%pts

14

Mobile full year EBIT Bridge

£(90)M £9M £41M £50M

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

£m P&L Non-cash Cash (in period) Cash (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) Exceptional FCF (37)

Other adjusting items

16

71 81 99 (84) (29) 138 (22) 116 (35) (18) 34 (14) 9 (24) (15) (39) Prior Yr H1 YoY

Free cash flow

* Other includes Taxation and Interest

17

£36m £114m £77m £63m £133m £(98)m £(20)m £(37)m

Headline EBIT Dep. & Amort. Workin ing capital Capex Other FCF before Excep. Excep. Free cash flow

£785m £(521)m £(26)m £797m £535m FY 18/19 Capitalised in period Amortised in period Revaluation H1 19/20

UK&I Mobile Network Debtor

18

(249) 116 (90) (46) (5) (274) (16) (39) 38

• 1

(16) £(290)m £(52)m £(46)m £(4)m £(265)m £77m Opening Net debt Free cash flow Dividend Pension Other Closing Net debt

Net debt

Prior Yr H1 YoY

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20

FINANCIAL GUIDANCE

UK Mobile expect loss of up to £90m Exceptional cash cost of c£80m Net debt lower Capex of ~£200m (from £275m) Dividend broadly flat* UK&I Electricals & International growth low single digit Group Headline PBT expected to be around £210m

Financial guidance for 2019/20

21

* 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

TRANSFORMATION UPDATE

Alex Baldock

Group Chief Executive

Capable and committed colleagues We work together as One Business Stronger infrastructure We offer amazing advice to our customers through assisted selling We understand technology and our customers; data We are big – we have something for everyone; range We are affordable: trusted on price and through credit We serve our customers however they want to shop:

• nline or in store

We have an easy end to end customer experience We are with our customers throughout the life of the product – via our Services Our sites and stores are amazing Our partnerships with suppliers make a big difference Mobile is central to our vision

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Priorities and enablers

Enablers

Capable & committed colleagues One Business Stronger infrastructure Mobile is central to our vision We have an easy end to end customer experience We help customers get the most out of their tech

Easy / Services Mobile

Priorities

We serve our customers however they want to shop:

• nline or in store

Online / Multichannel

We are affordable: trusted

• n price and through credit

Credit

25

Online: continuing to increase our share

UK&I ELECTRICALS

ONLINE / MULTICHANNEL

NORDICS ONLINE REVENUE ONLINE SHARE OF BUSINESS ONLINE MARKET SHARE

+7% +2ppts +0.4% +19% +3ppts

1H FY19 1H FY20 1H FY19 1H FY20 1H FY19 1H FY20 1H FY19 1H FY20 1H FY19 1H FY20

Easier to find Easier to buy Easier to get Smartphone first Crossover benefits

Increase personalisation Contact Centres Services Larger range Supply Chain Less friction Smartphone first development Credit FY20 + 4k SKUs Search Recommendation Checkout Site Speed Transactional App

26

Accelerating growth online

ONLINE / MULTICHANNEL

81 remodelled 62 post peak

27

Creating exciting stores

Gaming Smart Tech MDA

Market Share

+2.8 ppts +1.5 ppts +0.8 ppts

ONLINE / MULTICHANNEL

Click & collect share of online sales +1ppt

(33%)

Online sales made in store +35%

28

Moving towards true multichannel retail

ONLINE / MULTICHANNEL

29

Credit: making good progress

CREDIT

Active Credit Customers Credit Customer NPS Credit Sales Credit Adoption (% of Sales) 11% (+90bps vs 1H FY19) Over 1m, +35% vs 1H FY19 +16pts vs non-credit customers +8% vs 1H FY19

30 EASY / SERVICES

Trade-in & upgrade Set up & connectivity Repair Maintain Protect Delivery & installation

Mobile insurance almost 1m customers 10m Warranty agreements >250k laptop set-ups 4.6m home visits per year 1m installations in homes Maintenance Health checks Repair >2m products Inc repair >700k phones Shortening product replacement cycles

CSAT

1H FY19 1H FY20

+16pts +17pts +21pts +22pts +31pts purchase in store purchase online collect delivery installation

EASY / SERVICES

Source: Dixons Carphone internal data - Currys PC World CSAT based on purchases for 1H FY20 vs 1H FY19

Customer satisfaction improving through their journey

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Protection: Big and sustainable service

69%

want protection

Unique assets (10m warranty agreements) Stickier and more valuable customers Annuity stream

Good for Us

EASY / SERVICES

Good for Customers

Protect

Cost reduction Lower volume commitments Improved offer

33

Mobile is challenging as expected

• 3 actions underway

MOBILE

Better terms, without extending tenure c£60m positive EBIT impact, FY20 But: still constraining Accelerated cost reduction On track for £100m of cost savings by FY22 Wider choice of networks and better SIMO offers Better security of supply (iD now competitive) Credit based bundles in FY21

CONSTRAINTS LIFTED FY21 Legacy contracts Costs

Investing in capabilities

34

WE PUT OUR CUSTOMERS FIRST WE WIN TOGETHER WE OWN IT

CAPABLE & COMMITTED COLLEAGUES

Opened The Academy@Fort Dunlop Increased training budget x4 Shareholder scheme extended to >2000 additional colleagues Launched Dixons Carphone values

35

On track to deliver £200m of savings by FY22

ONE BUSINESS

ERP re-platforming

36

Improvements delivered in FY20

STRONGER INFRASTRUCTURE

Launched Mobile App Customer facing colleague tools Information security Pricing technology

Underway

Improved routing software for deliveries

Decommissioning legacy mobile IT

37

Christmas gift ideas

38

Currys PC World Dixons Travel Team Knowhow Carphone Warehouse iD Mobile Carphone Warehouse Business Elkjøp Elgiganten Gigantti Phone House InfoCare Kotsovolos

39

Dixons Carphone

TOTAL OF 978 STORES

OWN

978

FRANCHISE

–

UNITED KINGDOM 890

ELECTRICALS UK 312 UK DIXONS TRAVEL 30 MOBILE UK 548

IRELAND 88

ELECTRICALS IRELAND 18 MOBILE IRELAND 70

TOTAL OF 417 STORES

OWN

251

FRANCHISE

166

NORWAY 149 SWEDEN 176 DENMARK 38 FINLAND 42 OTHER NORDICS 13

TOTAL OF 94 STORES

OWN

73

FRANCHISE

21

GREECE 94

TOTAL OF

1,497

STORES

OWN 1,311 FRANCHISE 186