13 December 2017 Agenda Introduction Seb James Financial update - - PowerPoint PPT Presentation

13 December 2017 Interim Results 2017/18

Agenda

• Introduction

Seb James

• Financial update

Humphrey Singer

• Business review

Seb James

Page 2

Summary

Page 3

• Strong performance in electricals across the Group with growing

revenues, profitability and market share

• Maintaining scale in UK mobile but profitability challenging
• Repositioning mobile business to deliver a simpler, less capital

intensive business

• Board intends to maintain total full year dividend at 11.25p
• Expect to deliver full year 2017/18 Headline PBT within £360m -

£400m range

• Headline PBT consensus for FY18: range £362m-£420m,

average £383m

• Good start to peak trading with record Black Friday in all geographies

Humphrey Singer

Group Finance Director

Financial highlights H1 2017/18

Page 5

• Group headline PBT of £61 million (2016/17: £154 million); YoY includes (£58) million impact from revaluations
• Group H1 like-for-like revenue up 4%; Q2 like-for-like up 3%
• Group H1 electricals like-for-like up 7%; UK&I electricals like-for-like up 6%; Nordics like-for-like up 8%; Greece

like-for-like up 7%, strong growth in all markets and growth in all categories

• UK H1 mobile like-for-like down 3%, including the impact of delayed iPhone X launch into H2
• Free cash flow of £169 million (2016/17: £64 million); reduction in capex YoY, improved stock management and

favourable timing on working capital

• Net debt of £206 million (2016/17: £285 million)
• Full year total dividend maintained at 11.25p

H1 17/18 Reported rate Like-for- like H1 17/18 H1 16/17 £m % change % change £m £m UK & Ireland 3,009 (2)% 2% 34 130 Nordics 1,666 13% 8% 42 34 Greece 191 14% 7% 6 3 honeybee 2 (80)% n/a (12) (4) Group 4,868 3% 4% 70 163 Net finance costs (9) (9) Profit before tax 61 154 Headline revenue Headline profit / (loss)

70 61 (12) (9) 34 42 6 UK & Ireland Nordics Greece honeybee EBIT Net finance cost PBT

Profit bridge

Page 6

YoY £(96)m +£8m +£3m £(8)m £(93)m Flat £(93)m

£m

Free Cash Flow

Page 7

£m

169 (96) (30) (12) (19) 70 83 171 2 Headline EBIT

• Dep. &

amort. Working capital Capex Taxation Interest Restruct. Other Free cash flow

Balance Sheet

Page 8

£m

(206) (89) (46) (271) 169 29 2 Opening Net debt Free cash flow

• Acq. and

disposals Dividends Pension contributions Other Closing Net debt

H1/H2 split of revaluations

Page 9

• H1 this year includes (£19) million of network debtor revaluation
• Last year +£39 million including insurance

16/17 H1 H2 FY Customer support agreements 28 28 Network debtors 17 4 21 Insurance 22 22 Total 39 32 71

UK & Ireland like-for-like and Gross Margin

Page 10

Mobile

• Q1 like-for-like flat
• Q2 like-for-like (6)%, impacted by phasing of iPhone launches
• Trading gross margin down ~200bps
• Further reduction of ~400bps due to revaluations

Electricals

• Q1 like-for-like +7%, +1% excl. sales transfers
• Q2 like-for-like +5%, +1% excl. sales transfers
• Gross margin broadly flat

91 53 34 (39) (19) 130

Reported Revals Excl Revals Dixons CPW Excl Revals Revals Reported

UK & Ireland EBIT

Page 11

£m

Trading*

(38)

*Indicative split

16/17 17/18

Guidance FY 2017/18

• Full year headline PBT expected to be within £360m to £400m range

– Consensus headline PBT for FY18: £362m-£420m, average £383m

• We anticipate that our electrical businesses will deliver earnings growth this year across

the Group

• Full year headline interest of c.£18m
• The 2017/18 effective headline tax rate is expected to be around c.22%
• Mobile debtor revaluation, including EU roaming, expected to be in line with a negative

£10-£40m range provided

• Exceptional cash flow in 2017/18 c.£40m
• Pension contribution of £46m
• Capital is expected to be c.£200m:
• Full year total dividend maintained at 11.25p

Page 12

UK&I Nordics Greece honeybee

Capex by geography

Seb James

Group Chief Executive

Transforming Carphone Warehouse

The Carphone proposition remains just as relevant today

Page 15

Brand Strength / Relevance

ASSETS

Service Capability Network Relationships New Category Growth

£

1m insurance agreements 1.1m repairs a year 370,000 trade in a year Strong commercials Highly relevant to networks - 33% share of new subs Exclusive large indirect partner 22% market share SIMO Multiplay Energy switching +72 instore net promoter score Deep system integration 78% brand consideration Compare and Save

CHALLENGES

Cost Base and Profit Balance Sheet Customer Proposition

× High central costs driven by

complex business model

× Price difference vs.

customer perception

× Large receivable built up

Market Change

× Increasing handset prices × New aggressive market

entrants

× New customer buying

behaviours

Traditional postpay connections continue to shift with lengthening handset cycle and increased SIMO penetration

Page 16

CPW market share H1 17/18

13% 24% 4% 22% 47% 49% 49% 49% 43% 12% 11% 13% 16% 34% 25% 21% 19% 16% 12% 16% 19% 19% 19% 11%

FY 13/14 FY 14/15 FY 15/16 FY 16/17 1H 17/18 Postpay Postpay SIMO Prepay Prepay SIMO

Total UK mobile connections

What has caused the reduction in Carphone profitability?

Page 17

• Rising handset prices through technology and currency effects
• A lower demand in smartphones (lengthening of the

upgrade cycle) through a slowdown in the technology cycle and smartphone saturation

• Competitive SIMO pricing
• Reduced trading margin to achieve volumes
• Falling out of bundle spend, 4G data premiums and

EU regulation on roaming

• Performance of current model being

addressed

REVENUE

NO ROAMING

How have we responded to changes in consumer behaviour so far?

Page 18

• Handset leasing launched in Q2, credit
• ffering to follow
• New SIMO offers introduced
• Grow iD
• Diversification into new categories such as

fixed, broadband, TV content and energy switching

• Multi-play market share increased to

10%

• Better leverage of existing 3in1 estate

where appropriate

• Cost focus

What does the longer term look like?

Page 19

• A sustainable and simpler model
• Improved ROCE
• Closer matching of P&L and cash receipts
• Potentially meaningful cash release
• Further alignment of distribution strategies

Whilst maintaining relevance to the customer

Develop market leading Electrical businesses further

UK electrical pricing

UK & Ireland key performance indicators

Page 21

UK electrical advocacy

70% 75% 80% 85% 90% 95% 100% Q1 1415 Q2 1415 Q3 1415 Q4 1415 Q1 1516 Q2 1516 Q3 1516 Q4 1516 Q1 1617 Q2 1617 Q3 1617 Q4 1617 Q1 1718 Q2 1718 23.2% 24.0% 25.1% 25.7% 25.8% FY14 FY15 FY16 FY17 H118

UK electricals share

UK & Ireland achievements

Page 22

Stores

• 3in1 largely completed
• Launched new format Heathrow Terminal 3 store
• Opened our first cruise ship Travel store
• Tesco trial (2 stores)

Services and range

• Launch of nationwide same day delivery
• Midnight cut off for next day delivery
• Benefiting from extended range
• Team Knowhow: Same day repairs and white goods

promise

• Your Plan: 422k customers, £1.4bn of credit

approved, £365m drawn Online

• Revenue 3YR CAGR 17%
• Traffic 3YR CAGR 8%

UK & Ireland initiatives

Page 23

• Nationwide roll out of same day mobile phone repairs
• Launching Apple authorised same day repairs in the new year
• White goods same day repairs
• Expanding gaming proposition
• Online developments:
• New ways to pay – one click check out,

ApplePay

• Beacon technology to deliver in-store

notifications

• Carphone new concept store rollout
• Expansion of multiplay and energy saving

UK & Ireland: Black Friday

Page 24

Black Friday extended this year, with excellent performance in the “Why wait?” and Black Tag Event campaigns New records achieved on Black Friday:

• Online penetration reached 41%
• Mobile traffic mix was up to 73% at 6am
• Highest average order value at 1am
• Orders per second reached 4.55 at 9:34am
• Big categories: gaming and consoles, LSTVs,

headphones and smart tech

• On the day in Currys PC World we processed 27k Home

Delivery orders and 75k Reserve & Collect Orders

Nordic achievements

Page 25

• Record profits and low cost ratio in H1
• Strong total sales growth of 8% in H1
• Driven by online, increased range and

improved availability

• Increased market shares in all geographies
• Strong growth for the consumer electronics

and telecoms

• Improved customer satisfaction index in all

markets

• First Nordic retailer to top 1BNOK on Black

Friday

• More than 450k orders / 315 per minute
• 32% online penetration
• Higher order volumes 4-5pm

Outperforming the market in most categories White goods

• Cons. electronics

Small domestic appliances Telecoms Computing

Elkjop Market

Nordic achievements (cont.)

Page 26

• City store concept successfully

launched

• Increased range in Jönköping

Nordic DC (6,000 to 12,000 SKUs)

• Automatic replenishment working

well, driving record availability in stores

• New Nordic customer contact

centre up and running in Denmark

• Consolidated country head offices

into one Oslo site

Greece

Page 27

• Significant revamping of store estate
• New flagship stores opened
• Strong and growing NPS, brand awareness

and market share

• A Big Black Friday:
• Online and phone inbound penetration

reached 21%

• Mobile traffic reached 71% at 6am
• Highest average order value midnight to 1am
• Orders per minute peaked at 9.25 at 11am
• Launched YouTube channel, ‘Plugged in

Chef’

• 5.3m total views (38 episodes so far)

Summary

Page 28

• Strong performance in electricals across the Group with growing

revenues, profitability and market share

• Maintaining scale in UK mobile but profitability challenging
• Repositioning mobile business to deliver a simpler, less capital

intensive business

• Board intends to maintain total full year dividend at 11.25p
• Expect to deliver full year 2017/18 Headline PBT within £360m -

£400m range

• Headline PBT consensus for FY18: range £362m-£420m,

average £383m

• Good start to peak trading with record Black Friday in all geographies

Q&A