Dixons Carphone Interim results 2014-15 31 weeks ended 1 November 2014 17 December 2014 Agenda Highlights and strategy update Sebastian James, Group Chief Executive Financial update Humphrey Singer, Group Finance Director Page 2 Interim results 2014-15 H1 2014-15 highlights and strategy update Sebastian James Group Chief Executive H1 2014-15 highlights • Group H1 like-for-like up 5%; Q2 like-for-like up 9%, with stable gross margins in H1 – Market share gains across the largest electrical and mobile businesses – Netherlands and Germany; review and restructure underway – iPhone 6 • Group pro forma Headline PBT £78m, up 30% – Group pro forma Headline EBIT of £100m – Interim dividend of 2.5p, payable in January 2015 • Integration: now expected to deliver a minimum £80m of synergies by 2016-17, one year ahead of plan Page 4 Interim results 2014-15 Value drivers Core Synergies Services Market cap Market Core business Core business Synergies Connected World Services opportunities Services • Price • New categories • SWAS • Connected retail • Direct to consumer • Service • Int'l. portfolio review • Head office • Services & support • Leveraging platform • Market share gain • Consolidation opportunities • People • Omnichannel platform • Core services growth • Commercial • Global partnerships • MVNO Page 5 Interim results 2014-15 Market update: UK & Ireland • Strong performance in both mobile and electrical businesses • Customer satisfaction • Pricing • Continued market share gains • Network relationships • Targeted approach to gaining Phones 4U market share • Successful iPhone 6 launch • Black Friday a success • In good shape for Christmas Page 6 Interim results 2014-15 Market update: Northern Europe Nordic business • Good sales momentum, putting pressure on the competition • Market share gains • Pricing and customer service improvements Germany • Closing wholesale hardware business • Closing retail business • Continuing profitable cardware distribution business Netherlands • Significant market issues • Restructuring and reviewing business Page 7 Interim results 2014-15 Market update: Southern Europe Spain • Tough market, revenue and profit impact this year • Agreement to sell Movistar product now in place • Restructuring largely done Portugal • Building a business in quad play • Lack of scale remains key issue • Reviewing longer-term options Greece • Good top-line growth and market share gains • Some market recovery • Expect return to profitability in short term Page 8 Interim results 2014-15 Synergies accelerated • Minimum of £80m synergies by 2016-17, one year ahead of plan • Integration – Head office – A number of functions now integrated – UK structure – Sweden SAS: Stand-alone store Co-branded SAS, Skärholmen • UK SWAS programme – 32 CPW SWAS – 158 Phones 4U conversions ahead of plan SWAS: Store-within-a-store CPW SWAS, Currys PC World, Durham Page 9 Interim results 2014-15 Services • deployment for major global brand going well: improved NPS and conversion • New contract to provide services to BT • Live 3rd party discussions in US & UK • Hiccup online phone insurance launch • CWS profit growth • Team coming together Page 10 Interim results 2014-15 Pricing app now launched Page 11 Interim results 2014-15 H1 2014-15 financial update Humphrey Singer Group Finance Director Financial summary • Group H1 like-for-like up 5%; Q2 like-for-like up 9%, with stable gross margins in H1 • Pro forma Headline PBT up 30% to £78m (2013: £60m) • Pro forma Headline EBIT of £100m (2013: £85m) • Group Headline EPS 7.1p (2013: 3.2p) • Restructuring charges and asset write-offs in Germany and Netherlands • Average net debt for the period c.£300m • Dividend of 2.5p per share payable in January 2015 Page 13 Interim results 2014-15 A complicated set of financials… Pro forma Network receivables H1 14/15 H1 13/14 • Shift of network receivables interest from pro forma EBIT to finance costs Carphone April – October April – September – Decreases EBIT & finance costs – £5m impact in H1 14/15 Dixons May – October May – October – £10m anticipated impact on 14/15 full year • October 2013 EBIT from Carphone £6m – Prior year restated • Difference on cash c.£200m Opening balance sheet for 13/14 Segmental reporting • New segmental structure • Carphone opening balance sheet adjustments increase pro forma Headline EBIT by £14m in H1 – UK & Ireland (includes Dixons Travel) last year – Northern Europe (Nordics, Germany & Netherlands) – Positive impact in H1 from information received – Southern Europe (Greece, Spain & Portugal) in H2 last year – Connected World Services – No impact on full year result • Allocations to segments for full year 14/15 – Dixons central costs of c.£20m (allocated on revenue) – Dixons property losses of c.£20m (largely UK) Page 14 Interim results 2014-15 Prior period pro forma comparatives £m 100 (4) 80 14 6 60 48 40 85 20 21 - CPW Dixons Central Europe Opening Discount Comparative balance sheet unwind Pro forma Headline EBIT Page 15 Interim results 2014-15 Strong H1 earnings growth £m YoY +£19m -£4m -£3m +£3m +£15m +£3m +£18m 120 (4) 4 100 20 22 80 60 100 40 80 78 20 - UK & Ireland Northern Southern Connected EBIT Net finance PBT Europe Europe World cost Services Pro forma Headline Page 16 Interim results 2014-15 Statutory result reflects restructuring costs in Netherlands and Germany Amortisation of £m Pro forma Dixons pre- Headline PBT Asset write- Net pension acquisition Headline PBT Merger (statutory basis) Merger downs Restructuring interest intangibles Statutory PBT 100 2 80 (11) 60 40 78 80 (58) 20 (4) (9) - (18) (20) (20) (40) Page 17 Interim results 2014-15 Free cash flow £m Headline EBIT D&A W. Cap Capex Tax Interest Restructuring Other Free cash flow 200 150 77 100 (216) 50 100 - (50) (95) (100) (211) (150) (42) (14) (200) (30) 9 (250) Pro forma basis Page 18 Interim results 2014-15 Closing net debt broadly in line with average of c.£300m for the year £m Acquisitions, Opening net Free cash disposals and Pension Closing net funds flow Dividends Merger disc ops contributions Other debt 100 50 63 - (50) (211) (100) (150) (23) (293) (200) (71) (250) (31) (13) (7) (300) (350) Pro forma basis Page 19 Interim results 2014-15 Full year guidance • Comfortable with market expectations in advance of crucial Christmas period • Full year interest c.£30m • Effective tax rate (pro forma Headline) c.25% • Capex c.£200m although dependent on speed of integration work • Average net debt c.£300m • Year end net debt expected to be broadly in line with the average Page 20 Interim results 2014-15 Priorities • Business as usual • Focus on core and partnership opportunities • Integration benefits • Cash management and capex discipline • Strong internal control environment Page 21 Interim results 2014-15 In summary • The business is in robust shape today • Integration progressing well • Tangible plans for future growth • Plenty left to do Page 22 Interim results 2014-15 Q&A .