Preliminary results 2014/15

16 July 2015

FY 2014/15 highlights and strategy update

Sebastian JamesGroup Chief Executive

Quite a year

• Strong like-for-like revenue growth for the Group (+6%), in particular in the UK & Ireland (+8%), driven by both mobile and electricals

• 21% year-on-year growth in Headline pro forma PBT to £381m

• Further market share gains across electricals and mobile in the UK&I, Nordics and Greece

• Very strong customer satisfaction and progress on pricing

• Integration progressing well- Synergies to be delivered one year ahead of plan (at least £80m by FY 2016/17)- SWAS roll-out continues, 244 Carphone Warehouse stores now within Currys PCWorld- Head office and organisational decisions made

• Disposal of non-core operations in Germany and the Netherlands

• Good progress in CWS - agreement with Sprint and a strong pipeline

Page 3 Preliminary results 2014/15

Recap of value driversM

ark

et

ca

p

• Price• Service• Range• Market share gains• Kitchen• Multi-play

• Int’l portfolio review• Property portfolio• New categories• Consolidation opportunities• MVNO

• SWAS• Nordic co-

branding• Head offices• Warehousing• People• Commercial

• Connected retail• Services & support• Technology platform• Product solutions• MVNO/MVNE

• Direct to consumer• Leveraging platform

Core business Core businessopportunities

Synergies Connected WorldServices

Services

Core ServicesSynergies

Page 4 Preliminary results 2014/15

Good progress on strategic value drivers

Core business Core business opportunities Synergies Connected World Services Services

Core ServicesSynergies

• New propositions to be trialled this year

• Shift of repair activities to central location

• Focus on future model

• New structure in place• Sprint agreement

announced• honeyBee deployment

in Canada in the coming months

- UK performing well• Filling pipeline

• Market share gains in all key markets in all categories

• Captured more than fair share of P4U

• Customer satisfaction scores at all time highs

• Price at most competitive ever in UK

• Progress on initiatives:• Warranty, price,

delivery, online

• Launch of UK MVNO• Irish capacity MVNO to

launch imminently• Disposals of German and

Dutch businesses• Portugal exit announced• Significant work done on

end-state store portfolio• Multi-play propositions

in late stage development

• 244 SWAS (114 full CPW executions)• c.4 more per week• Trading encouraging

• Nordics co-branding• H/O: UK move in Oct,

Sweden complete• UK warehouse/repair

integration announced• Key organisational

structures in place

Page 5 Preliminary results 2014/15

Core business – 2014/15 highlights

Financials

• Group LFL revenue up 6% • UK and Ireland up 8% • Nordics up 4%

• Group pro forma Headline PBT of £381m (2013/14: £316m), up 21%

• Group pro forma Headline basic EPS from continuing operations 25.5p (2013/14: 20.5p)

• Final dividend of 6.0p (2013/14: 4.0p) proposed, taking total dividends for the year to 8.5p (2013/14: 6.0p)

• Integration progressing well and expect to deliver a minimum £80m of synergies by 2016/17, one year ahead of plan

Market share gains in all key categories in all key markets

UK electricals

UKpostpaymobile

Nordics

21.5%

23.2%

24.4%

FY 12/13 FY 13/14 FY 14/15

15.5% 16.0%

19.6%

FY 12/13 FY 13/14 FY 14/15

25.9%

26.6%

27.1%

FY 12/13 FY 13/14 FY 14/15

Page 6 Preliminary results 2014/15

Pricing

• UK pricing at most competitive ever

• Nordic price positioning good but more to do in Norway

Comparative pricing

Core business – 2014/15 highlights (cont.)

90%

95%

100%

105%

110%

115%

120%

125%

Ap

r-1

1

Jul-

11

Oct

-11

Jan

-12

Ap

r-1

2

Jul-

12

Oct

-12

Jan

-13

Ap

r-1

3

Jul-

13

Oct

-13

Jan

-14

Ap

r-1

4

Jul-

14

Oct

-14

Jan

-15

Ap

r-1

5

Competitor 1 Competitor 2 Competitor 3 Competitor 4

Customer satisfaction

• Customer satisfaction scores at record levels in the UK and Nordics

Page 7 Preliminary results 2014/15

Core business – opportunities

MVNO

• Launched iD in the UK in May- Encouraging start- Innovative propositions to launch shortly

• iD launch in Ireland later in the summer

International portfolio

• Focus on markets in which we have scale and relevance

- Disposals of German and Dutch businesses finalised- Announced plans to exit Portugal- Completed Central Europe and Pixmaniadisposals- Sale of Virgin Mobile France

Property

• Continuation of Currys and PC World 2-in-1 programme

• Trialling property options to help determine end state store portfolio

New categories

• Multi-play

• Smart tech (health and fitness)

• Connected Home (security, heating and lighting)

• Drones

Page 8 Preliminary results 2014/15

Synergies

Stores

• 244 Carphone Warehouse SWAS across the CurrysPCWorld estate

- 114 full CPW SWAS executions- Opening/converting c.4 per week

• Trialled co-branded stores in Sweden

• Launched Phone House in Norway

People

• New organisational structures for the Group, UK & Ireland and Sweden in place

• Established strong structure for CWS

• Warehouse and distribution centre integration announced

Head office

• Acton redevelopment underway- Hemel site to close in autumn

• Swedish head office relocation complete

• Irish head office relocation complete

Commercial

• Combining best buying practices and integrated group buying

• Leveraging scale on cost prices in goods not for resale

• Developed integrated cross category marketing campaigns

Page 9 Preliminary results 2014/15

Connected World Services - overview

• First full year set of full year results reported

• EBIT of £8m (FY 2013/14: £5m) • Investment continues• Contracts require longer lead times

• Sprint agreement announced on 2nd July

• honeyBee:• Continues to perform well in the UK• Expected to launch in Canada in the coming months

• Establishment of European services hub in the Netherlands

• Strong pipeline

Page 10 Preliminary results 2014/15

Connected World Services - Sprint

• Announced agreement with Sprint, two components:i. JV to enable rapid roll-out of up to 500 Sprint branded stores if initial 20 store trial

successfulii. Provide support across the wider Sprint estate

• Initial trial period for 20 stores in Chicago and Miami• First store expected to open mid August in Chicago• All expected to be open late November• Decision to move to wider roll-out within 6 months

• Support agreement to provide specialist knowledge and skills to deliver a best in-class experience across Sprint platforms has already commenced

• Opportunity to be a part of Sprint’s transformational journey

Page 11 Preliminary results 2014/15

Services – building a technology led home services and support business

Early trial launch later this year

Long term strategy under development

Hiccup and Knowhow proposition launched

Software and app development underway

Future proposition and building blocks to deliver

key services across the home

First stage research and planning complete

Positive customer reaction and supplier support

Product demonstration built

First port of call for our customers

Independent and expert help in reducing household spend

Indispensable to suppliers

Home as a fourth channel

Longitudinal relationships with customers

Attractive margins

Access to new growth markets

Leveraging existing platform – building new capabilities

Page 12 Preliminary results 2014/15

The year ahead

• Continue momentum in core retail operations• Further improvement in delivery options, pricing and warranty propositions• iD MVNO• Kitchen roll-out• Further growth in KNOWHOW added value services• Multi-play

• Deliver synergies• Head office moves• Nordic co-brand roll-out• Property integration

• Grow CWS• Successful Sprint trial and roll-out of Phase II• Convert and grow pipeline

• Build / buy / partner to develop services capabilities

• Reinvest for sustainable long term growth

Page 13 Preliminary results 2014/15

Summary

• Strong foundations in place

• Core business in strong position with tangible and material opportunities

• Integration going well

• CWS gaining traction

• Services plans evolving well

• Plenty left to do

Page 14 Preliminary results 2014/15

FY 2014/15 financial update

Humphrey SingerGroup Finance Director

• Group like-for-like revenue up 6% (UK & Ireland up 8% and Nordics up 4%)

• Strong profit performance:

- Group pro forma Headline PBT of £381m (2013/14: £316m), up 21%

- Group pro forma Headline basic EPS from continuing operations 25.5p (2013/14: 20.5p)

• Total statutory profit of £97m (2013/14: £48m) after Non-Headline charges of £188m (2013/14:

£55m) which include a loss from discontinued operations of £114m (2013/14: £10m)

• Strong balance sheet with year end net debt of £260m

• Final dividend of 6.0p (2013/14: 4.0p) proposed, taking total dividends for the year to 8.5p

(2013/14: 6.0p), up 42% year-on-year

• Integration progressing well, expecting to deliver at least £80m of synergies in 2016/17, one year

ahead of plan

• Disposals of non-core operations in France, Germany, the Netherlands and Portugal

Financial summary

Page 16 Preliminary results 2014/15

A complicated set of financials…

2014/15 2013/14

Carphone April – April April – March

Dixons May – April May – April

Pro forma

Segmental reporting

• New segmental structure

– UK & Ireland (includes Dixons Travel)

– Nordics

– Southern Europe (Greece & Spain)

– Connected World Services

Page 17 Preliminary results 2014/15

Prior period pro forma comparatives

Pro forma Headline EBIT

Page 18 Preliminary results 2014/15

Strong earnings growth

Pro forma Headline

YOY +£64m -£16m +£4m +£3m +£55m +£10m +£65m

Page 19 Preliminary results 2014/15

Statutory result

Page 20 Preliminary results 2014/15

Free cash flow

Pro forma basis

Page 21 Preliminary results 2014/15

(112)

(70)

(186)

(65)

(47)

(16)

414

141

13

(296)

(200)

(100)

100

200

300

400

500

600

Headline EBITDepreciation/amortisation

Working capitalincl. timing

Working capital- supplierfinancing

arrangementsCapital

expenditure Taxation Interest OtherRestructuring /

Merger Free cash flow

£m

(260)

(112)

(52)

(90)

(41)

(28)

63

(300)

(250)

(200)

(150)

(100)

(50)

50

100Opening net funds Free cash flow Dividends

Merger transactioncosts

Acquisitions anddisposals*

Pensioncontributions Closing net debt

£m

Strong balance sheet

Pro forma basis* - includes discontinued operations

Page 22 Preliminary results 2014/15

Pension

• Actuarial valuation as at 31 March 2013 showed a shortfall of £373m

• Recovery plan over 11 financial years agreed with Trustees

• Contributions of £28m made in 2014/15

• Contributions rise to £35m in 2015/16

• Contributions rise to £47m by 2024/25

Page 23 Preliminary results 2014/15

Full year 2015/16 guidance

• Full year Headline interest c.£25m

• Effective tax rate (pro forma Headline) c.25%

• Capex c. £250m although dependent on speed of integration work

• Integration synergies c. £40m in 2015/16 with at least £80m in 2016/17

• Exceptional cash flow in 2015/16 c. £40m

Page 24 Preliminary 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 25 Preliminary 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 26 Preliminary results 2014/15