Preliminary results 2016/17 and strategy update 28 June 2017

Transcription

1 Preliminary results 2016/17 and strategy update 28 June 2017

2 Agenda Introduction Seb James Financial update Humphrey Singer Strategy update Seb James Page 2

3 Humphrey Singer Group Finance Director

4 Financial highlights for 2016/17 Strong profit performance: Headline PBT of 501 million (2015/16: 457 million), up 10% Total statutory profit before tax of 386 million (2015/16: 263 million) after non-headline charges of 115 million (2015/16: 194 million) Headline basic EPS 33.8p (2015/16: 30.2p), statutory basic EPS 25.6p (2015/16: 14.0p) Focus on cost control Free cash flow of 160 million and net debt broadly flat year-on-year at 271 million Dividend of 11.25p, up 15% year-on-year 2016/ /16 million million Sterling Page 4 Headline revenue Year on year Local currency Like for like UK & Ireland 6,550 6,402 2% 2% 4% Nordics 3,156 2,632 20% 5% 1% Southern Europe % 4% 6% Connected World Services % 37% n/a Group 10,580 9,736 9% 3% 4%

5 Strong earnings growth YoY + 14m + 10m + 5m + 10m + 39m + 5m + 44m m Page 5

6 Free Cash Flow m Page 6

7 Balance Sheet m Page 7

8 Guidance FY 2017/18 Full year headline interest c. 20m Effective headline tax rate c.22% Capex c. 200m Exceptional cash flow in 2017/18 c. 40m Pension contribution of 46m pa for next 12 years Page 8

9 Seb James Group Chief Executive

10 A robust Group growing consistently in dynamic markets m Pro forma Group EBIT Another year of growth across the Group (average +13% CAGR pro forma EBIT growth since 13/14) despite volatile external markets >20% of Group EBIT from businesses outside the UK Dixons and Carphone Warehouse integration complete / / / /17 UK&I CWS Nordics Southern Europe Competitive advantage through leadership in all markets Diversified, multi channel model ability to service customers in a way that others cannot The Group is well placed to continue to flourish Page 10

11 Continued robust performance in the UK & Ireland 4% like for like revenue growth and EBIT increased 4% to 385 million Continued to grow market share Completed property programme Launched a new Carphone web platform Begun roll-out of new Carphone store format Increased price transparency Improved delivery options Grown id mobile to a base of over 600k Increased share in multiplay Record performance in Dixons Travel Successful services trial New format Carphone Warehouse

12 A good year against a relatively tough market backdrop in the Nordics 1% like for like revenue growth and EBIT increased 13% to 89 million Record local currency profits Continued to grow market share Extended Jönköping. Added a new small-product warehouse, the most efficient and modern operation in Europe. The warehouse is now 107,000m2 (15 football fields) Integrated Infocare Integrated the Fona business in Denmark Developments to digital infrastructure Implementing electronic shelf-edge ticketing New merchandising model drive cost and stock out and improve margins Jönköping Page 12

13 Continued recovery in both Greece and Spain 6% like for like revenue growth with EBIT growing from 17 million to 22 million Greece Spain Increased profitability Credit business performing well Opened new stores Grown market share Radically improved delivery options New digital agenda including a new e-commerce platform due to launch in the coming year More flexible franchise approach Pivot towards multiplay, sim-only and handset only Gaining traction with new SmartHouse proposition Page 13

14 A strong performance in CWS, generating 21 million of EBIT Partnerships TM New relationship announced with SSE to provide our Connected Home technology and service solution Continuing to deepen relationships with existing clients Sprint JV buy back Rolling-out our honeybee platform across the Sprint owned estate in the US New agreements with WebHelp and Capita for our Contact Centre product Further interest from multiple sectors Page 14

15 Strategy update UK&I

16 Electrical retail metrics in good shape Price competitiveness maintained Continued market share gains Customer satisfaction remains high 130% 26% 95% 125% 120% 115% 110% 105% 100% 95% 90% 85% 80% 11/12 12/13 13/14 14/15 15/16 16/17 25% 24% 23% 22% 21% 13/14 14/15 15/16 16/17 90% 85% 80% 75% 70% 65% 60% Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 2013/ / / /17 Page 16

17 Electricals plan for last year delivered, with lots more activity in 17/18 What we said we would do last year Complete 3-in-1 roll-out Increase supplier shop-in-shops Seamless digital experience Online pricing transparency Same day delivery extension, shorter delivery slots and later cut off time for next day delivery Simplified online journeys and enhanced mobile interface Multiplay rollout in CurrysPCWorld stores Advanced digital marketing - improved use of customer analytics Our plans for the future My Account functionality as a single place for customers to access all their details Further roll-out of mobile devices and digital customer journeys in store Single CurrysPCWorld website Later cut off for next day delivery and nationwide same day delivery New in store gaming proposition Energy switching app in stores Increase online extended ranges and availability Increase Team Knowhow presence in store and online Leverage new credit proposition Open two trial stores with Tesco Page 17

18 Market leading connectivity business CPW postpay market share and base size Connectivity retail NPS % 20% /14 14/15 15/16 16/17 Base CPW post-pay market share 15% 10% 5% 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2015/ /17 Key advantages 37% share of postpay new subs More than 1,000 stores including 300 SWAS 3.6 year average lease length Low cost of operation Customer NPS of 90 Page 18

19 Adapting propositions to market changes Market mix of new subs and upgrades Adapting propositions to suit customer needs 100% 80% 60% 14% 16% 17% 16% 23% 21% 19% 17% 11% 11% 13% 16% 40% 20% 0% 52% 52% 51% 51% 13/14 14/15 15/16 16/17 Post-pay Post-pay SIMO Prepay Prepay SIMO Mature market Smartphone penetration Little innovation in handsets Premium handset ARPs New MVNOs battling for share Growth of SIMO and Handset Only Profitability of a leasing proposition remains attractive In more decoupled markets share shifts to phone and hardware specialists Page 19

20 Future mobile plans reflect changing landscape New, simplified, web platform Launch leasing proposition Extension of Click & Collect Grow id What we said we would do last year Launch Everyday Heroes Introduce more SWAS and extend multiplay across estate Warehouse and repair consolidation Launch soft credit check Our plans for the future Develop leasing business residual value advantage through Trade-in Increase SIMO market share Grow id customer base Leverage multiplay and roll-out energy switching Extend B2B proposition in stores New store format Service and repairs e.g. same day screen repair Page 20

21 Active base (000) id MVNO is growing an incremental customer base MVNOs gaining share id base has doubled in a year Source of id customers in 2016/17 16% 30% 84% 70% MNO MVNO Source: YouGov % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Existing customer, number ported Customer new to CPW Existing customer, no number ported ID customers Non-incremental Incremental New post-pay price plan launched June - bill capping, data roll-over and inclusive roaming in 50 countries App-based customer service used by 64% of customers reduced cost to serve Our plans for the future Allow customers to manage all aspects of account in app, reducing cost to serve In app transactional capability Drive SIMO to increase Carphone Warehouse market share Develop direct channel (idmobile.co.uk) to attract more incremental customers Page 21

22 Large warranty and insurance bases robust and predictable sales Warranty and insurance closing bases (m) and annual sales (m) Mobile device insurance Warranty Insurance c.30% attach to post-pay handsets Average tenure 12.2 months Defaqto 5 star rating 99% claims acceptance rate Appliance warranties 25% - 40% attach across key categories 65% term, 35% PAYG 14 day repair promise - or we replace the product 0 Base Annual sales Newark repairs centre Our plans for the future Repair promise improvement to 7 days Insurance and warranty relaunch under Team Knowhow brand Direct to consumer product development Page 22

23 All service activities will be brought together under a single brand: Team Knowhow National brand roll-out across the summer in store, online Tech hubs in London trial and on the road Our plans for the future Wider roll out of same day mobile repair Currently in 9 store trial in the London area The model is profitable and has demonstrated demand Extend 48 hour chargeable white goods repair to new regions Successful trial in Leeds with NPS consistently > 80 Team Knowhow national roll-out over the summer Page 23

24 Fast growing Financial Services business driven by new flagship credit product Very successful launch of Your Plan flexible credit proposition with over 1bn approved since launch Average transaction values significantly higher with credit Your Plan credit approved since launch Your Plan online application ATV with credit vs without credit (comparable products) % bn Without credit With credit Over 300,000 customers Average approval 3,000+ c. 20% drawn down Early indication that customers return more frequently and a high proportion are new to the business Our plans for the future Flexible interest free credit and BNPL offers for different customers Drive flexible payment options throughout the business Bundled and subscription models Page 24

25 Dixons Travel business accessing affluent and growing customer base Strong passenger and gross margin growth More affluent and younger customer mix than our domestic business Higher end product mix driving higher ARP Passengers (m) 6% growth PA 13/14 14/15 15/16 16/17 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Dixons Travel Social Domestic Dixons Travel Age Domestic ipad +24% +25% Compact cameras +32% Headphones +67% Mobile accessories Source: CAA, departing passengers AB C1 C2/DE Dixons Travel Domestic New store format Heathrow T3 opening July Our plans for the future 3 additional stores this summer, bringing total to 31 New categories e.g. SKA International expansion Page 25

26 A diversified and resilient UK&I business Three years on - a UK&I business that is efficient, scaled, competitive and relevant 1. broad and diversified range of businesses 2. large, long-term customer revenue base 3. significantly more resilient 4. multi channel model and range of capabilities bringing competitive advantage 5. market leading scale driving customer acquisition Well placed for sustainable growth Page 26

27 which is increasingly robust and predictable UK&I (including CWS UK partnerships) margin by business area (2016/17) UK&I (including CWS UK partnerships) margin by customer relationship (2016/17) Dixons Travel id and switching B2B and partnerships id and switching Team Knowhow and Financial Services B2B and partnerships Electricals Team Knowhow and Financial Services Service and recurring Transacti onal Electricals Connectivity Connectivity Connectivity Dixons Travel Relationships with customers built on service and recurring revenues now generate more than half of our margin Page 27

28 We have dramatically reduced fixed liabilities and cost-to-serve Rent obligation reduced by 47% since 2012/13 Ave. lease length down by 28% since 2012/13 bn /13 13/14 14/15 15/16 16/17 Indicative rent obligation = average annual rent x average remaining lease term x number of stores. 12/13 13/14 14/15 15/16 16/17 CurrysPCWorld Carphone Warehouse Total Opex % of sales reduced by 2.5ppts since 2014/15 Revenue increased by 9% since 2013/ bn /15 15/16 16/ /14 14/15 15/16 16/17 Indexed to 2014/15 Page 28

29 Our multichannel model drives superior performance Over 1bn of online electricals sales reached in 2016/17 Well known specialist brands - lower cost of acquiring traffic than our (Web traffic by source 2016/17) Multichannel halo effect of digital marketing investment competitors (Return on digital marketing spend 2016/17) bn Home Delivery 24% average annual growth Paid Carphone Warehouse CurrysPC World Free /14 14/15 15/16 16/17 Collect in Store Home Delivery 0 Online Store Online Store Total customer spend generated by digital marketing investment required to generate 1 of online spend Page 29

30 Our platform is scaled and well invested with a large customer base Dixons Carphone customer base one of the largest in the UK 119m store visits 430m web visits Nectar Tesco Clubcard 22m customer calls Sell to >12m customers Boots Advantage British Gas Sky 3m deliveries 2.4m tech support calls 9m My Account registrations 0.4m finance customers Dixons Carphone D&G Amazon Prime AA Homeserve RAC B2B customers Millions 6m postpay base 0.6m installation s 1.8m repairs 0.6m id subscribers 11m insurance & assurance contracts Significant competitive advantage More profitable than pure play businesses A valuable customer base to act as a foundation for growth Page 30

31 Our relationship with customers is evolving From To Progress made One-off transactions Lifetime relationships Launched Your Plan Credit Multi-channel Channel agnostic Omni channel model integrated journeys Product focus Customer focus Data and analytics driving CLV view One-size fits all Personalisation Improved My Account to offer bespoke offers Ownership Consumption Leasing Service as attach Service as core offer Team Knowhow national launch Page 31

32 Another good year A lot of change in the UK, presenting new opportunities Business model keeps us competitive Increasing emphasis on customer lifetime value Relentless focus on price and service Tight control on costs and levers to pull Disciplined capital investment Well placed for sustainable growth Page 32