Preliminary Results and Strategy Update Results for the year ended 31 March June 2013

Transcription

1 Preliminary Results and Strategy Update Results for the year ended 31 March June 2013

2 Agenda Introduction Highlights Guidance CPW Europe Sir Charles Dunstone, Chairman Roger Taylor, Chief Executive Officer Andrew Harrison, chief executive officer of CPW Europe Virgin Mobile France Financial Update & Guidance Roger Taylor, Chief Executive Officer Nigel Langstaff, Chief Financial Officer In summary Roger Taylor, Chief Executive Officer 1

3 Introduction Sir Charles Dunstone, Chairman 2

4 Highlights / Guidance Roger Taylor, Chief Executive Officer 3

5 Highlights CPW Europe Strong market share growth Record customer Net Promoter Scores LFL momentum, particularly UK Roll out of store experience + broadening product range Strong cash generation: Operating free cash flow 245m (2012: - 40m) Orderly exit from France (cash cost c. 30m) EBIT 137m (2012: 135m) Virgin Mobile France Postpay customer base growth despite challenging environment Revenue growth of 4.2% (constant currency) Solid performance: profitability + cashflow Full MVNO (now > 55% of base) Good challenger business with excellent management 4

6 Highlights Group Overall earnings broadly flat year-on-year Headline PBT of 59m (2012: 58m) EPS of 12.3p (2012: 12.6p) Dividend maintained at 5p for the year (final dividend of 3.25p) Developing multiple third-party relationships Sale of 2 properties for 51m (remaining property valued at c. 20m) Acquisition of Best Buy s 50% share of CPW Europe Delivered on strategic imperatives 5

7 Acquisition of Best Buy's 50% share in CPW Europe Net consideration of 471m funded by: 250m in new bank debt (average total net debt of c. 300m) 9.99% cashbox placing at 2.22 per share, raising 103.2m The issue of 42.1m shares to Best Buy with retention of proceeds above 1.90 if placed within next 12 months 50m deferred consideration over two years CPW Group plc 100% ownership of Global Connect business (JV terminated in China and Mexico) Ongoing Group buying partnership Acquisition completed on 26 June

8 CPW Europe EBIT Guidance % profit growth 137m 150m France / Switz FV EBIT growth Range 140m to 160m for including plc 7

9 CPW Europe Guidance Key assumptions Stable ARPU (4G ARPU growth opportunity) Good postpay momentum Focus prepay strategy on more valuable customers Continue to build authority in tablets Maintaining focus on cash gross margin Ongoing cost management Investment focused on growth opportunities Mainland European developments Growth opportunities being developed Spain and The Netherlands performing well Germany breaking even Strong platform for growth 8

10 Group structure CARPHONE WAREHOUSE RETAIL BUSINESS CONNECTED WORLD SERVICES VIRGIN MOBILE FRANCE 46% PROPERTY & LOANS RECEIVABLE Leading telecommunications retailer 2,377 stores Across 8 European countries Developing services business Leveraging core capabilities, expertise & systems Largest MVNO in France 1.7m subscribers c.80% of base is postpay Two freehold properties in UK valued at 20m Loans receivable from Virgin Mobile France of 21m 9

11 The Connected World Services strategy CORE BUSINESS CAPABILITIES CONNECTED RETAILING RETAILERS MANUFACTURERS SERVICES & SUPPORT OMNI-CHANNEL PLATFORM GLOBAL PARTNERSHIPS CONNECTED WORLD SERVICES BUSINESS PARTNERS MNOs/MVNOs BANKS INSURANCE ISPs UTILITIES EMPLOYERS ( BYOD ) 10

12 Partnership in Netherlands with Media Markt / Saturn to progress Successful trial in Netherlands with Signed letter of intent with full commercial agreement in the coming months Full Connected World strategy in Netherlands, with multi-formats + multichannel Consistent proposition, systems, customer experience and people across all formats Sharing of economics (capital expenditure and incremental profits) Explore further potential agreements with 11

13 Intention to establish Connected World Partnerships in Germany with Trialled 17 Makro stores in The Netherlands Intention to enter into commercial agreements in Germany with SWAS format where economically feasible B2B / professional proposition SWAS B2C SWAS B2C SWAS Potential to roll out similar B2B opportunities in other markets 12

14 CPW Europe Andrew Harrison, chief executive officer 13

15 UK Momentum: Channels Investment in Wireless World format paying back Geek Squad in stores Deeper multichannel offering driving more customers into the business Market leading m-commerce platform Investment in footfall Improved retail and online conversion Significantly improved multichannel experience 14

16 UK Momentum: Proposition More compelling propositions Strong focus on new high-end postpay and pre to post migration Destination for tablets and connected tablets Using talkmobile - our exclusive network offering Strong supplier relationships / multi-network offering Driving great propositions to meet changing consumer needs 15

17 UK Momentum: Our people and service 12 Quarterly NPS improvement against Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q NPS higher than ever bps increase in overall customer satisfaction Walk out Working Training, uniforms, reward Geek Squad agents Central teams - organised around customer Continued focus on customer experience 16

18 Europe: Exporting knowledge and potential partnerships New ownership structure allows us to forge ahead more quickly on further partnerships Lessons learned from UK over last 18 months quickly exported Active discussions with several retailers in Europe over partnership Need to establish best fit on country by country basis Delivering scale across our European operations 17

19 Connected World Services CONNECTED RETAILING GLOBAL PARTNERSHIPS SERVICES AND SUPPORT OMNI-CHANNEL PLATFORM WHAT Mobile retail solutions Complex retail propositions Handset sourcing White label solutions Innovative content Mobile phone insurance Technical support White label services Activations management Single platform PARTNERS CUSTOMERS RETAILERS MANUFACTURERS ISPs MNOs/MVNOs MANUFACTURERS RETAILERS ISPs EMPLOYERS ( BYOD ) MNOs/MVNOs RETAILERS BANKS INSURANCE UTILITIES ISPs MANUFACTURERS EMPLOYERS ( BYOD ) MNOs/MVNOs RETAILERS MANUFACTURERS MNOs/MVNOs Multiple opportunities across geographies and sectors 18

20 Exciting opportunities ahead Consolidating our market leading position in UK retail Opportunity provided by 4G and handset launches this year Exporting recent momentum to Europe Developing European partnership opportunities Wider Connected World Services conversations and pipeline and breadth of opportunities Making more people s lives better through connected technology 19

21 Virgin Mobile France Roger Taylor, Chief Executive Officer 20

22 Virgin Mobile France: focused strategy Continue to attract high value postpay customers Migration of customers onto the Full MNVO platform 1,242 1,337 1, Postpay customer base (000 s) Q1 Q2 Q3 Q4 Full MVNO customer base (000 s) Maximising strategic flexibility for the business 21

23 Virgin Mobile France > 85% on new market tariffs Earnings broadly flat year-on-year Full MVNO base c.90% by end of the financial year Quality of postpay customer base to be maintained est Revenue m Focus on shareholder value 22

24 Financial Update Nigel Langstaff, Chief Financial Officer 23

25 Performance 24

26 CPW Europe Headline earnings CPW Europe earnings 'm YoY Revenue 3,694 3,313 11% Gross margin GM% 24.7% 28.6% -390bp Opex (698) (728) EBITDA % D&A (79) (85) Earnings in line with expectations 4.6% LFL, and significant growth in dealer revenues Solid cash GMs, with GM% affected by product mix and dealer revenues EBIT % EBIT% 3.7% 4.1% Interest (9) (16) Tax (26) (22) Profit after tax % 25

27 CPW Europe cash flow CPW Europe cash flow 'm EBITDA Working capital 89 (171) Capex (61) (88) OFCF 245 (40) Strong cash generation, with working capital inflow reflecting improved commercial terms Best Buy Mobile - 45 Best Buy UK (45) (125) Tax / other (50) (42) Net cash flow 150 (161) Closing funds (debt) 120 (29) 26

28 CPW Europe non-headline items CPW Europe non-headline items 'm Restructuring / France exit Cash costs (25) Asset write-downs (94) Tax 12 Best Buy UK / Best Buy Mobile Net operating losses - (20) Exit costs - (155) Net P&L charge (107) (175) Exceptionals in line with guidance Cash costs of restructuring programme Asset write-downs largely in relation to France Further French cash exit costs in range around 30m 27

29 Virgin Mobile France Headline earnings Virgin Mobile France Headline earnings 'm YoY Revenue % EBITDA % D&A (8) (4) EBIT % EBIT% 3.1% 5.5% Interest (1) (3) Tax (4) (7) Revenue growth 4% at constant currency Pressure on outbound ARPUs offset by inbound revenue EBIT investment of 4.9m in quad-play Profit after tax

30 Virgin Mobile France cash flow Virgin Mobile France cash flow 'm EBITDA Working capital 4 9 Capex (19) (13) OFCF 5 22 Further OFCF generation, despite Full MVNO capex deferred from last year Other (5) 1 Net cash flow - 23 Closing net debt (40) (40) 29

31 Group Headline earnings Group Headline earnings 'm YoY PAT maintained at 58m Revenue 11 6 Opex (8) (5) CPW Europe % Virgin Mobile France % Net interest and tax 1 2 Profit after tax % EPS Basic 12.3p 12.6p -2% Diluted 12.1p 12.1p 0% 30

32 Group cash flow Group cash flow 'm Net funds b/f Best Buy Mobile disposal Property disposals 41 - VMF loan repayments 4 10 Own shares - (28) Distributions (57) (811) Other 27 (2) Net funds c/f VMF loans receivable Net funds inc. loans Main Acton site sold for 40.5m in March, second Acton site sold for 10.5m in April Distributions include final 33m from Best Buy Mobile disposal Final dividend of 3.25p (full year 5p) in line with last year 31

33 Financial Effects of Acquisition 32

34 Effects of acquisition on funding Consideration structure 'm Illustrative net debt profile Net consideration 471 Funding structure 471 Cash Term debt 250 Placing 91 Deferred 50 Shares At 1.90 per share 80 Group facilities Term debt Value 250m Amortisation To 225m after 2 years To 175m after 3 years Maturity April 2017 'm Low Average High PLC Cash Term debt (250) (250) (250) CPW Europe Cash / (RCF) 120 (175) (315) Combined Cash / (RCF) 230 (65) (205) Term debt (250) (250) (250) Net debt (20) (315) (455) RCF Value 400m Maturity April

35 Effects of acquisition on financials Shares in issue 562m c.9m more on legacy LTIPs Acquisition accounting Recognition of assets and liabilities at fair value Acquisition intangibles Consideration shares Potential cash upside on disposal Other effects Incremental interest costs Dividends 3x cover maintained 34

36 Guidance 35

37 Headline EBIT guidance EBIT guidance range 140m- 160m 137m 150m France / Switz FV EBIT growth

38 Guidance: additional detail Retail Revenue LFL up single digit p Particularly strong in H1 Connections Up low single digit p Continued focus on postpay OFCF Cash generation ~ Capex range around 70m q W-cap outflow range around 50m (postpay) q French exit costs Virgin Mobile France Revenue Down c.10% q Market pressure Postpay base Broadly flat ~ Focus on quality EBIT Broadly flat in 'm q Competitive environment p Full MVNO migration OFCF Cash generation p 3P financing for capex q Some working capital outflow Group Tax c.23% ~ Interest c. 18m q Acquisition debt EPS 17-20p ~ Up from 12.3p in

39 In summary Roger Taylor, Chief Executive Officer 38

40 Q&A 39