Upload
others
View
7
Download
0
Embed Size (px)
Citation preview
Interim Results
(26 weeks ended 28 September 2013)
14 November 2013
AGENDA
2
H1 2013-14 Overview &
Virgin Mobile France
Roger Taylor, Deputy Chairman
Carphone Warehouse
Andrew Harrison, Chief Executive Officer
H1 Financial Performance Nigel Langstaff, Chief Financial Officer
Outlook Andrew Harrison, Chief Executive Officer
H1 2013-14 OVERVIEW & VIRGIN MOBILE FRANCE
Roger Taylor, Deputy Chairman
3
4
H1 2013-14 KEY RESULTS
STRONG FIRST HALF
• CPW H1 LFL revenue growth of 8.3% (H1 2012-13: 1.6%)
• Q2 LFL revenue growth 3.6% (Q2 2012-13: 5.0%) (Tough comps, transitory quarter ahead of 4G penetration)
• CPW H1 pro-forma Headline EBIT of £21m (H1 2012-13: £6m)
• Virgin Mobile France Q2 postpay net adds marginally positive (Q1: -15,000)
• Interim dividend of 2.00p (2012: 1.75p) payable in December 2013
• Reiterating full year guidance
• Cashflow
• EBIT range £140m - £160m
• EPS range 17.0p - 20.0p
• Board structure
5
H1 STRATEGIC DEVELOPMENTS
SOLID PLATFORM FOR GROWTH
• Completed acquisition of Best Buy’s 50% interest in CPW Europe
• 4G ready
• Developing European partnerships
• Connected World Service (CWS) – breadth of opportunities
• Virgin Mobile France back to growth
• Premium listing achieved; FTSE index review in December
VIRGIN MOBILE FRANCE
6
• Stabilising postpay base
• Pricing stabilisation with handsets + 4G
• 66% of total base on Full MVNO platform; targeting c.90% by end FY14
• Bouygues contract announced during Q2
• 4G offering available early 2014
• Contracts with the 3 major French networks
Postpay customer base Contracts with the 3 major networks
Q1FY12
Q2FY12
Q3FY12
Q4FY12
Q1FY13
Q2FY13
Q3FY13
Q4FY13
Q1FY14
Q2FY14
CARPHONE WAREHOUSE
Andrew Harrison, Chief Executive Officer
7
OTHER ASSETS
Two freehold properties in UK valued at c.£20m
and loans receivable from Virgin Mobile France of £18m
VIRGIN MOBILE FRANCE
46% share in largest MVNO in France
with 1.7m subscribers
8
GROUP STRUCTURE
“We exist to make more lives better through connected technology”
CARPHONE WAREHOUSE RETAIL
Multi-channel retail business providing specialist advice
to customers, helping them navigate through the
complexities of the connected world
CONNECTED WORLD SERVICES
New B2B business, converting core CPW capabilities,
expertise and systems into services
9
H1 2013-14 HIGHLIGHTS
ENCOURAGING PROGRESS ACROSS THE BUSINESS
• H1 LFL growth 8.3% and 5th consecutive quarter of LFL revenue growth
• Market share gains in both postpay & prepay categories
• Overall cash GM maintained despite
- Market transitioning prior to full 4G roll-out
- Further decline in prepay market
• Encouraging start to wider 4G roll-out
• Investment in people & advisory sales tool
• European partnerships progressing
• CWS platform developed with Accenture
10
CORE BUSINESS
EUROPEAN PARTNERSHIPS
CONNECTED WORLD SERVICES
CONTINUED PROGRESS TO TRANSFORM
THE BUSINESS
STRONG PLATFORM FOR GROWTH
11
4G ADVANTAGES
EST. 9M UK SMARTPHONE USERS WAITING TO UPGRADE TO 4G
WITHIN NEXT 12 MONTHS
CPW Customer
• Long-term ARPU increase (benefits of revenue
sharing)
• An average song will take 4 seconds to download,
compared to 27 seconds on 3G
• Increase of 3 to 5X seen in data usage by 4G
users versus 3G users across developed 4G markets
• Ability to watch TV, video call, shop online & access social
media, entertainment & information on the
go more easily
• A wide range of 4G devices coming to market;
stimulating handset replacement cycles
• Estimated 34% of 4G users say watching videos on their
mobiles makes a more enjoyable commute
• More connected tablets (“Wi-Fi like”
experience on the go)
• Posting a picture to Facebook is on average 25x
Faster using 4G
• Increasing complexity of tariffs (need to
understand coverage, data allowance etc.)
• Experience similar to “Wi-Fi” but on the go
FULLY COMPREHENSIVE 4G IN THE UK DURING 2015
12
4G UK MARKETPLACE
The three leading networks are maintaining a premium for 4G and more recently broadening the target market
Network Launched No. of Subscribers 4G Availability
Oct 2012
c.1.2m users
(as of 30 Sep 2013)
• > 100 locations
• 20 locations on double speed 4G
• population coverage of 60%
• targeting 98% coverage by end of 2014
Aug 2013 not announced • live in 11 cities
• 98% coverage during 2015
Aug 2013 > 0.1m users
(as of early Oct 2013)
• live in 14 cities
• 98% coverage during 2015
13
OUR INVESTMENT IN 4G
• 5,000 expertly trained colleagues in just
under 800 stores in the UK
• Pin Point sales advisory tool - 3,000 employee tablets in store
• Dedicated in-store 4G bays
• Widest range of 4G devices / networks
NETWORK COVERAGE CHECKER LIVE TARIFF CHECKER PERSONALISED DEAL
PIN POINT INCREASES NPS AND CONVERSION
14
EXITED H1 WITH c.20% OF CPW UK POSTPAY CONNECTIONS
SOLD ON 4G TARIFFS
4G TARIFF OVERVIEW
• TPH Netherlands - strong business in a challenging consumer environment
• Rolling out SWAS partnership with Media-Saturn Group in 2014
• TPH Germany - market leader in distribution
• SWAS partnership with Metro Group
• TPH Spain - market leading independent retailer
• Impressive performance in changing market; potential for partnerships
• CPW Ireland - market leading with > 20% market share
• SWAS Partnership with Harvey Norman - 11 stores
• TPH Sweden – good business but highly competitive market
• Potential for partnerships
• TPH Portugal - clear market leader in a predominantly prepay, low-margin market
• Weak consumer environment
• France - exit retail market by Spring 2014; potential for CWS
• Maintain guidance of cash exit costs in region of £30m
EUROPEAN OVERVIEW
15
EARLY ADOPTION OF 4G
EUROPEAN PARTNERSHIPS
16
IRELAND 11 Harvey Norman SWAS
now open
GERMANY Working on SWAS proposition with
METRO GROUP divisions
DISCUSSIONS
ACROSS
OTHER
TERRITORIES
CONTINUE
NETHERLANDS
• Profit share agreement with Media-Saturn Group
• Media-Markt / Saturn Connect - Plans for SWAS within majority of stores by end of Sep 2014
• Makro - 17 stores currently trading
17
MARKET LEADING DEALS THIS CHRISTMAS
SOMETHING FOR EVERYONE
• 4G
• Prepay smartphones from £29.95
• Postpay smartphones from £7.50/mth
• Tablet bundles
• Accessories
18
CHRISTMAS ADVERTISING CAMPAIGN
THE HOME OF GREAT DEALS
19
UNDERSTANDING THE OPPORTUNITY
20
CONNECTED WORLD SERVICES - OVERVIEW
Partnering with
Partnering with
HONEYBEE
PLATFORM
CONNECTED
RETAILING GLOBAL
PARTNERSHIPS
SERVICES &
SUPPORT
Provision of technology
platforms and managed
services to support complex
transactions, connections to
service providers and customer
relationship management
Multichannel consultancy and
support for connected product
and service propositions,
ranging from specific managed
services through to partnerships
on the Best Buy Mobile model
Leverages CPW Europe’s
scale and commercial
relationships, enabling partner
retailers to source hardware
and to provide network
operator services
Provision of insurance services,
including policy administration,
claims administration and
fulfilment; and provision of
technical support solutions for
connected devices
GLOBAL CONNECTING PLATFORM
21
EXCITING PIPELINE OF OPPORTUNITIES
H1 FINANCIAL PERFORMANCE
Nigel Langstaff, Chief Financial Officer
22
CPW
23
CPW - HEADLINE EARNINGS
24
CPW earnings (pro forma basis)
£'m 2013-14 2012-13 YoY
Revenue 1,566 1,480 6%
Gross margin 369 372
GM% 23.6% 25.1% -150bp
Opex (320) (328)
EBITDA 49 44 11%
D&A (28) (38)
EBIT 21 6
EBIT% 1.4% 0.4%
Interest (7) (4)
Tax (3) (1)
Profit after tax 11 1
• LFL revenue
growth of 8.3%
• GM% down by
150bp, reflecting
product mix and
investment in
proposition
• Earnings benefit
from reduced costs
and fair value
2013-14 H1
CPW - OPERATING FREE CASH FLOW
25
2013-14 H1
CPW operating free cash flow (pro forma)
£'m 2013-14 2012-13 YoY
Headline EBITDA 49 44
Working capital (165) (91)
Capex (22) (37)
OFCF (138) (84)
• Seasonal working
capital profile
accentuated by
stock build and
supplier mix
• Maintaining full
year guidance on
working capital
CPW – GUIDANCE UPDATE
26
2013-14 H1
June FY guidance Update
EBIT £140m-£160m NO CHANGE
OFCF Cash generation NO CHANGE
Capex range c.£70m
W-cap outflow range c.£50m (postpay)
French exit costs c.£30m
June FY guidance H1 performance H2 expectation
LFL Up single digit Up 8.3% NO CHANGE
Particularly strong in H1 Up low single digit
Tougher comps in H2
Connections Up low single digit Down 0.2% Down single digit
Continued focus on postpay Prepay weaker
27
VIRGIN MOBILE FRANCE
VMF - HEADLINE EARNINGS
28
2013-14 H1
• Revenue down
13.9% at constant
FX
• EBIT reflects prior
year market re-
pricing, offset more
fully in H2 by Full
MVNO benefits
Virgin Mobile France Headline earnings
£'m 2013-14 2012-13 YoY
Revenue 176 192 -8%
EBITDA 8 11 -27%
D&A (5) (3)
EBIT 3 8 -59%
EBIT% 1.9% 4.2%
Interest (1) (1)
Tax (1) (2)
Profit after tax 1 5
VMF - CASH FLOW
29
2013-14 H1
• Working capital
outflow as
expected
• Capex more
reflective of
underlying run-rate
Virgin Mobile France cash flow
£'m 2013-14 2012-13 YoY
EBITDA 8 11
Working capital (10) 9
Capex (4) (12)
OFCF (6) 8
Other (1) (2)
Net cash flow (7) 6
Closing net debt (47) (34)
VMF – GUIDANCE UPDATE
30
2013-14 H1
June FY guidance Update
EBIT Broadly flat YoY in €'m NO CHANGE
€15m in FY13 Affected by SAC investment
Competitive environment Not critical focus for VMF
Full MVNO migration
OFCF 3P financing for capex NO CHANGE
Some working capital outflow
June FY guidance H1 performance H2 expectation
Revenue Down c.10% Down 13.9% NO CHANGE
Recover the shortfall
Easier comps in H2
Stabilising prices
Postpay Broadly flat Down 15,000 NO CHANGE
Recover the shortfall
31
GROUP
GROUP – HEADLINE EARNINGS
32
2013-14 H1
• EPS reflects
earnings growth in
CPW , and phasing
of Q1/Q2 profits
Group Headline earnings
£'m 2013-14 2012-13 YoY
EBIT
Wholly-owned operations 22 2
Joint ventures (1) 1
Net interest and tax (7) -
Profit after tax 14 3 367%
EPS
Basic 2.6p 0.6p
Diluted 2.6p 0.6p
GROUP - NON-HEADLINE ITEMS
33
2013-14 H1
• France costs
exclude future
realisation of value
on assets of the
business
Group non-Headline items
£'m Total CPW share
France exit
Provisions / losses (46) (26)
Asset write-downs (8) (4)
CPW Europe Acquisition
Fees / incentive schemes (17) (17)
Revaluation / consideration shares 10 10
Other
Amortisation of acquisition intangibles (4) (4)
Net P&L charge (41)
GROUP – MOVEMENTS ON NET DEBT
34
2013-14 H1
• Net debt reflects
acquisition costs
• Committed facilities
of £650m
• Other costs include
France exit costs
Movements on net funds (debt) (pro forma)
£'m 2013-14 2012-13 YoY
OFCF (138) (84)
CPW Europe acquisition (360) -
Net proceeds on shares 126 -
Distributions (19) (48)
Other (41) (2)
Net cash flow (432) (134)
Closing net debt (194) (61)
GROUP – GUIDANCE UPDATE
35
2013-14 H1
June FY guidance Update
Tax c.23% NO CHANGE
Interest c.£18m NO CHANGE
EPS 17-20p NO CHANGE
Pro forma = Actual
Shares 571m post LTIPs NO CHANGE
576m in issue
Of which 5m held by EBT
Dividends 3 x cover NO CHANGE
Reserve position on cash v scrip Cash dividends
36
Q&A
APPENDIX - UNDERSTANDING CWS
37
38
CONNECTED WORLD SERVICES - OVERVIEW
HONEYBEE
PLATFORM
CONNECTED
RETAILING GLOBAL
PARTNERSHIPS SERVICES &
SUPPORT
39
MOBILE RETAILING IS A COMPLICATED BUSINESS
CONNECTED RETAILING
Selling mobile devices
requires a range of experience and
processes that many retailers find
impossible to build
BUILD • Strategic network relationships
with manufacturers & networks
• Product sourcing & selection
• Creative propositions
• Accessory ranging
• Understanding customer needs
1
2
FULFILMENT • Multi-channel offering
• Tariff checker
• Stock management
• Fraud prevention
• Credit checking
• Eligibility checking
• SIM card fulfilment
• Activations
• Number porting SERVICES & SUPPORT
• Repairs / returns
• Insurance
• 24/7 tech support
• Set-up services
• Expert advice
• Loan phones 3
4
RETAIN • Loyalty rewards
• Upgrade eligibility
• Upgrade reminder
service
• Device trade-in
• CRM capability
• Commissions
management
• Usage monitors
40
honeyBee suite
NEEDS
ANALYSIS ACTIVATIONS
PLATFORM
Manages full guided
sales process, helping
customers to understand
needs & make informed
decisions
Manages complexities of
selling activated device -
credit/fraud checks,
contractual elements &
activations with networks
SEAMLESS CUSTOMER EXPERIENCE
Key partnership with Accenture: • Additional intellectual property
• Experienced sales team
• Access to broader markets
• Speed to market
• Access to extensive expertise &
research
• End-to-end, multi-channel customer experience
HONEYBEE PLATFORM
GLOBAL PARTNERSHIPS
• Commercial know-how
• Mobile World Distribution in Germany supplies Amazon, Aldi, Otto, Expert
• New partnership with Allo, Ukraine’s biggest retailer (c.900 stores)
12 MILLION HANDSETS = STRONG VENDOR RELATIONSHIPS
41
SERVICES AND SUPPORT
• Partnering with Aviva
• Insurance business for Belgacom, RBS
and TalkTalk
• 3rd party insurance deal in France with Innov8
• Technical support for TalkTalk and British Gas Connected Home customers
2 MILLION EXISTING CPW INSURANCE CUSTOMERS PROVIDE
STRONG PLATFORM FOR GROWTH
42