Dixons Carphone Full Year Results 2020/21: “Strong performance in a challenging year"

Audited Results for the Year Ended 1 May 2021

STRONG PERFORMANCE IN A CHALLENGING YEAR
We Help Everyone Enjoy Amazing Technology

Key Highlights

• Strong trading in all markets; market share gains in all open channels
• Electricals online sales growth +103% to £4.7bn
• Significant acceleration in omnichannel transformation
• Strong cash flow generation driving return to net cash balance sheet
• Repaid governments £73m of furlough paid to UK & Ireland colleagues during the year and £144m VAT deferral
• Restarting dividend; full year dividend of 3.0p proposed

Financial Performance

• Electricals LFL +14%, despite UK, Ireland, Norway, Denmark and Greece stores being shut for substantial periods
• Group total revenue +2% as LFL growth offset by impact of high street store closures in Mobile
• Group adjusted profit before tax £156m (2019/20: £116m)
• Group statutory profit before tax of £33m (2019/20: loss of £(140)m)
• Free cash flow £438m (2019/20: £109m) aided by acceleration of Mobile network debtor cash
• Year-end net cash £169m (2019/20: net debt £(204)m)

Transformation progress accelerated following Covid-19 disruption

• Omnichannel: ShopLive launched and scaling up, order & collect and online-in-store sales growing fast
• Credit: UK Electricals active credit customers 1.4m, +20% year-on-year
• Services: Nordics Customer Club grown to over 5.4m members, equivalent to >40% of Nordic households
• Mobile: Improved contract agreed with Vodafone and with Three for our MVNO, iD Mobile

Alex Baldock, Group Chief Executive
“I’m so proud of my colleagues. They’ve navigated the challenges of the pandemic with skill and energy, helped many millions of people enjoy vital technology, kept our transformation on track, and performed strongly. Our big investments in colleague wellbeing, skills and reward have meant more engaged colleagues, and in turn more satisfied customers. This bodes well for our sustainable success.

Technology has become even more central to people’s lives. As the market leader, with the winning omnichannel business model, we can make the most of that. The past year has seen us do so, growing a big online business and adding it to our in-store strengths. We’re now financially stronger too, allowing us to pay back over £200m to governments and to recommence our dividend.

But we’re most excited about what lies ahead. New technology platforms will add more fuel to our growth and to innovation that customers love and no-one else can get close to, whether getting them their amazing technology ever-faster, or helping them 24/7 with live video shopping.

This year, we move to one brand in the UK (as we have in each international market), and Currys can become evermore the first choice for all things tech, electrical and mobile, products and services alike. The start of the financial year has seen continued strong trading in all our markets and I’m more confident than ever in our prospects.”

Divisional Highlights

• UK&I Electricals revenue +8% (LFL +14%), adjusted EBIT £209m, +£45m year-on-year (Statutory EBIT £78m)
  • Online sales +114% to £3.4bn, offsetting sales loss from enforced store closures and in Dixons Travel
  • Online market share gain +6.0ppts, store market share up when stores open
  • Grew number of customers with whom we have a relationship and contact permissions to 9.6m (from 3.5m)
• International revenue +16% (LFL +15%), adjusted EBIT £170m, +£23m year-on-year (Statutory EBIT £158m)
  • Online sales +79% to £1.3bn, contributing 28% of sales, +10ppts year-on-year
  • Nordics share growth +0.8ppts, delivering another year of record sales, profit and customer satisfaction
  • Greece sales +10% and profits robust despite widespread store closures
• UK&I Mobile revenue down (55)%, adjusted EBIT loss £(117)m, £(20)m year-on-year (Statutory EBIT loss £(89)m)
  • Sales declined due to UK standalone Carphone Warehouse store closures announced in March 2020, exacerbated by unexpected enforced 3-in-1 store closures
  • Network debtor unwind drove segmental free cash flow of £143m

Performance Summary
Group sales were +1% higher than last year on a currency neutral basis, as +11% growth in our Electricals business was offset by the decline in Mobile sales.

Gross margin declines due to the shift of sales online were more than offset by operating leverage from stronger sales and cost savings, resulting in improved operating margins. This drove higher cashflow and alongside working capital inflow meant the group generated free cash flow of £438m and ended the year with £169m of net cash.

Current Trading
The start to the financial year has seen continued strong trading. We continue to see evidence that our markets will be structurally larger post-pandemic, and that not all last year’s growth was pulled forward. In UK&I Electricals, our sales are up on last year, with around half of the sales through our stores, as expected. In International, our sales are trending positively against strong growth in the previous year.

Guidance

Current year guidance

• To maintain a net cash position at year end
• Capital expenditure of around £190m
• Net exceptional cash costs of less than £100m (from £130m previously guided)

Medium term guidance:

• Group to generate cumulative free cash flow of more than £1bn over 2019/20 to 2023/24
• Group expects at least 4.0% EBIT margin by 2023/24 (equivalent to 3.5% on a pre-IFRS16 basis)
• Total positive cashflow from UK&I Mobile over 2020/21 to 2023/24 will be at least £200m (from previously guided £125-175m range), including £143m generated in 2020/21
• Annual pension contributions will rise to £78m from 2021/22 onwards
• Dividend of 3.0p expected to grow, further details to be provided in due course

Notes

1. Net cash / (debt) has been redefined in the period to comprise only cash and cash equivalents and short-term deposits, less borrowings. As such, the year ended 2 May 2020 has been restated. A full reconciliation to net cash / (debt) can be found in note A10 within the Glossary and Definitions section.

Results presentation webcast
There will be a recorded presentation for investors and analysts available at 7:00am today, followed by a live Q&A at 9:00am. The presentation slides will be available via the webcast and on www.dixonscarphone.com

Next scheduled announcement
The Group’s AGM will be held on 15 September 2021.

The Group is planning a Capital Markets Day for 4 November 2021.

The Group is scheduled to publish its Interim results covering the 26 weeks to 30 October 2021 on Wednesday 15 December 2021.

For further information

Assad Malic
Group Strategy & Corporate Affairs Director
+44 (0)7414 191044

Dan Homan
Head of Investor Relations
+44 (0)7401 400442

Amy Shields
Director of External Communications
+44 (0)7588 201442

Tim Danaher, Sam Chiene
Brunswick Group
+44 (0)207 4045959

Follow us on Twitter: @dixonscarphone

About Dixons Carphone
Dixons Carphone plc is a leading omnichannel retailer of technology products and services, operating through 829 stores and 16 websites in 7 countries. We Help Everyone Enjoy Amazing Technology, however they choose to shop with us.

We are the market leader in the UK & Ireland, throughout the Nordics and in Greece, employing 35,000 capable and committed colleagues across the Group. Our full range of services and support makes it easy for our customers to discover, choose, afford and enjoy the right technology for them, throughout their lives. The Group’s operations are supported by a sourcing office in Hong Kong, state-of-the-art repair facilities and an extensive distribution network, enabling delivery to stores and homes.

Our brands include Currys PC World the UK & Ireland and Carphone Warehouse and iD Mobile in the UK where our services are provided through Team Knowhow; Elkjøp, Elgiganten and Gigantti in the Nordics; and Kotsovolos in Greece.

Certain statements made in this announcement are forward-looking. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from any expected future events or results referred to in these forward-looking statements. Unless otherwise required by applicable laws, regulations or accounting standards, we do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise. Information contained on the Dixons Carphone plc website or the Twitter feed does not form part of this announcement and should not be relied on as such.

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