UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported) June 14, 2011

 
BEST BUY CO., INC.
(Exact name of registrant as specified in its charter)

Minnesota	 	1-9595	 	41-0907483	
(State or other jurisdiction
of incorporation)	 	(Commission
File Number)	 	(IRS Employer
Identification No.)	

7601 Penn Avenue South	 	 	
Richfield, Minnesota	 	55423	
(Address of principal executive offices)	 	(Zip Code)	
 
Registrant’s telephone number, including area code (612) 291-1000
 
N/A
(Former name or former address, if changed since last report.)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o             Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o             Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o             Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o             Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 
Item 2.02  Results of Operations and Financial Condition.
 
On June 14, 2011, Best Buy Co., Inc. ( “Best Buy” or the “registrant”) issued a news release announcing its results of operations for the first quarter ended May 28, 2011. The registrant also reaffirmed its earnings guidance for the fiscal year ending March 3, 2012, in the news release.
 
The registrant is scheduled to conduct an earnings conference call at 10 a.m. Eastern Time on June 14, 2011. The earnings conference call is expected to be available live on the registrant’s Web site at www.investors.bestbuy.com.
 
The news release issued on June 14, 2011, is furnished as Exhibit No. 99.1 to this Current Report on Form 8-K. Best Buy Co., Inc.’s Annual Report to Shareholders and its reports on Forms 10-K, 10-Q and 8-K and other publicly available information should be consulted for other important information about the registrant.
 
Item 7.01  Regulation FD Disclosure.
 
On June 14, 2011, Carphone Warehouse Group plc (“CPW”) released its preliminary results for its fiscal year 2011.  In the news release, CPW reported the fiscal 2011 annual highlights and fiscal 2012 outlook and guidance, which includes Best Buy Europe, a venture between Best Buy and CPW, which is owned 50% by the registrant.   Figures for Best Buy Europe are presented by CPW in accordance with International Financial Reporting Standards and do not reflect accounting principles generally accepted in the United States of America (“ US GAAP”) or include purchase accounting applied by the registrant. As such, the figures presented by CPW for Best Buy Europe do not necessarily reflect the results that will be reported by the registrant in its consolidated statements of earnings. The registrant reported the results of Best Buy Europe in accordance with US GAAP for the 13 weeks ended April 2, 2011, within its fiscal 2012 first quarter results, as Best Buy Europe is consolidated on a two-month reporting lag.
 
The news release issued by CPW on June 14, 2011, is furnished as Exhibit No. 99.2 to this Current Report on Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that Section unless the registrant specifically incorporates it by reference in a document filed under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
 
In addition, on June 14, 2011, representatives of CPW held an investor presentation, which was webcast to discuss CPW’s preliminary results, including the results of Best Buy Europe, as well as a strategy update and fiscal 2012 guidance. The registrant is furnishing, as Exhibit 99.3 to this Current Report on Form 8-K, the slide presentation used for the June 14, 2011, webcast. The slide presentation is furnished pursuant to Item 7.01 of this Current Report on Form 8-K and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, unless the registrant specifically incorporates it by reference in a document filed under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
 
By furnishing the slide presentation, the registrant makes no admission as to the materiality of the information included in the slide presentation. The registrant undertakes no duty or obligation to publicly update or to revise the information included in the slide presentation, although it may do so from time to time as its management believes is warranted. Any such updating may be made through the filing of other reports or documents with the U.S. Securities and Exchange Commission (the “SEC”), through news releases or through other public disclosure.
 
Some of the matters discussed in this Current Report on Form 8-K (including Exhibits 99.1, 99.2 and 99.3) constitute forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements other than those made solely with respect to historical fact and are based on the intent, belief or current expectations of CPW, the registrant and/or its management.  The registrant’s business and operations are subject to a variety of risks and uncertainties that might cause actual results to differ materially from those projected by any forward-looking

 
statements. Factors that could cause such differences include, but are not limited to, the risk factors set forth in the registrant’s filings with the SEC.
 
Item 9.01  Financial Statements and Exhibits .
 
(d) Exhibits.
 
The following is furnished as an Exhibit to this Report.

Exhibit No.	 	Description of Exhibit	
99.1	 	News release issued June 14, 2011 (furnished pursuant to Item 2.02). Any internet addresses provided in this release are for information purposes only and are not intended to be hyperlinks. Accordingly, no information in any of these internet addresses is included herein.	
 	 	 	
99.2	 	News release issued by Carphone Warehouse Group plc dated June 14, 2011	
 	 	 	
99.3	 	Slide presentation used for webcast by Carphone Warehouse Group plc dated June 14, 2011	
 
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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 	 	BEST BUY CO., INC.	
 	 	(Registrant)	
 	 	 	
Date: June 14, 2011	By: 	/s/ SUSAN S. GRAFTON	
 	 	Susan S. Grafton	
 	 	Vice President, Controller and Chief Accounting Officer	
 
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Exhibit 99.1

 
Best Buy Reports Fiscal First Quarter Results
 
Improved sales performance delivered 1.4 percent revenue growth
 
Share repurchases exceeded $500 million during the quarter
 
Company’s full year guidance outlook unchanged
 
Fiscal First Quarter Financial Summary

 	 	Three Months Ended	 	 	 	
(U.S. dollars in millions, except per share amounts)	 	May 28, 2011	 	May 29, 2010	 	Change YOY	 	
Revenue	 	$	10,940	 	$	10,787	 	1	%	
Gross profit	 	$	2,768	 	$	2,793	 	(1	)%	
SG&A	 	$	2,484	 	$	2,480	 	0	%	
Operating income	 	$	282	 	$	313	 	(10	)%	
Diluted EPS	 	$	0.35	 	$	0.36	 	(3	)%	
Key Metrics:	 	 	 	 	 	 	 	
Comparable store sales % change 1	 	(1.7	)%	2.8	%	 	 	
Gross profit as % of revenue	 	25.3	%	25.9	%	 	 	
SG&A as % of revenue	 	22.7	%	23.0	%	 	 	
Operating income as % of revenue	 	2.6	%	2.9	%	 	 	
 
Fiscal First Quarter Highlights
 
·                   Strong Domestic mobile phones comparable store sales growth of 28 percent
·                   Domestic online revenue growth of 12 percent
·                   Domestic connections growth of 20 percent
·                   International segment operating income increased significantly year-over-year to $48 million
·                   Operating cash flow increased to $1.3 billion, an increase of $1.2 billion over the prior-year period
·                   Share repurchases totaled $505 million (16.6 million shares)
 
MINNEAPOLIS, June 14, 2011 — Best Buy Co., Inc. (NYSE: BBY), a leading multi-channel global retailer and developer of technology products and services, today reported net earnings of $136 million, or $0.35 per diluted share, for its fiscal first quarter ended May 28, 2011, compared with $155 million, or $0.36 per diluted share, for the prior-year period.
 
“I’d like to thank our employees around the world for their continued efforts to serve our customers and focus on profitable returns for our shareholders,” said Brian J. Dunn, CEO of Best Buy. “We’re pleased that our actions improved sales trends within the quarter, with continued double-digit growth online and strong growth of mobile phones and connections. We also made progress on our goal of enhancing returns by continuing strong share repurchasing activity.”

 
Revenue

 	 	Three Months ended May 28, 2011	 	Prior-Year Period	 	
($millions)	 	Revenue	 	Change YOY	 	Comp. Store Sales	 	Comp. Store Sales	 	
Domestic	 	$	7,859	 	(0.8	)%	(2.4	)%	1.9	%	
International	 	3,081	 	7.6	%	0.4	%	6.3	%	
Total	 	$	10,940	 	1.4	%	(1.7	)%	2.8	%	
 
Total Company revenue was $10.9 billion during the quarter, representing a revenue increase of 1.4 percent and included a modest comparable store sales decline of 1.7 percent versus the prior-year period. Within the Domestic segment, areas of comparable store sales growth included mobile phones, mobile computing (including tablets), eReaders, appliances and services. The online channel was key in driving growth, delivering a 12 percent revenue increase in the Domestic segment during the quarter. These sales gains were offset by declines in television, digital imaging, and physical media. Growth in the International segment was led by the continued strong performance of the Five Star business in China, which delivered comparable store sales gains during the period, while Europe and Canada each had modest comparable store sales declines.
 
Gross Profit

 	 	Three Months ended May 28, 2011	 	
($millions)	 	Gross Profit	 	Change YOY	 	% of Revenue	 	
Domestic	 	$	1,970	 	(3	)%	25.1	%	
International	 	798	 	6	%	25.9	%	
Total	 	$	2,768	 	(1	)%	25.3	%	
 
Total Company gross profit dollars declined 1 percent during the quarter, with the Domestic segment gross profit declining 3 percent, largely offset by International segment growth of 6 percent. The Domestic segment gross profit dollar decline was primarily driven by a rate decline of 60 basis points. The primary factors influencing the rate included: increased promotions to drive improved revenue, industry-wide product supply interruptions of digital imaging products due to the events in Japan, higher transportation costs, and the impact of lapping a large annual vendor rebate that occurred in fiscal first quarter 2011. Partially offsetting these factors was the continued favorable mix impact from the strong growth of mobile phones. The International segment gross profit dollar growth of 6 percent during the quarter was driven by revenue and rate strength in the Five Star business, as well as rate improvements in Canada.
 
Selling, General and Administrative expenses (“SG&A”)

 	 	Three Months ended May 28, 2011	 	
($millions)	 	SG&A	 	Change YOY	 	% of Revenue	 	
Domestic	 	$	1,736	 	(0	)%	22.1	%	
International	 	748	 	1	%	24.3	%	
Total	 	$	2,484	 	0	%	22.7	%	
 
Total Company SG&A spending was essentially flat during the quarter, as the net addition of new stores over the past 12 months was offset by timing of project-related costs. SG&A rate improved 30 basis points versus the prior-year period, as the International segment delivered rate improvement of 150 basis points due to cost savings on the European business and the Domestic segment rate was unfavorable 10 basis points.
 
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Operating Income

 	 	Three Months ended May 28, 2011	 	
($millions)	 	Op. Income	 	Change YOY	 	% of Revenue	 	
Domestic	 	$	234	 	(21	)%	3.0	%	
International	 	48	 	220	%	1.5	%	
Total	 	$	282	 	(10	)%	2.6	%	
 
Share Repurchases, Dividend, and Operating Cash Flow
 
During the first quarter of fiscal 2012, the Company repurchased $505 million, or 16.6 million shares of its common stock at an average price of $30.43 per share. The Company has approximately $800 million remaining capacity under its existing share repurchase authorization as of the end of the fiscal first quarter. On May 5, 2011, the Company paid a dividend of $0.15 per common share outstanding, or $58 million in the aggregate. As anticipated and noted within the Company’s fiscal 2011 fourth quarter earnings release, operating cash flow for the first fiscal quarter improved significantly, totaling $1.3 billion versus $169 million in the prior-year period, primarily driven by the timing of several working capital items.
 
Company Affirms Fiscal 2012 Annual Guidance
 
The Company reiterated its fiscal 2012 outlook, including its annual net earnings per diluted share guidance of $3.28 to $3.53 and adjusted net earnings per diluted share of $3.30 to $3.55 as provided on March 24, 2011. As stated on March 24, 2011, adjusted diluted EPS guidance excludes the impact of the previously announced restructuring charges and fiscal 2012 share repurchases. The Company expects revenue towards the higher end of its guided range of $51.0 to $52.5 billion. The Company also noted that it continues to expect annual operating income dollars of flat to growth of 7 percent, and expects that first half operating income dollars will be in line with its original expectations. More details regarding Best Buy’s fiscal 2012 guidance is available on the Company’s Web site at www.investors.bestbuy.com.
 
Conference Call
 
Best Buy is scheduled to conduct an earnings conference call at 10 a.m. Eastern Time (9 a.m. Central Time) on June 14, 2011. The call is expected to be available on its Web site www.investors.bestbuy.com both live and after the call. More details regarding historical store counts and square footage are available on the Company’s Web site at www.investors.bestbuy.com.
 
1  Best Buy’s comparable store sales is comprised of revenue at stores, call centers, and Web sites operating for at least 14 full months as well as  revenue related to other comparable sales channels. Relocated, remodeled and expanded stores are excluded from the comparable store sales calculation until at least 14 full months after reopening. Acquired stores are included in the comparable store sales calculation beginning with the first full quarter following the first anniversary of the date of the acquisition. The portion of the calculation of the comparable store sales percentage change attributable to the International segment excludes the effect of fluctuations in foreign currency exchange rates. The method of calculating comparable store sales varies across the retail industry. As a result, Best Buy’s method of calculating comparable store sales may not be the same as other retailers’ methods.
 
Forward-Looking and Cautionary Statements:
 
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that reflect management’s current views and estimates regarding future market conditions, company performance and financial results, business prospects, new strategies, the competitive environment and other events. You can identify these statements by the fact that they use words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “project,” “plan,” “outlook,” and other words and terms of similar meaning. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from the potential results discussed in the forward-looking statements. Among the factors that could cause actual results and outcomes to differ materially from those contained in such forward-looking statements are the following: general economic conditions, changes in consumer preferences, credit
 
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market constraints, acquisitions and development of new businesses, divestitures, product availability, sales volumes, pricing actions and promotional activities of competitors, profit margins, weather, changes in law or regulations, foreign currency fluctuation, availability of suitable real estate locations, the Company’s ability to react to a disaster recovery situation, the impact of labor markets and new product introductions on overall profitability, failure to achieve anticipated benefits of announced transactions and integration challenges relating to new ventures.  A further list and description of these risks, uncertainties and other matters can be found in the company’s annual report and other reports filed from time to time with the Securities and Exchange Commission, including, but not limited to, Best Buy’s Annual Report on Form 10-K filed with the SEC on April 25, 2011. Best Buy cautions that the foregoing list of important factors is not complete and assumes no obligation to update any forward-looking statement that it may make.
 
About Best Buy Co., Inc.
 
Best Buy Co., Inc. (NYSE: BBY) is a leading multi-channel global retailer and developer of technology products and services. Every day our employees - 180,000 strong - are committed to helping deliver the technology solutions that enable easy access to people, knowledge, ideas and fun. We are keenly aware of our role and impact on the world, and we are committed to developing and implementing business strategies that bring sustainable technology solutions to our consumers and communities. For information about Best Buy, visit www.bby.com.
 
Investor Contacts:
 
Bill Seymour, Vice President, Investor Relations
(612) 291-6122 or  bill.seymour@bestbuy.com
 
Adam Hauser, Director, Investor Relations
(612) 291-4446 or  adam.hauser@bestbuy.com
 
Mollie O’Brien, Director, Investor Relations
(612) 291-7735 or  mollie.obrien@bestbuy.com
 
Media Contacts:
 
Susan Busch, Senior Director, Public Relations
(612) 291-6114 or  susan.busch@bestbuy.com
 
Lisa Hawks, Director, Public Relations
(612) 291-6150 or  lisa.hawks@bestbuy.com
 
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BEST BUY CO., INC.
CONSOLIDATED STATEMENTS OF EARNINGS
($ in millions, except per share amounts)
(Unaudited and subject to reclassification)

 	 	Three Months Ended	 	
 	 	May 28, 2011	 	May 29,2010	 	
Revenue	 	$	10,940	 	$	10,787	 	
Cost of goods sold	 	8,172	 	7,994	 	
Gross profit	 	2,768	 	2,793	 	
Gross profit %	 	25.3	%	25.9	%	
Selling, general and administrative expenses	 	2,484	 	2,480	 	
SG&A %	 	22.7	%	23.0	%	
Restructuring charges	 	2	 	—	 	
Operating income	 	282	 	313	 	
Operating income %	 	2.6	%	2.9	%	
Other income (expense):	 	 	 	 	 	
Investment income and other	 	12	 	12	 	
Interest expense	 	(31	)	(23	)	
Earnings before income tax expense and equity in loss of affiliates	 	263	 	302	 	
Income tax expense	 	99	 	121	 	
Effective tax rate	 	37.6	%	40.3	%	
Equity in loss of affiliates	 	(1	)	—	 	
Net earnings including noncontrolling interests	 	163	 	181	 	
Net earnings attributable to noncontrolling interests	 	(27	)	(26	)	
Net earnings attributable to Best Buy Co., Inc.	 	$	136	 	$	155	 	
 	 	 	 	 	 	
Earnings per share attributable to Best Buy Co., Inc.	 	 	 	 	 	
Basic	 	0.35	 	0.37	 	
Diluted 1	 	0.35	 	0.36	 	
 	 	 	 	 	 	
Dividends declared per Best Buy Co., Inc. common share	 	0.15	 	0.14	 	
 	 	 	 	 	 	
Weighted average Best Buy Co., Inc. common shares outstanding (in millions)	 	 	 	 	 	
Basic	 	387.7	 	420.3	 	
Diluted	 	397.2	 	431.7	 	
 
1  The calculation of diluted earnings per share assumes the conversion of the Company’s convertible debentures due in 2022 into 8.8 million shares of common stock and adds back the related after-tax interest expense of $1.4 for the three months ended May 28, 2011 and May 29, 2010, respectively.
 
5 

 
BEST BUY CO., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
(Unaudited and subject to reclassification)

 	 	May 28, 2011	 	May 29,2010	 	
ASSETS	 	 	 	 	 	
Current assets	 	 	 	 	 	
Cash and cash equivalents	 	$	2,208	 	$	1,239	 	
Short-term investments	 	20	 	205	 	
Receivables	 	1,742	 	1,579	 	
Merchandise inventories	 	6,356	 	6,335	 	
Other current assets	 	967	 	1,030	 	
Total current assets	 	11,293	 	10,388	 	
Net property & equipment	 	3,767	 	3,982	 	
Goodwill	 	2,488	 	2,386	 	
Tradenames	 	134	 	153	 	
Customer relationships	 	194	 	247	 	
Equity and other investments	 	318	 	323	 	
Other assets	 	479	 	477	 	
TOTAL ASSETS	 	$	18,673	 	$	17,956	 	
 	 	 	 	 	 	
LIABILITIES & EQUITY	 	 	 	 	 	
Current liabilities	 	 	 	 	 	
Accounts payable	 	$	5,714	 	$	5,860	 	
Accrued liabilities	 	2,542	 	2,512	 	
Short-term debt	 	39	 	197	 	
Current portion of long-term debt	 	441	 	34	 	
Total current liabilities	 	8,736	 	8,603	 	
Long-term liabilities	 	1,184	 	1,253	 	
Long-term debt	 	1,700	 	1,093	 	
Equity	 	7,053	 	7,007	 	
TOTAL LIABILITIES & EQUITY	 	$	18,673	 	$	17,956	 	
 
6 

 
BEST BUY CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
(Unaudited and subject to reclassification)

 	 	Three Months Ended	 	
 	 	May 28, 2011	 	May 29,2010	 	
OPERATING ACTIVITIES	 	 	 	 	 	
Net earnings including noncontrolling interests	 	$	163	 	$	181	 	
Adjustments to reconcile net earnings to total cash provided by operating activities:	 	 	 	 	 	
Depreciation and amortization of definite-lived intangible assets  	 	236	 	243	 	
Other, net  	 	102	 	26	 	
Changes in operating assets and liabilities, net of acquired assets and liabilities:	 	 	 	 	 	
Receivables	 	650	 	388	 	
Merchandise inventories	 	(430	)	(873	)	
Accounts payable	 	844	 	620	 	
Other assets and liabilities  	 	(241	)	(416	)	
Total cash provided by operating activities	 	1,324	 	169	 	
 	 	 	 	 	 	
INVESTING ACTIVITIES	 	 	 	 	 	
Additions to property and equipment	 	(203	)	(161	)	
Other, net  	 	17	 	(93	)	
Total cash used in investing activities	 	(186	)	(254	)	
 	 	 	 	 	 	
FINANCING ACTIVITIES	 	 	 	 	 	
Repurchase of common stock	 	(480	)	(111	)	
Borrowings (repayments) of debt, net  	 	461	 	(444	)	
Other, net  	 	(18	)	61	 	
Total cash used in financing activities	 	(37	)	(494	)	
 	 	 	 	 	 	
EFFECT OF EXCHANGE RATE CHANGES ON CASH	 	4	 	(8	)	
 	 	 	 	 	 	
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	 	1,105	 	(587	)	
 	 	 	 	 	 	
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	 	1,103	 	1,826	 	
 	 	 	 	 	 	
CASH AND CASH EQUIVALENTS AT END OF PERIOD	 	$	2,208	 	$	1,239	 	
 
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BEST BUY CO., INC.
SEGMENT INFORMATION
($ in millions)
(Unaudited and subject to reclassification)
 
Domestic Performance Summary

 	 	Three Months Ended	 	 	 	
 	 	May 28, 2011	 	May 29, 2010	 	Change YOY	 	
Revenue	 	$	7,859	 	$	7,923	 	(1	)%	
Gross profit	 	$	1,970	 	$	2,040	 	(3	)%	
SG&A	 	$	1,736	 	$	1,742	 	(0	)%	
Operating income	 	$	234	 	$	298	 	(21	)%	
Key Metrics:	 	 	 	 	 	 	 	
Comparable store sales % change 1	 	(2.4	)%	1.9	%	 	 	
Gross profit as % of revenue	 	25.1	%	25.7	%	 	 	
SG&A as % of revenue	 	22.1	%	22.0	%	 	 	
Operating income as % of revenue	 	3.0	%	3.8	%	 	 	
 
International Performance Summary

 	 	Three Months Ended	 	 	 	
 	 	May 28, 2011	 	May 29, 2010	 	Change YOY	 	
Revenue	 	$	3,081	 	$	2,864	 	8	%	
Gross profit	 	$	798	 	$	753	 	6	%	
SG&A	 	$	748	 	$	738	 	1	%	
Operating income	 	$	48	 	$	15	 	220	%	
Key Metrics:	 	 	 	 	 	 	 	
Comparable store sales % change 1	 	0.4	%	6.3	%	 	 	
Gross profit as % of revenue	 	25.9	%	26.3	%	 	 	
SG&A as % of revenue	 	24.3	%	25.8	%	 	 	
Operating income as % of revenue	 	1.5	%	0.5	%	 	 	
 
1  Best Buy’s comparable store sales is comprised of revenue at stores, call centers, and Web sites operating for at least 14 full months as well as revenue related to other comparable sales channels . Relocated, remodeled and expanded stores are excluded from the comparable store sales calculation until at least 14 full months after reopening. Acquired stores are included in the comparable store sales calculation beginning with the first full quarter following the first anniversary of the date of the acquisition. The portion of the calculation of the comparable store sales percentage change attributable to the International segment excludes the effect of fluctuations in foreign currency exchange rates. The method of calculating comparable store sales varies across the retail industry. As a result, Best Buy’s method of calculating comparable store sales may not be the same as other retailers’ methods.
 
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BEST BUY CO., INC.
REVENUE CATEGORY SUMMARY
(Unaudited and subject to reclassification)
 
Domestic Summary

 	 	Revenue Mix Summary	 	Comparable Store Sales	 	
 	 	Three Months Ended	 	Three Months Ended	 	
 	 	May 28, 2011	 	May 29, 2010	 	May 28, 2011	 	May 29, 2010	 	
Consumer Electronics	 	35	%	37	%	(6.8	)%	0.0	%	
Computing & Mobile Phones 1	 	40	%	37	%	4.7	%	9.7	%	
Entertainment	 	12	%	13	%	(13.1	)%	(12.8	)%	
Appliances	 	6	%	6	%	2.9	%	14.4	%	
Services 2	 	6	%	6	%	0.8	%	(4.2	)%	
Other	 	1	%	1	%	n/a	 	n/a	 	
Total	 	100	%	100	%	(2.4	)%	1.9	%	
 
International Summary

 	 	Revenue Mix Summary	 	Comparable Store Sales	 	
 	 	Three Months Ended	 	Three Months Ended	 	
 	 	May 28, 2011	 	May 29, 2010	 	May 28, 2011	 	May 29, 2010	 	
Consumer Electronics	 	18	%	19	%	(8.6	)%	2.7	%	
Computing & Mobile Phones 1	 	59	%	56	%	4.5	%	6.2	%	
Entertainment	 	4	%	5	%	(13.6	)%	(6.2	)%	
Appliances	 	10	%	9	%	11.4	%	28.0	%	
Services 2	 	9	%	11	%	(5.2	)%	2.8	%	
Other	 	<1	%	<1	%	n/a	 	n/a	 	
Total	 	100	%	100	%	0.4	%	6.3	%	
 
1  The previous “Home Office” revenue category has been renamed to “Computing & Mobile Phones” to more clearly describe the key products contained within the category.  However, the composition of the products within this category has not changed from previous disclosures.
2  The services revenue category consists primarily of service contracts, extended warranties, computer-related services, product repair and delivery and installation for home theater, mobile audio and appliances.
 
9 

Exhibit 99.2

 
Tuesday 14 June 2011
 
Embargoed until 7am
 
Carphone Warehouse Group plc
 
Preliminary results for the year ended 31 March 2011
 
·                   Group Headline EPS up over 80% to 15.0p (2010: 8.3p), top end of guidance
·                   Group EBIT up 67% to £63.3m (2010: £38.0m)
·                   Group share of Best Buy Europe’s net income up 28% to £60.4m (2010: £47.3m)
·                   Best Buy Europe operating free cash inflow pre-Best Buy UK of £212.6m (2010: £171.7m)
·                   Virgin Mobile France moves into profit and delivers strong net additions
·                   Cash and loans receivable at March 2011 of £156.3m (2010: £150.8m)
·                   Inaugural dividend of 5.0p per share to be paid on 5 August 2011
 
Alongside its preliminary results Carphone Warehouse Group plc is today giving its annual strategy update and financial guidance for the year to March 2012.
 
Full year highlights
 
·                   CPW Europe Headline EBIT growth of 18% to £134.6m (2010: £114.4m)
·                   Best Buy Mobile US profit share up 111% to £97.9m (2010: £46.4m)
·                   Best Buy UK (‘Big Box’) EBIT loss of £62.2m (2010: loss of £21.0m)
·                   Group share of Virgin Mobile France’s Headline net income £8.2m (2010: loss of £8.2m)
 
Guidance for the year to March 2012
 
·                   CPW Europe like-for-like revenue range of -2% to +2%
·                   CPW Europe Headline EBIT flat to 10% growth
·                   Best Buy Mobile US connections growth c.20% and profit share growth of 20-30%
·                   Best Buy Europe operating free cash flow similar to last year before Best Buy UK, with EBITDA growth invested in the CPW Europe store portfolio
·                   Group share of Virgin Mobile France post-tax Headline profit c.£7-8m
·                   Continue to evaluate next steps in our multi-format/multi-channel consumer electronics strategy
 
A reconciliation of Headline results to statutory results is provided in note 5 to the financial review.
 
Roger Taylor, CEO, said:
 
“ This has been a year of considerable success for the Group, during which our businesses have made impressive progress. As a result, we ended the year with Group Headline earnings per share of 15.0p (2010: 8.3p) and a strong balance sheet with over £156m of funds and loan assets. The Group is well positioned to maintain this momentum, despite the tough economic environment. This combination of financial strength and positive outlook lies behind the inauguration of our progressive dividend policy, with a dividend for the year ended 31 March 2011 of 5.0p.”

 
Group operational overview
Carphone Warehouse Group comprises a 50% joint venture share in Best Buy Europe, a separate joint venture with Virgin, Virgin Mobile France, and directly owned property interests and other assets.
 
Best Buy Europe has three main operations: CPW Europe, Europe’s largest independent mobile retailer; a profit share in Best Buy’s mobile phone retailing operations in the US; and Best Buy UK, our ‘Big Box’ consumer electronics stores and online platform in the UK.
 
Virgin Mobile France is France’s leading MVNO.
 
Best Buy Europe
 
CPW Europe
CPW Europe capitalised well on the opportunities presented this year and grew its Headline EBIT by 18% to £134.6m.
 
During the year we saw an increase in penetration of smartphones and currently around 80-90% of handsets sold with a postpay connection in the UK are smartphones, with penetration in the rest of Europe increasing all the time. We see internet connectivity and smartphone features becoming the norm across virtually all mobile devices, further increasing smartphone penetration in the postpay segment. The prepay segment experienced lower penetration of smartphones, given the economic environment and higher price points.
 
Our ‘Wireless World’ format stores, which have a wider range of products and services than our traditional stores, continue to produce excellent customer feedback and compelling financial returns. As at the year end we had 106 ‘Wireless World’ stores across six markets. We are accelerating the roll-out of these stores with a target of 350-400 by the end of the current financial year and aspirations to convert most of the estate within five years.
 
We are excited about the ever-expanding range of tablet devices coming to the market, with forecasts for the size of this market increasing all the time. The CPW Europe ‘Wireless World’ format is ideally suited to offer a wide range of tablets, particularly as 3G enabled tablet sales increase and more tablets are purchased in a bundle with a smartphone.
 
Best Buy Mobile US
Best Buy Mobile US had an outstanding year, surpassing our expectations by some way. The US is one of the world’s largest mobile marketplaces, with over 280 million mobile phone accounts. Perhaps surprisingly, though, the US consumer has traditionally lacked a retail offering of choice and impartiality. Our partnership with Best Buy, a world-leading electronic goods retailer, was created specifically to address this. It combines the mobile retailing and connections experience of Carphone Warehouse with Best Buy’s formidable consumer electronics retailing expertise and store portfolio across the US, and the impartial advice heritage of both organisations. The results have been spectacular.  Best Buy Mobile’s market share in the US now stands at around 5%, up from around 1% when the venture started in 2006.
 
At the end of last year, all of Best Buy’s 1,101 US ‘Big Box’ stores had Best Buy Mobile stores-within-a-store, and Best Buy Mobile had rolled-out 190 smaller stand-alone stores, which are similar in size to a ‘Wireless World’ format store in Europe. In addition, Best Buy Mobile launched a new online platform during the year, providing new sales opportunities as well as developing the business’ multi-channel proposition.
 
Best Buy Mobile’s US connections grew by 28%, to over 7 million, and this increased Best Buy Europe’s share of profits by 111% to £97.9m.
 
Best Buy Mobile increased the space allocated for some 370 stores-within-a-store during 2010-11, and has increased a further 230 since the year end.  Looking ahead, the business is targeting 600 to 800 stand-alone stores over the next 5 years. We believe that Best Buy Mobile US can secure a 10% share of the US mobile retail market in the medium term.

 
Best Buy UK
Best Buy UK opened an initial six ‘Big Box’ stores in the UK during 2010-11 and launched its online offering in November. A further four stores have opened since the year end. The execution of these openings has been impressive, and we are delighted with the customer feedback. Following this launch period, we are in the process of evaluating the next steps in our multi-format/multi-channel consumer electronics strategy.
 
Virgin Mobile France
Virgin Mobile France had an extremely successful year, combining good organic growth with the successful integration of Tele2 France and delivering all the promised synergies. It is France’s largest MVNO with some 1.9 million customers and a strong distribution network of over 2,500 third party retail outlets and around 53,000 prepay voucher top-up points. Its management strength is illustrated by the completion of the Tele2 integration and its ability then to return to customer growth, with 161,000 net customer additions in the fourth quarter. This took total net customer growth for the year to over 200,000, bringing Virgin Mobile France within sight of its long-standing target of over 2 million customers.
 
The financial result last year was a transformation from a Headline EBIT loss of £22.2m to a Headline EBIT profit of £20.6m.
 
Virgin Mobile France now offers a much wider range of smartphones than it did for much of last year and has made significant market share gains through its creative marketing campaigns. Looking ahead, it will invest in its infrastructure to reduce costs and increase flexibility, and we believe it is well set to reinforce its number one MVNO position in France and to deliver further growth in revenue and operating profit in the current financial year.
 
Outlook and guidance for the year to March 2012
 
Best Buy Europe
Best Buy Europe continues to benefit from the proliferation of smartphone technology and the ever-expanding range of tablets coming to market, playing well into the business’ core proposition in both Europe and the US. We believe that the business is well positioned strategically and operationally to capitalise on the strong product cycle over time. The business is not entirely immune to the wider economic environment, however, and there is some uncertainty on the outlook for the prepay segment in particular this year.
 
We expect CPW Europe connections volumes to reduce by 0-5% in the coming year, again reflecting potential weakness in the prepay segment, together with the impact in the upgrade segment of the switch from 18 month to 24 month contracts in the UK from mid-2009. This switch will dampen postpay volumes, particularly in the first half of the year. The reduced upgrade volumes will have a negative impact on earnings in the short-term, especially in the first half, although this will start to be offset towards the end of the year by the benefit of renegotiated network commercials, which provide the business with a greater share of revenues beyond the customer contract term.
 
We expect this short-term impact to be fully offset by incremental profits from our ‘Wireless World’ stores, alongside the operational and commercial initiatives that are being implemented across our European businesses.
 
We anticipate a like-for-like revenue range of -2% to +2%, with an increasing proportion of non-connection revenue within the mix. As we accelerate the roll-out of the slightly larger ‘Wireless World’ format store, and expand our presence in the Spanish market, we would expect an increase in average space of 2-3%.
 
Following the completion of the migration of our service provider base in Germany, we anticipate a further reduction of around £100m in revenue from that business, with an associated drop in profits of around £10m for FY12.
 
Overall, we anticipate a Headline EBIT from CPW Europe of between £135m and £150m (2011: £134.6m), with the ultimate outcome within this range likely to be dependent on the performance of the prepay segment over the key Christmas trading period.

 
We expect continued strong progress from Best Buy Mobile in the US, anticipating overall connections growth of around 20%, with growth in the critical postpay category likely to be higher than this.
 
The business is rolling out around 150 more stand-alone stores during the year, providing additional average space of approximately 13%. These stores do not immediately enjoy the same level of footfall as the well-established ‘Big Box’ stores, and consequently will not immediately generate the same level of connections, but they provide a critical building block for increasing market share and earnings over time.
 
The additional space allocated to Best Buy Mobile stores-within-a-store translates into a further increase of around 7-8% in average space. This additional capacity is primarily focused on accessories and other ancillary products, but is also expected to support continued strong like-for-like growth in connections through this format.
 
As in the second half of 2010-11, we anticipate that the benefits of increasing scale will be partially re-invested in the customer proposition and marketing to drive the business’ long-term positioning in the marketplace, and as a result expect EBIT growth of approximately 20-30% year-on-year from £97.9m to around £120m-£130m.
 
Following the development of our Best Buy branded consumer electronics channels during the past year, we are now in the process of evaluating our next steps for this business, and will provide further guidance once this process is complete.
 
We expect that Best Buy Europe’s existing financing facilities will be replaced in the current year, and that this will result in lower cost and more flexible facilities going forward. Accelerated amortisation on existing facilities is likely to offset some of the profit benefit of this in the current year.
 
The tax charge will benefit from the lower rates in the UK, and we expect an effective rate of 23-24% for the year.
 
The accelerated roll-out of ‘Wireless World’ stores in CPW Europe is expected to result in an increase in capex year-on-year, offsetting anticipated EBITDA growth and resulting in flat operating free cash flow from CPW Europe and Best Buy Mobile US.
 
Virgin Mobile France
We expect the business to break through the 2 million customer target this year, with guidance for net additions of between 100,000 and 150,000. The strong growth seen in the second half of last year, together with these net additions, are expected to deliver revenue growth of 10-15%.
 
Some of the margin benefits of improving scale will be reinvested this year in driving further growth and in developing a full MVNO infrastructure, to help to improve flexibility and speed to market, and to improve medium-term operating margins. As a result, we expect an EBIT margin of around 7%.
 
As in the year just ended, we expect an underlying tax rate of 34% to apply, and on a net basis we expect the Group’s share of the venture’s profits to be £7-8m.
 
The full MVNO project will also require an increased capital investment, with total capex expected at around £10m (2011: £6.8m). Despite this we anticipate continued good cash generation, on the back of EBITDA growth and further positive movements on working capital.

 
Performance review
 
Best Buy Europe
 
Headline EBIT by division (100% basis) *

 	 	2011 
 £m	 	2010 
 £m	 	
CPW Europe	 	134.6	 	114.4	 	
Best Buy Mobile US	 	97.9	 	46.4	 	
EBIT pre-Best Buy UK	 	232.5	 	160.8	 	
Best Buy UK	 	(62.2	)	(21.0	)	
Best Buy Europe EBIT	 	170.3	 	139.8	 	
 
* See note 7 to the financial review
 
CPW Europe benefitted from strong smartphone sales, and from the cost and margin initiatives launched in the previous year, to deliver Headline EBIT growth of 18%.
 
Best Buy Mobile delivered phenomenal profit growth, on the back of rapid expansion in like-for-like sales and retail space, and further improvements in operational execution.
 
Best Buy UK saw EBIT losses of £62m, up from £21m in 2010, reflecting significant investment in developing the brand following launch.
 
Headline income statement (100% basis) *

 	 	2011 
 £m	 	2010 
 £m	 	
Revenue	 	3,572.0	 	3,528.8	 	
Gross margin	 	990.1	 	1,037.1	 	
GM %	 	27.7	%	29.4	%	
Operating expenses	 	(830.6	)	(851.8	)	
Best Buy Mobile US	 	97.9	 	46.4	 	
EBITDA	 	257.4	 	231.7	 	
Depreciation and amortisation	 	(87.1	)	(91.9	)	
EBIT	 	170.3	 	139.8	 	
EBIT %	 	4.8	%	4.0	%	
Interest	 	(15.2	)	(16.3	)	
Tax	 	(34.3	)	(28.9	)	
PAT	 	120.8	 	94.6	 	
 	 	 	 	 	 	
Group share	 	60.4	 	47.3	 	
 
* See note 7 to the financial review
 
Best Buy Europe generated revenues of £3,572.0m, an increase of 1.2% on last year (2010: £3,528.8m). As anticipated, revenues associated with our German service provider business fell year-on-year, by around £100m, as we continued to move to a more typical retail model. This decrease was more than offset by an increase in revenues from our dealer business in Germany, which has been developing its sales channels during the year, and which provides a platform for potential further growth in that market. Revenues were also adversely affected by around £50m due to the strengthening of Sterling year-on-year, being offset by revenues from Best Buy UK, which commenced trading in April 2010.
 
CPW Europe saw like-for-like revenue growth of 0.9%, despite a difficult economic backdrop. The business capitalised well on an exciting product cycle, investing in live demonstration models, innovative new displays, and a broader range of associated accessories and services. Smartphone penetration

 
continued to increase in the postpay segment, driving an improvement in average revenue per connection. The prepay segment was more significantly affected by subdued consumer confidence, with low penetration of smartphones into this category and some price deflation at the low end. Continuing the trend of last year, like-for-like growth was largely driven by the UK business, although there was an encouraging improvement in performance in some of the Group’s operations outside the UK towards the end of the year, reflecting investment in commercial and operational initiatives in these territories.
 
As anticipated, connections volumes dropped year-on-year, falling by 5.2% from 12.5m to 11.8m. This decrease primarily reflects the weakness in the prepay segment noted above. Towards the end of the year, it also reflected the impact of the shift from 18 month to 24 month contracts in the UK from mid-2009 onwards, which is likely to suppress year-on-year upgrade volumes during calendar 2011.
 
CPW Europe opened or resited approximately 140 stores and closed around the same number, ending the year at 2,429 stores, in line with the 2,430 at the start of the year. Within this portfolio, the number of franchise stores increased from 206 at March 2010 to 243 at the end of the year, primarily reflecting growth in France and Spain. The decrease in own stores was predominantly in Germany.
 
The business has continued to develop the ‘Wireless World’ store format, with 106 such stores at the end of the year across six markets. With a wider range of products and services than traditional stores, this format continues to produce excellent customer feedback and compelling financial returns.
 
After the year-end, we announced our decision to sell our retail operation in Belgium to Belgacom for a provisional cash consideration of €22m, subject to clearance from the Belgian competition authorities. Belgium is unique in Western Europe in being a largely unsubsidised mobile market, which has always been a challenge for our business model.
 
Gross margins in the core CPW Europe business continued to strengthen year-on-year, reflecting the margin improvement initiatives that started to bear fruit in the second half of the previous year. This was offset by the increase in low margin dealer revenues noted above and the lower sales margins and substantial investment in marketing in Best Buy UK. Overall Best Buy Europe’s gross margin percentage decreased by 170 basis points year-on-year to 27.7% (2010: 29.4%).
 
Operating expenses decreased by 2.5% year-on-year from £851.8m to £830.6m. CPW Europe benefitted from reduced operating costs in its German service provider business and from the annualised effects of last year’s cost reduction programme, together with the strengthening of Sterling noted above. These savings were partly offset by additional expenditure in Best Buy UK.
 
Best Buy Mobile achieved phenomenal profit growth year-on-year, translating into an increase in Best Buy Europe’s profit share from £46.4m to £97.9m.  Best Buy Mobile traded from all of Best Buy’s 1,101 (2010: 1,070) ‘Big Box’ stores in the US at March 2011 and from 190 stand-alone stores, up from 77 at the start of the year. The space allocated to Best Buy Mobile stores-within-a-store was increased from an average of 1,100 sqft to around 1,400 sqft in approximately 370 stores during the year, with a further 230 increased since the year-end. Best Buy Mobile plans to end its fiscal year (February 2012) with 325 stand-alone stores and to increase the total number of stand-alone stores to 600-800 within five years.
 
Additionally, Best Buy Mobile launched a new online platform during the year, providing new sales opportunities as well as developing the business’ multi-channel proposition.
 
Best Buy Mobile increased connections by 28.2% to 7.1m in 2010-11, compared to 5.5m in 2009-10. The business continues to invest in its differentiated customer proposition, and in marketing activity to increase awareness of the Best Buy Mobile brand and offering.
 
The increasing scale and operating leverage of the business naturally had a positive impact on operating profit margins year-on-year. This was partially offset by the investment in marketing and customer proposition noted above.
 
We opened the first six Best Buy branded ‘Big Box’ stores in the UK during the year, with four more following since March, and the Best Buy transactional website launched in November 2010. Customer feedback during this launch period has been highly encouraging both in store and online, a lead indicator of the opportunity for an innovative, service-led proposition.

 
Best Buy UK incurred EBIT losses of £62.2m in the year, up from £21.0m in 2009-10. With only six stores at the year-end, the business still has a disproportionately high central cost base, and has made a substantial investment during the year in marketing and promotional activity, to develop awareness of its brand and retail presence.
 
Best Buy Europe’s Headline EBIT margin increased from 4.0% to 4.8%, despite the significant additional investment in Best Buy UK, reflecting the strong performance of CPW Europe and Best Buy Mobile US year-on-year.
 
The interest charge decreased from £16.3m to £15.2m, reflecting lower average borrowings, partly offset by the higher costs of the stand-alone banking facilities introduced in 2009.
 
Best Buy Europe had an effective tax rate of 22.1% (2010: 23.4%). The decrease reflects the anticipated utilisation of tax losses that had not previously been recognised.
 
Cash flow (100% basis)

 	 	2011 
 £m	 	2010 
 £m	 	
Headline EBITDA pre-Best Buy UK	 	317.0	 	252.7	 	
Working capital	 	(35.0	)	(27.1	)	
Capex	 	(69.4	)	(53.9	)	
Operating free cash flow pre-Best Buy UK	 	212.6	 	171.7	 	
Best Buy UK	 	(78.0	)	(44.0	)	
Other	 	(60.3	)	(23.3	)	
Movement in net funds	 	74.3	 	104.4	 	
Opening net funds (debt)	 	57.4	 	(47.0	)	
Closing net funds	 	131.7	 	57.4	 	
 
Headline EBITDA within CPW Europe and Best Buy Mobile US grew by 25.4% year-on-year from £252.7m to £317.0m, reflecting the strong improvements in profitability noted above.
 
CPW Europe absorbed £35.0m of working capital in the year (2010: £27.1m) principally reflecting increased stock levels.
 
The focus of capex in CPW Europe continued to be its store portfolio and IT platforms. Capex increased from £53.9m last year to £69.4m, principally due to additional investment in the store portfolio.
 
Total cash investment in Best Buy UK was up from £44.0m in 2009-10 to £78.0m, reflecting EBITDA losses of £59.6m (2010: £21.0m) and capex of £18.4m (2010: £23.0m). Capex relates to new store openings, net of landlord contributions, and IT and online platforms.
 
The business paid corporation tax of £44.0m in the year, up from £24.0m in the previous year, reflecting the growth in pre-tax earnings seen over the last two years.
 
The principal other component of other cash flows in the year is interest expense, which was offset in the previous year by foreign exchange gains.
 
At the end of the year, net funds within Best Buy Europe were £131.7m, up from £57.4m at the start of the year, reflecting the cash generation described above.

 
Virgin Mobile France
 
Headline income statement (100% basis) *

 	 	2011 
 £m	 	2010 
 £m	 	
Revenue	 	328.4	 	232.8	 	
EBITDA	 	24.3	 	(19.3	)	
Depreciation and amortisation	 	(3.7	)	(2.9	)	
EBIT	 	20.6	 	(22.2	)	
EBIT %	 	6.3	%	(9.5	)%	
Interest	 	(2.9	)	(1.5	)	
Tax	 	(0.7	)	5.1	 	
PAT	 	17.0	 	(18.6	)	
 	 	 	 	 	 	
Group share	 	8.2	 	(8.2	)	
 
* See note 7 to the financial review
 
Virgin Mobile France saw a transformation in its profitability year-on-year, reflecting the additional scale achieved through its acquisition of Tele2’s French customer base in December 2009. Headline EBIT moved from a loss of £22.2m last year to a profit of £20.6m in the year to March 2011.
 
Revenue increased by 41.1% year-on-year from £232.8m to £328.4m. Revenue growth at a constant currency was 47.0%, with organic growth on the same basis before Tele2 of 29.0%.
 
The venture delivered substantial customer growth this year, adding over 200,000 customers to take the closing base to 1.92m customers. Most of this growth occurred in the final quarter of the year, when the business had secured deals with some key new product suppliers — enabling it to offer a full range of smartphones — and a number of new distribution channels. It took advantage of market opportunities in that period to deliver a significant increase in market share.
 
The business produced a Headline EBIT margin in 2010-11 of 6.3% (2010: negative 9.5%) despite high levels of customer acquisition, reflecting the scale benefits noted above.
 
Interest increased year-on-year from £1.5m to £2.9m, reflecting the additional debt associated with the Tele2 acquisition.
 
A tax rate of 34% has been assumed, in line with the rate applicable in France. The tax charge for the year was partly offset by a credit of £5.9m in relation to brought forward tax losses, of which the Group share is £2.8m. It is now anticipated that these losses will be utilised in France rather than the UK, attracting relief at 34% rather than the rate in the UK.
 
Virgin Mobile France recorded amortisation on acquisition intangibles arising on the Tele2 acquisition, of which the Group’s post tax share is £2.2m (2010: £0.6m). This charge is excluded from Headline results to avoid distortion of underlying performance.
 
Cash flow (100% basis)

 	 	2011 
 £m	 	2010 
 £m	 	
EBITDA	 	24.3	 	(19.3	)	
Working capital	 	2.6	 	2.9	 	
Capex	 	(6.8	)	(3.7	)	
Operating free cash flow	 	20.1	 	(20.1	)	
Other	 	4.5	 	(39.4	)	
Movement in net debt	 	24.6	 	(59.5	)	
Opening net debt	 	(88.2	)	(28.7	)	
Closing net debt *	 	(63.6	)	(88.2	)	
 
* Comprises shareholder loans of £74.3m (2010: £105.6m) and net cash of £10.7m (2010: £17.4m).

 
The significant year-on-year uplift in EBITDA described above translated into strong operating free cash flow. As anticipated, the business has seen an increase in capex year-on-year, with spend of £6.8m against £3.7m in the previous year, principally relating to a programme to bring billing operations in-house.
 
Other cash inflows in the year include £6.7m in relation to the finalisation of the Tele2 purchase price. Other cash flows in the prior year reflect an outflow of £45.2m in relation to Tele2, partially offset by an increase of £5.6m of share capital.
 
Other Group financials
 
Headline income statement

 	 	2011 
 £m	 	2010 
 £m	 	
Revenue	 	5.6	 	5.5	 	
Operating expenses	 	(8.7	)	(6.0	)	
Joint ventures	 	 	 	 	 	
- Best Buy Europe	 	60.4	 	47.3	 	
- Virgin Mobile France	 	8.2	 	(8.2	)	
Interest	 	3.9	 	(1.6	)	
Tax	 	(1.6	)	0.4	 	
Profit after tax	 	67.8	 	37.4	 	
 	 	 	 	 	 	
Earnings per share	 	15.0p	 	8.3p	 	
 
Revenue represents rental income from the Group’s freehold properties, and increased from £5.5m in 2009-10 to £5.6m in 2010-11.
 
As anticipated, operating costs increased year-on-year, from £6.0m to £8.7m, in the first year of a stand-alone PLC function following the Demerger.
 
Net interest income for the period was £3.9m (2010: expense of £1.6m) reflecting interest on cash and on loans to Virgin Mobile France, facility fees from Best Buy Europe and income from minority investments.
 
A tax charge of £1.6m arose in the year, compared to a credit of £0.4m in the prior year, reflecting increased interest income and a proportion of disallowable costs within profit before taxation.
 
Revenue and operating expenses are expected to remain similar in the year to March 2012.
 
Statutory profit after tax decreased from £218.8m in 2009-10 to £65.6m. Prior year statutory profits include dividend income of £182.0m which arose in association with the Demerger.  Current year statutory profits include amortisation of acquisition intangibles in Virgin Mobile France, which had a post-tax effect of £2.2m (2010: £0.6m). These items are excluded from Headline results to avoid distortion of underlying performance. A reconciliation between Headline results and statutory results is provided in note 5 to the financial review.
 
Net funds and dividends
The Group closed the year with net funds of £120.6m (2010: £100.0m) and loans receivable from Virgin Mobile France of £35.7m (2010: £50.8m).
 
As previously communicated, the Board is commencing a progressive dividend policy, with the aim of maintaining a dividend cover of at least three times, generally based on Headline earnings. Accordingly, we are proposing a dividend for the year of 5.0p per share. The ex-dividend date is Wednesday 6 July 2011, with a record date of Friday 8 July 2011 and an intended payment date of Friday 5 August 2011.

 
Analysts’ presentation and webcast
 
There will be a presentation for investors and analysts at 9.00 am this morning at the offices of Deutsche Bank: Winchester House, 1 Great Winchester Street, London EC2N 2DB.
 
The event will be audio webcast and the presentation slides will be available on our website, www.cpwplc.com.
 
Dial-in details - UK/International: +44 (0)20 7806 1957, USA: +1 888 935 4577, passcode 5146987.
 
Next announcement
 
The Group will give a full trading update for the first quarter of the current financial year on 27 July 2011.
 
For further information

For analyst and institutional enquiries	 	
Roger Taylor, CEO	07715 170 090	
Nigel Langstaff, CFO	07802 210 248	
Kate Ferry, IR Director	07748 933 206	
 	 	
For media enquiries	 	
Shane Conway, Head of PR, Best Buy Europe	07932 199 659	
Anthony Carlisle (Citigate Dewe Rogerson)	07973 611 888	
 	020 7638 9571	

 
FINANCIAL REVIEW
 
Condensed consolidated income statement for the years ended 31 March 2011 and 31 March 2010

 	 	 	 	Before
amortisation
of acquisition
intangibles	 	Amortisation 
 of acquisition
intangibles *	 	After
amortisation
of acquisition
intangibles	 	Before
amortisation
of acquisition
intangibles
and
exceptional
items	 	Amortisation
of acquisition
intangibles
and
exceptional
items *	 	After
amortisation
of acquisition
intangibles
and
exceptional
items	 	
 	 	 	 	2011	 	2011	 	2011	 	2010	 	2010	 	2010	 	
 	 	Notes	 	£m	 	£m	 	£m	 	£m	 	£m	 	£m	 	
Revenue	 	2	 	5.6	 	—	 	5.6	 	5.5	 	—	 	5.5	 	
Cost of sales	 	 	 	—	 	—	 	—	 	—	 	—	 	—	 	
Gross profit	 	 	 	5.6	 	—	 	5.6	 	5.5	 	—	 	5.5	 	
Operating expenses	 	 	 	(8.7	)	—	 	(8.7	)	(6.0	)	—	 	(6.0	)	
Share of results of joint ventures	 	2,7	 	68.6	 	(2.2	)	66.4	 	39.1	 	(0.6	)	38.5	 	
Profit before investment income, interest and taxation	 	 	 	65.5	 	(2.2	)	63.3	 	38.6	 	(0.6	)	38.0	 	
Interest income	 	 	 	3.9	 	—	 	3.9	 	3.7	 	—	 	3.7	 	
Interest expense	 	 	 	(0.6	)	—	 	(0.6	)	(5.3	)	—	 	(5.3	)	
Investment income	 	3	 	0.6	 	—	 	0.6	 	—	 	182.0	 	182.0	 	
Profit before taxation	 	 	 	69.4	 	(2.2	)	67.2	 	37.0	 	181.4	 	218.4	 	
Taxation	 	 	 	(1.6	)	—	 	(1.6	)	0.4	 	—	 	0.4	 	
Net profit for the year	 	 	 	67.8	 	(2.2	)	65.6	 	37.4	 	181.4	 	218.8	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings per share	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	6	 	15.0p	 	 	 	14.5p	 	8.3p	 	 	 	48.7p	 	
Diluted	 	6	 	14.4p	 	 	 	13.9p	 	8.2p	 	 	 	47.8p	 	
 
*  A reconciliation of Headline results to statutory results is provided in note 5.

 
Condensed consolidated statement of comprehensive income for the years ended 31 March 2011 and 31 March 2010

 	 	2011	 	2010	 	
 	 	£m	 	£m	 	
Net profit for the year	 	65.6	 	218.8	 	
Currency translation	 	(0.1	)	4.2	 	
Total recognised income and expenses for the year	 	65.5	 	223.0	 	
 
Condensed consolidated statement of changes in equity
 
For the year ended 31 March 2011

 	 	Share
capital	 	Share
premium
reserve	 	Accumulated
profits	 	Translation
reserve	 	Demerger
reserve	 	Total	 	
 	 	£m	 	£m	 	£m	 	£m	 	£m	 	£m	 	
At the beginning of the year	 	0.5	 	754.0	 	675.1	 	12.1	 	(751.2	)	690.5	 	
Total recognised income and expenses for the year	 	—	 	—	 	65.6	 	(0.1	)	—	 	65.5	 	
Net purchase of own shares	 	—	 	—	 	(2.7	)	—	 	—	 	(2.7	)	
Tax on items recognised directly in reserves	 	—	 	—	 	1.0	 	—	 	—	 	1.0	 	
Share of other reserve movements of joint ventures	 	—	 	—	 	1.5	 	—	 	—	 	1.5	 	
Net movement in relation to share schemes	 	—	 	—	 	1.2	 	—	 	—	 	1.2	 	
Movements in demerger reserve	 	—	 	—	 	—	 	—	 	1.0	 	1.0	 	
At the end of the year	 	0.5	 	754.0	 	741.7	 	12.0	 	(750.2	)	758.0	 	
 
For the year ended 31 March 2010

 	 	Share
capital	 	Share
premium
reserve	 	Accumulated
profits	 	Translation
reserve	 	Demerger
reserve	 	Total	 	
 	 	£m	 	£m	 	£m	 	£m	 	£m	 	£m	 	
At the beginning of the year	 	—	 	—	 	457.8	 	7.9	 	(51.8	)	413.9	 	
Total recognised income and expenses for the year	 	—	 	—	 	218.8	 	4.2	 	—	 	223.0	 	
Issue of share capital	 	0.5	 	754.0	 	—	 	—	 	(754.5	)	—	 	
Net movement in relation to share schemes	 	—	 	—	 	(1.5	)	—	 	—	 	(1.5	)	
Movements in demerger reserve	 	—	 	—	 	—	 	—	 	55.1	 	55.1	 	
At the end of the year	 	0.5	 	754.0	 	675.1	 	12.1	 	(751.2	)	690.5	 	

 
Condensed consolidated balance sheet as at 31 March 2011 and 31 March 2010

 	 	 	 	2011	 	2010	 	
 	 	Notes	 	£m	 	£m	 	
Non-current assets	 	 	 	 	 	 	 	
Property, plant and equipment	 	 	 	67.8	 	65.9	 	
Non-current investments	 	 	 	0.1	 	0.1	 	
Interests in joint ventures	 	7	 	592.2	 	541.8	 	
Deferred tax assets	 	 	 	1.4	 	0.8	 	
 	 	 	 	661.5	 	608.6	 	
Current assets	 	 	 	 	 	 	 	
Trade and other receivables	 	 	 	6.5	 	5.6	 	
Cash and cash equivalents	 	 	 	120.6	 	100.0	 	
 	 	 	 	127.1	 	105.6	 	
Total assets	 	 	 	788.6	 	714.2	 	
Current liabilities	 	 	 	 	 	 	 	
Trade and other payables	 	 	 	(16.2	)	(10.1	)	
Corporation tax liabilities	 	 	 	(1.2	)	—	 	
Provisions	 	 	 	(13.2	)	(13.6	)	
Total liabilities	 	 	 	(30.6	)	(23.7	)	
Net assets	 	 	 	758.0	 	690.5	 	
 	 	 	 	 	 	 	 	
Equity	 	 	 	 	 	 	 	
Share capital	 	 	 	0.5	 	0.5	 	
Share premium reserve	 	 	 	754.0	 	754.0	 	
Accumulated profits	 	 	 	741.7	 	675.1	 	
Translation reserve	 	 	 	12.0	 	12.1	 	
Demerger reserve	 	 	 	(750.2	)	(751.2	)	
Funds attributable to equity shareholders	 	 	 	758.0	 	690.5	 	
 
Approved by the Board of Carphone Warehouse Group plc
13 June 2011

 
Condensed consolidated cash flow statement for the years ended 31 March 2011 and 31 March 2010

 	 	 	 	2011	 	2010	 	
 	 	Notes	 	£m	 	£m	 	
Operating activities	 	 	 	 	 	 	 	
Profit before investment income, interest and taxation	 	 	 	63.3	 	38.0	 	
Adjustments for non-cash items:	 	 	 	 	 	 	 	
Share-based payments	 	 	 	1.9	 	2.4	 	
Non-cash movements on joint ventures	 	 	 	(66.4	)	(38.5	)	
Depreciation	 	 	 	0.8	 	0.7	 	
Impairment of non-current investments	 	 	 	—	 	0.1	 	
Operating cash flows before movements in working capital	 	 	 	(0.4	)	2.7	 	
Decrease (increase) in trade and other receivables	 	 	 	0.2	 	(0.6	)	
Increase in trade and other payables	 	 	 	5.0	 	3.0	 	
Decrease in provisions	 	 	 	(0.4	)	(2.6	)	
Cash flows from operating activities	 	 	 	4.4	 	2.5	 	
 	 	 	 	 	 	 	 	
Investing activities	 	 	 	 	 	 	 	
Investment income received	 	 	 	0.6	 	182.0	 	
Interest received	 	 	 	3.9	 	3.7	 	
Acquisition of property, plant and equipment	 	 	 	(2.3	)	(0.8	)	
Net receipts from (investment in) joint ventures	 	 	 	14.6	 	(32.4	)	
Cash flows from investing activities	 	 	 	16.8	 	152.5	 	
 	 	 	 	 	 	 	 	
Financing activities	 	 	 	 	 	 	 	
Movements on loans from TalkTalk Group	 	8	 	—	 	(397.4	)	
Movements on loans to Best Buy Europe	 	8	 	—	 	293.3	 	
Settlement of financial instruments	 	 	 	2.7	 	—	 	
Net purchase of own shares	 	 	 	(2.7	)	—	 	
Interest paid	 	 	 	(0.6	)	(5.3	)	
Cash flows relating to movements in the demerger reserve	 	 	 	—	 	54.4	 	
Cash flows from financing activities	 	 	 	(0.6	)	(55.0	)	
 	 	 	 	 	 	 	 	
Net increase in cash and cash equivalents	 	 	 	20.6	 	100.0	 	
Cash and cash equivalents at the start of the year	 	 	 	100.0	 	—	 	
Cash and cash equivalents at the end of the year	 	 	 	120.6	 	100.0	 	

 
1 Basis of preparation and accounting policies
 
Directors’ responsibilities
The directors of Carphone Warehouse Group plc are responsible, in accordance with the Listing Rules of the Financial Services Authority, for preparing and issuing this preliminary announcement, which was approved on 13 June 2011.
 
Basis of preparation
The financial information set out does not constitute the Group’s statutory accounts for the year ended 31 March 2011, but is derived from those accounts. Those accounts are the first set of statutory accounts for the Group, which will be delivered to the Registrar of Companies following the Company’s annual general meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) Companies Act 2006. Full financial statements for the year ended 31 March 2011 will be included in the Carphone Warehouse Group plc annual report which will be available on the Group’s website (www.cpwplc.com) in due course.
 
This financial information has been prepared using accounting policies and methods of computation consistent with International Financial Reporting Standards as adopted for use in the EU and specifically those set out on pages 14 to 19 of the Carphone Warehouse Group plc Summary Financial Information for the year ended 31 March 2010 (“Summary Financial Information”), along with the definitions that are set out on page 20 of the same document, except in relation to related party disclosures (see below).  The Summary Financial Information can be found on the Group’s website.
 
The financial information reflects the Group’s results for the period from 1 April 2010 to 31 March 2011 (“the year”).
 
Changes in accounting policies
In the current year the Group has adopted the amendment to IAS 24 ‘Related party disclosures’, which has revised the definition of a related party as well as introducing minor disclosure changes. Consequently TalkTalk Group is no longer considered to be a related party of the Group. Various other standards, amendments and interpretations have been adopted but do not have a material impact on the Group in the current year.
 
Going concern
At 31 March 2011 the Group had cash and cash equivalents of £120.6m (2010: £100.0m) and undrawn committed borrowing facilities of £50.0m (2010: £50.0m).
 
The directors have reviewed the future cash and profit forecasts of the Group’s joint venture investments and other businesses, which they consider to be based on prudent assumptions. The directors are of the opinion that the forecasts, which reflect both the current uncertain economic outlook and reasonably possible changes in trading performance, show that the Group should be able to operate within its facilities and comply with its banking covenants. In arriving at this conclusion the directors were mindful that the Group has significant cash and cash equivalents, and borrowing facilities which are committed until July 2012.
 
Accordingly the directors have a reasonable expectation that the Group has adequate resources to continue in operation for the foreseeable future and consequently the directors continue to adopt the going concern basis in the preparation of the financial statements.

 
2 Segmental reporting
 
Segmental results are analysed as follows:
 
2011

 	 	Best Buy
Europe 
 (see note 7)	 	Virgin Mobile
France 
  (see note 7)	 	Investment
properties
and central
functions	 	Total	 	
 	 	£m	 	£m	 	£m	 	£m	 	
Revenue	 	—	 	—	 	5.6	 	5.6	 	
Headline EBIT before share of results of joint ventures	 	—	 	—	 	(3.1	)	(3.1	)	
Share of Headline results of joint ventures (post-tax)	 	60.4	 	8.2	 	—	 	68.6	 	
Headline EBIT	 	60.4	 	8.2	 	(3.1	)	65.5	 	
Share of amortisation of joint venture acquisition intangibles (post-tax)	 	—	 	(2.2	)	—	 	(2.2	)	
Statutory EBIT (segment results)	 	60.4	 	6.0	 	(3.1	)	63.3	 	
 
2010

 	 	Best Buy
Europe 
 (see note 7)	 	Virgin Mobile
France 
 (see note 7)	 	Investment
properties
and central
functions	 	Total	 	
 	 	£m	 	£m	 	£m	 	£m	 	
Revenue	 	—	 	—	 	5.5	 	5.5	 	
Headline EBIT before share of results of joint ventures	 	—	 	—	 	(0.5	)	(0.5	)	
Share of Headline results of joint ventures (post-tax)	 	47.3	 	(8.2	)	—	 	39.1	 	
Headline EBIT	 	47.3	 	(8.2	)	(0.5	)	38.6	 	
Share of amortisation of joint venture acquisition intangibles (post-tax)	 	—	 	(0.6	)	—	 	(0.6	)	
Statutory EBIT (segment results)	 	47.3	 	(8.8	)	(0.5	)	38.0	 	

 
3 Exceptional items
 
The following prior year item has been disclosed separately given its size and one-off nature:

 	 	2011	 	2010	 	
 	 	£m	 	£m	 	
Investment income	 	—	 	182.0	 	
 
During the year ended 31 March 2010, as part of the Demerger, the Group received dividends of £182.0m from Old Carphone Warehouse. These dividends do not reflect the ongoing operations of the Group and have therefore been disclosed separately.
 
4 Equity dividends
 
The proposed dividend for the year ended 31 March 2011 is 5.0p per share at an expected cost of £22.7m.  As this dividend is subject to shareholders’ approval at the forthcoming annual general meeting it has not been included as a liability in this financial information. The expected cost of the dividend reflects the fact that the Group’s ESOT has agreed to waive its rights to receive dividends.
 
No dividends have been paid by the Company in the year (2010: £nil).
 
5 Reconciliation of Headline results to statutory results
 
2011

 	 	Profit before
investment
income,
interest and
taxation	 	Profit before
taxation	 	Net profit 
 for the
year	 	
 	 	£m	 	£m	 	£m	 	
Headline results	 	65.5	 	69.4	 	67.8	 	
Share of amortisation of joint venture acquisition intangibles (post-tax) (see note 7)	 	(2.2	)	(2.2	)	(2.2	)	
Statutory results	 	63.3	 	67.2	 	65.6	 	
 
2010

 	 	Profit before
investment
income, interest
and taxation	 	Profit before
taxation	 	Net profit 
  for the
year	 	
 	 	£m	 	£m	 	£m	 	
Headline results	 	38.6	 	37.0	 	37.4	 	
Share of amortisation of joint venture acquisition intangibles (post-tax) (see note 7)	 	(0.6	)	(0.6	)	(0.6	)	
Exceptional items (see note 3)	 	—	 	182.0	 	182.0	 	
Statutory results	 	38.0	 	218.4	 	218.8	 	
 
Headline results are shown before amortisation of acquisition intangibles and before exceptional items. Headline information is provided because the directors consider that it provides assistance in understanding underlying performance.

 
6 Earnings per share

 	 	2011	 	2010	 	
Headline earnings (£m)	 	67.8	 	37.4	 	
Statutory earnings (£m)	 	65.6	 	218.8	 	
 	 	 	 	 	 	
Weighted average number of shares (millions)	 	 	 	 	 	
Average shares in issue	 	457.1	 	457.1	 	
Less average holding by Group ESOT	 	(4.4	)	(7.8	)	
For basic earnings per share	 	452.7	 	449.3	 	
Dilutive effect of share options	 	5.7	 	8.4	 	
Dilutive effect of value enhancement schemes	 	12.7	 	—	 	
For diluted earnings per share	 	471.1	 	457.7	 	
 	 	 	 	 	 	
Basic earnings per share	 	 	 	 	 	
Headline	 	15.0p	 	8.3p	 	
Statutory	 	14.5p	 	48.7p	 	
 	 	 	 	 	 	
Diluted earnings per share	 	 	 	 	 	
Headline	 	14.4p	 	8.2p	 	
Statutory	 	13.9p	 	47.8p	 	
 
As the Group did not exist during the year ended 31 March 2010 in the form that arose on Demerger, the average actual shares in issue during this period does not provide a meaningful basis for calculating EPS. EPS has therefore been calculated based on the average number of Old Carphone Warehouse shares in issue and the shareholding of the Old Carphone Warehouse ESOT in this year, adjusted for the fact that following the Demerger two shares in Old Carphone Warehouse were replaced with one share in the Company. Diluted EPS has been calculated based on options held over Old Carphone Warehouse shares and its share price during the year ended 31 March 2010, adjusted for the two to one ratio noted above.
 
Prior to the Demerger, Old Carphone Warehouse introduced the Best Buy Europe VES to provide incentives to the Group’s senior management. The scheme enables participants to share in any increase in the value of Best Buy Europe above a defined minimum annual rate of return. The scheme has an initial performance period to July 2013 and a subsequent performance period to July 2014. It is expected that the scheme will be settled using the Company’s shares.
 
Best Buy Europe also introduced a VES in the year ended 31 March 2010. The Group’s obligations in relation to this scheme are also expected to be met using the Company’s shares.
 
The ultimate dilutive effect of these schemes cannot yet be determined, as they are both based on future performance, which is as yet unknown. The potential effect of the schemes has therefore been assessed by calculating the dilution that would have occurred had they vested during the year, taking an average of the results that would have occurred on each day. The value of the schemes has been derived from final results for the years ended 31 March 2010 and 31 March 2011 and the Group’s latest financial guidance for the year ended 31 March 2012, as communicated in June 2011.
 
In order to maintain alignment with shareholders, the Company’s Remuneration Committee has capped the potential dilution associated with these schemes at 5% of total shares in issue at the vesting date.

 
7 Interests in joint ventures
 
Interests in joint ventures are as follows:

Business	 	Principal activities	 	2011 
 interest	 	2010 
 interest	 	
Best Buy Europe	 	Retail, distribution, insurance, MVNO	 	50.0	%	50.0	%	
Virgin Mobile France	 	MVNO	 	47.1	%	47.5	%	
 
The Group’s interest in Virgin Mobile France reduced from 47.5% at 31 March 2010 to 47.1% at 31 March 2011 following the issue of shares during the year to management of Virgin Mobile France.
 
a)         Group balance sheet interests
 
The Group’s interests in joint ventures are analysed as follows:
 
2011

 	 	Net assets
(liabilities)	 	Goodwill	 	Loans	 	Total	 	
 	 	£m	 	£m	 	£m	 	£m	 	
Opening balance	 	384.7	 	106.3	 	50.8	 	541.8	 	
Share of results	 	66.4	 	—	 	—	 	66.4	 	
Loans repaid (net)	 	—	 	—	 	(14.6	)	(14.6	)	
Share of other reserve movements	 	1.5	 	—	 	—	 	1.5	 	
Foreign exchange	 	1.0	 	(3.4	)	(0.5	)	(2.9	)	
Closing balance	 	453.6	 	102.9	 	35.7	 	592.2	 	
Best Buy Europe	 	468.9	 	102.9	 	—	 	571.8	 	
Virgin Mobile France	 	(15.3	)	—	 	35.7	 	20.4	 	
Closing balance	 	453.6	 	102.9	 	35.7	 	592.2	 	
 
2010

 	 	Net assets
(liabilities)	 	Goodwill	 	Loans	 	Total	 	
 	 	£m	 	£m	 	£m	 	£m	 	
Opening balance	 	339.5	 	108.5	 	21.7	 	469.7	 	
Share of results	 	38.5	 	—	 	—	 	38.5	 	
Loans provided (net)	 	—	 	—	 	29.8	 	29.8	 	
Additions	 	2.6	 	—	 	—	 	2.6	 	
Foreign exchange	 	4.1	 	(2.2	)	(0.7	)	1.2	 	
Closing balance	 	384.7	 	106.3	 	50.8	 	541.8	 	
Best Buy Europe	 	406.3	 	106.3	 	—	 	512.6	 	
Virgin Mobile France	 	(21.6	)	—	 	50.8	 	29.2	 	
Closing balance	 	384.7	 	106.3	 	50.8	 	541.8	 	
 
A revolving credit facility of £125m is provided to Best Buy Europe equally by the Company and Best Buy. At 31 March 2011 and 31 March 2010 no amounts were drawn under this facility. The Company and Best Buy provide further financial support to Best Buy Europe under a letter of support through which both companies are committed to providing further funding to a maximum of £50m each. Prior to the Demerger, loans were provided by the Company to Best Buy Europe under a £475m RCF. Loans are provided to Virgin Mobile France under a shareholder agreement; funding requirements are agreed between the shareholders on a regular basis and are provided in proportion to each party’s shareholding.

 
b)         Analysis of profits and losses
 
The Group’s share of the results of its joint ventures is as follows:
 
Best Buy Europe

 	 	2011	 	2010	 	
 	 	£m	 	£m	 	
Revenue	 	3,572.0	 	3,528.8	 	
Headline EBITDA *	 	257.4	 	231.7	 	
Depreciation and amortisation	 	(87.1	)	(91.9	)	
Headline EBIT	 	170.3	 	139.8	 	
Net interest expense	 	(15.2	)	(16.3	)	
Taxation	 	(34.3	)	(28.9	)	
Profit after taxation	 	120.8	 	94.6	 	
 	 	 	 	 	 	
Group share of profit after taxation	 	60.4	 	47.3	 	
 
*  Headline EBITDA includes the unwinding of discounts for the time value of money on network commissions receivable over the life of the customer. This unwind has a value of £10.0m in the year ended 31 March 2011 (2010: £8.0m) and is treated as interest income in the joint venture’s statutory results.
 
Virgin Mobile France

 	 	2011	 	2010	 	
 	 	£m	 	£m	 	
Revenue *	 	328.4	 	232.8	 	
Headline EBITDA	 	24.3	 	(19.3	)	
Depreciation and amortisation	 	(3.7	)	(2.9	)	
Headline EBIT	 	20.6	 	(22.2	)	
Net interest expense	 	(2.9	)	(1.5	)	
Taxation on Headline results	 	(0.7	)	5.1	 	
Headline profit (loss) after taxation	 	17.0	 	(18.6	)	
 	 	 	 	 	 	
Group share of Headline profit (loss) after taxation before change in share ownership	 	8.0	 	(9.0	)	
Gain on reduction of % share ownership	 	0.2	 	0.8	 	
Group share of Headline profit (loss) after taxation	 	8.2	 	(8.2	)	
Group share of amortisation of acquisition intangibles (post-tax)	 	(2.2	)	(0.6	)	
Group share of profit (loss) after taxation	 	6.0	 	(8.8	)	
 
*   Revenue excludes contributions towards subscriber acquisition costs from network operators and customers, as the directors consider that this provides a better representation of underlying performance. These items, which had a value of £55.1m (2010: £41.6m) are netted off against acquisition costs within EBITDA.  Reported revenue on a statutory basis for the year ended 31 March 2011 is £383.5m (2010: £274.4m).
 
Total Group share

 	 	2011	 	2010	 	
 	 	£m	 	£m	 	
Headline	 	68.6	 	39.1	 	
Statutory	 	66.4	 	38.5	 	

 
c) Analysis of assets and liabilities
 
The Group’s share of the assets and liabilities of its joint ventures is as follows:
 
Best Buy Europe

 	 	2011	 	2010	 	
 	 	£m	 	£m	 	
Non-current assets	 	661.7	 	677.4	 	
Cash and overdrafts (net)	 	146.8	 	175.3	 	
Other borrowings	 	(15.1	)	(117.9	)	
Other assets and liabilities (net)	 	144.5	 	77.7	 	
Net assets	 	937.9	 	812.5	 	
 	 	 	 	 	 	
Group share of net assets	 	468.9	 	406.3	 	
 
Virgin Mobile France

 	 	2011	 	2010	 	
 	 	£m	 	£m	 	
Non-current assets	 	95.1	 	100.8	 	
Cash and overdrafts (net)	 	10.7	 	17.4	 	
Loans from the Group	 	(35.7	)	(50.8	)	
Other borrowings	 	(38.6	)	(54.8	)	
Other assets and liabilities (net)	 	(64.0	)	(58.0	)	
Net liabilities	 	(32.5	)	(45.4	)	
 	 	 	 	 	 	
Group share of net liabilities	 	(15.3	)	(21.6	)	
 
Total Group share

 	 	2011	 	2010	 	
 	 	£m	 	£m	 	
Total Group share of net assets of joint ventures	 	453.6	 	384.7	 	
 
8 Analysis of changes in Group funding
 
2011

 	 	Opening	 	Cash flows	 	Closing	 	
 	 	£m	 	£m	 	£m	 	
Cash and cash equivalents	 	100.0	 	20.6	 	120.6	 	
 
2010

 	 	Opening	 	Cash flows	 	Closing	 	
 	 	£m	 	£m	 	£m	 	
Cash and cash equivalents	 	—	 	100.0	 	100.0	 	
Loans from TalkTalk Group	 	(397.4	)	397.4	 	—	 	
Loans to Best Buy Europe	 	293.3	 	(293.3	)	—	 	
 	 	(104.1	)	204.1	 	100.0	 	
 
£50m revolving credit facility
 
The Group has a committed RCF of £50m, which matures in July 2012. The interest rate payable in respect of drawings under this facility is at a margin over LIBOR for the relevant period. A commitment fee is payable in respect of amounts available but undrawn under this facility. Although no covenants based on Group performance are included in the RCF, it is a requirement of the facility that certain covenants relating to Best Buy Europe’s £350m Receivables Financing Agreement have been achieved; this was the case at both 31 March 2011 and 31 March 2010.
 
This facility was undrawn throughout the year.

 
9 Related party transactions
 
During the year, the Group had the following disclosable transactions and balances with its joint ventures and other related parties:

 	 	Best Buy
Europe	 	Virgin Mobile
France	 	TalkTalk
Group	 	Best Buy
Europe	 	Virgin
Mobile
France	 	
 	 	2011	 	2011	 	2010	 	2010	 	2010	 	
 	 	£m	 	£m	 	£m	 	£m	 	£m	 	
Revenue for services provided	 	3.1	 	—	 	1.7	 	3.8	 	—	 	
Net interest and other finance income (expense)	 	1.0	 	1.6	 	(5.3	)	2.6	 	1.1	 	
Loans owed to the Group	 	—	 	35.7	 	—	 	—	 	50.8	 	
Other amounts owed by the Group	 	(1.2	)	—	 	—	 	—	 	—	 	
Other amounts owed to the Group	 	0.2	 	0.1	 	0.1	 	1.9	 	—	 	
 
Revenue for services provided relates to investment property rental income.
 
10 Risks and uncertainties
 
The principal risks of the Group are as follows:
 
Risk within the Best Buy Europe business

Risk	 	Mitigation	
 	 	 	
Consumer environment	 	 	
Best Buy Europe’s major markets have suffered low or negative economic growth since 2009, and there is uncertainty surrounding the economic outlook. Some of the products and services offered by the business may be viewed as discretionary, and may therefore be particularly affected by customer confidence.	 	The business undertook a major reorganisation programme in 2009, and maintains an ongoing programme to try to improve efficiency, and to ensure that it is well-positioned to deal with an uncertain environment.	
 	 	 	
Dependence on key suppliers and customers	 	 	
Best Buy Europe’s principal revenue streams are from mobile network operators, and any change in their strategy could affect the revenues and profits of the business. The business is also dependent on relationships with key suppliers to source products on which availability may be limited.
 	 	The business has moved towards commercial arrangements that provide a closer alignment of interests with the network operators, whereby the risks and rewards of customer ownership are shared, and has focused on the high value postpay and smartphone segments to help to drive economic value for the networks.
 
The business seeks to increase and leverage the scale of its operations to support global strategic relationships.	
 	 	 	
Competition	 	 	
Best Buy Europe operates in markets that are highly competitive, in which the behaviour of competitors may damage revenues and margins.	 	The business has sought to differentiate itself through innovative propositions, high quality customer service, and a good supply of scarce products.	
 	 	 	
Regulation	 	 	
Best Buy Europe is subject to regulation in a number of areas, including insurance operations, information security and customer management.	 	The business has internal committees and control structures to manage these requirements, to ensure appropriate compliance, and to react swiftly should issues arise.	
 	 	 	
Operations	 	 	
Best Buy Europe’s operations are dependent on internal and external IT systems which could fail or be unable to keep pace with the needs of the business.	 	A significant investment has been made over recent years in the IT infrastructure of the business, supported by testing processes and ongoing business continuity planning.	
 	 	 	
Foreign exchange	 	 	
A material part of Best Buy Europe’s earnings are denominated in US Dollars and Euros, giving rise to exposure to foreign currency fluctuations.	 	The business may hedge a proportion of such earnings, to provide certainty of their value.	

 
Risk within the Virgin Mobile France business

Risk	 	Mitigation	
 	 	 	
Consumer environment	 	 	
Consumer confidence in France remains relatively low, which may affect the level of customer spend and the ability of the business to acquire new customers.	 	The business is focused on improving the quality of its proposition through a wider product and service offering, increased distribution channels and ongoing brand development.	
 	 	 	
Dependence on key suppliers	 	 	
The business is reliant on third parties for the provision of its network infrastructure.	 	Virgin Mobile France has a strong relationship with its key suppliers, and its increasing scale helps to improve its commercial position. The business is in the process of developing a fuller MVNO infrastructure to reduce dependency and improve flexibility over time.	
 	 	 	
Competition	 	 	
The entry of a fourth network, expected in 2012, may make the market more competitive, and adversely affect the business’ revenue and margins.	 	The business continues to invest in the quality of its proposition, brand and distribution channels to try to improve its scale and competitive position.	
 	 	 	
Operations	 	 	
The business is reliant on internal and external IT systems which could fail or be unable to keep pace with the needs of the business.	 	A significant investment has been made over recent years in the IT infrastructure of the business, supported by evolving business continuity plans.	
 
Other risks within the Group

Risk	 	Mitigation	
 	 	 	
The Group does not exercise control over Best Buy Europe or Virgin Mobile France and therefore material decisions can only be made with the consent of the relevant joint venture partner. Inability to reach consensus on such decisions could have an adverse effect on the growth, business and financial results of these operations.	 	Such risks are mitigated through agreed strategies, defined and documented processes and regular communication.

11 Statement of directors’ responsibilities
 
The audited financial statements for the year ended 31 March 2011 have been prepared in accordance with IFRS and Article 4 of the IAS Regulation. The management report herein includes a fair review of the important events during the year, a description of current principal risks and uncertainties and a fair review of disclosure of related party transactions and changes therein.
 
The directors of Carphone Warehouse Group plc are listed on the Group’s website www.cpwplc.com.

By order of the Board
 
Nigel Langstaff
Chief Financial Officer
13 June 2011

Exhibit 99.3

	Carphone Warehouse Group plc Preliminary Results and Strategy Update 14th June 2011 Results for the year ended 31 March 2011	

	Agenda Overview & financial highlights Charles Dunstone - Chairman Strategy update Roger Taylor - CEO Financial update & 2012 guidance Nigel Langstaff - CFO	

	Overview & financial highlights Charles Dunstone Chairman	

	A year of considerable success Headline Financial Highlights 2010-11 EPS of 15.0p (FY10: 8.3p) Dividend of 5.0p per share CPW Europe EBIT growth of 18% to £135m (FY10: £114m) Best Buy Mobile US profit share up 111% to £98m (FY10: £46m) Best Buy UK ‘Big Box’ EBIT losses of £62m (FY10: £21m) Virgin Mobile France now profitable; EBIT of £21m & net adds of over 200,000	

	Outlook “Challenging trading conditions ahead, however the Group is well positioned to maintain its momentum.” CPW Europe - well positioned Best Buy Mobile US - continued growth Best Buy UK ‘Big Box’ - continue to evaluate next steps for CE strategy Virgin Mobile France - focus on value creation	

	Strategy update Roger Taylor CEO	

	Group structure Best Buy Europe 50% Virgin Mobile France 47.1% CPW Property 100% Cash ‘Big Box’ 10 stores open c.1,290 stores in US c.2,430 stores across Western Europe	

	The ‘Wireless’ journey Standard CPW/TPH store Mobile phones Accessories Laptops, netbooks (limited) Dummy handsets ‘Wireless World’ store After New in-store environment Key customer segments Smartphone zone Smartphones / tablets laptops / netbooks Live devices Wide accessory range Geek Squad Walk Out Working Before... and more	

	‘Wireless World’ - Product diversification, ranging & services Geek Squad penetration: +10% Accessories volume: +40% Postpay sales: +c.15% ‘Wireless World’ UK EUROPE Average sqft 1,000 - 1,600 900 - 1,600 Margin uplift c.20% c.20% Payback c.2 years c.3 years Capex £100 - £150k ‘Wireless World Essential’ UK EUROPE Average sqft 500 - 1,000 400 - 900 Margin uplift c.10% c.10% Payback c.2 years c.3 years Capex £50 - £100k	

	‘Wireless World’ - What our customers say “I like it a lot, they’ve made it a place you want to spend time in.” “I would take their advice more seriously because it seems more upmarket.” Walk Out Working launched mid-Sep 2010 NPS – improved with take up of WOW Other initiatives	

	‘Wireless World’ - Our ‘Wireless’ journey FY11 106 ‘Wireless World’ format stores across UK & Europe FY12 c.350-400 ‘Wireless World’ format stores across UK & Europe UK Europe Store aspirations Store aspirations 70% 100% 98% 90% 30% 0% 2% 10% FY10 FY11 FY12 FY15 Wireless World / Wireless World Essential Other 85% 96% 91% 75% 4% 9% 25% 15% FY10 FY11 FY12 FY15 Wireless World / Wireless World Essential Other	

 

	Smartphone revolution Graphic created by CPW based on Gartner data. Source: Gartner, Inc., Forecast: Mobile Devices, 2008-2015, 1Q11 Update, Carolina Milanesi et al, March 17, 2011. (Chart descriptions simplified by CPW and data points based on CPW's definition of Western Europe for purpose of presentation) Western Europe: Belgium, France, Germany, Ireland, Netherlands, Portugal, Spain, Sweden, UK Western Europe mobile device sales by type 12% 15% 22% 29% 30% 30% 30% 27% 17% 17% 19% 24% 31% 34% 41% 65% 61% 53% 43% 39% 36% 34% 31% 27% 6% 7% 6% 4% 4% 3% 2% 1% 2008 2009 2010 2011 2012 2013 2014 2015 Fully featured smartphones Entry-level smartphones Basic Low-Cost	

	Motorola Xoom (3G) BlackBerry PlayBook HTC Flyer (3G) HP Touchpad LG Optimus (3G) Home of smartphones & tablets Increase of 30-40% in global tablet forecasts in recent months Market forecast to be larger than current laptop/netbook market (2010: 185m) Global tablet market (m) Apple iPad 2 Source: Latest forecasts average of 5 issued during April (Gartner, ABI, Future Source, Strategy Analytics & iSuppli). Previous forecast average of 9 issued Sep-Dec 2010 (Gartner, Strategy Analytics, UBS, Goldman Sachs, Morgan Stanley, Display Search, iSuppli, Ovum &IC Insight) 122 17 57 93 133 166 198 95 70 43 2010 2011 2012 2013 2014 2015 Latest forecasts (Apr 2011) Previous (Dec 2010)	

	Tablets - Get connected iPad initially driving high percentage of Wi-Fi only Inverse sales behaviour for latest entrants (more contract than hardware) Pricing points key	

	FREE tablet & FREE smartphone	

	Connected tablets	

	Prepay market – a swing factor in the year ahead Top 5 sellers – prepay smartphones Blackberry Curve 9300 HTC Wildfire Nokia 5228 Blackberry Curve 8520 Samsung Galaxy Apollo £149.95 £99.95 £49.95 £119.95 £79.95 Economic environment Channel quality Pricing points Complexity & consultative sales approach Subsidy levels post MTR cuts Network relationships	

	Effect of move to 24 month contracts - + Significant H1 impact c.25% less upgrades Better network terms Upgrades / ‘Sleepers’ FY12 c.£20m impact on profit FY13 & beyond Significant profit upside Network terms alignment Volume effect 24 month contracts Smartphone upside Illustrative Postpay profits Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Q1 FY12 Q2 FY12 Q3 FY12 Q4 FY12 Q1 FY13 Q2 FY13 Q3 FY13 Q4 FY13	

	Germany update Sophisticated dealer business - ‘Mobile World Distribution’ Sold 3m handsets and c.400,000 postpay connections in FY11 Developed sales channels during the year Preferred distribution partner of all 4 mobile operators c.1,500 points of sale German Distribution market worth estimated EUR3.5bn c.5,000 non-network dealers available to supply Declining service provider business Move to traditional retail model Decrease in revenue (offset by ‘dealer’ revenues) £10m reduction in profitability year-on-year Retail business 135 own branded stores, 43 franchise stores c.90 network stores Reviewing strategy	

	Other European markets Overall Improved management structure Operationally more efficient Renegotiating network commercials ‘Wireless World’ roll-out Belgium - exit Cash consideration EUR22m Subject to clearance from Belgian competition authorities Spain - back to growth Plans for up to 100 additional stores Netherlands Market changes Last remaining independent retailer France Increased network competition	

	CPW Europe - the year ahead A year of transition in mobile marketplace EBIT guidance of flat to +10% + - ‘Wireless World’ stores driving growth in quality, customer experience & profitability Unknown prepay trends FY12 Continue to benefit from smartphones & development of tablet market Impact of 24 month contracts European markets improving performance Germany year-on-year Good cost management over last 2 years	

	Best Buy Mobile US - Overview FY11 FY10 Revenue c.$2.5b* - Connections 7.1m 5.5m Connections growth 28.2% 30.3% SAS Stores 190 77 SWAS Stores 1,101 1,070 > 13,000 dedicated specialists in stores > 10 carriers, 14 manufacturers & 132 handsets available in-store Wider online range with additional 60 handsets Only retailer with multi-channel/multi-carrier activation system (BEAST) * Based on Best Buy’s year end (February) and not previously provided.	

	Best Buy Mobile - Stores Stand-alone stores Average store size c.1,500 sqft FY12 target: c.325 stores* 5 year target: 600 - 800 stores Store-within-a-store Average store size End of FY 11: 370 larger format stores As at June 2011: 600 larger format stores Standard - 1,100 sqft Larger format - 1,400 sqft * Based on Best Buy’s year end (February)	

	Best Buy Mobile - Key value propositions & marketing	

 

	 Growth in connections LFL revenue growth & space growth Growth in awareness / draw rates Growth in market share Profit share growth of 20% - 30% Best Buy Mobile - Continued growth 20% growth Medium term market share aspiration of 10% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% Apr- 10 May- 10 Jun- 10 Jul- 10 Aug- 10 Sep- 10 Oct- 10 Nov- 10 Dec- 10 Jan- 11 Feb- 11 Mar- 11 Draw rates	

	Best Buy UK ‘Big Box’ Continue to evaluate next steps in our multi-format/multi-channel CE strategy FY11: Loss of £62m 10 stores now open (June 2011) Aintree store	

	Financial update & 2012 guidance Nigel Langstaff CFO	

	Best Buy Europe	

	Best Buy Europe financials - PAT 28% growth in PAT, despite incremental investment in Best Buy UK Best Buy Europe PAT £'m 2010-11 2009-10 YoY CPW Europe 135 114 Best Buy Mobile US 98 46 Best Buy UK (62) (21) EBIT 170 140 22% Interest (15) (16) Tax (34) (29) Profit after tax 121 95 28%	

	Best Buy Europe financials - EBIT Revenue ahead of expectations due to incremental dealer sales in Germany Continued strengthening of gross margins on core business Best Buy Europe EBIT £'m 2010-11 2009-10 YoY Revenue 3,572 3,529 1% Gross margin 990 1,037 GM% 27.7% 29.4% -170bp Opex (831) (852) Best Buy Mobile US 98 46 EBITDA 257 232 11% D&A (87) (92) EBIT 170 140 22% EBIT% 4.8% 4.0%	

	Best Buy Europe financials - cash flow 24% growth in operating cashflow from CPW Europe and Best Buy Mobile US Best Buy Europe cash flow £'m 2010-11 2009-10 YoY EBITDA pre-Best Buy UK 317 253 Working capital (35) (27) Capex (69) (54) OFCF pre-Best Buy UK 213 172 24% Best Buy UK (78) (44) Tax (44) (24) Other (16) 1 Net cash flow 74 104 -29% Closing funds 132 57	

	Best Buy Europe guidance - CPW Europe CPW Europe 2011-12 Space Up 2-3% 350-400 Wireless World Growth opportunity in Spain LFL revenue + / - 2% 24 month contracts in UK Weak prepay segment Wireless World refits Improvements in Europe Tablets / accessories Prepay Christmas 2011 Connections Down 0 to 5% 24 month contracts in UK Weak prepay segment Prepay Christmas 2011 German SP Revenue down ~£100m Earnings down ~ £10m EBIT % Strengthen YoY Margin improvement / cost reduction initiatives EBIT Flat to +10% Depending on prepay Christmas	

	Best Buy Europe guidance - CPW Europe £15m £10m £10m- £15m £20m £15m- £150m £20m £135m £135m 2010-11 EBIT German SP 24m Wireless GM / opex 2011-12 Prepay 2011-12 contracts World base Christmas upside	

	Best Buy Europe guidance - CPW Europe H1 H2 Drivers of profit phasing 24m contracts German SP Wireless World Wireless World Connections YoY Down mid-single digit Up mid-single digit LFL Down mid-single digit Up mid-single digit EBIT YoY Down c.£25m Up £25m to £40m	

	Best Buy Europe guidance - Best Buy Mobile US Best Buy Mobile US 2011-12 Space Up ~20% + 150 SAS, additional space in SWAS Connections Up ~20% SWAS space supports LFL growth EBIT Up 20-30% Reinvestment in growth	

	Best Buy Europe guidance - other Best Buy Europe 2011-12 Interest Flat Likely lower ongoing cash cost Tax 23-24% Lower UK rate OFCF (ex BBUK) Similar EBITDA growth Additional capex for Wireless World	

	Virgin Mobile France	

	Group	

	Q&A