BEST BUY CO INC

FORM 8-K(Current report filing)

Filed 04/26/10 for the Period Ending 04/26/10

Address 7601 PENN AVE SOUTH

RICHFIELD, MN 55423Telephone 6122911000

CIK 0000764478Symbol BBY

SIC Code 5731 - Radio, Television, and Consumer Electronics StoresIndustry Retail (Technology)

Sector ServicesFiscal Year 02/03

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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) April 26, 2010

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

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: � Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) � Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) � Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) � Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Minnesota 1-9595

41-0907483 (State or other jurisdiction

(Commission (IRS Employer

of incorporation) File Number)

Identification No.)

7601 Penn Avenue South

Richfield, Minnesota 55423

(Address of principal executive offices) (Zip Code)

ITEM 7.01 Regulation FD Disclosure On April 26, 2010, Carphone Warehouse Group plc (“CPW”) released its trading statement for its fiscal fourth quarter ended April 3, 2010. In the news release, CPW reported the fiscal fourth quarter highlights, fiscal 2010 annual highlights and fiscal 2011 strategic and financial goals for Best Buy Europe, a venture between Best Buy Co., Inc. (“Best Buy” or the “registrant”) 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 will report the results of Best Buy Europe in accordance with US GAAP for the 13 weeks ended April 3, 2010, within its fiscal 2011 first-quarter results as Best Buy Europe is consolidated on a two-month reporting lag. The news release issued by CPW on April 26, 2010, is furnished as Exhibit No. 99.1 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 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 or the Securities Exchange Act of 1934. In addition, on April 26, 2010, representatives of CPW held an investor presentation, which was webcast to discuss CPW’s financial and operating results, including the results of Best Buy Europe, as well as fiscal 2011 guidance. The registrant is furnishing, as Exhibit 99.2 to this Current Report on Form 8-K, the slide presentation used for the April 26, 2010, 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 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 or the Securities Exchange Act of 1934. 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 and 99.2) 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, those risk factors set forth in the registrant’s filings with the SEC. ITEM 9.01 Exhibits (d) The following exhibits are furnished as exhibits to this report.

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Number Description

99.1 News release issued by Carphone Warehouse Group plc dated April 26, 2010

99.2

Slide presentation used for webcast of Carphone Warehouse Group plc dated April 26, 2010

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.

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BEST BUY CO., INC.

(Registrant)

Date: April 26, 2010 By: /s/ SUSAN S. GRAFTON

Susan S. Grafton

Vice President, Controller and Chief

Accounting Officer

Exhibit 99.1

Monday 26 April 2010 For immediate release

Carphone Warehouse Group plc

Fourth quarter trading update

• Group Headline EPS c.8-8.4p to March 2010 (2009: 4.0p) with Q4 outperformance in Best Buy Mobile US • Group share of Best Buy Europe’s net income to March 2010 c.£47m, ahead of recently upgraded £40m-£45m guidance range • Best Buy Mobile US profit share c.£46m (2009: £8m), well ahead of initial guidance • Best Buy Europe operating free cash inflow pre-‘Big Box’ of c. £170m vs £80m outflow last year

Carphone Warehouse is today giving its annual strategy update and financial guidance for the year to March 2011. The company is also providing indicative financials for the full year to March 2010 since, following the recent demerger, there will not be a preliminary results announcement this year. A full set of audited results will be posted on the company website in July. Q4 2010 highlights

• Carphone Warehouse Europe like-for-like revenue +3.0% (constant currency) • Carphone Warehouse Europe connections -2.9% (calendar adjusted) • Best Buy Mobile US connections +34.2%

FY 2010 highlights (indicative) • Carphone Warehouse Europe EBIT £114m (2009: £97m) with year-on-year margin improvement • Best Buy Mobile US profit share £46m (2009: £8m) • Best Buy UK (‘Big Box’) EBIT loss of £21m (2009: loss of £7m) • Virgin Mobile France customer base 1.7m (2009: 1.1m) with Tele2 integration progressing well

Guidance for the year to March 2011 • Carphone Warehouse Europe like-for-like revenue growth 0-3% • Carphone Warehouse Europe EBIT growth 15-20% with continued margin improvement • Best Buy Mobile US connections and profit share growth 15-20% • Best Buy Europe operating free cash flow before ‘Big Box’ £170m-£180m • ‘Big Box’ operating loss £40m-£45m with further capex of £35m-£40m • Group share of Best Buy Europe post-tax profit £47m-£50m • Group share of Virgin Mobile France post-tax Headline profit c.£5m • Group EPS year-on-year +40-45%

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Charles Dunstone, Chairman, said: “We have ended 2010 with another strong performance and given our third upgrade in six months. Best Buy Mobile US is out-performing even our expectations. Carphone Warehouse Europe continues to trade strongly with like-for-like revenue up 3.0% in the fourth quarter. Our full year results are ahead of expectations and our operating free cash flow is well ahead and represents a transformational improvement on the prior year. “The demerger is now successfully completed, and we are moving into our next phase of growth. Our vision of the ‘Connected World’ resonates with customers, as do our principles of impartial advice and knowledgeable service. This Friday, we open our first UK Best Buy ‘Big Box’ store; Best Buy Mobile continues to show good potential in the US; Carphone Warehouse Europe continues to roll out its ‘Wireless World’ format; and Virgin Mobile France is now moving into profit. “The macro environment will undoubtedly present challenges but we are well positioned in each of our businesses and we are targeting 40% to 45% EPS growth for our 2011 financial year with further strong cash generation in both of our joint ventures.” Fourth quarter trading Carphone Warehouse Europe Overall connections were down 2.9% from 2.94m to 2.86m (or down 5.2% without adjusting for the comparable calendar quarter) reflecting the strong pre-pay driven comparative (connections in Q4 2009 +12%). However the quality of connections continues to improve with smartphone penetration driving an increase in revenue per connection. Quarter four like-for-like revenue growth on a constant currency basis was up 3.0% (up 1.8% at actual currency). Best Buy Mobile US Best Buy Mobile is performing strongly, demonstrating the appeal of its differentiated offer to US consumers. It delivered another impressive quarter with total connections up 34.2% to 1.43m (2009:1.07m). Virgin Mobile France Virgin Mobile France’s customer base is now 1.7m with net growth of 30,000 in the quarter. The business’ scale and efficiency enabled it to achieve both profitability and positive cash flow in this quarter. We continue to be on track to meet our medium term target of 2m customers. The Tele2 business has been migrated onto Virgin Mobile network terms and head office integration is well underway. Indicative full year financials Group Group revenue and opex are in-line with expectations whilst EPS of c.8-8.4p (2009: 4.0p) is substantially ahead of guidance given at the start of the year and in January, reflecting the strong out-performance in Best Buy Europe. The Group had £100m of cash at March 2010 following demerger. Best Buy Europe Carphone Warehouse Europe delivered 18% EBIT growth to £114m (2009: £97m) reflecting good smart phone sales, strengthened gross margins and cost savings resulting from the reorganisation programme undertaken in the first half of 2009.

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Best Buy Mobile US has had a transformational year and contributed £46m to Best Buy Europe’s EBIT, up from £8m last year, reflecting strong top line growth and operational leverage. Opex investment in Best Buy UK (‘Big Box’) was £21m, broadly in-line with guidance. The Group’s share of Best Buy Europe’s net income was c.£47m (2009: £28m), after interest of c.£16m (2009: £12m) and taxation of c.£28m (2009: £29m). Operating free cash flow before ‘Big Box’ investment was c.£170m, reflecting reduced capex and much improved working capital. Best Buy Europe ended the year with net funds of £60m compared to net debt of £47m at March 2009. Virgin Mobile France The Group’s share of Virgin Mobile France (47.5% stake) was a £9m loss. Following the acquisition of Tele2 in December the synergies from this combination are beginning to have a meaningful impact on cash flow and profit contribution. Outlook and guidance for the year to March 2011 As part of our presentation to analysts and investors today, we will be giving updated financial guidance for the coming year. The key elements of this guidance are set out below. Best Buy Europe We anticipate a like-for-like revenue performance of +0-3% from the Carphone Warehouse Europe business, with gross margins continuing to strengthen. Space growth is expected to be 0-1%, with a flat to slightly lower overall store count offset by continued investment in our new, larger store format (over 100 ‘Wireless World’ stores by March 2011). We expect a further decline in revenue from Germany as the business continues to migrate from a service provision model to a more typical retail model. At the EBIT level we expect 15-20% growth at Carphone Warehouse Europe, 15-20% growth in Best Buy Mobile profit share and a loss of £40m-£45m for Best Buy UK (‘Big Box’). We expect the interest charge to be similar to the year to March 2010, and the effective tax rate to be 24-25%. Reflecting the increased investment in launching Best Buy ‘Big Box’ stores and the cost of the debt facilities, we expect the overall post-tax share of profits from Best Buy Europe to be in the £47m - £50m range. We expect Carphone Warehouse Europe and Best Buy Mobile US to generate operating free cash flow of approximately £170m-£180m, reflecting capex of £70m-£80m and working capital absorption of £20m-£30m. In addition to operating cash costs, Best Buy Europe plans to invest a further £35m-£40m in ‘Big Box’ capex in 2010-11. Working capital absorption in the ‘Big Box’ business is expected to be minimal. Virgin Mobile France Proforma annualised revenue for FY 2010, including Tele2, was c.€350m. We expect this to grow by 10-15% in FY 2011. The target EBIT margin for FY 2011 is 5% to 6% with a year-end run-rate of closer to 10%, both pre amortisation of acquisition intangibles arising on the Tele2 deal. We expect the group share of Virgin Mobile France post-tax Headline profit to be c.£5m.

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PLC costs We expect an increase of £2m-3m in PLC costs from c.£6m in FY 2010 reflecting the move from a share of ‘old’ Carphone Warehouse PLC infrastructure to a standalone PLC position. We expect that PLC cash costs will be substantially covered by rental income and interest income. Dividend policy As previously indicated, the Group does not expect to pay dividends in the short-term, as it is anticipated that cash generated by its principal investments will be reinvested to drive further growth. Presentation There is a presentation for investors and analysts on Group strategy and guidance for the coming year at The Hilton Dartford Bridge Hotel, DA2 6QF, starting at 9.30am this morning. The dial-ins are : UK: +44 (0)20 7806 1950 USA: +1 212 444 0412 Confirmation Code: 3917348# Replay Details (1 week): UK: +44 (0)20 7111 1244 USA: +1 347 366 9565 Confirmation Code: 3917348# The event will be audio webcast live at www.cpwplc.com. Next announcement The Group will publish its Q1 trading update on 28 July 2010. For further information For analyst and institutional enquiries

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Roger Taylor, CEO 07715 170 090 Nigel Langstaff, CFO 07802 210 248 Kate Ferry, IR Director 07748 933 206 For media enquiries

Shane Conway, Corporate PR Manager 07932 199 659 Anthony Carlisle (Citigate Dewe Rogerson) 07973 611 888

020 7638 9571

Best Buy Europe Like-for-like revenue

Connections ( 000s)

2008-09 was a 53 week period for Carphone Warehouse Europe; the comparable calendar results are weeks 2 to 53 rather than weeks 1 to 52

Store numbers

Virgin Mobile France Customer base (000s)

2009 excluded Tele2 customer base

5

13 weeks to 3 April 2010

Constant currency Actual currency

Revenue

3.0 % 1.8 %

13 weeks to 3 April 2010 52 weeks to 3 April 2010

2010

2009 % change

2010 2009

% change

Carphone Warehouse Europe

- against comparable period 2,861

2,945 (2.9 )% 12,496

12,469 0.2 %

- against reported 52 weeks 2,861

3,019 (5.2 )% 12,496

12,463 0.3 %

Best Buy Mobile US

1,430 1,066

34.2 % 5,505 4,224

30.3 %

As at 3 April 2010

2010 2009

% change

Carphone Warehouse Europe

Own stores 2,224

2,240 (0.7 )%

Franchises 206

219 (5.9 )%

Total stores 2,430

2,459 (1.2 )%

Best Buy Mobile US

SWAS (store within a store)

1,070 1,023

4.6 % SAS (standalone store)

77 39

97.4 % Total stores

1,147 1,062

8.0 %

As at 31 March 2010

2010 2009

% change

Total base 1,715

1,114 53.9 %

*

*

*

*

Exhibit 99.2

Carphone Warehouse Group plc Anal ys ts’ Day 26 April 2010

Agenda Overview Strategy upda te Financ ial upda te and 2011 guidance Charles Dunstone Roger Tayl or Nige l Langst aff

Charles Dunstone, Chairman Overview

An encouragi ng end to a successful year.... Financ ial Highlights: - Third upgrade in s ix months - Best Buy Europe prof it ahead of expec tations (pr imarily due to B est Buy Mobile US , profi t share £46m) - Cash generation ahead (BBE opera ting free cash inf low pre ‘Big Box’ c.£170m vs £80m outf low last yr) - Virgin Mobile customer numbers 1.7m Q4 H ighl ights: - CPW LFLs +3% - Best Buy Mobile connect ions growt h + 34% - Virgin Mobi le generating profi ts and cash

.....and wel l posit ioned for the year ahead CPW – smartphone / wireless world roll -out B est Buy Mobile US – brand traction / marke t sha re gains Best Buy “Big Box” – launches this week in the UK Virgin Mobi le – leveraging scale follow ing Te le2 acquisit ion

“Best Buy ” comes to the UK

Roger Taylor, CEO CPW plc Strategy Update

Carphone Warehouse Group plc CPW plc Group Struc ture Bes t Buy Europe 50% Virgin Mobile France 47.5% CPW Property 100% Cash £100m ‘Big Box’ 1st store to open this week c.1,100 stores in US c .2,400 stores across Weste rn Europe

Carphone Warehouse......smartphones dr iving grow th Source: Gartne r Dataquest, Forecast: Mobile Devices Estimated 83% of mobile phones w ill be smartphones by 2013 4% 7% 5% 5% 5% 6% 7% 6% 4% 4% 3% 5% 7% 14% 22% 32% 36% 40% 15% 19% 31% 55% 70% 76% 81% 87% 86% 87% 92% 43% 41% 33% 17% 3% 3% 1% 9% 1% 8% 12% 5% 5% 5% 4% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Basic phone Enhanced Phones Smartphones - entry l evel Smartphones - fully fea tured

What inc reasing smartphone penetrati on means for CP W Smartphones hi gher va lue per connect ion (ave rage revenue pe r connecti on increasi ng, dr iving positive LF Ls), Q4 LFL 3% Geek attachment: 44% on smartphones (vs 35% on non-smartphones) Access ories attachment: 36% on smartphones (vs 14% on non-smartphones) F Y 2011 anti cipat e up to 65% CPW/TP H postpay volume from smartphones 0 10 20 30 40 50 60 70 80 90 100 Q1 Q2 Q3 Q4 2009/2010 (UK) % Smartphone Non-Smartphone

“Wireless Worl d” : confident that format worki ng...... Currently 29 in UK , 7 in S pain >100 by April 2011 S uccess story for: Our People Our Customer The Store Environment Our Propositi on The Geek Squad S ervi ce The Financ ials ......rol l-out to dr ive furthe r growt h S tretchi ng the brand to incorpora te all things connected

Tr iall ing new formats to extend wireless world concept to s ma lle r stores Current Store Portfolio: >1000 sq f t 250 700 – 1000 sq ft 400 <700 sq ft 1,780 2,430

We can do ‘mult i product wireless store’ in s ma ll format ...... ......as seen in Alicante

Hardware Connections Cont ent Services Access ories Smartphones Ne tbooks Laptops Tablet/sl ate The Connected World

UK in good shape... but...work to do in Europe Some key changes in t he business.... Operat ional ef fic ienc ies Commercia l alignment w ith ne tworks Customer focus (0% commission 100% impartial) .....are really sta rti ng to have an impact: Q4 UK LF L c .6% Cont inued market sha re gains (especia lly in smartphones) Improvement in NPS De livery of Geek Squad

The C PW business in the year ahead Economic environment rema ins tough but we st ill expec t LF L growt h Emphasi s on qua lity of connect ions ra ther than quantity Margins more robust Cont inued focus on costs and improving net opera ting margi n Overall profi t grow th of 15% to 20% Strong cash conversion

Best Buy Mobile US 77 stand alone stores (SAS) and 1,070 stores within store (SW AS ) as at March 2011 Opport unit y t o roll out signi ficantly more S AS stores in FY11 and beyond With no other signi ficant independent mobil e specia lists in the US t he re is good grow th potential

Best Buy Mobile US: exceeded a ll expec tations Q4 connect ions 1.43m (Jan – March 2010), up 34% yoy BB M U.S. marke t share at the end of Fisca l 2010 was approxima tely 4 -5% (of U.S . handsets sold). Our current da ta suggests that there are approxima tely 130 -140 milli on handsets sold per year in the U .S. Ta rge t market sha re of 10%+ in less than 5 years, which i nc ludes both S AS and SWAS concepts. Source: Company - 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 Mar-07 Jun-07 Sep -07 Dec -07 Mar-08 Jun-08 Sep -08 Dec -08 Mar-09 Jun-09 Sep -09 Dec -09 Mar-10 000s

BBM US : tipping point around brand awareness Marke t share ove r last 4 yea rs 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 2006 Q1 2006 Q2 2006 Q3 2006 Q4 2007 Q1 2007 Q2 2007 Q3 2007 Q4 2008 Q1 2008 Q2 2008 Q3 2008 Q4 2009 Q1 2009 Q2 2009 Q3 2009 Q4 Postpay Prepay Draw Rate by Category 3.3 2.7 6.2 4.3 4.0 6.7 5.6 6.1 5.9 7.5 7.9 Overa ll handset Post pay Prepay Smartphone 2007 2008 2009 Best Buy Mobile Promote r S core — SWAS BBY Promote r — SAS BBY Promote r* Oct FY08 Dec FY08 Feb FY08 Apr FY09 Jun FY09 Aug FY09 Oc t FY09 Dec FY09 Feb FY09 Apr FY10 June FY10 Aug FY10 Oct F Y10 Dec FY10 Feb FY10 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0

The P erfect Partnership.... Smart provisioning syst ems Se lling complex produc t Customer focused Operat ional experience (CPW brought time to effect a subsc ripti on down from 45 mi nut es to 10 mi nut es) Simplif ica tion of proposition Ne twork re lationships Creativit y / innova tion Customer centr ic ity Strong global brand Established in non CPW te rr itor ies Signifi cant footfall Leverage w ith consumer electronic supplie rs S trong opera ting processes Employee focused Capable of fast and effic ient roll out Big Box expertise .....now dr iving signif icant re turns: £46m in FY10 and 15-20% growt h i n F Y11

The B est Buy “Big Box” launch 8-10 “Big Box” stores opened by March 2011 30,000 to 45,000 sq.f t Fi rst f ive: Thurrock, Essex Hedge End, Southampton Aintree , Live rpool Merry Hill , W est Mi dl ands Croydon, Surrey Online pl atform launched i n Autumn 2010 c.£70 - £80m cash investment in 2010 / 2011: £35m - £40m capex; c.£40 - £45m P& L

Best Buy Key Initia tives: why are we so di fferent? Uniquely posit ioned to de liver the connect ed world: abilit y t o de liver complex sol ut ions for customers Qual ity of sta ff and investment in t ra ining: every ‘bl ue shi rt ’ recei ves ni ne weeks upfront trai ni ng and continuous development programmes Category ownership: authorit y i n a ll cat egories presented Wa lk out working: Buy any laptop, camera or mobil e phone and Best B uy will of fer to s et up and pe rsona lise the product so it ’s ready to use be fore you leave the store Geek Squad: the 24 -hour technology support service Flexible multi channel approach Bes t Buy: The World ’s Best.....here to succeed!

Virgin Mobi le France Standing start in 2006 to Number 4 in the French market, with 1.7 million customers, follow ing the acquisit ion of Te le2 in December 2009 (consolida ting its posit ion as France ’s l argest MVNO) 60% of base post-pay customers Targe ting 2 mi llion customers FY 09 FY 10 Virgin customer base Quarter ly revenue 0 10 20 30 40 50 60 70 80 90 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Revenue (€'m) 500 1,000 1,500 2,000 2,500 2006 2007 2008 2009 2010 2011 2012 2013

Virgin Mobi le France : a va luable brand Strong brand awareness: recent marke t research indi cat ed 33 pe r cent spontaneous brand awareness and 93 pe r cent prompted brand awareness Reputat ion for innova tion: introducing unli mited texts and more recentl y “all you can eat” packages to the French market Outstanding customer servi ce: 85 pe r cent customers “satisf ied ” and 92 pe r cent, stating tha t they would recommend Virgin Mobi le France (a ll based on Maxi phone surveys conduc ted during first quarter 2010) One of the widest MVNO di stribution pl atforms in France : sold from 2,500 re tai l outl ets and 40000 outlets for top-ups Commercia l re lationships: Long standing commercia l re lationship w ith Orange (cust omer base signi ficant to Orange enabling competit ive wholes ale rat es)

Virgin Mobi le France : developing the brand TDF deal si gned last week: Mobile TV services will be included in a ll postpa id offers 14 channels will be avail able i n a ll postpa id offers Premium offers will i nclude 2 channel s

Virgin Mobi le France stra tegic objecti ves Full integration of Te le2 - mi gra tion to orange on Virgin terms complete - head office integration we ll underway - mi gra tion of bi lling and CRM by end 2010 Strong growt h i n customer base - targeting 2m by 2012 / 2013 - 100K - 150K ne t adds FY 2011 Targeting sect or ave rage EBIT margins - 10% 2011/2012 Strong opera ting free cash f low

Carphone Property Acton Preston £m Book va lue of Freeholde rs 66 Current renta l income 5.6 Marke t value at 8% yield 70 Marke t value at 6% yield 93 Long leases Strong covenants Furthe r development opportunities

Nige l Langst aff, CFO Financ ial upda te and 2011 guidance

2009-10 – indi cat ive group financ ial s EP S growt h substantia lly ahead of guidance a t sta rt of yea r, re flecting strong out-pe rformance in B est Buy Europe 2008-09 2009-10 (£m) indi cat ive only (£m) Revenue 5 5 Opex (5) (6) Post- tax P&L from JVs - Best Buy Europe 28 47 - Virgin Mobile France (8) (9) Ne t Inte rest and tax (2) (1) PAT 18 37 EPS * 4.0 8.2

2009 -10 – indi cat ive Best Buy Europe fi nancia ls 18% grow th from CPW Europe Transformational year for Best Buy Mobile Best Buy Europe OF CF be fore Bi g B ox investment c.£170m, ref lec ting reduced capex and much improved worki ng capita l 2008 -09 2009-10 (£m) indica tive only (£m) - CPW Europe 97 114 - Best Buy Mobile US 8 46 - Big Box (Best Buy UK) (7) (21) EBIT 98 139 - Inte rest (12) (16) EBT 86 123 - Tax (29) (28) PAT 57 95 Best Buy Europe cash flow - opera ting free cash f low pre -Big Box (80) 171 - ne t (debt) funds at March

2010-11 guidance - Best Buy Europe PBT Guiding for Group share of post -tax prof its of £47m -£50m Growth in CPW Europe and Best B uy Mobile funding further investment i n Big Box 2009-10 2010-11 indi cat ive only (£m) (£m) - CPW Europe 114 + 15% to 20% - Best Buy Mobile US 46 + 15% to 20% - Big Box (Best Buy UK) (21) (40) to (45) - Inte rest (16) S imila r - Tax 23% 24% to 25%

CPW Europe Space up 0-1% LF L revenue growt h of 0 to 3% (a t constant currency) Connections 0-5% down, but ARP C up GM% expec ted to strengt hen further Annualis ed cost savings from 2009 reorganisa tion programme Cont inued decli ne on German se rvice provider revenue, as business mi gra tes to reta il mode l, resulting in reduced contri buti on 2010-11 guidance - Best Buy Europe PBT 2009-10 2010-11 Indica tive only (£m) (£m) - CPW Europe 114 + 15% to 20% - Best Buy Mobile US 46 + 15% to 20% - Big Box (Best Buy UK) (21) (40) to (45) - Inte rest (16) Simila r - Tax 23% 24% to 25%

Best Buy Mobile US Connections and prof it share growt h 15 -20% Increased contri buti on from existing sites pa rtia lly of fset by investment i n SAS and online opera tions 2010-11 guidance - Best Buy Europe PBT 2009 -10 2010-11 Indica tive only (£m) (£m) - CPW Europe 114 + 15% to 20% - Best Buy Mobile US 46 + 15% to 20% - Big Box (Best Buy UK) (21) (40) t o (45) - Inte rest (16) Simila r - Tax 23% 24% to 25%

Best Buy UK ( ‘Big Box’) Support cost s, IT, pre -trading losses Deprec iat ion and amortisati on of £7m to £8m 2010-11 guidance - Best Buy Europe PBT 2009 -10 2010-11 Indica tive only (£m) (£m) - CPW Europe 114 + 15% to 20% - Best Buy Mobile US 46 + 15% to 20% - Big Box (Best Buy UK) (21) (40) t o (45) - Inte rest (16) Simila r - Tax 23% 24% to 25%

Inte rest Annualis ed impact of standalone facilit ies Non-ut ilisat ion fees Amortisati on of facilit y fees Impac t of worki ng capita l requirements at peak trading pe ri ods Tax Cont inued mix of prof its in lower tax jurisdic tions 2010 -11 guidance - Best Buy Europe PBT 2009 -10 2010 -11 Indica tive only ( £m) ( £m) - CPW Europe 114 + 15% to 20% - Best Buy Mobile US 46 + 15% to 20% - Big Box (Best Buy UK) (21) (40) t o (45) - Inte rest (16) Simila r - Tax 23% 24% to 25%

CPW Europe Capex investment i n store re furbs and opera tional ef fic iency Working capita l in l ine w ith FY10 Best Buy UK Capex on new st ores Deve lopment of onli ne platform and further development of IT systems 2010-11 guidance - Best Buy Europe cash f low 2009-10 2010-11 Indica tive only (£m) (£m) CPW Europe / Best Buy Mobile US EBITDA 254 + c.10% Capex (55) (70) to (80) Working capita l (28) (20) to (30) Operat ing F CF 171 170 to 180 Big Box (Best Buy UK) EBITDA (21) (32) t o (37) Capex (23) (35) to (40) W orking capit al - Mi ni mal Operat ing F CF (44) (70) to (80)

Annualised revenue follow ing Te le2 acquisit ion of c €350m, growi ng by 10-15% in 2010 -11 Targe t EB IT margi n of 5% to 6% , wit h run-ra te by end of yea r c loser to 10% Capex investment of c €10m to “in-house” bi lling pl atform Mi ni mal worki ng capita l No tax in the short to medium term due to avail ability of losses 2010-11 guidance – Virgin Mobi le France

R enta l income and interest income expec ted to cover cash opex EP S up by 40-45% Before investment i n Best Buy UK, EP S of c .15p 2010-11 guidance – Group EPS 2009-10 2010-11 Indica tive only (£m) (£m) Revenue 5 Simila r Opex (6) (2) to (3) hi gher P os t-tax P&L from J Vs - Best Buy Europe 47 47 to 50 - Virgin Mobile France (9) c.5 Ne t interest and t ax (1) +ve 1 to 2 PAT 37 + 40-45% EP S 8.2 + 40-45% 2010 -11 guidance – Group EPS

2010-11 reporting cal endar Q1 trading Q2 trading / Inte rims Q3 trading Q4 trading / guidance upda te Pre lims 28 July 2010 5 November 2010 January 2011 April 2011 June 2011 CPW Europe CPW Europe CPW Europe CPW Europe Stores Stores Stores Stores Connections Connections Connections Connections Revenue Revenue Revenue Revenue LF L revenue LFL revenue LFL revenue LFL revenue Best Buy Mobile US Best Buy Mobile US Best Buy Mobile US Best Buy Mobile US Stores Stores Stores Stores Connections Connections Connections Connections Big Box (Best Buy UK) Big Box (Best Buy UK) Bi g B ox (Best Buy UK) Big Box (Best Buy UK) St ores Stores Stores Stores Revenue Revenue Revenue Revenue Best Buy Europe Best Buy Europe Best Buy Europe P&L Guidance P&L Cash f low Cash f low Virgin Mobi le France Virgin Mobile France Virgin Mobi le France Vi rgin Mobile France Virgin Mobi le France Base Base Base Base P&L Revenue Revenue Revenue Revenue Cash flow P&L Guidance Cash flow Other Othe r P&L P&L Cash f low Cash f low EPS

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