Ceconomy : Results Presentation Q4/FY 2018/19

Results Presentation

Q4/FY 2018/19

Dr Bernhard Düttmann	Düsseldorf, 17 December 2019
Karin Sonnenmoser
Ferran Reverter

DISCLAIMER

AND NOTES

This disclaimer shall apply in all respects to the entire presentation (including all slides of this document), the oral presentation of the slides by representatives of CECONOMY AG, any question-and-answer session that follows the oral presentation, hard copies of the slides as well as any additional materials distributed at, or in connection with this presentation. By attending the meeting (or conference call or video conference) at which the presentation is made, or by reading the written materials included in the presentation, you (i) acknowledge and agree to all of the following restrictions and undertakings, and (ii) acknowledge and confirm that you understand the legal and regulatory sanctions attached to the misuse, disclosure or improper circulation of the presentation.

To the extent that statements in this presentation do not relate to historical or current facts, they constitute forward-looking statements. All forward-looking statements herein are based on certain estimates, expectations and assumptions at the time of publication of this presentation and there can be no assurance that these estimates, expectations and assumptions are or will prove to be accurate. Furthermore, the forward-looking statements are subject to risks and uncertainties including (without limitation) future market and economic conditions, the behaviour of other market participants, investments in innovative sales formats, expansion in online and omnichannel sales activities, integration of acquired businesses and achievement of anticipated cost savings and productivity gains, and

the actions of public authorities and other third parties, many of which are beyond our control, that could cause actual results, performance or financial position to differ materially from any future results, performance or financial position expressed or implied in this presentation.

Accordingly, no representation or warranty (express or implied) is given that such forward-looking statements, including the underlying estimates, expectations and assumptions, are correct or complete. Readers are cautioned not to place reliance on these forward-looking statements. See also "Opportunity and Risk Report" in CECONOMY's most recent Annual Report for risks as of the date of such Annual Report. We do not undertake any obligation to publicly update any forward-looking statements or to conform them to events or circumstances after the date of this presentation. This presentation is intended for information only, does not constitute a prospectus or similar document and should not be treated as investment advice. It is not intended and should not be construed as an offer for sale, or as a solicitation of an offer to purchase or subscribe to, any securities in any jurisdiction. Neither this presentation nor anything contained therein shall form the basis of, or be relied upon in connection with, any commitment or contract whatsoever. CECONOMY AG assumes no liability for any claim which may arise from the reproduction, distribution or publication of the presentation (in whole or in part). The third parties whose data is cited in this presentation are neither registered broker-dealers nor financial advisors and the permitted use of any data does not constitute financial advice or recommendations.

Historical financial information contained in this presentation is mostly based on or derived from the consolidated (interim) financial statements for the respective period. Financial information with respect to the business of MediaMarktSaturn Retail Group is particularly based on or derived from the segment reporting contained in these financial statements.

Such financial information is not necessarily indicative for the operational results, the financial position and/or the cash flow of the CECONOMY business on a stand-alone basis neither in the past nor in the future and may, in particular, deviate from any historical financial information based on corresponding combined financial statements with respect to the CECONOMY business. Given the aforementioned uncertainties, (prospective) investors are cautioned not to place undue reliance on any of this information. No representation or warranty is given and no liability is assumed by CECONOMY AG, express or implied, as to the accuracy, correctness or completeness of the information contained in this presentation.

This presentation contains certain supplemental financial or operative measures that are not calculated in accordance with IFRS and are therefore considered as non-IFRS measures. We believe that such non-IFRS measures used, when considered in conjunction with (but not in lieu of) other measures that are computed in accordance with IFRS, enhance the understanding of our business, results of operations, financial position or cash flows. There are, however, material limitations associated with the use of non-IFRS measures including (without limitation) the limitations inherent in the determination of relevant adjustments. The non-IFRS measures used by us may differ from, and not be comparable to, similarly-titled measures used by other companies. Detail information on this topic can be found in CECONOMY's Annual Report 2018/19, pages 52-55.

All numbers shown are as reported, unless otherwise stated. All amounts are stated in million euros (€ million) unless otherwise indicated. Amounts below €0.5 million are rounded and reported as 0. Rounding differences may occur.

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Agenda

01 02 03 04

Highlights	Financial	Outlook	Operations
Performance	Update

01

Highlights

We achieved all financial targets in FY 18/19 with earnings even slightly ahead of expectations

+0.8% 629 €m 402 €m 815 €m

Slight increase	Adj. EBITDA*	Adj. EBIT*	Change in NWC
in fx-adjusted	excl. Fnac Darty	excl. Fnac Darty		-310 €m
sales	on PY level	+4 €m above PY	lower than PY
*Adjusted EBIT/DA excl. expenses in connection with the reorganization and efficiency program and management changes.
Note: Net Working Capital (NWC) acc. to Balance Sheet. PY = prior year.
		Results Presentation Q4/FY 2018/19		Public	Date: 17 Dec 2019	// 5

We delivered visible operational and structural progress in a year of transition

Operations

Portfolio

Reorganization & Efficiency program

Strategy

Where we came from

Declining

profitability

Impairments and portfolio losses weighed on results

Complex structures and

high cost base

Strategy lacking execution

Achievements in FY 18/19

Profit stabilization

Completed sale of METRO stake, solution for Greece & smaller portfolio companies

Established foundations for more competitive cost base

Progress on all initiatives,

but refinement and detailing

necessary

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Our full focus is on the execution of our four strategic initiatives

DIGITAL		SERVICES &		CATEGORY &		ORGANIZATION &
GROWTH		SOLUTIONS		SUPPLY CHAIN		COST STRUCTURE
				MANAGEMENT
ONGOING	ONGOING	GRADUAL PROGRESS	SHORT TERM

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We have accelerated our digital growth efforts

Consolidation of six different webshop platforms to one common IT platform

Significantly improved webshop front-endin Germany and new app with improved user interface

3rd largest webshop in Germany, incl. MediaMarkt and Saturn

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We have improved our Services & Solutions offering

Harmonized service offering at

SmartBars across all stores

Increasing customer demand for screen protection, ready-to-use and repairs

Tendered, refined & rolled out new insurances & warranties proposition in

Germany

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Progress on the centralization of our Category and Supply Chain Management is also steadily building

Roll-outof central pricing system in

Germany

Go-liveof category management pilot store including new systems in Spain

Ramp-upof central logistics platform in

Germany and in the Netherlands

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We have launched a program to reduce complexity and costs, primarily in Germany

Completed staffing of central management team

Streamlining of organizations at CECONOMY and MediaMarktSaturn Holding and Germany

Portfolio solutions for Juke, RMG,

iBood, Greece

1 Incl. 34 €m of expenses booked in Q1 18/19 related to top management changes and incl. non-cash accounting effects.

Reorganization & Efficiency Program

Central Functions		Portfolio

			Target			Status
Timeframe		6 - 18 months
Run-rate savings		110 - 130 €m
Total P&L		204 - 224 €m			c. 190 €m
expenses1

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02

Financial Performance

CECONOMY's FY 18/19 financial performance in a nutshell

Solid market share gains

Improved steering of Black Friday period in 2018

Active management of operational costs, especially on

store level

Germany with operational turnaround, Italy and Spain with continued strong performance

Performance in the Netherlands and Poland below expectations

Lower gross margin

Expenses related to cost & efficiency program and top management changes weighed on reported earnings

Online business again the key growth driver

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Sales increase mainly driven by solid development in Germany, Spain and Turkey

Q4

Total sales (in €m)	Sales by segment Q4 18/19
		(fx-adjusted, yoy change)
	fx-adjusted
+0.5%

Q4 Highlights

	+0.9%
4,953	4,996
Q4 17/18	Q4 18/19

1.5%

-0.5%	-0.3%
	-5.5%
DACH W. & S.	East. Others
Europe	Europe

 DACH: Successful campaigns in Germany (e.g.

MediaMarkt 40 years anniversary); Hungary

continued strong growth, also due to expansion

 Western & Southern Europe: Strong

development in Spain; declining sales in the

Netherlands due to competitive environment

and switch to new online warehouse

FY

Total sales (in €m)	Sales by segment FY 18/19
		(fx-adjusted, yoy change)
	fx-adjusted
+0.8%

 Eastern Europe: Turkey with ongoing solid

	+0.2%
21,418	21,455
FY 17/18	FY 18/19

1.1%	0.4%	0.2%
		-1.7%
DACH W. & S.	East. Others
	Europe	Europe

development; Poland's negative trend continued

 Others: Decline at other smaller operating

businesses (iBood sale in August); sales in

Sweden almost on prior-year's level

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Online continued to be the overall growth driver, while Services & Solutions growth has picked up again in Q4

Q4

FY

Online sales (in €m)	Services & Solutions sales*	Q4 Highlights
	(in €m)

	+4.9%			+1.2%	 Solid online growth due to higher number of
			visits and increase of average bon
605	635		396	401
12.2%	12.7%	in % of sales	8.0%	8.0%	 Excl. online business in the Netherlands, online
					sales increased by +9% yoy
Q4 17/18	Q4 18/19		Q4 17/18	Q4 18/19

		 Strong demand for pick-up option at 50% vs.
Online sales (in €m)	Services & Solutions sales*	43% in the prior-year period

			(in €m)		 Strong growth in extended warranties/
	+13.2%			+1.3%
				insurances, screen protection and ready-to-use
	2,935		1,478		1,498
2,592			as well as repair services
12.1%	13.7%	in % of sales	6.9%		7.0%	Weaker financing and mobile contracts
					
FY 17/18	FY 18/19		FY 17/18		FY 18/19	business

*According to IAS 18.

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Strict cost discipline more than compensated lower gross margin

Q4

FY

Gross margin1 (in % of sales)

OPEX1,2 (in % of sales)

Q4 Highlights

	-0.6%p.		-1.5%p.	 Gross margin with slight trend improvement in
		Q4 compared to 9M development
21.6%	21.0%	20.4%	18.9%
				 OPEX reduction due to active operational cost
Q4 17/18	Q4 18/19	Q4 17/18	Q4 18/19	management driven by e.g. optimization of
back-office processes and personell
				deployment in German stores

Gross margin1 (in % of sales)

OPEX1,2 (in % of sales)

		Excluding non-			 Reduction of personnel and marketing
	-0.8%p.	recurring effects:	-0.8%p.		expenses as well as lower material costs,
	-0.6%p.
				especially in Germany, Switzerland and Italy
20.1%		19.3%	19.2%	18.4%
					 C. 10 €m savings in connection with
FY 17/18		FY 18/19	FY 17/18	FY 18/19	Reorganization & Efficiency Program

1 Excluding restructuring-related expenses 2 Sum of SG&A expenses and Other operating expenses

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The gross margin was impacted by non-recurring effects, especially in prior-year's third quarter

Q	Gross margin (in % of sales)

-0.6%p.
19.0%	18.4%
Q1 17/18	Q1 18/19

-0.5%p.
20.1%	19.5%
Q2 17/18	Q2 18/19

Excl. non-recurringeffects: -0.8%p.

-1.6%p.
20.3%	18.7%
Q3 17/18	Q3 18/19

Excl. restructuring- related effects: -0.6%p.

-0.7%p.
21.6%	21.0%
Q4 17/18	Q4 18/19

FY

Gross margin (in % of sales)

20.1%

+0.1%p.

-0.1%p.

-0.1%p.

-0.1%p.

-0.6%p.

19.3%

FY		Inventory	Gift card liabilities	Tarifsensation	IFRS 15	Underlying		FY
17/18		revaluation (in PY)	(in PY)	(in PY)	(in CY)		18/19
	Results Presentation Q4/FY 2018/19				Public	Date: 17 Dec 2019	// 17

EBIT increase driven by significant cost savings, higher income from Services & Solutions and positive sales development

Q4

FY

Adj. EBIT* excl. Fnac Darty (in €m)				Q4 17/18				Q4 18/19
148	153
			73	86	63	87
							16	2
										-4		-22
	Group	DACH	W. & S. Europe	E. Europe	Others**
Adj. EBIT* excl. Fnac Darty (in €m)				FY 17/18				FY 18/19

399 402

300 320

		123	146
			43	10
					-67-74
Group	DACH	W. & S. Europe E. Europe	Others**

Q4 Highlights

• DACH: Switzerland benefited from lower costs; earnings in Germany exceeded recent expectations due to higher cost savings
• Western & Southern Europe: Strong performance in Spain and Italy more than compensated ongoing sales and margin-relatedpressure in the Netherlands
• Eastern Europe: Ongoing sales and margin- related pressure in Poland
• Others: Decline largely due to non-recurrence of pension income in the prior year; weaker earnings in Sweden

*Adjusted EBIT excl. expenses in connection with the reorganization and efficiency program and management changes. **Others: Including consolidation.
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Adjusted EBIT slightly above prior-year's level, while restructuring-related expenses weighed on reported earnings as expected

Q4

FY

EBIT excl. Fnac Darty (in €m)

	148				153
		5		-46	107

EBIT Q4 17/18	Yoy change	Adj. EBIT Q4 18/19	Restructuring-	EBIT Q4 18/19
			related expenses*

EBIT excl. Fnac Darty (in €m)

	399				402
		4			-200	203
	EBIT FY 17/18	Yoy change	Adj. EBIT FY 18/19	Restructuring-	EBIT FY 18/19
								related expenses*

*Expenses in connection with the reorganization and efficiency program and management changes in EBIT.
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The Reorganization & Efficiency Program is fully on track

˃ As of April 2019

˃ Update December 2019

Annual

gross

Early realisation

savings

100-120

110-130

of c. 10 €m savings

100-120

110-130

c. 20

(in €m)

0-10

Total P&L expenses1 (in €m)

-204-224

Timing	FY 18/19	FY 19/20	FY 20/21

	Expected positive
c. 10	net effect

-200

FY 18/19	FY 19/20	FY 20/21

Some savings already realized earlier in FY 18/19; total restructuring-related P&L expenses lower than expected

1 Incl. 34 €m of expenses booked in Q1 18/19 related to top management changes and incl. non-cash accounting effects.

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EPS negatively impacted by restructuring-related expenses, while financial result and tax rate had a positive impact

€m	FY 17/18	FY 18/19	Change
EBITDA	650	465	-186
EBIT	419	224	-196
Net financial result	-198	12	210
Earnings before taxes	221	235	14
Income taxes	-134	-77	57
Tax rate	60.7%	32.7%	28.0%p.
Profit or loss for the period	87	158	71
Non-controlling interest	64	37	-27
Net result	23	121	99
EPS (€)	0.07	0.34	0.27

Highlights

• Reported EBIT impacted by 200 €m restructuring-relatedexpenses (o/w 14 €m not included in EBITDA mainly related to JUKE)
• Fnac Darty profit contribution of 21 €m included in EBIT/DA (FY 17/18: 21 €m)
• Net financial result with positive impact from transaction of 5.4% METRO stake; PY mainly impacted by impairments of METRO stake
• Tax rate improved due to absence of METRO impairment and ongoing tax optimization
• No dividend pay-out foreseen to strengthen equity position and especially in light of the reorganization and efficiency program

Note: Reported EBIT/DA incl. Fnac Darty and incl. expenses in connection with the reorganization and efficiency program and management changes.
Results Presentation Q4/FY 2018/19	Public	Date: 17 Dec 2019	// 21

CECONOMY's underlying* tax rate shows a continuous improvement, primarily supported by tax optimization projects

Tax rate development		Highlights
Reported tax rate

	60.7%		Underlying* tax rate	 Structural tax optimization and one-time effects
50.7%		Reported tax rate		from projects improved the underlying* tax
		rate
	impacted by
		METRO impairment
		32.7%	Underlying* tax rate	 Tax consolidation projects: New tax groups and
			to develop towards	mergers implemented in two projects in
			35%	Germany in both FY 17/18 and FY 18/19 to
42.1%	34.1%			activate tax-loss carry forwards
	31.7%
				 Portfolio measures: Closure and disposal of
FY 16/17	FY 17/18	FY 18/19		entities with non-utilizable tax losses

Going forward, CECONOMY expects the underlying tax rate to		 Structural tax improvements: Optimization of
develop towards 35% (previously 40%)		the transfer-pricing system
* Excl. any effects from METRO, Fnac Darty and restructuring
	Results Presentation Q4/FY 2018/19		Public	Date: 17 Dec 2019	// 22

As expected, Free Cash Flow mainly impacted by NWC outflow and first restructuring-related cash outflows

FY 18/19: Free Cash Flow (in €m)

Highlights

465

 Free Cash Flow at -107 €m; negatively

impacted by expected normalization of NWC

-310

84

86

and first restructuring-related cash outflows

-152

 Lower change in NWC due to high starting

-193

-107

point and active cash management

Reported

NWC

Tax

Other

OCF

Cash

FCF

EBITDA

investments

 Cash taxes higher due to temporary effects of

FY 17/18: Free Cash Flow (in €m)

payment and refund of capital gains tax

	302						 Other OCF positive mainly due to reversal of
				743
650		-119				not yet cash effective restructuring-related
	-90
	Exceptionally high esp.			480	expenses
			-263
	due to temporary
	improvement of						 Cash investments declined by -70 €m yoy due
	payables
Reported	NWC	Tax	Other	OCF	Cash	FCF	to lower modernization investments and more
selective expansion strategy
EBITDA					investments
	Results Presentation Q4/FY 2018/19			Public	Date: 17 Dec 2019	// 23

03

Outlook

Our underlying assumptions for FY 19/20

Sales

Driven mainly by Online and Services & Solutions business

Gross margin

Pressure on goods margin still to continue, but overall gross margin trend improvement expected due to further ramp-up of Services & Solutions business

Costs

Strong cost decline, especially due to reduced personnel expenses, in line with communicated targets

Strategic initiatives

Ongoing improvements in Online and Services & Solutions; progress on centralization steadily building, implementation requiring ramp-up

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Outlook for FY 19/20

• Adjusted for portfolio changes
• Excluding non-recurring earnings effects in connection with the reorganization and efficiency program announced on 29 April 2019

	FY 19/20	thereof IFRS 16
	incl. IFRS 16		effect
Fx-adjusted sales	Slight increase
EBIT (excl. associates)	445 - 475 €m		5 - 15 €m

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04

Operations Update

In 2018/19 we prepared for sustainable success

1		Leadership team established and new critical competencies on-boarded

2		Leaner organization and a more competitive cost structure, especially in Germany

3		Faster decision-makingprocesses due to clearer responsibilities

4		Clear focus on consistently transforming our business

	5				Progress across all four strategic initiatives and acceleration
				Results Presentation Q4/FY 2018/19	Public	Date: 17 Dec 2019	// 28

2019/20: Ongoing implementation of the strategic initiatives

CUSTOMER-CENTRICOMNI-CHANNEL BUSINESS MODEL

	DIGITAL		SERVICES &		CATEGORY &
	GROWTH		SOLUTIONS		SUPPLY CHAIN
							MANAGEMENT
	Improve online/omni-channel		Improve attachment rates,		Deploy Category Management
	conversion, growth, margins
		ramp-up existing services and		and central planning globally,
	(e.g. online services) and
		extend services portfolio		and improve last mile delivery
	customer retention

ORGANIZATION & COST STRUCTURE

Reduce overall costs,

implement harmonized

organizational structures and

optimize store portfolio

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Digital Growth: Ongoing improvements of our platforms enabling a better omni-channel customer journey

New webshop

platform

Assisted

selling

Market

place

State of the art platform for faster responsiveness and improved customer experience; go-live in Germany in November '19 and roll-out in other countries to follow

Digitizing our sales colleagues with a new app to improve processes, efficiency & customer satisfaction by combination of store & online assortment

Enabling us to broaden our assortment, increase the number of online SKUs and improve product availability; go-livein Germany in May 2020 expected

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Services & Solutions: Focus on achieving best-in-class attachment rates in all countries

Insurances &		Further ramp-up and roll-out of standardized customer
Warranties		proposition to strengthen customer relationships

SmartBars		Group-wide full utilization of SmartBars potential with
	harmonized offerings of three core services

Subscription		Drive recurring revenue models through own billing
models		platform for e.g. security software

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Centralization of procurement volumes on track; pricing and category management with gradual progress

Ramp-up of central negotiated purchasing in 2019 in Germany

(in % of purchasing volume)

100%
								~70% 
0% Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov

Current focus

• Ramp-upof centrally negotiated procurement volume in Germany, Spain, Italy and the Netherlands on track
• Better control of margins & reliable price promises across all channels through pricing cockpit & simulator in all key countries
• Implementation of state-of-the-artIT-system for Forecasting & Replenishment to improve product availability
• Implementation of automated Digital Floor & Shelf- Planning for creating store layouts based on local customer preferences to rationalize selling space

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Logistics will build on centralization and national distribution centres

Transforming our supply chain into an omni-channel logistics network …

… based on central platforms

• Central platforms in the Netherlands, Italy and Spain as well as pilot in Germany (Erfurt) already established
• Central platform for Germany (Göttingen) starts in autumn 2020
• Omni-channellogistics operations go-livefor Benelux and Iberia in 2020

Central platform established

Central platform pilot

Central platform planned

Cross dock established

Percentage of supply replenished via centralized distribution (non-2MH)

ES

TR

SE

IT

NL

HU

DE

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We continued the success of last year and built again a profitable Black Friday - centralization was key

Centrally elaborated campaign concepts for entire group supported by professional toolkit

Actively steered pre- and post-campaign period (e.g. Singles Day, Red Friday Warm-up)

First joint international sourcing in key markets (Germany, Italy, Spain)

Improved pricing approach driven by cross- selling of bundles

Strong marketing strategy with focus on services and higher margin product mix

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Summary

FOCUS	EXECUTE
FIXING	TRANSFORMING
THE BASICS	THE BUSINESS
Laying the	Changing into a
foundation for a	customer-centric
sustainable future	business model

We focus on our omni-channel business model

and want to be customers' first choice

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STRATEGY UPDATE

SAVE THE DATE: 26 MARCH 2020

Q&A

Dr Bernhard Düttmann	Karin Sonnenmoser	Ferran Reverter
Chief Executive Officer	Chief Financial Officer	Chief Executive Officer
CECONOMY AG	CECONOMY AG	Media-Saturn-Holding GmbH

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CECONOMY AG

Investor Relations

Kaistrasse 3

CONTACT 40221 Düsseldorf

Germany

Tel.: [phone]

Email: [e-mail] https://www.ceconomy.de/en/investor-relations/

Store network as of 30 September 2019

	30/06/2019	Openings	Closures	30/09/2019
Germany	431	1	-1	431
Austria	52	-	-	52
Switzerland	26	-	-	26
Hungary	32	-	-	32
DACH	541	1	-1	541
Belgium	28	-	-1	27
Greece	12	-	-	12
Italy	117	-	-	117
Luxembourg	2	-	-	2
Netherlands	49	-	-	49
Portugal	10	-	-	10
Spain	87	1	-	88
Western/S. Europe	305	1	-1	305
Poland	90	-	-	90
Turkey	73	5	-	78
Eastern Europe	163	5	-	168
Sweden	28	-	-	28
Others	28	-	-	28
CECONOMY	1,037	7	-2	1,042

Highlights Q4

• Selective expansion with 7 openings continued (thereof 5 in Turkey)
• 2 store closures in Germany and Belgium
• Average store size reduced by c. -1% to 2,636 sqm since June 2019, mainly due to openings of smaller store formats and further store rightsizings

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Sales & number of stores by country

	Sales (€m)
	FY 17/18		FY 18/19
Germany	10,340		10,472
Austria	1,161		1,150
Switzerland	569		578
Hungary	340		364
DACH	12,410		12,565
Belgium	701		697
Greece	186		193
Italy	2,096		2,157
Luxembourg	65		65
Netherlands	1,581		1,495
Portugal	146		151
Spain	2,002		2,050
Western/S. Europe	6,777		6,807
Poland	1,037		970
Turkey	651		596
Eastern Europe	1,689		1,567
Sweden	462		439
Others	542		516
CECONOMY	21,418		21,455

	Number of Stores
30/09/2018	Openings	Closures	30/09/2019
432	2	-3	431
52	-	-	52
27	-	-1	26
24	8	-	32
535	10	-4	541
29	-	-2	27
12	-	-	12
115	2	-	117
2	-	-	2
49	-	-	49
10	-	-	10
85	3	-	88
302	5	-2	305
86	5	-1	90
71	8	-1	78
157	13	-2	168
28	-	-	28
28	-	-	28
1,022	28	-8	1,042

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CECONOMY's underlying tax rate improved to 31.7% driven by further tax optimization

Transition of reported to underlying tax rate (FY 18/19)

Reported				32.7%
235
				77
METRO &	53
									2
Fnac Darty
		200
Restructuring*									43
Underlying						31.7%
382						121
				Pre-tax profit				Tax expense
Improvement of underlying tax rate (FY 17/18 vs. FY 18/19)
				8.1%		-8.6%	-1.9%
		34.1%
													31.7%
	Underlying	One-time	New German	Others	Underlying
		FY 17/18	effects in PY	tax groups					FY 18/19

*Effects in connection with the reorganization and efficiency program and management changes Results Presentation Q4/FY 2018/19

Highlights

• Underlying tax-rate excl. METRO, Fnac Darty and restructuring-related* effects improved to 31.7% vs 34.1% in prior year
• Restructuring-related*tax savings reduced reported tax expenses by only 43 €m in FY 18/19
• Implementation of 31 additional German tax groups and 8 mergers to activate tax-losscarry forwards led to one-timetax expense reduction of €33m in FY 18/19
• In prior year, implementation of an initial tax group in Germany and DTA activation in Turkey led to one-timetax expense reduction

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Net Working Capital

€m	30/09/20171	30/09/2018	Change	30/09/2018	30/09/20192	Change
Inventories	2,449	2,480	31	2,480	2,548	68
Trade receivables and similar claims	497	613	117	613	4173	-197
Receivables due from suppliers	1,197	1,239	43	1,239	1,295	56
Receivables from credit cards	66	71	5	71	51	-20
Advance payments on inventories	0	0	0	0	1	1
Trade liabilities and similar liabilities	-4,817	-5,277	-460	-5,277	-4,9144	363
Liabilities to customers	-129	-45	83	-45	-13	32
Deferred sales from vouchers and customer loyalty programmes	-63	-137	-74	-137	-133	4
Provisions for customer loyalty programmes and right of return,	-19	-23	-5	-23	-22	1
liabilities for right of return
Prepayments received on orders	-39	-46	-8	-46	-45	2
Net Working Capital	-858	-1,125	-267	-1,125	-815	310

1. Balance sheet figures were adjusted for discontinued operations to enable comparison.
2. Balance sheet figures for the current period do not include the assets and liabilities of the disposal group. The resulting effect for net working capital amounted to €-21 million.
3. Not including contract assets from future contract extensions in connection with brokerage commissions of €39 million.
4. This item does not include contract liabilities of €407 million.

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New simplified NWC definition as of Q1 2019/20 with all items easily readable from balance sheet positions

Old NWC definition

New NWC definition

Assets

Liabilities

	Inventories
	Receivables due from suppliers
	Trade receivables and similar claims
	Receivables from credit cards
	REMOVED1
	Advance payments on inventories
	REMOVED2
	Trade liabilities and similar liabilities

Liabilities to customers

Deferred sales from vouchers and customer loyalty programmes

Provisions for customer loyalty programmes and right of return

Prepayments received on orders

Without liabilities for rights of return

Inventories

Receivables due from suppliers Trade receivables and similar claims

Contract assets
NEW

Trade liabilities and similar liabilities

Deferred sales from
warranty extension	NEW
Contract liabilities
NEW

1 Reclassified as Cash and cash equivalent due to similar character 2 Removed due to non-material amount

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Comparison of new vs old NWC definitions

		€m	30/09/2018	30/09/2019
		Inventories	2,480	2,548
		Trade receivables and similar claims	613	417
		Receivables due from suppliers	1,239	1,295
		Receivables from credit cards	71	51
Old		Advance payments on inventories	0	1
	Trade liabilities and similar liabilities	-5,277	-4,914
		Liabilities to customers	-45	-13
		Deferred sales from vouchers and customer loyalty programmes	-137	-133
		Provisions for customer loyalty programmes and right of return	-23	-22
		Prepayments received on orders	-46	-45
		Net Working Capital	-1,125	-815
		€m	30/09/2018	30/09/2019
New		Inventories	2,480	2,548
	Trade receivables and similar claims	610	455
	Receivables due from suppliers	1,241	1,295
		Trade liabilities and similar liabilities	-5,745	-5,321
		Net Working Capital	-1,415	-1,023

• NWC becomes easily readable from balance sheet positions
• New definition ensures completeness of NWC positions
• Due to revised disclosure under new definition, NWC is more negative than under old definition
• Redefinition has no economic impact

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IFRS 16 applied as of 1 October 2019 - estimated P&L impact in FY 19/20

	ESTIMATED
	EFFECT 1
Leasing expenses		Decrease by 525-565 €m as leasing expenses are recognized as D&A and interest cost
EBITDA		Increase by 525-565	€m equalling the amount of leasing expenses
D&A		Increase by 515-555	€m due to depreciation of capitalized operating lease asset
EBIT		Increase by approx. 5-15 €m as lease expense is replaced by D&A and interest
Interest expense		Increase by a low double-digit €m amount due to interest cost component
Earnings before taxes		Reduce by a low single-digit €m amount due to higher interest during first years

1 Estimated effect on financials of FY 19/20 as first year of IFRS 16 application; financial effects based on preliminary and unaudited impact analysis as of 11 November 2019.

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IFRS 16 applied as of 1 October 2019 - estimated balance sheet and cash flow impact in FY 19/20

	ESTIMATED
	EFFECT 1
Assets		Increase by around 2.3	€bn2 due to recognition of lease contracts as rights of use assets
Liabilities		Increase by around 2.4	€bn2 due to recognition of lease contracts as lease liabilities

	ESTIMATED
	EFFECT 1
Operating CF		Increase by 525-565 €m as leasing payments shift to financing CF
Financing CF		Decrease by 525-565 €m as leasing payments are recognized as interest and redemption

1. Estimated effect on financials of FY 19/20 as first year of IFRS 16 application; financial effects based on preliminary and unaudited impact analysis as of 11 November 2019.
2. Difference between Assets and Liabilities due to other balance sheet related items (e.g. onerous contracts) of around 0.1 €bn which are already recognized. CECONOMY uses the modified retrospective method without equity impact.

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Key considerations for financial modelling

Greece transaction

• Closing of the transaction occurred on 29 November 2019
• • As of December 2019, sales and EBIT of Greece are not consolidated anymore
  • No discontinued operation pursuant to IFRS 5
    (i.e. no retrospective adjustment of prior year's results)
  • Sales and EBIT of Greece not considered when compared to guidance
• Transaction-relatedpositive EBIT effect of around 35 €m expected1
• • To be booked in Western- & Southern Europe in Q1 19/20
  • This effect is excluded from the EBIT guidance
• At-equitycontributions of the JV will be booked on a quarterly basis2 in the Others segment

Net Working Capital

• New NWC definition with four positions easily readable from balance sheet:
• • Inventories
  • Trade receivables and similar claims
  • Receivables due from suppliers
  • Trade liabilities and similar liabilities
• Due to revised disclosure under new definition, NWC is more negative than under old definition
• Redefinition has no economic impact

METRO AG

• Expected dividend of c. 2.3 €m3
  to be booked in the other investment result in Q2 19/20
  (only for the remaining 1% stake)
• Minorities do not participate

M.video

• Dividend of c. 14 €m4
  to be booked in the other investment result in Q1 19/20
• Minorities participate with c. 21.6% (in Profit or loss for the period attributable to non-controllinginterests)

IFRS 16

• EBITDA: Increase by 525-565 €m equaling the amount of leasing expenses
• EBIT: Increase by approx. 5-15 €m as lease expense is replaced by D&A and interest
• Financial liabilities: Increase by around 2.4 €bn due to recognition of lease contracts as lease liabilities

1 Subject to final PPA and valuation 2 Time shift possible 3 Subject to AGM approval 4 Subject to final FX conversion

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Financial calendar and events

Financial calendar
Q1 2019/20 results		7 February 2020
Annual General Meeting		12 February 2020
Capital Markets Day		26 March 2020
Q2/H1 2019/20 results		14 May 2020
Q3/9M 2019/20 results		13 August 2020
Q4/FY 2019/20 trading statement		23 October 2020
FY 2019/20 results		15 December 2020

Upcoming events

KeplerCheuvreux & Unicredit Conf., Frankfurt

22 January 2020

Results Presentation Q4/FY 2018/19

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