WH Smith PLC · LSE:SMWH
WH Smith — H1 2017 Earnings Presentation
37 slides from WH Smith's earnings presentation, Apr 12, 2017
Slide 1: Disclaimer
Disclaimer This document contains forward-looking statements with respect to the operations, performance and financial condition of WH Smith PLC. By their nature, these statements are subject to risks, assumptions and uncertainties that could cause actual results to differ materially from those expr
Slide 2: WH Smith PLC Interim Results 2017
WH Smith PLC Interim Results 2017 12 April 2017
Slide 3: Introduction, financial review, business review, questions
WH Smith PLC Introduction Stephen Clarke Financial review Robert Moorhead Business review Stephen Clarke Questions Interim Results 2017
Slide 4: Good performance across the Group
Good performance across the Group Total Group revenue up 2%; like-for-like sales flat Group profit before tax up 4% Earnings per share up 7% Interim dividend up 9% Travel profit up 11% Travel sales up 10%; like-for-like sales up 5% High Street profit flat High Street sales down 4%; l
Slide 5: Robert Moorhead, Chief Financial Officer
Robert Moorhead Chief Financial Officer
Slide 6: Group financial summary
Group financial summary 6 mths to 6 mths to Feb 2017 Feb 2016 Change £m £m % Revenue 643 633 2% Profit from trading operations1 92 88 5% Group profit before tax 83 80 4% EPS 2 61.6p 57.4p 7% Free cash flow (£m) 44 58 (24)% Interim dividend per share 14.6p 13.4p 9% 1 Stated after directly attributabl
Slide 7: Revenue analysis
Revenue analysis H1 2017 H1 2016 Change Total Revenue £m £m % Travel 289 263 10% High Street 354 370 (4)% Total revenue 643 633 2% H1 2017 H1 2016 LFL Revenue % % Travel 5% 5% High Street (3)% -% -% 2% Interim Results 2017
Slide 8: Category LFL revenue performance
Category LFL revenue performance H1 2017 H1 2016 H2 2016 % % % Stationery 2% 5% -% Books (3)% (1)% (3)% News & Impulse 1% 1% -% -% 2% (1)% Interim Results 2017
Slide 9: Group profit before tax
Group profit before tax 6 mths to 6 mths to Feb 2017 Feb 2016 Growth £m £m % Travel trading profit1 39 35 11% High Street trading profit1 53 53 -% Profit from trading operations1 92 88 5% Unallocated central costs (8) (8) Group operating profit 84 80 5% Net finance cost (1) - Group profit before tax
Slide 10: Profit from trading operations
Profit from trading operations 6 mths to 6 mths to Feb 2017 Feb 2016 Change £m £m % Revenue 643 633 2% Gross contribution 377 366 Costs (285) (278) Costs – occupation costs (127) (123) – store costs (102) (100) – other costs (56) (55) Profit from trading operations1 92 88 5% Gross margin 58.6% 57.8%
Slide 11: Group free cash flow
Group free cash flow 6 mths to 6 mths to Feb 2017 Feb 2016 £m £m Operating profit 84 80 Depreciation, amortisation and impairment 21 21 Share based payments 3 5 Working capital (25) (16) Employers payroll tax on exercised share awards (2) (2) Capital expenditure (23) (21) Net tax paid1 (14) (9) Inte
Slide 12: Group net debt
Group net debt 6 mths to 6 mths to Feb 2017 Feb 2016 £m £m Free cash flow 44 58 Dividends paid (34) (31) Pension deficit and retirement benefit funding (2) (1) Net purchase of own shares for employee share schemes (9) (6) Purchase of own shares for cancellation (24) (23) Return of payment on account
Slide 13: Group balance sheet
Group balance sheet Feb Aug 2017 2016 £m £m Goodwill & other intangible assets 64 63 Property, plant & equipment 161 158 Working capital (15) (42) Corporation tax (16) (16) Other assets 11 10 Provisions (6) (6) Operating assets employed 199 167 Cash (8) 20 Finance leases (13) (13) Total net assets (
Slide 14: Return of cash to shareholders
Return of cash to shareholders Continue to invest in the business – capex of £49m for this year Consistent record of growing dividends supplemented by buybacks and a special dividend Returned £829m to shareholders since 2007 111 7 100 14 92 88 88 16 3 84 84 81 14 12 15 10 11 11 1 34 Interim Di
Slide 15: Group key indicators
Group key indicators 6 mths to 6 mths to Growth Feb 2017 Feb 2016 % Group profit before tax (£m) 83 80 4% EPS1 61.6p 57.4p 7% Fixed charges cover 1.9x 1.8x ROCE (after capitalised operating leases) 13% 15% Free cash flow (£m) 44 58 Interim dividend per share 14.6p 13.4p 9% 1 Diluted (weighted averag
Slide 16: Stephen Clarke, Group Chief Executive
Stephen Clarke Group Chief Executive
Slide 17: WHSmith Travel
WHSmith WHSmith Travel
Slide 18: Strategy continues to drive good growth
Strategy continues to drive good growth Total sales up 10%; LFL sales up 5% Good profit performance - up 11% to £39m Continue to invest in future growth in UK Store investment programme Range development Additional staff in our busiest stores New space and format development Leverage
Slide 19: Sales growth in all key channels
Sales growth in all key channels Channel Total sales LFL sales UK Air 6% 6% UK Rail 2% 1% UK Hospital 7% 7% International 43% 9%* Continued investment in key growth initiatives Improvement in UK passenger numbers in most locations Rent payments increase with other variable costs as sales and p
Slide 20: Investment in Travel stores helps to deliver profitable growth
Investment in Travel stores helps to deliver profitable growth Euston Bookshop Interim Results 2017
Slide 21: Space management continues to drive sales mix
Space management continues to drive sales mix Growth categories improve our ability to drive spend per pax for overseas passengers Food, drink, confectionery, travel accessories and souvenirs 18% 19% 11% 19% Travel Accessories Books 28% Food, Drink & Confectionery 49% News & Mags 35% 21% 2007 20
Slide 22: Looking ahead: UK growth
Looking ahead: UK growth Airports continue to forecast passenger growth Continue to open new space Invest in existing stores to drive sales per passenger Expect to open c.15 stores this year Active space management Interim Results 2017
Slide 23: International business is profitable and continues to grow
International business is profitable and continues to grow Sales per passenger continue to outperform previous incumbents Six months Six months YoY LFLs to 28 Feb to 29 Feb 2017 2016 Sales (£m) 50 35 43% 9%* Profit (£m) 4 3 33% 255 units won; of which 213 are open; 42 airports and 25 countries o
Slide 24: Changi Airport, Singapore tender win
Changi Airport, Singapore tender win Changi Airport, Singapore Interim Results 2017
Slide 25: Growth opportunities in Europe
Growth opportunities in Europe Europe is an area of focus for us Strong international and local incumbents WHSmith format and operations proving attractive to landlords Won tenders in Helsinki, Athens, Tenerife, Malta, Alicante and Dusseldorf Dusseldorf Airport Athens Airport Interim Results
Slide 26: Further growth opportunities overseas
Further growth opportunities overseas International Travel is a large, growing market WHSmith still a small player with good growth potential Short-term investment for long-term future growth Our broad customer offer and sales per pax are attractive to overseas landlords Good success in a
Slide 27: WHSmith High Street
WHSmith WiSmaith High Street
Slide 28: Sales driven by good Christmas trading
Sales driven by good Christmas trading Good performance over Christmas Strong performance in seasonal categories Like-for-like sales down 3% versus last year Profit flat at £53m; matching a very strong performance from last year Profit focused strategy continues to create value Margin up
Slide 29: Continued margin optimisation
Continued margin optimisation Margin growth of 100 bps for the year Main driver continues to be category mix management – both across and within categories Further margin growth from: Trading terms and Far East sourcing Improved markdown and promotional management Improved shrinkage perf
Slide 30: Continued focus on cost efficiencies
Continued focus on cost efficiencies Cost efficiencies key to our strategy Sustainable cost saving initiatives and variable costs to sales £7m cost savings delivered in first half in line with plan £3m target for second half remains unchanged Continue to develop pipeline of new initiatives
Slide 31: Building on areas of strength in Books
Building on areas of strength in Books General Retail Market more stable Annualised strong sales from ‘colour therapy’ last year Good sales from spoof humour books this Christmas Continue to improve efficiency of books operating model Further strengthen our book club offer Interim Results
Slide 32: Stationery a key area of investment
Stationery a key area of investment Stationery benefits from more and better quality space Continue to differentiate WHSmith offer Increased focus on range development, quality and design Successful seasonal ranges Good like-for-like sales growth in Christmas cards, wrap, diaries, calendar
Slide 33: Space management continues to present opportunities
Space management continues to present opportunities Huge variability in store size and configuration Continue to identify opportunities to reconfigure space in store Seasonal stationery trial over Christmas period in c.80 stores Further trial activity in this area over the coming months Inte
Slide 34: Post Office update
Post Office update WHSmith now operates 162 Post Offices in its stores Modern, open-plan layouts with extended opening hours Positive customer feedback Combination of franchises and concessions New agreement will run until 2026 Interim Results 2017
Slide 35: Growing Funkypigeon.com
Growing Funkypigeon.com Further sales and profit growth in the period with a strong performance over Christmas Mobile continues to grow as the main channel Extended gifting ranges Further investment in the website New fulfillment centre Interim Results 2017
Slide 36: Continue to deliver shareholder value
Continue to deliver shareholder value Like-for-like sales growth in Travel: further opportunities in UK and International Good performance from High Street with continued good cash generation and profit growth Group profit before tax up 4%; EPS up 7%; interim dividend up 9% Good cash generat
Slide 37: WH Smith PLC Interim Results 2017
WH Smith PLC Interim Results 2017 12 April 2017