Theworks.co.uk Plc · LSE:WRKS
Theworks.co.uk — The Works — H1 FY2019 Earnings Presentation
20 slides from Theworks.co.uk's earnings presentation, Jan 16, 2019
Slide 1: Interim results 26 weeks ended 28 October 2018
Interim results 26 weeks ended 28 October 2018 16 January 2019
Slide 2: Agenda
Agenda • Introduction Kevin Keaney (CEO) • Financial review Gavin Peck (CFO) • Business review Kevin Keaney (CEO) • Questions 1
Slide 3: Strong first half performance, with sales momentum continuing into Christmas trading period
Strong first half performance, with sales momentum continuing into Christmas trading period • Net 32 new stores opened – on track for net 50 for full year • LFL sales growth of +3.8% Strategic • Further multi-channel developments • Continued growth in product gross margin H1 FY19 H1 FY18 YOY Change
Slide 4: Financial Review
Financial Review 15/01/2019 3 3
Slide 5: Summary income statement
Summary income statement Adjusted results H1 FY19 H1 FY18 YOY Change KEY HIGHLIGHTS £'m £'m Revenue 91.5 79.5 15.0% • Strong revenue growth ‒ LFLs Gross Profit 13.6 11.5 18.1% ‒ New stores Gross Profit Margin 14.8% 14.5% 0.3ppts • Further gross profit margin growth Adjusted EBITDA loss (0.9) (0.2) 2
Slide 6: Ongoing improvement in product margin offset by increased operating costs
Ongoing improvement in product margin offset by increased operating costs H1 FY19 % of H1 FY18 % of YOY increase £'m revenue £'m revenue (%) Cost of goods sold 32.8 35.9% 30.6 38.4% 7.4% Store wages 18.2 19.9% 14.8 18.6% 23.1% Store property costs 20.8 22.7% 18.0 22.7% 15.3% Other direct costs 6.1 6
Slide 7: Disciplined approach to predictable capital expenditure
Disciplined approach to predictable capital expenditure H1 FY19 H1 FY18 £'m £'m New stores and relocations 2.9 1.9 IT hardware and software 0.3 0.3 Web development 0.3 0.1 Store refits and rebrands 0.3 0.2 Other 1.0 0.4 Total capital expenditure 4.8 2.9 Capital expenditure on finance lease (0.2) (0.
Slide 8: Strong financial position post-IPO
Strong financial position post-IPO Net Debt as at 28 October 2018 £'m Current liabilities 4.2 Non‐current liabilities 0.3 Total borrowings 4.6 Add back: Unamortised debt costs capitalised 0.2 Gross debt 4.8 Less: Cash (0.3) Net debt 4.4 KEY HIGHLIGHTS • Timing of payment runs around October month-en
Slide 9: Business Review
Business Review 15/01/2019 8 8
Slide 10: Clear strategy for future growth
Clear strategy for future growth 9
Slide 11: Rollout of profitable new stores
Rollout of profitable new stores • Continuing track record of delivery ‒ 32 net new stores opened in first half, across a variety of formats ‒ A further 5 net new stores opened pre-peak ‒ On target to open a net 50 new stores for the full year ‒ Strong pipeline of opportunities building for FY20 • P
Slide 12: Continued growth in LFL sales
Continued growth in LFL sales • LFLs +3.8% in H1 (H1 FY18: +8.2%) • A range of factors contributing: ‒ Positive LFLs both in-store and online ‒ Ongoing refresh of product offering – driving “product discovery” ‒ Continuing to offer customer exceptional value for money ‒ Stationery strong: new “Pen B
Slide 13: Further development of the Group's multi-channel proposition
Further development of the Group’s multi-channel proposition • Further enhancements to web functionality – driving strong growth in visits and conversion ‒ Click and Collect – continues to be fastest growing channel with strong in-store add-ons Refreshed the online customer journey Improved in s
Slide 14: Continuing to deliver margin enhancement
Continuing to deliver margin enhancement • Further growth in product gross margin • Multiple levers driving ‒ Mix management – overall and within categories ‒ Lower mark-downs, supported by: “Aged stock” remaining at historic lows Strong sell-through of summer “Out to Play” ranges Careful mana
Slide 15: Summary
Summary • Pleasing to report a strong set of maiden interim results • We are delivering against the strategy set out at the time of our IPO ‒ LFL growth over Christmas trading period is particularly pleasing ‒ Profitable new store growth continues, with a strong pipeline moving into FY20 ‒ Our multi
Slide 16: Questions?
Questions? 15/01/2019 15 15
Slide 17: Appendices
Appendices 15/01/2019 16 16
Slide 18: Balance sheet
H1 FY19 H1 FY18 Balance sheet Non‐current assets £'000 £'000 Property, plant and equipment 23,032 19,175 Goodwill 16,180 16,180 Deferred tax assets 307 320 39,519 35,675 Current assets Inventories 36,288 30,976 Current tax asset 1,305 1,345 Derivative asset 301 0 Trade and other receivables 13,133 1
Slide 19: Cash flow
Cash flow H1 FY19 H1 FY18 £'000 £'000 Cash flows from operating activities (Loss) / profit for the period (6,735) (3,105) Adjustments for: Depreciation 2,780 2,378 Impairment of property, plant and equipment ‐ ‐ Derivative exchange (gain)/loss (212) (296) Net finance costs 1,104 1,819 Gain / Loss on
Slide 20: Our investment highlights
Our investment highlights Differentiated proposition within attractive growth market segments Proven multi-channel model Well invested infrastructure to support growth Highly experienced management team Clear four pillar strategy for growth Strong and consistent track record of delivering profitable